/raid1/www/Hosts/bankrupt/TCRAP_Public/220107.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Friday, January 7, 2022, Vol. 25, No. 0
Headlines
A U S T R A L I A
AUSTRALIAN FUNDING: Second Creditors' Meeting Set for Jan. 14
ESPRESSO PATRONUM: Commences Wind-Up Proceedings
SARSWAT PTY: Commences Wind-Up Proceedings
SYZ AUTOCARE: Commences Wind-Up Proceedings
C H I N A
CHINA: US$708 Billion Race for Cash Adds Pressure for Easing
GUANGZHOU R&F: Short of Funds to Settle Bond Tender Offer
HUACHEN ENERGY: Chapter 15 Case Summary
MODERN LAND: Fitch Withdraws Ratings
I N D I A
CREATIVE CASUAL: CARE Withdraws B+ Rating on LT/ST Bank Debts
DECCAN ISPAT: ICRA Keeps D Debt Ratings in Not Cooperating
FASHION FLARE: ICRA Lowers Rating on INR2.0cr LT Loan to D
FUTURE ENTERPRISES: CARE Keeps C Debt Ratings on Credit Watch
GROVER ZAMPA: CRISIL Reaffirms B+ Rating on INR25cr Cash Loan
INDIA CLEAN: Moody's Assigns Ba3 Rating New USD Secured Notes
JEKIN ENTERPRISE: CARE Lowers Rating on INR25cr LT Loan to D
JET AIRWAYS: Interim CEO Sudhir Gaur Steps Down
KRISHNADEVARAYA CONSTRUCTIONS: CARE Reaffirms B+ LT Debt Rating
MINDHOLA FOODS: CARE Hikes Rating on INR34.27cr Loan to B+
NAIKNAVARE PROFILE: CARE Reaffirms D Rating on INR38.04cr NCD
PRIMARY AGRICULTURE: CARE Cuts Rating on INR45.76cr Loan to B+
RAMANI ICE: CARE Lowers Rating on INR64.04cr LT Bank Debt
RELIANCE BIG: CARE Keeps D Debt Rating in Not Cooperating
SAI MAATARINI: CARE Moves D Debt Rating to Not Cooperating
SAMRUDDHI COLD: CARE Reaffirms B- Rating on INR2.28cr LT Loan
SANDOR LIFESCIENCES: ICRA Keeps D Debt Rating in Not Cooperating
SARAVANA CONSTRUCTIONS: CRISIL Moves B+ Rating from Not Cooperating
SHUBHLAXMI DAL: CARE Reaffirms B+ Rating on INR6.50cr LT Loan
SITI NETWORKS: CARE Keeps D Debt Rating in Not Cooperating
SUPERSONIC DISTRIBUTION: CARE Reaffirms B+ Rating on LT/ST Debt
TATA PROJECTS: NCLAT Stays Insolvency Resolution Process Order
VENKATA LAKSHMI: CRISIL Moves D Debt Rating from Not Cooperating
J A P A N
FURUKAWA ELECTRIC: Egan-Jones Keeps BB+ Senior Unsecured Ratings
JAPAN AIRLINES: Egan-Jones Cuts Senior Unsecured Ratings to CCC+
NISSAN MOTOR: Egan-Jones Keeps BB- Senior Unsecured Ratings
RICOH CO: Egan-Jones Keeps BB+ Senior Unsecured Ratings
TOSHIBA CORP: No. 2 Shareholder Urges EGM Vote on Break-Up Plan
S I N G A P O R E
BARRAMUNDI ASIA: Commences Wind-Up Proceedings
GOODMAN SINGAPORE: Creditors' Proofs of Debt Due on Feb. 4
S O U T H K O R E A
ASIANA AIRLINES: Regulator to Speed Up Review of Takeover Deal
V I E T N A M
VIET A COMMERCIAL: Moody's Assigns B2 Issuer Rating
- - - - -
=================
A U S T R A L I A
=================
AUSTRALIAN FUNDING: Second Creditors' Meeting Set for Jan. 14
-------------------------------------------------------------
A second meeting of creditors in the proceedings of Australian
Funding Partners Pty Limited has been set for Jan. 14, 2022, at
11:00 a.m. via online video conference using Zoom Meetings.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 13, 2022, at 5:00 p.m.
Barry Wight and Rachel Burdett of Cor Cordis were appointed as
administrators of Australian Funding on Nov. 30, 2021.
ESPRESSO PATRONUM: Commences Wind-Up Proceedings
------------------------------------------------
Members of Espresso Patronum Pty Ltd, trading as Blends and Bros,
on Nov. 15, 2021, passed a resolution to voluntarily wind up the
company's operations.
The company's liquidator is:
Mitchell Griffiths
Rapsey Griffiths Turnaround + Advisory
Newcastle, NSW 2300
SARSWAT PTY: Commences Wind-Up Proceedings
------------------------------------------
Members of Sarswat Pty Ltd, on Jan. 6, 2022, passed a resolution to
voluntarily wind up the company's operations.
The company's liquidator is:
Clifford John Sanderson
Dissolve Pty Ltd
Level 8, 80 Clarence St
Sydney, NSW 2000
SYZ AUTOCARE: Commences Wind-Up Proceedings
-------------------------------------------
Members of SYZ Autocare Pty Ltd, on Jan. 6, 2022, passed a
resolution to voluntarily wind up the company's operations.
The company's liquidator is:
Clifford John Sanderson
Dissolve Pty Ltd
Level 8, 80 Clarence St
Sydney, NSW 2000
=========
C H I N A
=========
CHINA: US$708 Billion Race for Cash Adds Pressure for Easing
------------------------------------------------------------
Bloomberg News reports that a wall of maturing debt and a surge in
seasonal demand for cash will test China's financial markets this
month, putting pressure on the central bank to ensure sufficient
liquidity.
Demand for liquidity may total about CNY4.5 trillion (US$708
billion) in January, 18% more than the amount seen last year,
according to calculations by Bloomberg based on official data and
analysts' estimates. An increase in the amount of policy loans
coming due and demand for cash to be spent during the Lunar New
Year, which takes place earlier in 2022, are drivers, Bloomberg
says.
A recent reduction in the reserve-requirement ratio for banks could
provide relief but some market watchers predict the central bank
could ease again to avoid a liquidity crunch, Bloomberg relates.
Cash tightness adds another headache for authorities grappling with
the fallout of China Evergrande Group, which has led a wave of
defaults with at least six developers failing to pay debts on time
in the last quarter.
"There are a number of factors that may pose threats in January to
the stable liquidity conditions the central bank has vowed to
maintain," Bloomberg quotes Yishuang Li, an analyst at Cinda
Securities Ltd., citing tax payments and maturity of policy loans,
as saying. "The bond market is currently vulnerable after an
increase of leverage in December, which means financial
institutions will be more reliant on PBOC's liquidity support."
Further policy easing will be a double-edged sword for the People's
Bank of China. While such a move could soothe concerns about higher
funding costs and prevent a liquidity squeeze, it may also fuel
asset bubbles that Beijing wants to avoid, Bloomberg notes.
Ahead of the Lunar New Year in 2019 and 2020, the authorities
lowered the reserve ratio to pump in cash. However, they avoided
supplying extra funds last year, stoking fears about a tighter
policy stance and sending short-term funding costs soaring.
On Jan. 4, the PBOC reduced its injection of short-term cash to
CNY10 billion from CNY100 billion in the previous session. That
resulted in a net liquidity drainage of CNY260 billion, the most
since early October, Bloomberg discloses.
Some CNY1.2 trillion of negotiable certificates of deposit -- a
form of short-term bank debt -- will mature in January, along with
CNY500 billion of medium-term policy loans and another CNY700
billion of reverse repurchase agreements, according to Bloomberg's
calculations.
Adding to the stress, CNY700 billion could be drained from the
financial system for gifts and travel for the Lunar New Year
holiday in the first week of February, according to Zhaopeng Xing,
senior China strategist at Australia & New Zealand Banking Group
Ltd, Bloomberg relays. ANZ estimates that about CNY1 trillion is
required to meet tax obligations and banks may purchase a net
CNY300 billion of local and central government bonds issued in
January.
On top of that, Chinese property firms will need at least $189
billion to cover maturing onshore bonds, trust products and wages
to millions of migrant workers, according to Bloomberg's
calculations and analysts' estimates. This comes as the sector's
debt woes have shut most of it out of the offshore primary market
for refinancing.
Even though most analysts foresee liquidity support, most don't
expect the PBOC to go as far as cutting the reserve ratio again or
even lowering the policy interest rate, Bloomberg says. The central
bank will more likely resort to using short- and medium-term tools
to adjust the cash supply, according to Peiqian Liu, an economist
at Natwest Group Plc.
According to Bloomberg, more easing measures could give government
bonds another leg up. Benchmark 10-year yields slid to the lowest
in over a year in late December when the PBOC injected a net CNY650
billion into the financial system via reverse repurchase agreements
in the last two weeks of the month. Yields on the sovereign note
rose one basis point to 2.79% on Jan. 4, Bloomberg notes.
Bloomberg adds that the PBOC could lower the policy rate in the
first quarter to help reduce financing costs for companies, which
may push 10-year yields to as low as 2.6%, according to Yewei Yang,
rates strategist at Guosheng Securities Co.
"The demand for liquidity will start to pick up from mid-January,"
Bloomberg quotes Ming Ming, head of fixed-income research at Citic
Securities Co., as saying. "But the PBOC will use a prudent policy
to ensure the supply of cash is stable."
GUANGZHOU R&F: Short of Funds to Settle Bond Tender Offer
---------------------------------------------------------
Reuters reports that Guangzhou R&F Properties said it did not have
sufficient funds to buy back a $725 million bond as sales of its
assets had not come through as planned.
It said in a filing late on Jan. 5 that the funds available to
settle its tender offer for the offshore bond was materially less
than the $300 million it previously expected, due to continued
volatility in the property sector, Reuters says.
According to Reuters, R&F sought consent from bondholders of the
5.75% notes last month to extend maturity of the bond due Jan. 13
by six months, as part of efforts to "improve its overall financial
condition."
Reuters relates that the developer also proposed two options under
a tender offer: buying back the notes at a 17% discount, or $830
for every $1,000 in principal; or buying back at most half of
bondholders' notes in full, both with accrued interest.
Reuters notes that China's real estate developers have been
struggling to overcome tight liquidity conditions in the past few
months due to the government's clampdown on excessive borrowing and
speculation in the sector.
R&F said in the filing that 71.7% of the bondholders had tendered
for the first option, while 24.2% for the second - but it expects
it has "materially less" than $300 million to buy back all the
bond, Reuters relays.
"Proceeds from certain asset sales contemplated by the group may
fail to materialise by the settlement date," it said, adding the
settlement date has been postponed by two days to around Jan. 12.
In the document last month, the firm said it would accept tenders
of notes on a pro rata basis, and any notes not accepted for
purchase would be returned to the bondholders. And holders who have
tendered would be deemed to have approved the maturity extension.
"Despite the delays in the progress of certain anticipated asset
sales, the group is continuing to take active measures to shore up
its liquidity position up to the settlement date," R&F added in the
Jan. 5 filing.
The developer's total borrowings at the end of June were CNY143.4
billion (US$22.50 billion), Reuters discloses citing half year
financial report.
About Guangzhou R&F
Guangzhou R&F Properties Co., Ltd. operates real estate businesses.
The Company provides housing renovation, housing loans, real
estate brokerage, property management, and other services.
Guangzhou R&F Properties also operates hotel management.
As reported in the Troubled Company Reporter-Asia Pacific on
Dec. 30, 2021, Moody's Investors Service has downgraded the
corporate family ratings (CFR) of Guangzhou R&F Properties Co.,
Ltd. to Caa2 from B3 and R&F Properties (HK) Company Limited (R&F
HK) to Caa3 from Caa1. The rating outlooks for both companies
remain negative.
HUACHEN ENERGY: Chapter 15 Case Summary
---------------------------------------
Chapter 15 Debtor: Huachen Energy Co., Ltd.
No. 20 Shouti South Road
3/F, Building 4, Guoxingjiayuan
Beijing Haidian District
People's Republic of China
Business Description: The Debtor is a private thermal power
generator in the PRC, owning and
operating thermal coal and gas-fired
plants as well as renewable energy
photovoltaic power plants. Its power
generation business is primarily located
in the Jiangsu and Henan provinces of
the PRC.
Foreign Proceeding: No. 1 Intermediate People's Court of
Beijing
Chapter 15 Petition Date: January 4, 2022
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 22-10005
Judge: Hon. Lisa G. Beckerman
Foreign Representative: Ernst & Young Hua Ming LLP
Room 01-12, 17/F
Ernst & Young Building
Oriental Plaza, No. 1 East Chang'an St
Beijing Doncheng District
People's Republic of China
Foreign
Representative's
Counsel: Caroline A. Reckler, Esq.
Jonathan J. Weichselbaum, Esq.
Alexandra M. Zablocki, Esq.
LATHAM & WATKINS LLP
1271 Avenue of the Americas
New York, NY 10020
Tel: 212-906-1200
Fax: 212-751-4864
Email: caroline.reckler@lw.com
jon.weichselbaum@lw.com
alexandra.zablocki@lw.com
- and -
Jeramy D. Webb, Esq.
Andrew J. Miller, Esq.
LATHAM & WATKINS LLP
330 North Wabash Avenue, Suite 2800
Chicago, IL 60611
Tel: (312) 876-7700
Fax: (312) 993-9767
Email: jeramy.webb@lw.com
andrew.miller@lw.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of the Chapter 15 is available for free at
PacerMonitor.com at:
https://bit.ly/3t5KQi2
MODERN LAND: Fitch Withdraws Ratings
------------------------------------
Fitch Ratings has affirmed Chinese property developer Modern Land
(China) Co., Limited's Long-Term Foreign-Currency and
Local-Currency Issuer Default Ratings (IDRs) at 'RD' (Restricted
Default), as the company failed to repay its USD250 million
outstanding senior notes due October 25, 2021. There is no grace
period for the bond repayment.
The non-payment is consistent with an 'RD' rating, signifying the
uncured expiry of any applicable grace period, cure period or
default forbearance period following a payment default on a
material financial obligation.
At the same time, Fitch has affirmed Modern Land's senior unsecured
rating and the ratings on its US dollar bonds at 'C' with a
Recovery Rating of 'RR6'.
Fitch is withdrawing the ratings as Modern Land has chosen to stop
participating in the rating process. Therefore, Fitch will no
longer have sufficient information to maintain the ratings.
Accordingly, Fitch will no longer provide ratings or analytical
coverage for Modern Land.
KEY RATING DRIVERS
Non-Payment of Notes: Modern Land's failure to make payment on the
US dollar bonds due October 2021 is consistent with Fitch's
definition of an 'RD' rating, as the company has experienced an
uncured payment default on a material financial obligation but has
not yet entered into bankruptcy filings, administration,
receivership, liquidation, or other formal winding-up procedures,
and has not otherwise ceased operating.
Cross Default with Notes: The non-payment of Modern Land's October
2021 US dollar bonds triggered events of default on the company's
other US dollar notes, which will become immediately due and
payable if the bond trustee or holders of at least 25% in aggregate
principal amount of the offshore notes declare so.
DERIVATION SUMMARY
Modern Land's IDRs were downgraded to 'RD' in line with Fitch's
definition of an uncured payment default but no initiation of
bankruptcy filings, administration, receivership, liquidation, or
other formal winding-up procedures as yet and continuity of
business operations.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Attributable contracted sales of CNY24 billion in 2021;
-- Gross profit margin from property development maintained at
around 25%-26% in 2021-2022;
-- Construction cash cost accounting for 30%-35% of attributable
contracted sales in 2021-2022;
-- Land premium accounting for 55%-60% of annual sales receipts
in 2021-2022 and average land acquisition costs to increase in
2021-2022.
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that Modern Land would be
liquidated in a bankruptcy because it is an asset-trading
company;
-- Fitch has assumed a 10% administrative claim.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of
balance-sheet assets that can be realised in sale or liquidation
processes conducted during bankruptcy or insolvency proceedings and
distributed to creditors.
-- An advance rate of 60% is applied to adjusted inventory, as
Modern Land's EBITDA is lower than 20%;
-- Property, plant and equipment advance rate at 60%;
-- An advance rate of 70% applied to accounts receivable;
-- An advance rate of 0% applied to both restricted and excess
cash due to lack of clarity from the issuer on the breakdown
of cash for 1H21.
RATING SENSITIVITIES
Rating sensitivities are no longer relevant as the ratings have
been withdrawn.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
ISSUER PROFILE
Modern Land, established in 2000, was listed on the Hong Kong Stock
Exchange in 2013. The company focuses on green housing by adding
energy-preserving systems to its buildings.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Following the withdrawal of ratings for Modern Land Fitch will no
longer be providing the associated ESG Relevance Scores.
=========
I N D I A
=========
CREATIVE CASUAL: CARE Withdraws B+ Rating on LT/ST Bank Debts
-------------------------------------------------------------
CARE Ratings Ltd. has withdrawn the outstanding ratings of 'CARE
B+; Stable/CARE A4 assigned to the bank facilities of Creative
Casual India Private Limited with immediate effect.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term/ - Revised to CARE B+; Stable/
Short Term CARE A4 from CARE BB-; Stable/
Bank Facilities CARE A4 and Withdrawn
Long Term - Revised to CARE B+; Stable
Bank Facilities From CARE BB-; Stable and
Withdrawn
The above action has been taken at the request of Creative Casual
India Private Limited and 'No Objection Certificate' and 'No Dues
Certificate' received from the bank(s) that have extended the
facilities rated by CARE Ratings Ltd. The company has repaid the
aforementioned bank facility (Non-fund-based - ST-BG/LC) rated by
us and there is no amount outstanding under the facility as on
date.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Small size of operation: The total income from operations of the
company was at INR17.98 crore in FY20 which has further
deteriorated to INR5.50 crore in FY21. The current COVID-19
pandemic situation has had an adverse impact on the company's
revenue-generating capacity. Due to its modest scale of operations,
CCIPL remains exposed to and can be adversely impacted if some big
order does not materialize or does not get executed.
* Leveraged capital structure and debt coverage indicators: CCIPL
has a geared capital structure with weak debt coverage indicators.
The company's overall gearing ratio was at 2.47x as of March 31,
2020 which further worsened to 4.01x as on March 31, 2021. Also,
CCIPL's interest coverage ratio deteriorated from 1.20x in FY20 to
-1.41x in FY21 due to negative PBILDT of INR1.32 crore in FY21.
* High Operating Cycle: The operating cycle of the company stood at
604 days in FY21 as against 240 days in FY20. The company's
receivable period deteriorated from 108 days in FY20 to 338 days in
FY21 and, the inventory period remained stretched at 40 days in
FY21 as against 221 days in FY20 due to disruptions caused by
COVID-19 pandemic. Further, the company's high operating cycle is
due to the slow movement in retail outlets to which CCIPL is a
supplier.
* Fragmented, competitive and cyclical nature of the industry:
There are too many small players in the industry with minimal entry
barriers resulting in higher competition faces stiff competition
from integrated and non-integrated players from both domestic and
other low cost producing countries which in turn results in lower
margins. Textile is a cyclical industry and closely follows the
macroeconomic business cycles. The prices of raw materials and
finished goods are determined by global demand-supply scenario and
are not limited to only domestic factors. Hence, any shift in
macroeconomic environment globally would have an impact on domestic
textile industry.
Key Rating Strengths
* Experience and long track record of the promoters in textile
industry: Creative Casuals India Pvt Ltd (CCIPL) is a joint venture
between Vijay Agarwal, Chairman of the Creative Group and Rahul
Mehta (Managing Director). Mr Rahul has more than 30 years of
experience in the industry and is the Chairman of Clothing
Manufacturers Association of India.
* Strong Client base: The company manufactures private label
clothing for large format retailers like Future Enterprises, Vishal
Mega Mart. More than half of the sales of the company are denim and
rest comprises clothing and kids wear.
Creative Casual India Pvt Ltd. (CCIPL) was incorporated in 1982 as
Creative Casual Wear Pvt Ltd as a garment manufacturer. It was set
up as a joint venture between Vijay Agarwal, Chairman of the
Creative Group (holding 51% stake through related parties) and
Rahul Mehta (Managing Director) holding the balance 49%. CCIPL is
engaged in manufacturing of Ready Made Garments especially Jeans,
Trousers and Shirts. They have in-house expertise of manufacturing
of Jeans. The manufacturing plant is located at Bhiwandi (Thane,
Mumbai). CCIPL completely outsources manufacturing of shirts &
trousers to units located in Karnataka and Andhra Pradesh. The
finishing and packaging for these garments is done in house at
Bhiwandi Plant. The major business comes from manufacturing private
label garments.
DECCAN ISPAT: ICRA Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------
ICRA has retained the short-term ratings of Deccan Ispat Limited in
the 'Issuer Not Cooperating' category. The ratings are denoted as
[ICRA]D; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Short Term- 3.00 [ICRA]D; ISSUER NOT COOPERATING;
Unallocated Rating continues to remain under
'Issuer Not Cooperating' category
Short Term– 7.00 [ICRA]D; ISSUER NOT COOPERATING;
Non Fund Based Rating continues to remain under
'Issuer Not Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity. The rating action has been taken in accordance with
ICRA's policy in respect of non-cooperation by a rated entity
available at www.icra.in.
Incorporated in 2005, Deccan Ispat Limited is engaged in trading of
timber logs, veneers and plywood. The directors of the company are
Mr. Rajiv Agrawal & Mr. Anshu Agrawal who have extensive experience
of two decades in manufacturing plywood, block board and trading of
timber.
FASHION FLARE: ICRA Lowers Rating on INR2.0cr LT Loan to D
----------------------------------------------------------
ICRA Ratings reaffirmed ratings on certain bank facilities of
Fashion Flare International Private Limited (FFIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 2.00 [ICRA]D ISSUER NOT COOPERATING;
Fund Based TL Rating downgraded from
[ICRA]B(Stable) and continues to
remain under 'Issuer Not
Cooperating' category
Short Term- 4.00 [ICRA]D ISSUER NOT COOPERATING;
Fund Based Rating downgraded from [ICRA]A4
and continues to remain under
'Issuer Not Cooperating'
Category
Short Term- 2.00 [ICRA]D ISSUER NOT COOPERATING;
NonFund Based Rating downgraded from [ICRA]A4
and continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating downgrade reflects Public Announcement for Corporate
Insolvency announced by National Company Law Tribunal. The rating
is based on limited information on the entity's performance since
the time it was last rated in April 2021. The lenders, investors
and other market participants are thus advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity, despite
the downgrade.
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity. The rating action has been taken in accordance with
ICRA's policy in respect of non-cooperation by a rated entity
available at www.icra.in.
Formed in 1998, FFIPL is involved in the manufacture and export of
woven RMG for women (western style), which account for most of its
production. A small portion of sales also pertains to knitted RMGs.
The company has been into direct exports since
commencement of operations and has its manufacturing facility in
Okhla, New Delhi.
FUTURE ENTERPRISES: CARE Keeps C Debt Ratings on Credit Watch
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Future
Enterprises Limited (FEL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 1,175.00 CARE C (CWD) (Under Credit
Facilities Watch with Developing
Implications) Continues to be
on Credit watch with Developing
Implications
Short Term Bank 602.00 CARE A4 (CWD) (Under Credit
Facilities Watch with Developing
Implications) Continues to be
on Credit watch with Developing
Implications
Non-Convertible 100.00 CARE C (CWD) (Under Credit
Debentures Watch with Developing
Implications) Continues to be
on Credit watch with Developing
Implications
Non-Convertible
Debentures 325.00 CARE D Reaffirmed
Non-Convertible
Debentures 358.00 CARE D Reaffirmed
Non-Convertible
Debentures 50.00 CARE D Reaffirmed
Non-Convertible
Debentures 300.00 CARE D Reaffirmed
Non-Convertible
Debentures 265.00 CARE D Reaffirmed
Non-Convertible
Debentures 327.00 CARE D Reaffirmed
Non-Convertible
Debentures 332.00 CARE D Reaffirmed
Non-Convertible
Debentures 150.00 CARE D Reaffirmed
Non-Convertible
Debentures 425.00 CARE D Reaffirmed
Non-Convertible
Debentures 92.00 CARE D Reaffirmed
Fixed Deposit 700.00 CARE C (FD) (CWD) (Under Credit
watch with Developing
Implications) Continues to be
on Credit watch with Developing
Implications
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities and instruments of FEL
primarily factors in continued poor liquidity position leading to
reduced cash accruals on account of impact of COVID-19, slower than
anticipated recovery of business of key customers Future Retail
Limited and Future Lifestyle Fashions Limited.
The ratings also factor in high promoter pledge and falling market
capitalisation significantly impacting financial flexibility,
dependence on group companies for revenue and high working capital
cycle. The rating continues to derive strength from experienced
promoter group.
The ratings assigned to the bank facilities of FEL continue to
remain on 'Credit Watch with Developing Implications' on account
of the company's announced scheme of arrangement with FEL. The
One-time restructuring (OTR) plan has also been implemented
w.e.f. April 23, 2021. The approved plan assumes monetization of
certain assets resulting in de-leveraging of the balance sheet
of FEL, which continues to remain a key rating monitorable. CARE
will continue to monitor the developments in the divestment
of assets and scheme of arrangement with FEL and will resolve the
watch once clarity emerges on the same.
Rating Sensitivities
Positive Factors
* Improvement in company's liquidity profile resulting from equity
infusion/divestment of investments/improved credit profile
of its key customer, FRL
Negative Factors- Factors that could lead to negative rating
action/downgrade:
* Delay in asset monetisation as envisaged
Detailed description of the key rating drivers
Key Rating Weakness
* Weakened financial flexibility; considerable promoters' stake
pledged: As on September 30, 2021, the promoters of FEL have
pledged 98.67% of their 20.61% stake in the company. Falling market
capitalisation coupled with rising debt has led to
significant deterioration of debt to market-capitalisation.
Considerable reduction in market capitalisation and in absence of
any additional cover provided by the promoters, significant amount
of pledged shares have been invoked.
* Continued subdued operational performance for H1FY22: The
quarterly performance continues to remain weak in Q2FY22. FEL has
witnessed significant shrinkage in volumes from FLFL and FRL
despite the government easing restrictions. Although, the
financials have improved on a sequential basis, fixed costs and
interest has been eroding the profitability and networth of the
company. FEL has reported cash losses for H1Y22. Pickup in business
from FRL and FLFL leading to company posting profits remains a key
rating factor.
* Continued weakening of credit profile and liquidity of both
customers: FEL provides infrastructure support to group
companies and logistical support through its subsidiary Future
Supply Chain Solutions Limited. The company also designs,
manufactures garments for in-house brands and engages in trading
for various group companies. FEL is completely reliant on
FRL and FLFL for its sales. Due to the COVID19 pandemic, the retail
sector has been one of the most adversely affected sectors. Due to
continued liquidity stretch on account of reduced cash accruals
along with declining market capitalization, both FRL and FLFL have
implemented OTR plan. Liquidity and operating cash flow of FEL has
consequently been impacted in view of the
foregoing.
* Disproportionately High Working Capital Cycle: FEL had elongated
gross working capital cycle of 991 in FY21 which deteriorated from
158 days in FY20. The company sources and manufactures on behalf of
group companies and goods are kept at various retail outlets across
the country thereby leading to high inventory period. The company
receives payment after 6-7 weeks from sale of goods. Due to the
lockdown imposed to contain COVID19 pandemic towards the end of
March 2020, the company could not liquidate its inventory and
realise its existing debtors thereby leading to disproportionately
elongated operating cycle.
* Deterioration in credit profile of Future Group: The share price
of various Future Group entities has witnessed a steep decline. The
weakening of market capitalization has impacted the financial
flexibility of the group.
Key Rating Strengths
* Experienced Promoters & Management: FEL is a part of Future Group
(FG), with the flagship company of group as Future Retail Limited
(FRL). The group is headed by Mr. Kishore Biyani and has business
interest across various sectors such as retail,
FMCG, logistics, financial services etc. The promoters are
supported by a strong management team having significant experience
in retail industry.
* Divestment of investments to improve cash flows: FEL is looking
to divest its investments across various businesses. The divestment
includes stake sale in insurance and logistics business. The
divestment is expected to improve the company's cash flows and the
proceeds will be used towards debt reduction. Importance to Future
group in terms of sourcing and manufacturing fashion products: FEL
sources and manufactures goods for Future group which is sold to
the customer through FRL and FLFL's retail outlets. FEL continues
to an integral part of Future group's fashion business as both FRL
and FLFL, in FY21, sourced 70% and 1% of its products respectively
from FEL.
Industry Outlook
* Industry Outlook: The retail industry was affected due to the
outbreak of Covid-19 followed by the nation-wide lockdown in the
last week of March 2020. The closure of retail stores and shopping
malls across the country led to a sharp decline in retail sales.
While stores selling essential items like food and groceries,
medicines were allowed to function, stores selling non-essential
items like apparels, consumer durables etc. were completely shut.
As the lockdown restrictions were eased in a phased manner, the
industry initially grappled with both supply and demand side
issues. Even when the shopping complexes and malls were allowed to
open from June 2020, footfalls were low as people were cautious of
stepping out due to the virus. Also, during times of uncertainty,
people become prudent in terms of discretionary spending.
Meanwhile, on the supply side, retailers faced logistic challenges.
The consumer demand began improving on a quarterly basis from
Q2FY21. Further, the vaccination inoculation drive started in
January 2021 aided the consumer confidence. The spread of the virus
led to an acceleration in online sales of consumer products as
consumer behaviour changed during the lockdown as people avoided
physical store visits due to fears of virus contraction. Shopping
through online channels not only enabled customers to shop from the
comfort and safety of their homes but it also allowed retail
players to operate and survive despite restrictions during the
period of lockdown and subsequent stages of unlock.
After gradual pick up in revenues in Q3-Q4FY21, the revenues
declined in April-May 2021, this decline was primarily due to the
state-wise imposition of restrictions from April onwards on account
of the recent spike in Covid-19 cases. Restrictions in movement and
limited hours of operation for stores created a challenging
business environment for retailers. Consumer sentiment was once
again adversely impacted, and people became cautious with regards
to discretionary expenses. In near future, consumer demand is
expected to improve for non-essential items as lockdown
restrictions are lifted from June 2021. The recovery in consumer
demand is dependent on the spread of the virus and the progress of
the vaccination drive in the country. Overall, for FY22, sales are
expected to be higher than FY21 levels but is to be noted that the
possibility of a third wave of Covid-19 might impact the industry
dynamics. The long-term outlook of the industry remains positive on
the back increase in disposable income, favourable demographics,
brand consciousness, growth of e-commerce amongst other enablers.
Liquidity Position: Poor
The company's liquidity profile has been severely impacted on
account of lockdown measures and weakened credit profile of its key
customers FRL and FLFL. Both FRL and FLFL both are facing liquidity
issues and have implemented the OTR plans. The inability of FEL to
realise its debtors during COVID-19 pandemic and shut down of
operations during Q1FY21 led to cash crunch, increase in debtor
days and subsequently default on its debt servicing obligations.
Total outstanding trade receivables as on March 31, 2021, stood at
INR2062.44 crore on a total income of INR914.05 crore for FY21 as
against INR1520.10 crore on a total income of INR4069.54 crore for
FY20.
Erstwhile Future Retail Ltd. has now been renamed as Future
Enterprises Ltd. (FEL) and houses the physical assets (store
formats of erstwhile FRL and Bharti Retail Limited including all
the infrastructure assets situated in the stores) apart from
strategic investments in various companies. The company is also in
the business of manufacturing and trading of men's wear, women's
wear and kid's wear in the denim segment. Consequent to de-merger,
the long term debt (comprising bank term loans and NCDs of
erstwhile FRL) now resides in the books of FEL. FEL is also the
holding company for future group's various other businesses.
GROVER ZAMPA: CRISIL Reaffirms B+ Rating on INR25cr Cash Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of Grover Zampa Vineyards Limited
(GZVL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.25 CRISIL A4 (Reaffirmed)
Cash Credit 25.00 CRISIL B+/Stable (Reaffirmed)
Term Loan 4.35 CRISIL B+/Stable (Reaffirmed)
The ratings reflect GZVL's exposure to risks related to high
government regulation and intense competition in the wine-making
industry, its working capital-intensive operations and weak
operating efficiencies. These weakness are partially offset by its
promoter's extensive experience and track record in the industry
and established brand image.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to risks related to high government regulation in
wine-making industry and intense competition: The wine industry's
performance is sensitive to changes in climate and government
policies. The structure of duties and taxes levied on the wine
industry in India are complex and differ from state to state.
Further, GZVL faces intense competition from various indigenous and
foreign players, which restricts its pricing power. GZVL's business
will remain susceptible to government regulation and intense
competition over the medium term.
* Working capital intensive operations: Its intensive working
capital operation is reflected in its gross current assets (GCA)
assets of 674 days as on March 31, 2021. Its large working capital
requirements arise from its high debtor and inventory levels. It is
required to extend long credit period. Furthermore, due to its
business need, it holds large work in process inventory.
* Weak operating efficiencies: GZVL has weak operating
efficiencies, marked by operating losses and low return on capital
employed (RoCE). It is driven by pressure on capacity utilization
led by subdued demand in fiscal 2021 due to lockdown and high
marketing expenses.
Strength:
Promoter's extensive experience and track record in the industry
and established brand image: GVZL has been formed with merger of
Grover Vineyard Limited (GVL) and Vallee de Vin (VDV) and its
promoters have vast experience in manufacturing of wine. GZVL owns
reputed brands Grover and Zampa, both are well recognized and
premium wines in India.
Liquidity: Stretched
Liquidity profile of the company is stretched. The sanctioned
limits of INR30 crores were utilized at about 96% for the past 8
months through Octobers 2021. The cash accruals are likely to be
nominal in the medium term. Annual debt obligations of INR2 - 3
crores over the medium term would be funded via equity infusion
expected in fiscal 2022 and available cash balances. The promoters
are likely to extend support in the form of unsecured loans to meet
its working capital requirements and repayment obligations.
Outlook: Stable
CRISIL Ratings believe GZVL will continue to benefit from the
extensive experience of its promoter and established brand.
Rating Sensitivity factors
Upward factors:
* Substantial increase in revenue and profitability, leading to
cash accruals of over INR2 crores
* Improvement in financial risk profile with interest coverage to
above 2 times
Downward factors:
* Any large, debt-funded capital expenditure plan or delay in
equity infusion leading to higher gearing of above 1 times
* Delay in debt servicing
GZVL was formed by the merger of Vallee de Vin (VDV) with Grover
Vineyards Ltd (GVL) in April 2013. The company manufactures wines
and its vineyards are located in Nandi hills near Bengaluru and
Nashik (Maharashtra).
GVL was established in 1988 by Mr Kanwal Grover and sells its wines
under the Grover brand.
VDV was set up in 2006 by Mr. Ravi Jain and sells its wines under
the Zampa brand.
INDIA CLEAN: Moody's Assigns Ba3 Rating New USD Secured Notes
-------------------------------------------------------------
Moody's Investors Service has assigned a first-time Ba3 rating to
the proposed USD senior secured notes to be issued by India Clean
Energy Holdings (ICEH).
The outlook on the rating is stable.
ICEH will use the proceeds from its USD issuance to principally
fund its subscription of USD senior unsecured debt (RPPL Notes) to
be issued by ReNew Power Private Limited (RPPL, CFR Ba2). RPPL, in
turn, will use the proceeds of the RPPL Notes mainly to refinance
the existing debt of its operating subsidiaries, to fund capital
expenditure and for general corporate purposes. RPPL will undertake
hedging for the RPPL Notes using either call spread options or
at-the-market currency call options.
ICEH is a wholly owned subsidiary of ReNew Energy Global Plc (RNW),
RPPL's listed parent company. As of the end of September 2021, RNW
held a 92.96% equity stake in RPPL. ICEH will not undertake any
other business activity other than investing in the proposed RPPL
Notes under the draft financing documents.
"The Ba3 rating assigned to ICEH's proposed notes considers (1)
RPPL's Ba2 corporate family rating, given ICEH's reliance on cash
payment under the RPPL Notes to meet its own USD bond servicing
obligations and (2) ICEH bondholders' subordinated claim to cash
flow and assets behind the secured lenders of RPPL and its
operating subsidiaries, partly offset by the diversity in RPPL's
project portfolio," says Spencer Ng, a Moody's Vice President and
Senior Analyst.
RATINGS RATIONALE
RPPL's underlying credit profile reflects the group's (1)
predictable cash flow backed by its large and diversified portfolio
of solar, wind and hydro generation projects with long-term power
purchase agreements (PPAs), (2) experienced management team and
solid track record in delivering its growth projects, and (3) high
financial leverage that will likely remain elevated due to its
growth appetite.
RPPL's operating cash flows are stable, benefiting from the
long-term PPAs with either central government-owned or state
government-owned utilities, with predefined tariffs for the
duration of the contract. These contracts represent more than 90%
of the group's generation revenue, with the remainder mostly coming
from bilateral industrial customers with initial tenors typical
around 8 to 12 years.
Revenue under the long-term PPAs is predominantly 'take and pay' in
nature. As such, the group's revenue is susceptible to fluctuations
in the availability of solar and wind resources, as indicated by
the group's lower revenue caused by slow wind speed in fiscal 2021
(ended in March 2021). Such risks, however, is reduced by the
geographic diversification of RPPL's generation fleet and the use
of P-90 assumptions in Moody's forward-looking projections.
RPPL's credit profile further considers the group's high financial
leverage, primarily driven by the additional debt needed to fund
its greenfield development projects.
"The group's financial profile could improve as projects currently
under construction are commissioned and start to generate operating
cash flow. But the extent and timing of such improvements will
depend on RPPL's growth plans and the incremental debt that will be
required for new development projects," adds Ng.
Under Moody's base-case scenario, RPPL's consolidated cash flow
from operations pre-working capital (CFO pre-WC)/debt will remain
at around the mid-single digit percentage range over the next 2-3
years. This incorporates the additional debt needed for further
growth projects beyond the existing committed pipeline. RPPL has
outlined a potential to grow its generation capacity to around 18
gigawatts (GW) by the end of the fiscal 2025, subject to market
conditions and competition for new projects.
At the same time, Moody's financial projections also incorporate
the impact of a depreciation in the Indian Rupee, given the group's
decision to leave some of its USD debt repayments exposed to
fluctuations in the exchange rate, until the rupee depreciates
beyond the strike price of call options the group had executed to
cap its currency exposure.
RPPL's solid operational track record, underpinned by its
experienced management and project development teams, will support
its delivery of the new projects.
RPPL's credit profile also benefits from its substantial
shareholders, which include Goldman Sachs, Canada Pension Plan
Investment Board and Abu Dhabi Investment Authority, collectively
holding around 62% equity interest in RPPL. The substantial
shareholders have injected capital in support of RPPL's growth
development since its inception in 2011; the most recent was a
USD300 million injection completed in 2019. Through RNW's Nasdaq
listing completed in August 2021, the group raised another USD610
million of equity from new investors.
Shareholder support, along with RPPL's solid liquidity position,
give the group flexibility to manage its capital spending and
liquidity requirements. This is notwithstanding the continued
build-up of outstanding receivables from state-owned distribution
companies during 2021.
Moody's expects RPPL's substantial shareholders to continue to
provide support to the group's growth and liquidity funding
requirements, should the situation arise.
RATIONALE FOR STABLE OUTLOOK
The stable rating outlook reflects RPPL's solid liquidity position,
Moody's expectation of stable cash flows underpinned by long-term
PPAs and RPPL's successful completion of committed projects over
the next 1-2 years without a significant time delay or cost
overrun.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the close linkage between the credit quality of ICEH and
RPPL, the rating of ICEH could be upgraded if RPPL's corporate
family rating is upgraded.
On the other hand, the Ba3 rating of the proposed bond could come
under downward pressure if the RPPL's corporate family rating is
downgraded.
Incorporated in Mauritius in 2021, India Clean Energy Holdings is a
wholly owned subsidiary of ReNew Energy Global PLC (RNW).
ReNew Power Private Limited (RPPL) is one of the largest
independent renewable power producers in India by operational
generation capacity. As of September 2021, RPPL had 6.4GW of
operational renewable energy capacity. RPPL is also developing
3.9GW of new projects that it plans to commission over the next 1-2
years. Around 93% of RPPL's equity interest is held by its listed
parent, ReNew Energy Global PLC (RNW). The remaining equity are
held by management and pre-listing shareholders.
JEKIN ENTERPRISE: CARE Lowers Rating on INR25cr LT Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Jekin Enterprise (JE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 25.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
Category and Revised from
CARE B-; Stable
Short Term Bank 20.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
Under ISSUER NOT COOPERATING
Category and Revised from
CARE A4
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated June 24, 2021, placed the
rating(s) of JE under the 'issuer noncooperating' category as JE
had failed to provide information for monitoring of the rating and
had not paid the surveillance fees for the rating exercise as
agreed to in its Rating Agreement. JE continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter/email dated
January 3, 2022.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings assigned to the bank facilities of JE have been revised
on account of delay in debt servicing recognised from lender
feedback.
Jekin Enterprise (JE) is a partnership firm set up by Mr. Mukesh B.
Shah and Mrs. Savita Shah in 2001. Later, in 2011, it was
reconstituted with Mr. Mukesh B. Shah and Mr. Jekin M Shah as the
partners of the firm. The firm was originally established as a
proprietary concern in the year 1990 The firm is engaged in
execution of civil construction projects which involve earth work,
road work, deep excavation, bridges, hard rock cuttings, blasting
operations, land development, drainage system, industrial building
(civil work) and various other infrastructure jobs for both private
as well as government departments whereby it gets orders through
bidding and tendering process. The firm also executes projects as
sub-contractor for government projects which are obtained through
private corporates. The firm has been classified as Class 1A
contractor by Public Works Department.
JET AIRWAYS: Interim CEO Sudhir Gaur Steps Down
-----------------------------------------------
The Hindu BusinessLine reports that Jet Airways' interim CEO, Capt.
Sudhir Gaur has resigned from his position. Mr. Gaur was also the
Vice-President of Operations at Jet Airways. According to sources,
Capt. Priyapal Singh has been appointed as the interim manager of
Jet Airways.
Sources told BusinessLine that Mr. Gaur "resigned as he wants to
return to flying and not inclined in an active management role."
On the other hand, another source close to Mr. Gaur said that he
left for personal reasons.
According to BusinessLine, the first person said that Singh comes
with 37+ years of experience will be manning the cockpit for now
till such time a new CEO is appointed.
In a recent press note, Jet Airways' consortium including Murari
Lal Jalan and Kalrock Capital said that the airline would commence
domestic operations with six narrow body aircraft in 2022. It said
that the airline plans to have a fleet of 100 plus aircraft as part
of its 5-year plan, the report discloses.
It further said that Jet Airways 2.0's new corporate office is in
Gurugram and the consortium is looking for a bigger office in Delhi
NCR to house the entire team in one office. The announcements of
the new management team will be done when the entire team is ready,
BusinessLine relays.
Speaking on senior management hirings, the consortium said that
"most of the senior management positions as per our approved
organization structure has been filled and the consortium will
introduce the entire senior management team to all stakeholders
soon," it had said, adds BusinessLine.
About Jet Airways
Based in Mumbai, India, Jet Airways (India) Limited was one of
India's top airlines founded by Naresh Goyal. It provided
passenger and cargo air transportation services as well aircraft
leasing services. It operated flights to 66 destinations in India
and international countries.
Jet Airways on April 17, 2019, halted all flight operations after
its lenders rejected its plea for emergency funds.
On June 20, 2019, the National Company Law Tribunal (NCLT), Mumbai
Bench, accepted an insolvency petition against Jet Airways filed by
its creditors as they attempt to recover some of their dues.
Ashish Chhawchharia of Grant Thornton India has been named as the
resolution professional in the case. Law firm Cyril Amarchand
Mangaldas will represent the interests of the lenders' consortium,
according to a Reuters report.
Creditors have filed claims worth INR30,907 crore, according to
Financial Express. The RP has so far admitted claims worth over
INR14,000 crore.
Jet Airways would be acquired by an investor consortium under a
multi-million dollar resolution plan approved by the carrier's
creditors on Oct. 17, 2020.
KRISHNADEVARAYA CONSTRUCTIONS: CARE Reaffirms B+ LT Debt Rating
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Sri
Krishnadevaraya Constructions (SKC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank - Rating continues to remain
Facilities under ISSUER NOT COOPERATING
category; Reaffirmed at
CARE B+; Stable; ISSUER NOT
COOPERATING
Short Term Bank - Rating continues to remain
Facilities under ISSUER NOT COOPERATING
category; Reaffirmed at
CARE A4; ISSUER NOT
COOPERATING
Detailed Rationale & Key Rating Drivers
CARE Ratings Ltd has reaffirmed and withdrawn the outstanding
ratings of 'CARE B+; Stable; Issuer Not Cooperating/CARE A4; Issuer
Not Cooperating' assigned to the bank facilities of SKC with
immediate effect. The above action has been taken at the request of
Sri Krishnadevaraya Constructions and 'No Objection Certificate'
received from the bank that have extended the facilities rated by
CARE Ratings Ltd.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Partnership nature of constitution with withdrawal of capital:
Being a partnership firm, SKC is exposed to inherent risk of
partners' capital being withdrawn at time of personal contingency,
and firm being dissolved upon the death/retirement/insolvency of
partners. However, overall fearing of the firm is comfortable
at 0.2x in FY21(P).
* Fluctuating revenue: The revenue of the firm INR86.37 crore in
FY19 to INR36.6 crore in FY20, and then increased to INR43.1 crore
in FY21. In the current year, the firm has achieved top-line of ~Rs
40.0 crore till August 2021. PBILDT margins have improved from
8.55% in FY19 to 14.36% in FY21(Prov.). PAT margins also show an
upward trend and is comfortable at 8.07% in FY21(Prov.).
* Tender-based nature of operations in intensely competitive civil
construction industry: SKC receives all its work orders from
government and quasi government departments/companies, constituting
majority of its order book position. There are numerous fragmented
& unorganized players operating in the civil construction segment
which makes this space highly competitive. However, the promoters'
long industry experience of more than two decades mitigates this
risk to some extent.
Key Rating Strengths
* Experienced and resourceful partners: The firm was established in
the year 1996 by Mr. Narayana Chowdary (Managing Partner) and Mr.
Balaji (Partner). Mr. Narayana Chowdary is a graduate by
qualification and has more than three decades of experience in the
civil construction industry. He also has considerable experience in
dealing with Roads and Buildings departments and Irrigation
Department in terms of procurement and completion of the tender
works. The day to day activities of the firm are managed by both
the partners.
* Comfortable capital structure with satisfactory debt coverage
indicators: The capital structure of the firm marked by overall
gearing remained stable at 0.29x in FY20 and 0.2x in FY21(Prov.).
The overall gearing remained comfortable on account of plough back
of profits to the reserves. The debt coverage indicators marked by
total debt/GCA which improved from 1.44x in FY20 to 0.84x in FY21
at the back of decrease in total debt levels coupled with increase
in cash accruals. Furthermore, the PBILDT interest coverage ratio
stands comfortable at 6.76x in FY21.
Sri Krishnadevaraya Constructions (SKC) was established in the year
1996 by Mr. L. Narayana Chowdary and Mr. Balaji who are the
partners of the firm. The firm has its registered office located at
Anantapur in Andhra Pradesh and is a special class contractor for
construction of roads and buildings. Presently, the firm is engaged
in construction of roads and check dams. SKC procures work orders
through online government tenders from Roads and Building
department, Irrigation department, Panchayat Raj of various
districts of Andhra Pradesh.
MINDHOLA FOODS: CARE Hikes Rating on INR34.27cr Loan to B+
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Mindhola Foods LLP (MFLLP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 34.27 CARE B+; Stable Revised from
Facilities CARE B-; Stable
Long Term/ 24.00 CARE B+; Stable/CARE A4
Short Term Revised from CARE B-; Stable/
Bank Facilities CARE A4
Short Term 0.10 CARE A4 Reaffirmed
Bank Facilities
Detailed Rationale & Key Rating Drivers
The revision in the long-term ratings assigned to the bank
facilities of MFLLP take into consideration improvement in its
profitability and leverage position, along with its moderate scale
of operations. The ratings continue to favorably consider
experience of its promoters and presence of group entities in the
seafood processing business, locational advantage of being situated
on the bank of river Mindhola and certification for export of
marine products.
The ratings however continued to remain constrained on account of
its presence in a fragmented and seasonal sea food processing
industry with associated regulatory risks, susceptibility of its
profitability to foreign exchange price fluctuations, its leveraged
capital structure and weak debt coverage indicators and stretched
liquidity.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Growth in scale with TOI of above INR300 crore on sustained basis
with maintenance of healthy PBILDT margin.
* Improvement in overall gearing to less than 2 times on sustained
basis.
* Improvement in liquidity resulting in reduction on reliance on
external debt for working capital requirements.
Negative Factors- Factors that could lead to negative rating
action/downgrade:
* Decline in total operating income by more than 20% from present
levels.
* PBILDT Margin falling below 8% on sustained basis.
* Deterioration in overall gearing beyond 4 times on sustained
basis.
* Withdrawal of funds infused by group entities adversely impacting
liquidity.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Improved but leveraged capital structure and moderate debt
coverage indicators: In FY21, MFPL has achieved TOI of INR154.82
crore, which was lower by (~23%) compared to TOI of INR200.53 crore
in FY20, mainly on account of Covid pandemic related disruptions.
However, the performance has gradually picked up as evinced by TOI
of INR113.91 Cr in H1FY22, full year sales is expected to reach pre
Covid levels. MFPL's capital structure stood leveraged with an
overall gearing of 4.28 times as on March 31, 2021, though the same
improved from 11.61 as on March 31, 2020 owing to accretion of
profits to reserves and infusion of capital by partners. Debt
profile of the entity also includes unsecured loans from group
entities of INR24.75 to fund the operational and financial
requirements. Also, debt coverage indicators stood moderate with
total debt to GCA of 6.29 times as on March 31, 2021.
* Foreign exchange fluctuation risk: MFLP's entire total operating
income is by way of exports and this exposes its operating
profitability to adverse movement in forex rates, as it shall be
unable to pass on any adverse movement to its suppliers, which are
largely unorganized groups of seafood farmers. Further, MFLP does
not hedge any of its foreign currency exposure.
* Highly fragmented and seasonal sea food industry, with associated
regulatory risks: The seafood market is characterized by high level
of fragmentation, along with seasonality and regulatory risks.
MFLLP procures its raw material requirement primarily from farmers
around river Mindhola, which exposes it to risks of regional
concentration and is also regulated by various authorities in terms
of food and safety standards. Apart from severity of regulations,
adverse seasonal conditions, lack of quality input and feed and
diseases continue to pose risk to the seafood industry. Further, as
shrimp is used largely as food, there are also restrictions imposed
by the customers for quality and area of procurement. Further, due
to less technological intensity of the industry, the entry barriers
are also low. As a result, MFLLP needs to compete with many small
players in the region, limiting its operating profitability. In the
export markets, Indian seafood manufacturers face stiff competition
from China and many South-East Asian nations. However, MFLLP
benefits to some extent owing to presence in hatcheries in group
entities which ensures regular and good quality supply of raw
material and firm also has an in-house laboratory assuring usage of
healthy shrimps.
Key Rating Strengths
* Experienced promoters in seafood processing business: Mr. Hetal
Patel, partner at Mindhola Foods LLP has a Masters degree in
Aquatic Biology (M.Sc.) and has an experience of around two decades
in in seafood processing business through other group entities
engaged in similar field of business. Further, the promoters group
entities, engaged in similar line of business, have demonstrated
their support towards MFLLP by way of infusion of unsecured loans
(USL) for operational and financial requirement of the firm. As on
March31, 2021, the outstanding USL stood at INR24.91 crore as
against INR25.90 crore as on March 31, 2020.
* Certified for export of marine products: MFLLP processing unit is
certified by United States Food and Drug Administration (USFDA),
Food Safety System Certification (FSSC), its products hold a
British Retail Consortium (BRC) certification. BRC certification
allows MFLLP to sell its ready-to-eat products directly in the
European supermarkets and malls. MFLLP sells its products under the
brand name Oceanus.
* Proximity to marine products procurement area: MFLLP processing
plant is located at on the bank of river Mindhola, near Palsana in
Gujarat where the shrimp nurseries are located close to the Arabian
Sea where the natural availability of nutrient rich water provides
for unique flavours of the shrimps produced. MFLLP purchases
shrimps from nearby farmers cultivating shrimps and other seafood
products and processes the same in its factory premises with
different shapes and flavours for exports.
Moderate scale of operations with improvement in profitability
MFPL commenced operations in FY20 and during FY21, it achieved a
moderate TOI of INR154.82 crore, which was however lower by (~23%)
compared to TOI of INR200.53 crore in FY20 mainly on account of
Covid pandemic related disruptions. However, the performance has
gradually picked up in FY22 as evinced by a TOI of INR113.91 crore
registered in H1FY22 and hence full year sales are expected to
reach pre Covid levels. Despite dip in TOI, firm's operating
profitability improved significantly by 970 bps to ~12% with
reduction in raw material costs. Consequently, firm registered
gross cash accruals (GCA) of around INR13.50 crore in FY21 (as
against meagre GCA of below INR1 crore registered in FY20).
Liquidity: Stretched
The liquidity of the firm stands stretched marked by largely full
working capital utilization (including requirement for availment of
temporary overdraft with high requirements during peak season),
though gross cash accruals remain adequate vis-à-vis debt
repayment obligations.
The firm has repayment obligations in the range of INR4-5 crore for
FY22-FY24 which are expected to be met out of its cash accruals.
Operating cycle of the firm remains moderate at 71 days with
moderate receivables days of 20 in FY21; however, the inventory
days remained high at 121 days in FY21. Firm has also paid its
creditors during FY21 funded through bank borrowings.
Incorporated in October 2017, Mindhola Foods LLP (MFLP) is a
limited liability partnership firm (LLP) which commenced operations
in May 2019. MFLP is engaged in processing of seafoods and exports
frozen marine products primarily to China, Japan, UAE, New Zealand
and some Middle East countries. MFLP has a processing cum storage
facility located at Palsana (Gujarat) with total installed capacity
of 75 metric tonne per day (MTPD) for processing and freezing of
shrimps. MFPL sells its products under the brand name Oceanus.
NAIKNAVARE PROFILE: CARE Reaffirms D Rating on INR38.04cr NCD
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Naiknavare Profile Constructions Private Limited (NPCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible
Debentures 38.04 CARE D Reaffirmed
Non-Convertible
Debentures 6.00 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The reaffirmation in the rating assigned to the long-term
instrument of NPCPL continues to factor in weak financial risk
profile and stretched liquidity position of the company which has
led to ongoing delay in the redemption of rated NCDs.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Regularization of debt servicing of NCDs for a sustained period
Negative Factors- Factors that could lead to negative rating
action/downgrade: Not applicable
Detailed description of the key rating drivers
Key Rating Weakness
* Ongoing delays in servicing of debt obligations: Owing to
stretched liquidity position of the company, there has been ongoing
delay in redemption of NCDs which was due on December 19, 2021. The
company has been in discussion with the investor/debenture holder
to extend the term of redemption by one year, however, such
extension is still under process and could not happen before the
due date of redemption leading to delay in timely servicing of the
debt obligations.
Liquidity: Poor
Liquidity is marked by tightly matched accruals to debt obligations
on the NCDs.
Naiknavare Developers Private Limited (NDPL) belonging to Naiknavre
Group is developing a residential project through Naiknavare
Profile Constructions Private Limited (NPCPL, erstwhile Naiknavare
Profile Developers LLP) by the name of Avon Vista at Balewadi, Pune
(Project) with total saleable area of 7.83 lakh square ft (lsf).
Naiknavare group is engaged in real estate construction business
for past 28 years in Pune.
PRIMARY AGRICULTURE: CARE Cuts Rating on INR45.76cr Loan to B+
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Primary Agriculture Cooperative Society Limited, Chandupatla
(PACS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 45.76 CARE B+; Stable Revised from
Facilities CARE BB-; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating for long-term bank facilities of PACS
takes into consideration the deterioration in the asset quality
metrics during FY21 (refers to the period April 01 to March 31).
The rating continues to be constrained by relatively small scale of
operation despite long track record, concentrated loan portfolio,
leveraged capital structure with high dependence on external
borrowings, inadequate MIS system and safety mechanisms, unrelated
project capex undertaken and minimum regulatory restrictions. The
rating is, however, underpinned by the experience management team
and moderate profitability.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Ability of the society to scale up the operation with portfolio
size increasing above INR100 crore.
* Ability to improve asset quality.
Negative Factors- Factors that could lead to negative rating
action/downgrade:
* Weakening of asset quality resulting in stress on liquidity.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Relatively small scale of operation despite long track record:
PACs has nearly six decades of track record of lending to its
members. However, despite long existence, the society remains
relatively small in size with outstanding portfolio of INR47.24
crore as of March 31, 2021 as against INR49.68 crore as of March
31, 2020. As of September 30, 2021, the loan outstanding stood at
INR44.15 crore.
* Concentrated Loan portfolio: The loan portfolio of PACs is
distributed into ACC (Agriculture Cash Credit), ATL (Agriculture
Term loans), SHG (Self Help Group) loans and loans against fixed
deposits to its members. The society provides ACC loan which is
also known as crop loan to farmers for purchasing improved seeds,
fertilizers, etc. which are basic day to day farming requirements
for raising crops mainly wheat and paddy. Agricultural Term Loan
(ATL) covers purchase of tractors, pump set, electric motors, and
bullock cart. Nonfarm sector loans comprise loans for setting up of
general stores, barber shop etc. SHG (Self Help Group) focuses on
helping women to set up dairy units or purchase milch animals.
However, as the society was founded with an objective to help
farmers, the majority of portfolio is concentrated on ACC loan
which constituted about 89% of total portfolio as on March 31, 2021
as against 86% as of March 31, 2020. The other segment borrowing
requirement has been reducing due to overall liquidity squeeze in
the market.
* Deterioration in asset quality during FY21: The society has weak
asset quality with high NPA levels. The GNPA & NNPA deteriorated to
31.99% and 29.91% as on March 31, 2021. Further the GNPA
deteriorated to 45.43% as on September 30, 2021. The Government of
Telangana had announced a farm loan waiver scheme in 2018 and part
of the loans given by the society are eligible for the waiver. This
resulted in increase in NPA levels. However, the timing for receipt
of payment from the scheme remains to be seen.
* Leveraged capital structure with high dependence on external
borrowings: The overall gearing ratio has been high due to
dependence on external funds from bank for financing the loans to
members. Overall gearing remained at 5.03x as on March 31, 2021 as
against 5.15x as on March 31, 2020.
* Inadequate MIS system and safety mechanisms: The society has
evolved with time and has adopted computerized system which records
the data and retrieves whenever required. However, the society is
still not fully computerized and still requires maintaining and
recording of data manually.
* Unrelated project capex undertaken: The society has setup its own
outlet of petrol bunk in Chandupatla district (entered into
agreement with Bharat Petroleum Corporation Ltd. for the same). The
project was entirely funded by the societies own funds (reserves)
and the petrol bunk is expected to be operational by January 2022.
* Minimum regulatory restrictions: PACS is registered under Andhra
Co-operative Societies Act of 1964 where each society is governed
by its own set of bye-laws. There is no intervention from any
government regulatory bodies. However, the society has NPA
provisioning norms for loans overdue as per the prevailing
Circulars on Prudential Norms given by the Registrar of Cooperative
Societies and NABARD. The capital adequacy ratio remained
satisfactory at 15.29% as of March 31, 2021 (PY: 12.30%).
Key Rating Strengths
* Experienced Management: PACS was founded on October 28, 1955,
with an objective to provide financial assistance to farmers. The
society is run by an experienced management team headed by the
Chairman; Mr. Balguri Madhusudhan Reddy who was elected as the
Chairman of the Society on January 1, 2013. He is supported by Mr.
Ramulu (Temporary CEO) and a qualified team down the line. The
total number of employees working in this society is 12, inclusive
of the CEO. The society has operations in 8 Revenue villages of
Bhongir Mandal and primarily supports the funding requirement of
farmers and thus has support from the State Government in the form
of Government grants.
* Moderate Profitability: The total income of the society during
FY21 increased to INR27.88 crore from INR15.22 crore during FY20.
However, the increase is mainly on account of increase in trading
segment of the society. The total income in H1FY22 is INR22.08
crore. The interest income from farmers increased from INR5.54
crore during FY20 to INR7.85 crore during FY21 majorly on account
of increase in rate of interest rate pertaining to Agriculture Cash
Credit that constitute major portion of the portfolio. ROTA
slightly moderated to 1.42% during FY21 (PY: 1.90%). In H1FY22,
ROTA stood at 1.20%.
* Impact of Covid-19: The impact of COVID-19 lockdown in the
agricultural sector has been minimal. The society has not provided
any moratorium to its members, nor have they availed any moratorium
from bank during FY21.
Liquidity: Stretched
The society has stretched liquidity profile with deteriorating
asset quality given the rise in GNPA level on a y-o-y basis. The
cash and bank balance as of September 30, 2021 remained at a
moderate level of INR0.21 crore. The company has higher dependency
on external funding. However, the company has been able to manage
liquidity as majority of the borrowings are of working capital in
nature.
Primary Agricultural Credit Society (PACS) was founded on October
28, 1955, with an objective to help farmers. PACS is registered
under Andhra Pradesh Co-operative Societies Act of 1964. It is
engaged in lending money to its registered members from the corpus
formed by taking deposits from its members and loans from banks.
PACS also assists farmers in marketing of products and distribution
of seeds and fertilizers to them. The society runs by its own
bye-laws which are framed confirming the principles laid down in
the Act and it is governed by the co-operative registrar. The loan
portfolio of PACS is diversified into Agriculture Term Loan (ATL),
Agricultural Cash Credit (ACC), SHG loans and Non-farm sector loan.
Any member who needs financial assistance should have 10% of the
loan value as share capital. The society is also involved in
trading of fertilizers and seeds and providing assistance to
farmers in sale of paddy to Civil Supplies Department of
Telangana.
RAMANI ICE: CARE Lowers Rating on INR64.04cr LT Bank Debt
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Ramani Ice Cream Company Limited (RICL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 64.04 CARE D Revised from CARE B;
Facilities Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of RICL
take into account irregularities in servicing of its debt
obligations on the back of its poor liquidity.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Establishing a track record of timely servicing of debt
obligations for a period of at least 90 days
Detailed description of the key rating drivers
Key Rating Weaknesses
* On-going delays in debt servicing: As per lander interaction and
information received from the company, its debt servicing remain
irregular due to poor liquidity.
Liquidity: Poor
Liquidity position of RICL remained poor marked by overdrawn of its
working capital limit owing to lower sales in December, 2021 on the
back of slack winter season coupled with the company is
experiencing difficulties in realization of inventory and debtors
on time.
Further, RICL's gross current assets days remained elongated at 450
days in FY21 (Unaudited) and cash accruals of the company remained
modest in FY21 (UA) as against scheduled debt repayment of around
INR10 crore in FY22. It has elongated operating cycle of 248 days
in FY21 (UA) on the back of high inventory days of 360 days. Cash
flow from operations deteriorated on the back of operating loss and
remained modest at INR3.56 crore in FY21 (UA).
RICL (CIN: U15544MP1991PLC006612), a closely-held unlisted company,
was established by Bhopal-based Ramani group. Initially constituted
as Ramani Ice Cream Company Pvt. Ltd. in 1991, it was later on
converted into a public limited company in 2011. Founded by Late
Mr. Balchand Kukreja, Ramani group is engaged in manufacturing of
ice cream since 1970. RICL sells ice-cream under the brand name of
'Top 'N Town' which has dominant presence in Madhya Pradesh and
good presence in nearby states like Maharashtra, Chhattisgarh,
Orissa and Uttar Pradesh. RICL had an annual capacity of 27 million
litres per annum (MLPA) for manufacturing of ice cream at its two
plants located in Bhopal, Madhya Pradesh and Durg, Chhattisgarh.
RELIANCE BIG: CARE Keeps D Debt Rating in Not Cooperating
---------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Reliance
Big Entertainment (US) Inc (RBEUS) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 487.50 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE Ratings Ltd. has been seeking information from RBEUS to
monitor the rating vide e-mail communications/letters dated
September 1, 2021, December 15, 2021 among others and numerous
phone calls. However, despite CARE's repeated requests, the company
has not provided the requisite information for monitoring the
ratings. In line with the extant SEBI guidelines, CARE Ratings Ltd.
has reviewed the rating on the basis of the best available
information which however, in CARE Ratings Ltd.'s opinion is not
sufficient to arrive at a fair rating. The rating on RBEUS's bank
facilities will now be denoted as CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on October 16, 2020 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* On-going delay in debt servicing: Ratings continue to factors in
its ongoing delays in debt servicing.
Reliance Big Entertainment (US) (RBEUS) is a Delaware Corporation
incorporated in 2008. It is owned by Reliance Interactive Advisors
P Ltd (33%) and Reliance Big Entertainment Pvt. Ltd (67%). This
company is a SPV engaged in the development, production, sales and
distribution of motion pictures in North America through its
subsidiaries and affiliates. It operates mainly through its
subsidiaries and associates like DreamWorks and Tang Media
Partners.
SAI MAATARINI: CARE Moves D Debt Rating to Not Cooperating
----------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Sai
Maatarini Tollways Limited (SMTL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 1,397.35 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE Ratings Ltd. has been seeking information from SMTL to
monitor the rating(s) vide e-mail communications/letters dated
October 18, 2021, December 13, 2021 among others and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite information for monitoring the ratings.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating. The rating on Sai Maatarini Tollways
Limited's bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings take into account the continuous delay in debt
servicing due to discontinued operations on account of termination
of the project by NHAI.
Detailed description of the key rating drivers
At the time of last rating on December 10, 2020, the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Strengths
* Delays in debt servicing: Auditor has qualified in the annual
report FY21 that the company has defaulted in payment of interest
to the Banks and Financial Institutions. Further, the account
continuous to be NPA with all the lenders.
* Termination of the project: The company and NHAI have both issued
termination notices to the other party and the company has on
January 31, 2020 handed over the project to NHAI. Thereby, the
company is no more operating the stretch. Both the parties are
currently pursuing settlement through a Conciliation Committee of
Independent Experts, constituted in June 2020.
* Lower than envisaged toll collections: The toll revenues are
lower than that envisaged projected revenues at the time of
financial closure on account of:
* Quantum of iron ore production has dropped significantly after
induction of Shah Commission.
* Due to mining ban as directed by the Hon'ble Supreme Court, iron
ore production has completely stalled.
* In Odisha state carrier buses were not paying the toll fee and
there was agitation for collecting the same. Claims on this account
are being submitted to NHAI and approval is still pending with
NHAI.
* During FY19 the company has collected toll of INR30 lakh per day
against estimated toll collection of INR90.00 lakh per day.
Key rating strengths
* Established track record of EPC as a developer of various
BOT-based roads: SMTL has entered into fixed-price EPC contract
with Gayatri Projects Limited (CARE D; as on November 15, 2019) for
INR2020 crore. GPL is a prominent infrastructure construction
company with over 40 years of experience in executing various
infrastructure projects, especially road and irrigation segment.
GPL, an ISO 9001-2000 company, is engaged in execution of major
Civil Works including Concrete/Masonry Dams, Earth Filling Dams,
National Highways, Bridges, Canals, Aqueducts, Ports, etc. The
company has successfully undertaken and completed road projects in
the past.
Liquidity: Poor The company's average daily toll collection was
around INR30 lac/day, which is significantly lower (1/3th of the
envisaged toll collection of INR90 lac/day) than the estimated toll
collections resulting in poor liquidity thereby having continuous
default in debt servicing. Further, the NHAI has issued termination
based on that the assets have been transferred to NHAI and company
ceases to stop toll collection and the matter is in arbitration. On
the basis of the contract termination and transfer of assets, the
banks have demanded immediate repayment of loans, which has further
aggravated the liquidity position.
Sai Maatarini Tollways Limited (SMTL), an SPV entered into
Concession Agreement (CA) on September 28, 2011 with National
Highways Authority of India (NHAI)/Authority for developing 4
laning of Panikoili-Remuli section of NH-215 (from 0.00 Km to
163.00 Km; Design Length: 166.17 km.) in the state of Orissa under
DBFOT (toll) basis for a period of 24 years including construction
period of 910 days.
SAMRUDDHI COLD: CARE Reaffirms B- Rating on INR2.28cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Samruddhi Cold Storage and Warehousing (SCSW), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 2.28 CARE B-; Stable; Rating removed
Facilities from ISSUER NOT COOPERATING
category and Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SCSW is tempered on
account of small scale of operations with net losses registered in
FY20 & FY21. The rating further takes into account the leveraged
capital structure and moderate debt coverage indicators, stretched
liquidity position, its presence in a highly competitive and
fragmented industry and constitution as a proprietorship firm
limiting the financial flexibility.
The rating however continues to derive strength from the experience
of the promoter in agro-based business, locational
advantage emanating from its proximity to supplier and customer
base and eligibility for subsidy against capital expenditure under
central and state government-funded scheme.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Sizeable improvement in scale of operations while reporting
operating, cash as well as net profit on a sustained basis.
* Improvement in capital structure (overall gearing ratio below
2.00x) and its reduced reliance on external borrowing.
Negative Factors- Factors that could lead to negative rating
action/downgrade:
* Any decline in scale of operations from present level on a
sustained basis
* Deterioration in capital structure as a result of more than
expected increase in debt levels or withdrawal of capital.
* Deterioration in liquidity position
Detailed description of the key rating drivers
Key Rating Weaknesses
* Decline in ToI and profitability margins in FY21: During FY21,
the SCSW has recorded ToI of INR1.27 crore (vis-à-vis INR2.01
crore in FY20). The reason of decline in ToI is on account of less
demand for storage facilities from the farming community.
Furthermore, the PBILDT margin of the firm declined and stood at
87.14% in FY21 (vis-à-vis 88% FY20). However due to high fixed
capital charges the firm has reported a net loss of INR0.51 crore
in FY21 (vis-à-vis net loss of INR0.55 in FY20). Further, the
cash accruals declined by INR0.39 crore and stood positive at
INR0.61 crore in FY21 (vis-à-vis INR1.00 crore in FY20). Further,
the capital employed by the firm stood low at INR7.05 crore as on
March 31, 2021 (vis-à-vis INR8.19 crore as on March 31, 2020)
which restricts the financial flexibility of SCSW in times of
stress and deprives it of scale benefits. Moreover, the company
has achieved turnover INR0.82 crore in 8MFY22 (refers to the period
April 01, 2021 to November 30, 2021) as against INR2.16 crore in
11MFY21(referring to the period April 01 to February 28,2021).
* Improvement in capital structure in FY21; albeit weak debt
coverage indicators: As of March 31, 2021, the capital structure of
the firm improved marked by a overall gearing of 1.23 times as of
March 31, 2021 (vis-à-vis 2.07 times as of March 31, 2020) due to
reduction in term loan on account of repayment of term loan
instalments. Furthermore, on account of accretion to reserves the
tangible networth of the firm has improved by 15.65% to INR3.13
crore as on March 31, 2021 (vis-à-vis INR2.64 crore as of March
31, 2020). Despite improvement in overall gearing, the total debt
to GCA has deteriorated to 6.25 times as of March 31, 2021
(vis-a-vis 5.45 times as of March 31, 2020) due to lower accruals.
The interest coverage also deteriorated to 2.24 times as of March
31, 2021 (vis-a-vis 2.30 times as of March 31, 2020) despite
reduction in interest expenses by 57.14% to INR0.49 crore in FY21
(vis-à-vis INR0.77 crore in FY20).
* Seasonality of business with susceptibility to vagaries of nature
coupled with price volatility of agro-based products:
SCSW's operations are seasonal in nature as the firm is into
providing facility for storage of agro commodities. Lower
agricultural output may have an adverse impact on the available
fruits and vegetables and rental collections as the cold storage
units collect rent on the basis of quantity stored. Fragmented
nature of operations and intense competition from other players in
the region: The Indian cold storage and warehousing industry is
highly unorganized & fragmented in nature due to low entry
barriers. The Industry in the country is flooded with many
unorganized players. This has led to high level of competition in
the industry and players work on wafer thin margins.
* Proprietorship nature of constitution: Being a proprietorship
concern, it is exposed to the risk of withdrawal of capital by the
proprietor on personal exigencies, dissolution of firm due to death
and restricted financial flexibility due to inability to explore
cheaper sources of finance leading to limited growth potential.
Key Rating Strengths
* Experienced promoter: SCSW is promoted by Mr. Chandrashekar
Akkalkote having an experience of around one and half decade agro
trading business. The promoter is ably supported by his father Mr.
Naganath Akkalkote who has experience in the trading of agro based
products through its proprietary concern Vinay Sales Corporation.
He looks after the day to day operations of the firm. The
satisfactory experience of promoters and management might aid in
establishing good relationship with customers & suppliers and
smooth operations of the firm.
* Locational advantage with proximity to raw material and customer
base: Location advantage of SCSW emanating from proximity to farms
in the district of Solapur which covers all major fruits and milk
products. Also, for the cold storage it has a favorable location
proximity to the grapes, custard apple and vegetable growing
areas (Marathwada Region) which augers well for the firm. Both the
factors provide wide catchment making it suitable for the farmers
in terms of transportation and connectivity. This enables SCSW to
reduce its dependence on any single agricultural
commodity.
* Eligible for subsidy against capital expenditure under central
and state government funded scheme: SCSW is eligible for
electricity duty exempt for 15 years as it is located in D+ Zone
and the firm will benefit from the refund of 5% interest of the
total interest paid to the lending agency for 7 years. Also, the
Government of lndia, Ministry of Agriculture'& Cooperation has
approved the Capital Investment subsidy scheme for Construction,
Expansion, Modernization of Cold Storages and Storages for
Horticulture Produce. Also, the National Horticulture Mission
offers subsidy for the projects at the rate of 25% of the total
investment in the project of cold storage.
Liquidity: Stretched
Liquidity position of the company remain stretched marked by lower
accruals of INR0.61 Crore as against repayment obligations of
INR0.48 crore for FY21, nominal cash balance of INR0.06 crore as on
March 31, 2021. Further the firm has unutilised cash credit
facility of INR0.25 crore. The firm had not availed both moratorium
(March to August) as per RBI announcements under COVID pandemic for
repayments of principal and interest of term loan account.
Samruddhi Cold Storage & Warehousing (SCSW) was incorporated in
March 2017 and the commercial operations commenced in the January
2019. SCSW is engaged in providing warehousing and cold storage
facility to farmers. The firm has one central unit consisting of
multi chambered and multi commodity cold storage having a storage
capacity of 3,150 metric tons (MT) and warehousing capacity of
3,688 metric tons (MT).
SANDOR LIFESCIENCES: ICRA Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------------
ICRA has retained the short-term ratings of Sandor Lifesciences
Private Limited (SLPL) in the 'Issuer Not Cooperating' category.
The ratings are denoted as [ICRA]D; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 35.00 [ICRA]D; ISSUER NOT COOPERATING;
Debentures Rating continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating continues to remain under "Issuer Not Cooperating
category" because of lack of adequate information regarding SLPL
performance and hence the uncertainty around its credit risk. ICRA
assesses whether the information available about the entity is
commensurate with its rating and reviews the same as per its
"Policy in respect of non-cooperation by a rated entity" available
at www.icra.in. The lenders, investors and other market
participants are thus advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity.
As part of its process and in accordance with its rating agreement
with Sandor Lifesciences Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with the aforesaid policy of ICRA, a rating view has
been taken on the entity based on the best available information.
Promoted by Mr. Rajeev Sindhi, Sandor Lifesciences Private Limited
(SLPL), provides services in medical genetics, cellular biology,
protemics, genomics etc. The company is also a provider of trained
scientists and research assistants to the Centre for DNA
Fingerprinting and Diagnostics, operated by the Department of
Biotechnology, Ministry of Science and Technology and University of
Delhi. The company also provides bio-repository services following
standard protocols for inventory and tracking solutions. Also, the
R&D department of SLPL is recognised by the Department of
Scientific and Industrial Research.
SARAVANA CONSTRUCTIONS: CRISIL Moves B+ Rating from Not Cooperating
-------------------------------------------------------------------
Due to inadequate information, CRISIL Ratings, in line with SEBI
guidelines, had migrated its rating on the bank facilities of Sri
Saravana Constructions (SSC) to 'CRISIL B+/Stable Issuer Not
Cooperating'. However, the management has subsequently started
sharing requisite information, necessary for carrying out
comprehensive review of the rating. Consequently, CRISIL Ratings is
migrating the rating on the long-term bank facilities of SSC from
'CRISIL B+/Stable Issuer Not Cooperating' to 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Secured Overdraft 10 CRISIL B+/Stable (Migrated
Facility from 'CRISIL B+/Stable ISSUER
NOT COOPERATING')
The rating continues to reflect the extensive experience of the
promoter in the civil construction industry and SSC's sound
operating efficiency. These strengths are partially offset by the
company's modest scale of operations and large working capital
requirement.
Key Rating Drivers & Detailed Description
Weaknesses:
* Susceptibility to intense competition and risks inherent in
tender-based business: Revenue and profitability depend on ability
to win tenders. Intense competition in the civil construction
segment requires entities such as SSC to bid aggressively to bag
contracts. This restricts scalability and operating margin. Also,
given the cyclicality inherent in the construction industry, the
ability to maintain profitability through operating efficiency,
becomes critical.
* Working capital-intensive operations: Gross current assets stood
at 168 days as on March 31, 2021 and are funded through a mix of
trade credit and external debt
Strength:
* Extensive experience of the promoter: The decade-long experience
of the promoter in the civil construction industry, his strong
understanding of market dynamics, and established relationships
with suppliers and customers will continue to support the business
risk profile.
Liquidity: Poor
Bank limits were fully utilized during the last 6 months ended
November 2021. Accruals are estimated to be over INR3 crores
against repayment obligation of about INR1 crore per annum. With
increasing order book, the firm is expecting enhancement in its
working capital limit over the medium term. In the absence of
enhancement, its liquidity shall remain constrained over the medium
term.
Outlook: Stable
CRISIL Ratings believe SSC will continue to benefit from the
extensive experience of its promoter and established relationships
with clients.
Rating Sensitivity factors
Upward factors:
* Sustained increase in revenue and improvement in profitability,
leading to higher cash accrual of over INR3.5 crore
* Improvement in the working capital cycle leading to improvement
in liquidity.
Downward factors:
* Decline in operating profitability or revenue leading to net cash
accruals of less than INR1.5 crores.
* Further stretch in working capital cycle leading to weakening of
liquidity.
Set up in 2013 in Dindigul, Tamil Nadu, as a partnership firm by
Mr. A.K. Saravanan and Ms. M. Rajeswari, SSC undertakes civil
contracting works for government bodies on tender basis.
SHUBHLAXMI DAL: CARE Reaffirms B+ Rating on INR6.50cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Shree
Shubhlaxmi Dal & Oil Mill Limited (SSML), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 6.50 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The reaffirmation of rating assigned to the bank facilities of SSML
remain tempered on account of its modest scale of operations with
moderate profitability margins, leveraged capital structure, weak
debt coverage indicators, and stretched liquidity position. The
rating also factors in presence of the company in highly fragmented
industry with susceptibility of its operating profitability margins
to price volatility associated with seasonal availability of
agro-based inputs. The rating however, is supported by extensive
experience of the promoters with long track record of operations of
company of more than two decades, and established relationship with
customer and suppliers.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Improvement in scale of operations over INR30 crore on a
sustained basis
* Improvement in PBILDT margins over 8.50% on sustained basis
Negative Factors- Factors that could lead to negative rating
action/downgrade:
* Decline in TOI below INR10 crore and decline in PBILDT margins
below 4.50% on a sustained basis
* Deterioration in liquidity position
* Any significant impact on the scale and profitability due to
impact of Covid-19 pandemic
Detailed description of the key rating drivers
Key Rating Weaknesses
* Modest scale of operations with moderate profitability margins:
The company has an operational track record of more than two
decades. Despite such a long operational track record, the scale of
operation of the company continues to remain modest with TOI of
INR16.30 'crore in FY21. TOI of the firm declined by 33% in FY21 on
account of lower execution of orders due to covid. However, the
company is entering into new line of commodity – Moong dal. The
operations of which will start from January 2021, which is expected
to result in improved scale going forward. Moreover, the company
has achieved a turnover of around ~Rs.7 crore during 8MFY22 ended
on November 30, 2021. The PBILDT margin stood moderate in the range
of 5.43%-7.24% for the last three years ended March 31, 2021 on
account of limited value addition nature of business and presence
of SSML in highly fragmented industry thus limiting its bargaining
power. The PAT margin continues to remain below unity during the
aforementioned period.
* Leveraged capital structure with weak debt coverage indicators:
The capital structure of the company continues to remain leveraged
with overall gearing ratio of 7.51x as of March 31, 2021 as against
7.33x as on March 31, 2020. Moreover, with lower accruals and
higher gearing levels, the debt coverage indicator of the company
continues to remain weak with interest coverage at 1.26x in FY21.
* Highly fragmented and competitive industry and highly regulated:
SSML operates in an industry characterized by high competition due
to low entry barriers, high fragmentation and the presence of a
large number of players in the organized and unorganized sector.
Thus, the entities present in the segment generally have a very low
bargaining power vis-à-vis their customers.
* Operating margins are susceptible to seasonality associated with
agro commodity industry and regulatory risk: Prices of raw material
i.e. Toor Dal are highly volatile in nature and depend upon factors
like, area under production, yield for the year, international
demand supply scenario, export quota decided by government and
inventory carry forward of last year. SSML usually has to procure
raw materials at significantly higher volume to bargain bulk
discount from suppliers. Further, agro commodity products being a
seasonal crop results into a higher inventory holding period for
the business. Thus, aggregate effect of both the above factors
results in exposure of SSML to price volatility risk. The dal
prices in India are highly regulated by government through MSP
(Minimum Support Price) fixed by government, though due to huge
demand-supply mismatch the prices have rarely been below the MSP.
Moreover, export of dal is also regulated by government through
quota systems to suffice domestic demand for rice and wheat.
Key Rating Strengths
* Established relations with suppliers and customers: SSML has
long-standing relationship with its suppliers and customers due to
the extensive experience of promoters of more than two decades in
the industry. The clients have been associated with SSML over the
years. However, being in a highly competitive business, customer
retention is a constant challenge for the company.
* Experienced promoters with long and established track record of
more than two decades in decade in the agro products industry: SSML
is currently managed by Mr. Rajendrakumar Mohanlal Agrawal
(Managing Director). He is well versed with the intricacies of the
business on the back of more than two decades of experience in
processing agro commodity through this company. He is ably
supported by Mr. Shyamsunder Mohanlal Agrawal (Director) and Mr.
Pratik Agrawal (Manager) and a team of experienced professionals.
Long experience of the managing director has supported the business
risk profile of the company to a large extent.
Liquidity: Stretched
The liquidity position of the company remains stretched lower GCA
led by thin margins due to lower value addition and modest cash
balance of INR0.80 crore as on March 31, 2021. Further, as
confirmed from banker and management, utilisation depends on
drawing power and due to lower sales and inventory the utilisation
for month ending November 2021 was INR3.91 crore of total working
capital limit of INR6.5 crore and during high sales month the
utilisation is ~90%.
Shree Shubhlaxmi Dal and Oil Mill Limited (SSML) incorporated in
1997 and based out of Nagpur (Maharashtra). The company is engaged
in the business of processing of Toor Dal at its processing
facility located at Nagpur with an installed capacity of 8000
metric tons per annum (MTPA). The company procures its raw material
i.e. raw Toor Dal from open market of Nagpur and the sell in the
domestic market of Tamil Nadu, Karnataka, Andhra Pradesh,
Telangana, Maharashtra and Madhya Pradesh.
SITI NETWORKS: CARE Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Siti
Networks Limited (SNL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 87.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE Ratings Ltd. has been seeking information from SNL to monitor
the rating vide e-mail communications dated October 6, 2021 and
December 15, 2021 among others and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with the
extant SEBI guidelines, CARE Ratings Ltd. has reviewed the rating
on the basis of the best available information which, however, in
CARE Ratings Ltd.'s opinion is not sufficient to arrive at a fair
rating. The rating on SNL's bank facilities will now be denoted as
CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on October 27, 2020 the following were
the rating strengths and weaknesses (updated for the information
available from stock exchange).
Key Rating Weaknesses
* On-going delay in debt servicing: As per the recent audit report
for FY21 and Audit Report available with the company's stock
exchange disclosure for FY21 results, there are ongoing delays in
debt servicing. The account has been classified as Non-performing
asset.
Siti Networks Limited (SNL) is a part of Essel group, which is one
of India's leading business houses with a diverse portfolio of
assets in media, packaging, entertainment, technology-enabled
services, infrastructure development and education. It has grown to
be India's largest Multi-System Operator (MSO) and a leading wired
broadband service provider. With 15 digital head ends and a network
of more than 33,000 km of optical fibre and coaxial cable, it
provides its cable services in India to ~580 locations and
adjoining areas, reaching out to over 11.55 million digital
viewers. SNL deploys State-of-the-art technology for delivering
multiple TV signals to enhance consumer viewing experience. Its
product range includes Digital & Analogue Cable Television,
Broadband and Local Television Channels. SNL has been providing
services in analogue and digital mode, armed with technical
capability to provide features like Video on Demand, Pay per View,
Over-The-Top content, Electronic Programming Guide and Gaming
through a Set Top Box. All products are marketed under SITI brand
name.
SUPERSONIC DISTRIBUTION: CARE Reaffirms B+ Rating on LT/ST Debt
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Supersonic Distribution and Services Private Limited (SDSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term/ 42.55 CARE B+; Stable/CARE A4
Short Term Reaffirmed
Bank Facilities
Detailed Rationale & Key Rating Drivers
The rating assigned to bank facility of SDSPL continues to factor
in its thin operating margin inherent to trading nature of
business, highly leveraged capital structure, weak debt coverage
indicator, stretched working capital cycle, high supplier and
customer concentration risk, product concentration risk, presence
in highly competitive and fragmented trading industry, foreign
exchange fluctuation risk along with geographical concentration
risk. However, rating assigned to bank facility of SDSPL derives
strength from experienced and resourceful promoter, significant
growth in total operating income in FY21 and H1FY22 along with
operational synergies with group companies:
Rating Sensitivities
Positive Factors -
* Increase in scale of operation with TOI exceeding INR200 crores
along with PBILDT margin exceeding 6% on sustained basis
* Improvement in operating cycle below 150 days
* Improvement in the debt coverage indicators with interest
coverage ratio exceeding 3x on a sustained basis
Negative Factors-
* Deterioration in the collection period beyond 160 days
* Deterioration in PBILDT margin below 5%
Detailed description of the key rating drivers
Key Rating Weaknesses
* Thin operating margin inherent to trading nature of business
which is showing declining trend: The company operates with low
PBILDT margin owing to trading nature of business operations.
SDSPL's PBILDT margin deteriorated to 5.11% in FY21 from 6.77% in
FY20 and 7.99% in FY19. PBILDT margin deteriorated in FY21 on
account of increase in direct cost especially freight rates so the
company had to reduce margin slightly on few products (Cable,
Inverter, batteries) to be more competitive. Decline in
contribution from high margin- products viz. batteries,
confectionery, chemicals have led to the company fetching lower
margins in FY20. However, PAT margin has improved from 0.09% in
FY19 to 1.32% in FY20 to 1.37% in FY21 on account of lower
depreciation and interest cost incurred during the year.
* Highly leveraged capital structure and weak debt coverage
indicators: SDSPL has highly leveraged capital structure as overall
gearing stood at 10.72 times as on Mar 31, 2021 (as against 9.81
times as of Mar 31, 2020) owing to higher reliance on the debt to
fund its working capital requirement. The company has enhanced its
working capital limit from INR26.93 crores to INR42.55 crores
during FY21 as company needed higher working capital limit to
support the operations on account of increase in scale of
operation. SDSPL's debt coverage continued to remain weak as Total
Debt to Gross Cash Accruals stood at 25.32x as of Mar 31, 2021(PY
22.26x) and interest coverage 1.95x as of Mar 31, 2021 (PY 1.89x).
* Stretched working capital cycle: SDSPL's operations remained
working capital-intensive owing to funds are blocked in debtors and
inventory as against lower credit period offered by supplier to the
company. The company majorly trades its goods to foreign countries
hence collection period remained high. Further, the collection
period has significantly increased to 154 days in FY21 (vis-à-vis
52 days in FY19 & 117 days in FY20). The company provides 120 days
credit period to customers, collection period in FY21 elongated
because the company have done INR39.32 crores of export in first 8
months of FY21 and INR34.96 crores of export in last four months of
FY21 which is about 47% of total turnover in FY21. The inventory
period has remained at same level of 24 to 30 days in the past
three years. Hence, working capital cycle of SDSPL further
elongated to 161 days in FY21 (vis-à-vis 125 days in FY20 & 62
days in FY19) which further led to average of 90% of utilization of
working capital limits in last 12 months ending November-21.
* High supplier and customer concentration risk, product
concentration risk: SDSPL's supplier profile remained highly
concentrated marked by 74.29% of total purchases contributed by top
5 suppliers in FY21 (vis-à-vis 60.94% in FY20). Further, SDSPL's
top 5 customer contributing 92.79% of total operating income in
FY21 (vis-a-vis 95.61% in FY20). Vistara General Trading FZE, Nexus
for Life Limited, Maple leaf Press Ltd, Nexus Industries (Kenya)
Ltd are among top 5 customers which are related parties. These
entities are managed by the common management and relatives. The
company shares operational synergies with them which mitigate
customer concentration risk. SDSPL is into exports and has to offer
wide range of products across the industries. The product portfolio
of the company consists of in trading of paper and paper products,
machinery & spare parts, wires & cables, batteries, chemicals &
spares, inverter, confectionary and agricultural commodities etc.
thereby providing wide range of products. However, SDSPL's revenue
concentrated to Paper and Paper
Products contributing 67.85% of total sales in FY21 (PY 38.91%).
* Presence in highly competitive & fragmented trading industry:
Owing to low entry barriers in the trading business, presence of
large numbers of players operating in the industry and low degree
of product differentiation, the industry remained highly
competitive and fragmented in nature limiting bargaining power of
players of like SDSPL.
* Risk related to foreign exchange rate fluctuation along with
geographical concentration risk: Being primarily into exports of
variety of products, the company has traded with different clients
from different countries, susceptible to risk related to foreign
exchange rate fluctuation. Further, it also susceptible to
geographical concentration risk as out of the total revenue 95.06%
revenue derived from Nigeria in FY21 (P.Y. 94.48%). Hence, any
geopolitical imbalances in the country along with any barriers from
the government may lead to impact on the revenue profile of the
company.
Key Rating Strengths
* Experienced and resourceful promoters and management personnel:
The promoters of the company Mr. Chandru Vaswani and Mr. Haneet
Vaswani, have more than three decades of experience in in present
line of business. However, the management of the company is vested
in the hands of Mr. Parmesh, Director, who has around 40 years of
experience in present line of business and looks after the day to
day operations of the company. He is further assisted by Mr. Jayant
Gogate, Finance controller having more than 25 years of experience
in the similar field and looks after finance and logistics
departments. The promoters have established strong relationship
with its customers abroad and receive repeated orders from strong
customer base. Further, the promoters are resourceful in nature and
providing financial support in the form of unsecured loans.
* Significant growth in total operating income in FY21 and H1FY22:
SDSPL's total operating income significantly increased from
INR43.82 crores in FY20 to INR75.24 crores in FY21 to INR122.14 in
H1FY22 on account of surge in trading of paper and paper products
and duplex board. Surge in trading of paper and paper products was
on account of lack of supply from international supplier,
competitive Indian origin paper price as compared international
paper prices and better freight element. SDSPL is likely achieve
TOI of INR215 crores in FY22 on account of more orders of paper and
paper products from buyers due to lack of supply from international
supplier. Company has already achieved INR156 crores of turnover
till November 30, 2021.
* Operational synergies with group companies: The group companies,
Mapleleaf Press Ltd, Nexus For Life Limited and Assudamal & Sons
(HK) Limited, Vistara General Trading FZE, Nexus Industries (Kenya)
Limited, Deekay & Sons (Nig) Limited located across Nigeria, Hong
Kong, Kenya and Dubai are major customers of the company and these
entities are managed by the common management and relatives.
Therefore, the company shares operational synergies with them. The
company primarily sell its traded goods to the above-said group
entities.
Liquidity: Stretched
The company's stretched liquidity is marked by elongated working
capital cycle to 161 days in FY21 vis-a-vis 125 days in FY20
resulting into 90% of utilization of working capital limits in last
12 months ending November 2021 and insignificant unencumbered cash
balance as of November 30, 2021. However, the company envisages GCA
of INR5.18 crores for FY22 against repayment obligation of INR0.05
crores which has already been repaid in August 2021.
Supersonic Distribution and Services Private Limited (SDSPL) was
incorporated as a private limited company on October 12, 1995 by
Mr. Chandru Vaswani and Mr. Haneet Vaswani. SDSPL is engaged in
trading of paper and paper products, machinery & spare parts,
wires & cables, batteries, chemicals & spares, inverter,
confectionary and agricultural commodities. The company exports the
various products to many countries such as Nigeria, East African
countries, West African countries and others. It is an ISO
9001:2008 certified company and also has star export house
certificate awarded by the Government of India. SDSPL purchases all
the products and materials from domestic suppliers which are easily
available in the country. It operates through its registered office
based out of Mumbai, Maharashtra.
TATA PROJECTS: NCLAT Stays Insolvency Resolution Process Order
--------------------------------------------------------------
Livelaw reports that the Chennai Bench of the National Company Law
Appellate Tribunal (NCLAT) has stayed the order initiating
Corporate Insolvency Resolution Process against Tata Projects
Limited upon being informed that the parties have entered into a
settlement agreement.
According to the report, the NCLAT comprising Justice M. Venugopal
and Kanthi Narahari also directed the IRP to file an application
for withdrawal of the Corporate Insolvency Resolution Process under
Section 12A of the Code coupled with Regulation 30A of the
Insolvency & Bankruptcy Board of India (Insolvency Resolution
Process for Corporate Person) Regulation, 2016 before the
Adjudicating Authority within three days.
In the event of such application being filed by the Interim
Resolution Professional, then the Adjudicating Authority was
directed to dispose of the same within three days thereafter
without fail, Livelaw relates.
According to the report, the National Company Law Tribunal of
Hyderabad had recently initiated the process against Tata Projects
for its failure to pay back legally-established dues to Nexo
Industries Pvt Ltd.
However, during the appeal proceedings, it was stated that the
subject matter had been resolved between the parties. Hence the
appeal was dismissed as withdrawn and the order of the Hyderabad
NCLT was stayed.
Senior Advocate Gopal Jain appeared for the appellant while
Advocate Mayur Mundra appeared for the respodent in the matter,
Livelaw discloses. Krishna Komaravolu was the IRP in person.
Tata Projects Limited provides infrastructure construction
services. The Company constructs power plants, railways, commercial
buildings, airports, water management solutions, metal purification
systems, and chemical process projects. Tata Projects serves power,
water, mineral, metals, oil and gas, transportation, and urban
infrastructure sectors worldwide.
VENKATA LAKSHMI: CRISIL Moves D Debt 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
rating on the bank facilities of Venkata Lakshmi Narasimha Rice
Industries (VLNRI) to 'CRISIL D/CRISIL D Issuer Not Cooperating'.
However, the management of the firm has started sharing the
requisite information for a comprehensive review of the rating.
Consequently, CRISIL Ratings is migrated its rating on the bank
facilities of VLNRI from 'CRISIL D/CRISIL D Issuer Not Cooperating'
to 'CRISIL D/CRISIL D'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft Facility 7.5 CRISIL D (Migrated from
'CRISIL D ISSUER NOT
COOPERATING')
Term Loan 2.5 CRISIL D (Migrated from
'CRISIL D ISSUER NOT
COOPERATING')
The rating migrated reflects delays in servicing interest and
principal repayments on a term loan facility.
The ratings reflect modest scale of operations in the intensely
competitive rice industry and exposure to fluctuations in raw
material prices and uneven monsoon. These rating weaknesses are
partially offset by extensive experience of the partners in the
rice industry and VLNRI's moderate financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale in the intensely competitive rice industry: Limited
capacity and intense competition in the rice industry have led to a
small scale, reflected in estimated revenue of INR30.09 crore in
fiscal 2021. The modest scale also restricts benefits of economies
of scale and limits pricing flexibility, thereby constraining
profitability.
* Exposure to volatility in raw material prices and uneven monsoon:
Vulnerability of the rice crop to the vagaries of rainfall can lead
to fluctuations in availability and prices of paddy, and thus could
impact the business risk profile of rice processors such as VLNRI.
* Weak financial risk profile: The financial risk profile is
constrained by estimated high gearing of over 4 times as on March
31, 2021. The company's debt protection metrics were average with
interest cover of around 1.7 times and NCATD of 0.03 times in
fiscal 2021.
Strengths:
* Extensive experience of the partners: The partners' extensive
experience and their understanding of the local market dynamics,
which helps in anticipating price trends and calibrating purchasing
and stocking decisions, should continue to support the business.
* Proximity to paddy growing region: The milling facility is
located in Nellore, Andhra Pradesh, which is one of the prime
rice-producing regions in the state. Therefore, the company gets
abundant and quality supply of paddy. Further, close proximity to
the rice-producing belt has helped the firm to establish healthy
relationships with paddy growers and avoid extra costs such as
brokerage and transportation.
Liquidity: Poor
With average month-end bank limits almost fully utilized, liquidity
is likely to remain under pressure over the medium term, mainly due
to large working capital requirements. The company's cash credit
limits have been fully utilized on average in the 6 months ending
November 2021.
Rating sensitivity factors
Upward factors:
* Timely debt repayment with a track record of 90 days
* Efficient working capital management leading to moderation in
bank limit utilization
VLNRI, set-up in 2016 as a partnership firm by Mr. P Bhaskar and
Ms. P Vashundhara, mills paddy into processed rice. It has an
installed paddy milling and sorting capacity of 8 tons per hour.
=========
J A P A N
=========
FURUKAWA ELECTRIC: Egan-Jones Keeps BB+ Senior Unsecured Ratings
----------------------------------------------------------------
Egan-Jones Ratings Company, on December 7, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Furukawa Electric Co., Ltd.
Headquartered in Chiyoda City, Tokyo, Japan, Furukawa Electric Co.,
Ltd. manufactures wires, cables, and metal products.
JAPAN AIRLINES: Egan-Jones Cuts Senior Unsecured Ratings to CCC+
----------------------------------------------------------------
Egan-Jones Ratings Company, on December 9, 2021, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Japan Airlines Co. Ltd. to CCC+ from B-. EJR also
maintained its 'B' rating on commercial paper issued by the
Company.
Headquartered in Shinagawa City, Tokyo, Japan, Japan Airlines Co.
Ltd. provides air transportation services.
NISSAN MOTOR: Egan-Jones Keeps BB- Senior Unsecured Ratings
-----------------------------------------------------------
Egan-Jones Ratings Company, on December 9, 2021, maintained its
'BB-' foreign currency and local currency senior unsecured ratings
on debt issued by NISSAN MOTOR CO., LTD. EJR also maintained its
'B' rating on commercial paper issued by the Company.
Headquartered in Yokohama, Kanagawa, Japan, NISSAN MOTOR CO., LTD.
manufactures and distributes automobiles and related parts.
RICOH CO: Egan-Jones Keeps BB+ Senior Unsecured Ratings
-------------------------------------------------------
Egan-Jones Ratings Company, on December 7, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Ricoh Company, Ltd.
Headquartered in Ota City, Tokyo, Japan, Ricoh Company, Ltd.
manufactures and markets office automation equipment, electronic
devices, and photographic instruments.
TOSHIBA CORP: No. 2 Shareholder Urges EGM Vote on Break-Up Plan
---------------------------------------------------------------
Reuters reports that Toshiba Corp's second-largest investor called
on Jan. 6 for an extraordinary shareholder meeting for a vote to
force the Japanese company to get two-thirds support before
continuing with a controversial plan to split in three.
Reuters relates that the proposal by Singapore-based hedge fund 3D
Investment Partners marks the latest in a long and acrimonious
battle between the once-mighty Japanese conglomerate and a number
of its foreign shareholders, many of them activist funds.
In a statement, 3D highlighted concerns about the cost of Toshiba
going ahead with its split before getting a mandate from
shareholders. It also called for Toshiba to continue with its
strategic review, the report says.
"There is no rationale for pursuing at great expense the separation
plan without knowing whether a sufficient number of Toshiba
shareholders will ultimately provide consent," the fund, which owns
more than 7 per cent of Toshiba, said, Reuters relays.
With its proposal, 3D is effectively trying to force the
conglomerate to bring forward by more than a year a legally
mandated vote requiring backing from two-thirds of shareholders.
Officially, the vote is not slated to be held until the annual
shareholders meeting in 2023.
Since Toshiba is now nearly 30 per cent owned by foreign funds,
many of which are seen as taking a dim view of the split, 3D's
proposal could ultimately force the conglomerate to ditch its
plan.
According to the report, Toshiba said it has received the proposal
from 3D and is currently examining it.
Weakened by a 2015 accounting scandal and the bankruptcy of its US
nuclear business, Toshiba has proposed the break-up - similar to a
move by General Electric Co - to sharpen focus on individual
businesses, Reuters states.
But 3D and other shareholders have pushed for a more thorough
review that would take into account potential private-equity bids.
Toshiba's strategic review so far "failed to consider a full range
of alternatives," 3D said, adds Reuters.
About Toshiba Corp.
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/--
manufactures and markets electrical and electronic products. The
Company's products include digital products such as PCs and
televisions, NAND flash memories, and system LSIs (large-scale
integrated), as well as social infrastructures such as power
generators, medical equipment, and home appliances.
As reported in the Troubled Company Reporter-Asia Pacific on Nov.
18, 2021, S&P Global Ratings has placed its 'BB+' long-term issuer
credit rating on Toshiba Corp. on CreditWatch with negative
implications. At the same time, S&P affirmed its 'B' short-term
issuer credit and commercial paper program ratings.
=================
S I N G A P O R E
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BARRAMUNDI ASIA: Commences Wind-Up Proceedings
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Members of Barramundi Asia Holdings Pte Ltd and Commonwealth
Harvests Pte Ltd, on Dec. 23, 2021, passed a resolution to
voluntarily wind up the company's operations.
The company's liquidator is:
Mr. Yiong Kok Kong
DKKY Corporate Advisory
24 Peck Seah Street
#04-01 Nehsons Building
Singapore 079314
GOODMAN SINGAPORE: Creditors' Proofs of Debt Due on Feb. 4
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Creditors of Goodman Singapore Pte Ltd, which is in voluntary
liquidation, are required to file their proofs of debt by Feb. 4,
2022, to be included in the company's dividend distribution.
The company commenced wind-up proceedings on Dec. 29, 2021.
The company's liquidators are:
Lin Yueh Hung
Oon Su Sun
c/o 8 Wilkie Road
#03-08 Wilkie Edge
Singapore 228095
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S O U T H K O R E A
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ASIANA AIRLINES: Regulator to Speed Up Review of Takeover Deal
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Yonhap News Agency reports that South Korea's antitrust regulator
said Jan. 4 it will accelerate the review of a deal by Korean Air
Lines Co., the country's biggest carrier, to buy the debt-ridden
Asiana Airlines Inc.
In November 2020, Korean Air inked a deal to acquire a 63.88
percent stake in its smaller rival Asiana Airlines, a deal valued
at KRW1.8 trillion (US$1.5 billion) that could create the world's
10th-biggest airline by fleet, Yonhap recalls.
According to Yonhap, the Fair Trade Commission (FTC) said in its
2022 policy plan that it will "swiftly and closely" review Korean
Air's merger and other takeover deals aimed at industrial
restructuring.
"We expect the FTC to hold a deliberation session to make a
decision in January or February," Kim Jae-shin, vice chief of the
regulator, told a press briefing.
Yonhap says the commission recently sent a report to Korean Air,
which a Korean Air official said detailed conditions of the
approval of Korean Air's takeover deal.
Yonhap relates that Korean Air said it was closely reviewing the
commission's report. The flagship carrier will have four weeks to
review it, according to the regulator.
If approved, the takeover is expected to reshape the country's
airline sector that has been reeling from the fallout of the
COVID-19 pandemic.
But critics said the conditions put forward by the regulator for
approval appear to fall short of addressing a monopoly in the
country's airline industry, the report states.
The FTC also said it will strengthen the monitoring of unfair
business activities by online platforms this year in a bid to
encourage competition in the digital sector and protect consumers.
According to Yonhap, the commission said it will focus on keeping
close tabs on whether mobility and online shopping operators abuse
their dominant market status and hamper competition.
Amid a non-contact consumption trend, online platform giants, such
as Naver Corp. and Kakao Corp., have aggressively expanded into new
businesses with their increased market presence.
There are concerns that powerful online platforms have abused their
market status and engaged in unfair business practices against
suppliers and contractors, posing a threat to the survival of small
merchants, Yonhap relays.
Yonhap adds that the FTC said it will also strengthen a probe into
unfair business activities related to intellectual property rights
in web-based cartoons, novels and music services.
About Asiana Airlines
Headquartered in Osoe-Dong Kangseo-Gu, South Korea, Asiana Airlines
Incorporated is engaged in air transportation, engineering,
construction, facilities, electricity, ground handling, catering,
communication, logo products and e-business. Asiana Airlines is a
unit of the Kumho Asiana Group, a South Korean conglomerate whose
business portfolio includes tire manufacturing and chemical
production.
State lenders Korea Development Bank and the Export-Import Bank of
Korea planned to inject a combined KRW1.7 trillion into Asiana to
help the airline stay afloat. In self-help measures, Asiana has
had all of its 10,500 employees take unpaid leave for 15 days a
month since April 2020 until business circumstances normalize,
Yonhap noted. Asiana's executives have also agreed to forgo 60% of
their wages, though no specific time frame was given for how long
the pay cuts will remain in effect.
In November 2020, Korean Air said it will acquire Asiana Airlines
in a deal valued at KRW1.8 trillion that could create the world's
10th-biggest airline by fleets, Yonhap said.
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V I E T N A M
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VIET A COMMERCIAL: Moody's Assigns B2 Issuer Rating
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Moody's Investors Service has assigned first-time B2 long-term
deposit and issuer ratings to Viet A Commercial Joint Stock Bank
(VAB), a bank based in Vietnam (Ba3 positive). Moody's has also
assigned a b3 Baseline Credit Assessment (BCA) and Adjusted BCA to
the bank.
The rating outlook is stable.
RATINGS RATIONALE
The b3 BCA reflects VAB's high asset risks due to the bank's
significant concentration in the real estate and construction
sectors; modest capital; average profitability, constrained by a
high cost of funds; modest funding structure, reflective of its
small deposit franchise; and average liquidity.
VAB's asset risks are high because of its significant concentration
in the real estate and construction sectors. Its problem loan ratio
(gross outstanding Vietnam Asset Management Company [VAMC] bonds
and nonperforming loans as a percentage of adjusted gross loans)
declined substantially to 2.1% as of the end of June 2021, from
6.7% as of the end of 2019 due to the recoveries and writebacks of
its VAMC bonds in 2020. However, loans to real estate and
construction purposes accounted for around 90% of its corporate and
small and medium enterprise (SME) loans.
Profitability will remain stable over the next 12 to 18 months.
Return on tangible assets increased to 0.8% in the first six months
of 2021 from 0.4% in 2020, due to a large fall in provision
expenses as a result of the recoveries and writebacks of its
outstanding VAMC bonds. Increased asset yields from the bank's
strategy to grow its higher-yielding retail and SME segments will
be offset by the bank's relatively high cost of funds.
VAB's capital is modest with a tangible common equity to adjusted
risk weighted assets (TCE) ratio of 7.7% as of the end of June
2021. The ratio will likely remain at this level over the next 12
to 18 months.
VAB has a modest funding structure, reflective of its small deposit
franchise in Vietnam. The bank is highly reliant on
confidence-sensitive term deposits. Its share of current account
savings account (CASA) deposits accounted for only about 7% of its
total deposits as of the end of June 2021. Its liquidity is average
but adequate, with a liquid assets-to-tangible banking assets ratio
of 25% as of the end of June 2021.
VAB's B2 long-term ratings incorporate one notch of government
support uplift due to Moody's assumption of a moderate level of
support from the Vietnamese government. This reflects VAB's small
market share of 0.6% in system assets and 0.7% in system deposits
as of the end of June 2021, and the Vietnam government's track
record of providing support to the banking sector in the form of
liquidity assistance and regulatory forbearance.
VAB's Counterparty Risk Ratings (CRR) are positioned at B1/Not
Prime, and the bank's Counterparty Risk (CR) Assessments are
positioned at B1(cr)/Not Prime (cr). Moody's considers Vietnam to
be a jurisdiction with a nonoperational resolution regime
(non-ORR). For non-ORR countries, the starting points for the CRR
and CR Assessment are one notch above the bank's Adjusted BCA, to
which Moody's then adds government support uplift. VAB's CRR and CR
Assessment benefit from one notch of government support uplift.
Moody's regards VAB's concentrated ownership by a Vietnamese family
with business interests outside of the bank, a trait not uncommon
in the Vietnamese banking system, as a governance risk under the
rating agency's environmental, social and governance (ESG)
framework, given its implications for the bank's organization
structure, financial strategy and risk management.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade VAB's long-term ratings if the bank
meaningfully diversifies its loan portfolio while maintaining a
stable problem loan ratio; improves its capital such that its TCE
ratio increases to above 9.3%; and increases its profitability such
that return on assets consistently remains above 0.8%.
Moody's could downgrade VAB's long-term ratings if the bank's TCE
ratio declines to below 6%; or its liquidity and funding structure
deteriorates significantly.
Viet A Commercial Joint Stock Bank (VAB) is a privately-owned
commercial bank headquartered in Hanoi. As of the end of June 2021,
the bank operated through a network of 24 branches and 73
transaction offices with total reported assets of VND 83.1 trillion
(or USD 3.65billion).
LIST OF AFFECTED RATINGS
Assignments:
Issuer: Viet A Commercial Joint Stock Bank
Adjusted Baseline Credit Assessment, Assigned b3
Baseline Credit Assessment, Assigned b3
Long-term Counterparty Risk Assessment, Assigned B1(cr)
Short-term Counterparty Risk Assessment, Assigned NP(cr)
Long-term Counterparty Risk Rating (Foreign and Local Currency),
Assigned B1
Short-term Counterparty Risk Rating (Foreign and Local
Currency), Assigned NP
Short-term Issuer Rating (Foreign and Local Currency), Assigned
NP
Long-term Issuer Rating (Foreign and Local Currency), Assigned
B2, outlook stable
Short-term Bank Deposit Rating (Foreign and Local Currency),
Assigned NP
Long-term Bank Deposit Rating (Foreign and Local Currency),
Assigned B2, outlook stable
Outlook, stable
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S U B S C R I P T I O N I N F O R M A T I O N
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 2022. All rights reserved. ISSN: 1520-9482.
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