/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/140203.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 Monday, February 3, 2014, Vol. 17, No. 23 Headlines A U S T R A L I A ADELAIDE SPECIALISED: Cor Cordis Appointed as Administrators ATLAS IRON: Moody's Affirms B2 CFR; Outlook Revised to Positive BENDIX INDUSTRIES: SV Partners Appointed as Administrators EASTERN ELECTRIC: Jirsch Sutherland Appointed as Administrators ERGON ENERGY: To Slash 95 Jobs as Part of Restructuring FORTESCUE METALS: Production Results No Impact on Moody's Ba1 CFR RETAIL ADVENTURES: Cameron's Firms Appeal NSW Court Decision C H I N A * CHINA: Rating Agencies Criticize Bailout of Failed Trust I N D I A ADINATH MOTORS: CARE Revises Rating on INR8.80cr Loan to 'B+' AMBUJA GINNING: ICRA Suspends 'B' Rating on INR9.5cr Loans BALAJI COTTON: ICRA Reaffirms 'B' Rating on INR7cr Long-Term Loan BRILLIANT TUTORIALS: CARE Assigns 'B' Rating to INR24.85cr Loans COUNTY DEVELOPERS: ICRA Suspends 'B' Rating on INR12.5cr Loans ELYMER ELECTRICS: CRISIL Cuts Rating on INR324MM Loans to 'D' ELYMER INT'L: CRISIL Cuts Rating on INR409MM Loans to 'D' GANESH COTTON: CRISIL Assigns 'B+' Ratings to INR61.5MM Loans HEMANT GOYAL: CRISIL Reaffirms 'D' Ratings on INR170MM Loans INDRA CONSTRUCTION: CRISIL Reaffirms 'B+' Rating on INR70MM Loan JANAA INDUSTRIES: CRISIL Reaffirms B+ Rating on INR57MM Loans JG AGRO: ICRA Suspends 'B' Rating on INR9cr Bank Loans JINDAL CHAWAL: ICRA Suspends 'B+' Rating on INR10cr Bank Loans KAY EM: ICRA Suspends 'B' Rating on INR10cr Bank Loans KOHLI AUTO: CRISIL Lowers Rating on INR180MM Loans to 'D' MAGNUM INTERGRAFIKS: CRISIL Reaffirms B Rating on INR207.5MM Loan MANDOVI MINERALS: CRISIL Cuts Rating on INR170MM Loans to 'D' MANGALORE MINERALS: CRISIL Reaffirms B Rating on INR210.2MM Loan METROSTAR PRINT: CRISIL Assigns 'B' Rating to INR87MM Loan NAVDEEP CONSTRUCTION: ICRA Places 'B' Rating on INR15cr Loans OYSTER STEEL: CRISIL Reaffirms 'B+' Rating on INR600MM Loan P.S.A. CONSTRUCTION: CRISIL Reaffirms B Rating on INR27.5MM Loan PACT INDUSTRIES: CARE Assigns 'B+' Rating to INR10.59cr LT Loans PAWAN AUTOWHEELS: CARE Reaffirms 'B' Rating on INR10.3cr LT Loan PRANAVADITYA SPINNING: CARE Assigns 'B+' Rating to INR14cr Loan PSV INFRASTRUCTURES: CRISIL Cuts Rating on INR70MM Loans to 'D' SACHDEVA RICE: CRISIL Reaffirms 'B' Rating on INR70MM Loans SALSAN STEELS: ICRA Suspends 'B' Rating on INR16cr Bank Loans SHIVA WHEELS: CRISIL Reaffirms 'B-' Rating on INR57.7MM Loans SONA BISCUITS: ICRA Suspends 'B+' Rating on INR24.15cr Loans SULAKSHANA AGENCIES: CRISIL Assigns 'B' Rating to INR60MM Loan THAKOR REDUCTANTS: ICRA Assigns 'B+' Rating to INR5cr Loans UNITED INDUSTRIES: CRISIL Puts 'B+' Rating on INR190MM Loans V.T. FOODS: ICRA Assigns 'B+' Rating to INR5cr Long Term Loan J A P A N SOJITZ CORP: Moody's Lowers Issuer Rating to Ba1; Outlook Stable * S&P Raises Ratings on 3 Japanese Synthetic CDO Tranches P A P U A N E W G U I N E A PAPUA NEW GUINEA: S&P Affirms Currency LT Ratings at 'B+' P H I L I P P I N E S RURAL BANK OF SUBANGDAKU: PDIC Files Charges v. Ex-Bank President - - - - - ================= A U S T R A L I A ================= ADELAIDE SPECIALISED: Cor Cordis Appointed as Administrators ------------------------------------------------------------ Jason Tang -- jtang@corcordis.com.au -- and Mark Hutchins -- mhutchins@corcordis.com.au -- of Cor Cordis were appointed as administrators of Adelaide Specialised Freight Pty Limited on Jan. 28, 2014. A first meeting of the creditors of the Company will be held on Feb. 7, 2014, at 11:30 a.m. at Hotel Richmond, 128 Rundle Mall, in Adelaide. ATLAS IRON: Moody's Affirms B2 CFR; Outlook Revised to Positive --------------------------------------------------------------- Moody's Investors Service has affirmed Atlas Iron Limited's B2 corporate family and senior secured ratings and changed the outlook on the ratings to positive from stable. Ratings Rationale "The outlook change reflects the progress made on the company's growth plan to increase production, leading to strengthening in cash flow metrics", says Matthew Moore, Moody's Vice President and Senior Analyst. "Moody's has previously stated that a sustainable growth in production (to above 10mtpa) would be positive for Atlas' ratings. We believe this target will be achieved for the full fiscal year ending June 2014." adds Moore who is also Lead Analyst for the company. The increase in production levels, and notwithstanding the softness in iron ore prices, has contributed to lower financial leverage and stronger cash flow generation. This is strengthening Atlas' position within its rating. Notwithstanding the ongoing capital expenditures required to grow and sustain production levels, we expect Atlas' debt-to-EBITDA to improve to below 1.5x in FY14 under our base case assumptions. Assuming iron ore prices of around USD110 to USD120 (based on 62% Fe) for FY15 and a weaker Australian dollar we expect this ratio to remain strong for the rating in FY15, strongly positioning the company to manage unexpected weakness in the iron ore price. "The outlook change also reflects the strong liquidity and the prefunding of capital expenditure requirements for the expansion", adds Moore. "We forecast Atlas to maintain solid liquidity, which will assist to mitigate the company's exposure to potential volatility and downside risk to iron ore prices." "Atlas has a strong financial profile for its current rating and we expect credit metrics to be stronger following the completion of the current expansion projects. Atlas' rating could be upgraded within 12 months if it demonstrates an ability to maintain production above 10mtpa on a sustainable basis. In addition, we would want to see the company's debt-to-EBITDA remain below 3.5x- 4.0x on an ongoing basis. On the other hand, the rating and/or outlook could face negative pressure if there are any material cost increases and/or delays to Atlas' project delivery, leading to concerns about the company's ongoing production profile, liquidity, and/or credit metrics. The ratings could also face negative pressure if there were a material weakening in iron ore fundamentals, with prices dropping below USD100/t for a protracted period. Specifically, an inability to maintain debt-to EBITDA below 4.0x on a consistent basis could pressure the outlook and/or rating. The principal methodology used in this rating was the Global Mining Industry published in May 2009. Atlas Iron Limited (Atlas), headquartered in Perth, Australia, is an iron ore producer and developer focused on the North Pilbara region of Western Australia. In FY13, Atlas shipped 7.4Mt of iron ore and generated revenues of around $695 million. Moody's: Fortescue's quarterly production results within expectations; ratings unaffected BENDIX INDUSTRIES: SV Partners Appointed as Administrators ---------------------------------------------------------- Anne Meagher -- anne.meagher@svp.com.au -- and Terrence John Rose -- terry.rose@svp.com.au -- of SV Partners were appointed administrators of Bendix Industries (Qld.) Pty Ltd on Jan. 28, 2014. A first meeting of the creditors of the Company will be held on Feb. 7, 2014, at 10:00 a.m. at 138 Mary Street, in Brisbane, Queensland. EASTERN ELECTRIC: Jirsch Sutherland Appointed as Administrators --------------------------------------------------------------- Sule Arnautovic -- sulea@jirschsutherland.com.au -- and Trent Andrew Devine -- trentd@jirschsutherland.com.au -- of Jirsch Sutherland were appointed administrators of Eastern Electric Motors Pty Ltd on Jan. 28, 2014. A first meeting of the creditors of the Company will be held on Feb. 7, 2014, at 11:00 a.m., at Level 4, 55 Hunter Street, in Sydney. ERGON ENERGY: To Slash 95 Jobs as Part of Restructuring ------------------------------------------------------- Daily Mercury reports that 95 Ergon Energy staff will be offered voluntary redundancy or redeployment ahead of an operations restructure within the company. Daily Mercury relates that an Ergon Energy spokesperson said Electrical Trades Union claims that 116 jobs would be slashed were incorrect. "I think originally the union is claiming 116 jobs . . . 21 of those positions will be transferred to other parts of Ergon Energy." According to the report, the spokesperson said no "front line positions" would be impacted during the restructure, which would target professional management ranks or support services like administration and design. Ergon Energy is an electricity retailer to homes and businesses in regional Queensland. FORTESCUE METALS: Production Results No Impact on Moody's Ba1 CFR ----------------------------------------------------------------- Moody's Investors Service says that Fortescue Metals Group Ltd's production report for the quarter ended December 2013 were broadly within its expectations and hold no rating implications. Fortescue Metals Group's Corporate Family Rating (CFR) is Ba1 with senior secured term loan facility rating of Baa3 and a senior unsecured notes rating of Ba2. The outlook on all ratings is stable. "Total shipments guidance for FY14 of 127mt, towards the lower end of the company's previous guidance, is broadly in line with Moody's expectation of around 125mt" says Matthew Moore - a Moody's Vice President and Senior Analyst. "Therefore, production guidance at the lower end of the company's guidance range does not impact on our expectations for cash flow generation or credit metrics", adds Mr. Moore. "Under our base case assumptions of iron ore prices of around USD110 to USD120 (based on 62% Fe) for the second half of the fiscal year ending 30 June 2014, we expect Fortescue's debt-to- EBITDA to improve to close to 2.0x," Mr. Moore says. The company has also increased its capital expenditure guidance for FY14 to USD2.1 billion from USD1.9 billion."The Capital expenditure guidance of around USD2.1 billion is still broadly in- line with our expectation of around USD2.0 billion for FY14" says Moore. "The incremental capital expenditure can more than adequately be accommodated by the large cash balance of $2.9 billion at the end of the quarter and the strong operating cash flow generation expected by the company" adds Moore who is also Moody's lead analyst for the company. During the quarter the company also completed the construction of the Kings ore processing facility (OPF) and announced that it is on track to ramp up operations at the Kings deposit to reach the 155mtpa target production levels within the March 2014 quarter. The recent rating upgrade reflected the continued progress the company has made on its expansion activities. "The stable outlook reflects our expectation that Fortescue will continue to generate solid cash flow and achieve its production targets following the completion of the current expansion activities", says Moore. The ratings are not likely to be upgraded in the near term. Over the longer term, the ratings could face positive trend if Fortescue demonstrates a track record of 1) consistently producing at the full expanded 155mtpa capacity and 2) maintaining a conservative financial profile such that Debt-to-EBITDA is maintained below 2.0x through the cycle. In addition, a critical issue for a rating upgrade will be the company's growth intentions post completion of the current phase of expansion. Achieving a more geographically diversified customer base would also be supportive of a rating upgrade. The outlook or rating could face negative pressure if the company experiences any unexpected execution challenges with the remaining expansion activities, is unable to sustain production levels near the 155mtpa target, embarks on any material further expansions, and/or adapts more aggressive shareholder-friendly initiatives, such that credit metrics do not remain in line with Moody's expectations. Iron ore prices sustained materially below our base case assumptions could also lead to negative pressure on the rating or outlook. Financial metrics that Moody's would consider for a downgrade include Debt-to-EBITDA exceeding 2.5x and FFO-to- Interest falling below 4.0x on a consistent basis The principal methodology used in this rating was the Global Mining Industry published in May 2009. Fortescue Metals Group Limited based in Perth, is an iron ore producer engaged in the exploration and mining of iron ore for export, mainly to China. Fortescue is Australia's third largest iron ore producer and exporter as well as one of the world's largest producers and sea-borne traders. Fortescue has around 15.6 billion tonnes of iron ore Resources, including 2.2 billion tonnes of reserves, and its tenement holdings span an area of over 85,000 square km in the Pilbara region of Western Australia. For the December 2013 quarter, Fortescue achieved and annual run rate of around 112mtpa of production. Moody's expects full year shipments for FY2014 to be around 125mt. RETAIL ADVENTURES: Cameron's Firms Appeal NSW Court Decision ------------------------------------------------------------ Nick Clark at The Mercury reports that two of Jan Cameron's companies have filed a notice of appeal against a Supreme Court of NSW decision which put the former Retail Adventures chain into liquidation. After a December 19 decision, Ms. Cameron had until January 24 to appeal, the report says. The Mercury relates that a court spokeswoman said Ms. Cameron's companies DSG Holdings and Bicheno Investments had filed notices of appeal and that a directions hearing was scheduled for today, Feb. 3. According to the report, the decision by NSW Justice Stephen Robb to set aside a deed of company arrangement, which would have paid unsecured creditors 6c in the dollar, and to appoint a liquidator to wind up the company would have opened Retail Adventures and its directors to claims of insolvent trading. Litigation funder Bentham IMF, which backed unsecured creditors in the case, has flagged it will back insolvent trading claims against Ms. Cameron and seek close to AUD50 million, the report says. In the hearings, the Mercury notes, a former Retail Adventures director told the court the discount chain traded while insolvent for more than two years before going into administration. The Mercury relates that Justice Robb said Penny Moss gave evidence in cross examination that "in my opinion was a clear acceptance that RAPL [Retail Adventures] was unable to pay its debts as and when they fell due over the whole of the period following July 1, 2011." The report adds that Ms. Moss also gave evidence that the financial viability of the rump of Retail Adventures, which operates the 200 Sam's Warehouse and Crazy Clark's stores on the eastern seaboard, could be at risk if the deed was overturned. "Ms Moss opined that if the deed of company arrangement is not passed, DSG is unlikely to be able to secure the working capital that it needs from any external party," Justice Robb said in his judgment, the Mercury reports. He said that, depending on the financial resources of DSG, a substantial judgment for insolvent trading could lead to the liquidation of DSG, the report relays. About Retail Adventures Retail Adventures Pty Ltd is an Australia-based discount variety retailer and operates nationally under brand names Chickenfeed, Go-Lo, Crazy Clark's, and Sam's Warehouse. The company operates around 270 stores across the four brands. Deloitte Restructuring Services Partners Vaughan Strawbridge, David Lombe and John Greig were appointed Joint Voluntary Administrators of Retail Adventures Pty Limited, effective Oct. 26, 2012. Ms. Cameron, the sole shareholder and only secured creditor, bought back 210 Sam's Warehouse and Crazy Clarks stores and two distribution centres for AUD59 million from the administrators, Deloitte, in February 2013. ========= C H I N A ========= * CHINA: Rating Agencies Criticize Bailout of Failed Trust ---------------------------------------------------------- Josh Noble, writing for The Financial Times reports that global rating agencies -- often among the more sanguine voices on China - - have warned that last week's bailout of a soured $500 million trust loan was a wasted chance to address rising moral hazard in the country's shadow banking sector. FT says the words of caution follow a last-minute deal to avert the default of a CNY3 billion trust product backed by loans to a now-defunct coal mining company. The product's issuer, China Credit Trust, on Jan. 27 said it had raised the cash needed to pay back investors from three unnamed backers. Though such products have failed in the past, a full or partial default of the "Credit Equals Gold No. 1" trust would have been the most high-profile case in which investors were left nursing losses, FT relates. Instead their investments were made good, with only the third year of interest payments held back -- something ratings agencies have billed as a missed opportunity to address skewed risk perceptions within the shadow banking sector, according to FT. "By bailing out investors in this particular instance, the authorities are perpetuating moral hazard within the Chinese financial system -- and this risk may in fact have become a whole lot bigger," wrote Jonathan Cornish, an analyst at Fitch, in a research report, FT reports. "We think the authorities have missed a chance of putting a clear marker in the sand that non-bank products would certainly not be supported." According to FT, Moody's analysts said that while the resolution of this particular trust had limited the risks of contagion across the financial system, the government had failed to create a useful framework for future defaults. "Although the current proposed settlement does entail losses to investors in terms of foregone interest, by fully repaying their principal, it reinforces the perception that investors will be bailed out one way or another when the products go sour, which is contrary to the establishment of sound market discipline and a healthy credit market," said Moody's, FT reports. FT adds that Liao Qiang, credit analyst at Standard & Poor's, described the fund rescue as "counterproductive in the long run", as it would undermine efforts to rein in the growth of such products. The shadow banking system has risen to account for roughly a third of new credit in China's debt-fuelled economy. About $660 billion of trust loans are due for repayment or refinancing this year, according to estimates from Bank of America Merrill Lynch, raising the prospect that investor jitters over the sector could feed into the real economy, FT notes. Trust loans, the largest form of shadow financing, have often been used by local governments to fund infrastructure projects, and by developers to buy land and build apartment blocks. Difficulty in rolling over such debts could dent economic growth across the country, FT adds. ========= I N D I A ========= ADINATH MOTORS: CARE Revises Rating on INR8.80cr Loan to 'B+' ------------------------------------------------------------- CARE revises/reaffirms rating assigned to the bank facilities of Adinath Motors. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 8.80 CARE B+ Revised Facilities from CARE B Short-term Bank 0.50 CARE A4 Reaffirmed Facilities The rating assigned by CARE is based on the capital deployed by the partners and the financial strength of the firm at present. The ratings may undergo change in case of the withdrawal of the capital or the unsecured loans brought in by the partners in addition to the financial performance and other relevant factors. Rating Rationale The revision in the long-term rating assigned to the bank facilities of Adinath Motors is primarily driven by the healthy growth achieved in turnover and cash accruals during FY13 (refers to the period April 1 to March 31) coupled with marginal improvement in profit margins and subsequent improvement in capital structure as well as debt coverage indicators. The ratings continue to remain constrained on account of its financial risk profile marked by thin profit margin, leveraged capital structure and weak debt coverage indicators. The ratings are further constrained by its presence in the high working capital intensive automobile dealership business and its direct linkages to the cyclical automobile industry. The ratings, however, continue to take into account the vast experience of the partners in the automobile dealership business, long association with Maruti Suzuki India Limited (MSIL) which enjoys a dominant position in the passenger car segment in India and diversified portfolio of allied services. Going forward, the ability of the firm to consistently scale up its operations and diversify its revenue mix with higher contribution from high-margin vehicle servicing and pre-owned cars business, thereby improving its profitability and solvency position would be the key rating sensitivities. Established in 2000, Adinath Motors is an authorized dealer of Maruti Suzuki India Limited. It is engaged in the sale of new cars (mainly passenger vehicles), servicing of vehicles, sale of spare parts and purchase and sale of pre-owned cars. Currently, the firm is managed by two partners, Mr Mahesh Malaiya and Mr Kapil Malaiya, who have an experience of more than four decades in the automobile dealership business. Adinath started with its first showroom at Sagar, Madhya Pradesh (MP) in January 2000 and later started its showrooms at Tikamgarh, Damoh and Chhatarpur in MP. The partners are also associated with Malaiya Tractors (engaged into the dealership of Mahindra tractors since 1972) and Economy Centre (engaged into the dealership of Yamaha motorcycles since 1982) at Sagar, MP. In FY13, Adinath sold 1,369 cars vis-a-vis 1,225 sold in FY12. During FY13, Adinath reported a total operating income of INR55.53 crore with a PAT of INR0.33 crore as against a net profit of INR0.20 crore on a total operating income of INR42.35 crore in FY12. AMBUJA GINNING: ICRA Suspends 'B' Rating on INR9.5cr Loans ---------------------------------------------------------- ICRA has suspended '[ICRA]B' rating assigned to the INR9.50 crore long term working capital facilities of Ambuja Ginning Pressing & Oil Company Private Limited. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise. Incorporated in March 1995, Ambuja Ginning Pressing & Oil Company Private Limited is promoted by Mr. Tulsi Patel, Mr Manoj Lathiya, Mr Ashok Lathiya and Mr Jina Kukadiya. At present, it has 34 ginning machines and 1 pressing machine for ginning operations and 5 expellers for crushing operation with its plant location at Bhavnagar, Gujarat. BALAJI COTTON: ICRA Reaffirms 'B' Rating on INR7cr Long-Term Loan ----------------------------------------------------------------- ICRA has reaffirmed the '[ICRA]B' rating for the INR7.00 crore fund based facilities of Balaji Cotton Industries. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term fund 7.00 [ICRA]B reaffirmed based-Cash Credit The ratings continue to be constrained by the firm's weak financial profile as reflected by low profitability, leveraged capital structure along with stretched liquidity and weak debt coverage indicators. The ratings also take into account the low value additive nature of operations and intense competition on account of fragmented industry structure leading to thin profit margins. The ratings are further constrained by vulnerability of profitability to adverse fluctuations in raw material prices which are subject to seasonal availability of raw cotton and government regulations on MSP and export quota. Further, BCI being a partnership firm, any significant withdrawals from the capital account would affect its net worth and thereby the gearing levels. The ratings, however, positively factors in the long experience of the promoters in the cotton ginning and pressing business and the advantages arising from the firm's proximity to the raw material sources which ensures regular and easy availability of raw cotton as well as favorable demand outlook for cotton and cottonseed. Established in 2005, Balaji Cotton Industries is engaged in cotton ginning, pressing and crushing operations. The business is owned and managed by Mr. Vijay Jivani and other family members. The firm's manufacturing facility is located at Tankara, Dist Rajkot. The firm has 18 ginning machines and 1 pressing machine with the processing capacity of 100 TPD of raw cotton. It has also installed 4 expellers for cottonseed crushing. BRILLIANT TUTORIALS: CARE Assigns 'B' Rating to INR24.85cr Loans ---------------------------------------------------------------- CARE assigns 'CARE B' rating to the bank facilities of Brilliant Tutorials Pvt Ltd. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 24.85 CARE B Assigned Rating Rationale The rating assigned to the bank facilities of Brilliant Tutorials Private Ltd (BT) is constrained by its weak financial risk profile marked by negative net-worth, high debt level and its presence in a highly fragmented and competitive industry. The rating, however, draws strength from the vast experience of the promoters in the education sector and financial support from the promoters by way of equity infusion and unsecured loans. Going forward, timely infusion of funds by the promoters is critical to the credit and growth prospects of the company. Besides, the ability of the company to scale up its operations and successfully monetize its content through new revenue streams would also be the key rating sensitivities. Brilliant Tutorials Private Limited is engaged in coaching for various entrance examinations like the Joint Entrance Examination (JEE) for the Indian Institute of Technology (IITs), the All-India Institute of Medical Science (AIIMS), Union Public Service Commission (UPSC) examinations and many other professional courses of study. BT offers both class-room based coaching and distance education through study material. Promoted by the late Mr N Thanu in 1970, BT is a pioneer in the entrance exam coaching segment, with several thousand students as its clientele. BT is a closely held company with the promoter's family owning the entire stake. Ms Vasanthi Neelakantan, managing director of BT, manages the day- to-day affairs of the company. As per the audited results for FY13 (refers to the period April 1 to March 31), BT incurred a net loss of INR12.7 crore on a total operating income of INR3.5 crore. COUNTY DEVELOPERS: ICRA Suspends 'B' Rating on INR12.5cr Loans -------------------------------------------------------------- ICRA has suspended the [ICRA]B rating assigned to the INR5.00 crore long term fund based facilities and INR7.50 crore of non fund based facilities of County Developers Private Limited. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based-limits 5.00 [ICRA]B Suspended Non-fund-based- Limits 7.50 [ICRA]B Suspended According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise. County Developers Private Limited is engaged in manufacturing of polypropylene coated bags for cement packaging. Its manufacturing facility is located at Sikandarabad, District Bulandshahar (Uttar Pradesh) with total capacity of 600 lakh sacks per annum. The company was promoted in June 2006 by Mr. Ram Pal Singh. Polypropylene bags manufactured by CDPL are used in the packing and transport of cement. ELYMER ELECTRICS: CRISIL Cuts Rating on INR324MM Loans to 'D' ------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Elymer Electrics Pvt Ltd (EEPL; a part of the Elymer group) to 'CRISIL D/CRIDIL D' from 'CRISIL BB/Negative/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 164 CRISIL D (Downgraded from 'CRISIL A4+') Cash Credit 134 CRISIL D (Downgraded from 'CRISIL BB/Negative') Vendor Financing 26 CRISIL D (Downgraded from 'CRISIL A4+') The downgrade reflects the irregularities in the Elymer group's cash credit facility for more than 30 days. The group's delays in meeting its debt obligations have been caused by liquidity crunch due declining scale of operations and inability of the Elymer group to realign its fixed cost overheads in line with its revenue has led to continuous operating losses. The ratings continue to reflect the Elymer group's moderate net worth despite operating losses and gearing and the extensive industry experience of the group's promoters. These rating strengths are partially offset by the pressure on the Elymer group's business risk profile, amidst the decline in the group's scale of operations and operating losses, and exposure to the risk of high receivables. For arriving at the ratings, CRISIL has combined the business and financial risk profiles of EEPL and its group company, Elymer International Pvt Ltd (EIPL). This is because the two entities, together referred to as the Elymer group, are under the same management team and have strong business and operational linkages with each other. EEPL, set up in 1991 by Mr. Ajesh Gupta, manufactures electronic meters; it is a leading supplier of electronic meters to SEBs (State Electricity Boards) and private players. EEPL manufactures one- and three-phase electronic meters and has been supplying to various SEBs for more than 15 years. EIPL, incorporated in 1997, manufactures electronic meters at its manufacturing unit in Faridabad (Haryana). ELYMER INT'L: CRISIL Cuts Rating on INR409MM Loans to 'D' --------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Elymer International Pvt. Ltd. (EIPL; a part of the Elymer group) to 'CRISIL D/CRIDIL D' from 'CRISIL BB/Negative/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 190 CRISIL D (Downgraded from 'CRISIL BB/Negative') Cash Credit 219 CRISIL D (Downgraded from 'CRISIL BB/Negative') The downgrade reflects the irregularities in the Elymer group's cash credit facility for more than 30 days. The group's delays in meeting its debt obligations have been caused by liquidity crunch due declining scale of operations and inability of the Elymer group to realign its fixed cost overheads in line with its revenue has led to continuous operating losses. The ratings continue to reflect the Elymer group's moderate net worth despite operating losses and gearing and the extensive industry experience of the group's promoters. These rating strengths are partially offset by the pressure on the Elymer group's business risk profile, amidst the decline in the group's scale of operations and operating losses, and exposure to the risk of high receivables. For arriving at the ratings, CRISIL has combined the business and financial risk profiles of EIPL and its group company, Elymer Electrical Pvt. Ltd. (EEPL). This is because the two entities, together referred to as the Elymer group, are under the same management team and have strong business and operational linkages with each other. EEPL, set up in 1991 by Mr. Ajesh Gupta, manufactures electronic meters; it is a leading supplier of electronic meters to SEBs (State Electricity Boards) and private players. EEPL manufactures one- and three-phase electronic meters and has been supplying to various SEBs for more than 15 years. EIPL, incorporated in 1997, manufactures electronic meters at its manufacturing unit in Faridabad (Haryana). GANESH COTTON: CRISIL Assigns 'B+' Ratings to INR61.5MM Loans ------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the bank facilities of Ganesh Cotton Industries. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 16.5 CRISIL B+/Stable Bank Guarantee 1 CRISIL A4 Cash Credit 45 CRISIL B+/Stable The ratings reflect GCI's initial and small scale of operations in the highly competitive cotton industry, and expected average financial risk profile, marked by high gearing and average debt protection metrics. These rating weaknesses are partially offset by its promoters' extensive industry experience, and the proximity of the firm's unit to the cotton-growing belt in Gujarat. Outlook: Stable CRISIL believes that GCI will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the firm registers higher- than-expected sales and cash accruals while strengthening its capital structure, leading to improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if GCI's accruals are lower than expected, it undertakes any substantial debt-funded expansion programme, or its working capital management deteriorates, significantly weakening its financial risk profile. GCI is a partnership firm located at Vijapur in Mehsana (Gujarat). The firm's partners have over five years of experience in the cotton industry. GCI has commenced its operation of cotton ginning and oil milling from November 2013. HEMANT GOYAL: CRISIL Reaffirms 'D' Ratings on INR170MM Loans ------------------------------------------------------------ CRISIL's rating on the long-term bank facilities of Hemant Goyal Motors Pvt Ltd continues to reflect instances of delay by HGMPL in servicing its term loan installments. HGMPL also has a weak financial risk profile marked by a high gearing and small net worth, and is exposed to cyclicality in demand in the automotive industry. The company, however, benefits from its promoter's extensive experience in the automobile dealership business. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 130 CRISIL D (Reaffirmed) Standby Line of Credit 10 CRISIL D (Reaffirmed) Term Loan 30 CRISIL D (Reaffirmed) Update HGMPL' business profile has deteriorated over the past two years with decline in topline, marked by net sales of INR577 million in 2012-13 (refers to financial year, April 1 to March 31) as against net sales of INR720 million in 2011-12. In 2013-14, the company's turnover is estimated to further decline as it has generated only INR260 million in the first nine months. SAPL's operating profitability declined to 3.9 per cent in 2012-13 from 4.1 per cent in the previous year. The company's financial profile has remained weak with high gearing of 3.31 times as on March 31, 2013 and weak debt protection measures marked by interest coverage and net cash accruals to total debt ratios of 1.3 times and 0.03 times, respectively, for 2012-13. The liquidity profile is stretched led by low cash accruals, insufficient to meet its high working capital requirements and term loan obligations. The company has reported cash accruals of INR4.5 million in 2012-13 against which it had term loan obligations of INR8.4 million. With expected decline in turnover in 2013-14, the cash accruals are also expected to be around INR0.40 million to INR0.50 million which will be insufficient to meet the debt payments for the year. HGMPL, incorporated in 2005, is promoted by Mr. Amit Goyal. Goyal Motors, a proprietorship concern, was merged with HGMPL in 2007- 08. HGMPL has been a dealer of Tata Motors Ltd (rated 'CRISIL AA- /Postive/CRISIL A1+') vehicles since 2000. HGMPL has set up its showrooms and six service centers in Patiala, Fategarh, Barnala, and Sangrur (all in Punjab). From February 1, 2012 onwards, three of the six centers have been hived off to a new dealership (under the same management), Hemant Goyal Motors (a proprietorship concern of Ms. Pushpa Goyal [wife of Mr. Amit Goyal]). Currently, HGMPL has one showroom at Patiala and two extension counters at Barnala and Fatehgarh. HGMPL is estimated to report a profit after tax (PAT) of INR1.0 million on net sales of around INR577 million in 2012-13, against a PAT of INR1.3 million on net sales of around INR720 million in 2011-12. INDRA CONSTRUCTION: CRISIL Reaffirms 'B+' Rating on INR70MM Loan ---------------------------------------------------------------- CRISIL's ratings on the bank facilities of Indra Construction Company continue to reflect ICC's modest scale of operations, stretched working capital cycle, and weak financial risk profile, marked by subdued debt protection metrics. These rating weaknesses are partially offset by the extensive experience of ICC's promoter in the civil construction business. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 10 CRISIL A4 (Reaffirmed) Cash Credit 70 CRISIL B+/Stable (Reaffirmed) Outlook: Stable CRISIL believes that ICC will continue to benefit over the medium term from its established market position and the extensive industry experience of its promoter. The outlook may be revised to 'Positive' in case of a significant increase in the firm's revenues along with improvement in its net cash accruals and debt protection metrics. Conversely, the outlook may be revised to 'Negative' if ICC's operating margin declines or it there is a further stretch in its working capital cycle, materially impacting its liquidity. ICC, set up in 1984, is proprietorship concern based in Mumbai (Maharashtra). The firm undertakes civil construction work including drainage de-silting. JANAA INDUSTRIES: CRISIL Reaffirms B+ Rating on INR57MM Loans ------------------------------------------------------------- CRISIL's rating on the long-term bank facilities of Janaa Industries continues to reflect JIT's small scale of operations in the highly fragmented cotton-yarn industry. The rating also factors in the firm's working-capital-intensive operations and its below-average financial risk profile, marked by a highly leveraged capital structure. These rating weaknesses are partially offset by the extensive industry experience of JIT's promoters. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 30 CRISIL B+/Stable (Reaffirmed) Long Term Loan 27 CRISIL B+/Stable (Reaffirmed) Outlook: Stable CRISIL believes that JIT will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the firm records considerable increase in its revenues and profitability while improving its capital structure. Conversely, the outlook may be revised to 'Negative' if JIT faces a significant decline in its yarn realisations, leading to lower accruals, if its working capital management deteriorates, resulting in weak liquidity, or if it undertakes a large debt-funded capital expenditure (capex) programme, leading to further weakening of its financial risk profile. Update For 2012-13 (refers to financial year, April 1 to March 31), JIT recorded revenues of INR149 million, which was marginally higher than CRISIL's expectations owing to higher-than-expected capacity utilisation as a result of improvement in the power situation in the region. During the nine months ended December 31, 2013, the firm recorded revenues of INR135 million and is expected to record close to INR170 million for the year. JIT's operating margin of about 11.5 per cent in 2012-13 was marginally lower than expectations owing to the increase in raw material prices which was not fully passed on to customers. The firm's operations remain working-capital-intensive primarily because of its long inventory holding period, moderate receivables period, and limited payables period. JIT's financial risk profile continues to be below average, marked by high gearing and a small net worth. The firm plans a capex of about INR20 million over the medium term towards capacity expansion, to be funded in a debt-to-equity ratio of 3:1. With no equity infusion expected over the medium term, JIT's financial risk profile is expected to remain below average over this period. JIT's liquidity remains stretched, marked by high bank limit utilisation and low accruals; however, its accruals are sufficient to meet its maturing debt obligations. Also, it gets funding support from its promoters in the form of unsecured loans. JIT reported a profit after tax (PAT) of INR1.5 million on net sales of INR149 million for 2012-13 as against a PAT of INR1.1 million on net sales of INR128 million for 2011-12. JIT was incorporated in 1996 and promoted by Mr. Janagaraj. The firm, based in Rajapalayam (Tamil Nadu), manufactures cotton yarn. JG AGRO: ICRA Suspends 'B' Rating on INR9cr Bank Loans ------------------------------------------------------ ICRA has suspended the '[ICRA]B' rating assigned to INR9.00 crore bank lines of JG Agro Industries. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise. JINDAL CHAWAL: ICRA Suspends 'B+' Rating on INR10cr Bank Loans -------------------------------------------------------------- ICRA has suspended the '[ICRA]B+' rating assigned to INR10.00 crore bank lines of Jindal Chawal Nigam. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise. KAY EM: ICRA Suspends 'B' Rating on INR10cr Bank Loans ------------------------------------------------------ ICRA has suspended the '[ICRA]B' and '[ICRA]A4' rating assigned to INR10.00 crore bank lines of Kay Em Copper Private Limited. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise. KOHLI AUTO: CRISIL Lowers Rating on INR180MM Loans to 'D' --------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Kohli Auto Company (S) [Kohli Auto] to 'CRISIL D' from 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 175 CRISIL D (Downgraded from 'CRISIL B+/Stable') Long Term Loan 5 CRISIL D (Downgraded from 'CRISIL B+/Stable') The rating downgrade reflects delays by Kohli Auto in payment of interest on its working capital bank limit; the delays have been caused by the firm's weak liquidity, driven by its large working capital requirements and low profitability. Kohli Auto also has a weak financial risk profile, marked by a small net worth and weak debt protection metrics, and is exposed to risks related to intense competition in the automobile dealership market and to supplier concentration. However, the firm benefits from its long track record in the industry. Kohli Auto, a partnership firm, was set up by Mr. Navinder Singh Kohli and his family members in 1968. It is a dealer in Mahindra & Mahindra Ltd's vehicles and spare parts. MAGNUM INTERGRAFIKS: CRISIL Reaffirms B Rating on INR207.5MM Loan ----------------------------------------------------------------- CRISIL's ratings on the bank facilities of Magnum Intergrafiks Private Limited continue to reflect MIPL's below-average financial risk profile marked by weak debt protection metrics and its low operating profitability owing to the intense competition in the advertising industry. These rating weaknesses are partially offset by MIPL's promoters' extensive experience, the company's established position in the advertising industry, and its geographically diversified revenue profile. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 7.5 CRISIL A4 (Reaffirmed) Cash Credit 180.0 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 15.0 CRISIL B/Stable (Reaffirmed) Term Loan 12.5 CRISIL B/Stable (Reaffirmed) Outlook: Stable CRISIL believes that MIPL will continue to benefit from its established position and promoters' extensive experience in the advertising industry. The outlook may be revised to 'Positive' if there is a significant improvement in MIPL's debt protection metrics, driven most likely by an increase in its cash accruals backed by increase in its operating profitability. Conversely, the outlook may be revised to 'Negative' if the company's liquidity, and consequently debt protection metrics, deteriorates further, caused most likely by less-than-expected cash accruals or large, debt-funded capital expenditure. MIPL, promoted by Mr. Sudhir Ghate, was established in the early 1990s as a partnership firm and was incorporated in 1994. The company is in the advertising and communication business, offering services across media categories such as print, radio, television broadcasting, outdoor publicities and event management. MIPL reported a net profit after tax (PAT) of INR3.47 million on net sales of INR910.8 Million for 2012-13 (refers to financial year, April 1 to March 31), against a PAT of INR4.88 million on net sales of INR859.5 million for 2011-12. MANDOVI MINERALS: CRISIL Cuts Rating on INR170MM Loans to 'D' ------------------------------------------------------------- CRISIL has downgraded its rating on the bank facilities of Mandovi Minerals Pvt Ltd to 'CRISIL D' from 'CRISIL B-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL D (Downgraded from 'CRISIL B-/Stable') Long Term Loan 150 CRISIL D (Downgraded from 'CRISIL B-/Stable') The downgrade reflects delays by Mandovi Minerals in debt servicing due to weak liquidity and cash flow mismatches. The company has weak liquidity on account of low cash accruals, fully utilised fund-based bank lines, and unprecedented stretch in receivables. A tighter control on working capital cycle and timely support from the promoters and associate companies will be crucial in restoring the company's liquidity over the medium term. The company has working-capital-intensive operations resulting in weak liquidity, below-average financial risk profile, marked by small net worth, aggressive gearing, and inadequate debt protection metrics, susceptibility to intense competition in the fragmented industrial sands market, and to adverse regulatory changes. These weaknesses are, however, partially offset by the extensive experience of the promoters in the industry and the fund support extended by the promoters and the associate company. Mandovi Minerals was promoted in 2004 by Mr. Shivaji Mendon and Mrs. Rama Mendon. It manufactures washed and dry silica sand. For 2012-13 (refers to financial year, April 1 to March 31), Mandovi Mineral reported net loss of INR13.6 million on revenue of INR93.6 million as against net loss of INR9.2 million on revenue of INR55.8 million for 2011-12. MANGALORE MINERALS: CRISIL Reaffirms B Rating on INR210.2MM Loan ---------------------------------------------------------------- CRISIL's ratings on the bank facilities of Mangalore Minerals Pvt Ltd (MMPL; part of the Mangalore group) continue to reflect the group's weak liquidity due to working-capital-intensive operations, and exposure to risks related to intense competition in the fragmented industrial sands market and regulated nature of the industry. These rating weaknesses are partially offset by the Mangalore group's moderate financial risk profile marked by moderate gearing, healthy net worth and comfortable debt protection metrics, and extensive experience of its promoters in the industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4.4 CRISIL A4 (Reaffirmed) Buyer Credit Limit 91.5 CRISIL A4 (Reaffirmed) Cash Credit 60.0 CRISIL B/Stable (Reaffirmed) Letter of Credit 80.9 CRISIL A4 (Reaffirmed) Long Term Loan 150.2 CRISIL B/Stable (Reaffirmed) For arriving at its ratings, CRISIL has combined the business and financial risk profiles of MMPL and Mandovi Minerals Pvt Ltd (Mandovi Minerals), together referred to as the Mangalore group. This is because both these entities are in the similar line of business, have a common management team, and have fungible cash flows. Outlook: Stable CRISIL believes that the Mangalore group's credit risk profile will remain constrained over the medium term owing to working capital intensive nature of operations. The outlook may be revised to 'Positive' in case the group's working capital cycle improves on a sustained basis or the promoters infuse significant long term funds, strengthening its liquidity. Conversely, the outlook may be revised to 'Negative' in case the Mangalore group undertakes a large, debt-funded capital expenditure (capex) programme leading to deterioration in financial risk profile, or it generates lower- than-anticipated cash accruals coupled with stretch in working capital cycle leading to further deterioration in liquidity. The Mangalore group, promoted by Mr. Shivaji Mendon and Mrs. Rama Mendon, is headquartered in Mangalore (Karnataka). Incorporated in 1987, MMPL, the flagship entity of the group, produces industrial sands. MMPL reported a profit after tax (PAT) of INR67.4 million on net sales of INR635.5 million for 2012-13 (refers to financial year, April 1 to March 31), against a net profit of INR57.2 million on net sales of INR598.9 million for 2011-12. METROSTAR PRINT: CRISIL Assigns 'B' Rating to INR87MM Loan ---------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the bank facilities of Metrostar Print Solutions Pvt. Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Export Packing Credit 13 CRISIL A4 Term Loan 87 CRISIL B/Stable The rating reflects MPSPL's exposure to stabilization and offtake related risks associated with the company's ongoing project. This rating weakness is partially offset by the extensive experience of MPSPL's promoters in the printing consumables industry. Outlook: Stable CRISIL believes MPSPL will benefit over the medium term from the extensive industry experience of its promoters. The outlook may be revised to 'Positive', if the unit stabilises its operations as per schedule and demonstrates a significantly better than expected performance in terms of cash accruals and debt servicing indicators. Conversely, the outlook may be revised to 'Negative', if there is significant cost or time overrun in the project execution or delays in stabilizing the operations of the unit, translating to weakening of its debt servicing ability. Metrostar Print Solutions Pvt Ltd (MPSPL), incorporated in 2011, is setting up a manufacturing unit to produce offset printing plates which are used in printing industry. The company is promoted by Mr. Mukund Bhuta and his wife, Mrs. Hetal Bhuta. The manufacturing facility is expected to be located at Taloja (Maharashtra). NAVDEEP CONSTRUCTION: ICRA Places 'B' Rating on INR15cr Loans ------------------------------------------------------------- ICRA has assigned a long-term rating of '[ICRA]B' to the INR15.00 crore fund based bank limits of Navdeep Construction Company. ICRA has also assigned a short-term rating of '[ICRA]A4' to the INR10.00 crore non-fund based bank limits of NCC. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Rated on long-term 15.00 [ICRA]B Assigned scale Fund based limits Rated on short-term 10.00 [ICRA]A4 Assigned scale Non-fund based limits The ratings favorably factor in the long standing experience of the promoters of NCC in the construction sector, and its established relationship with its clients, which has enabled the firm to garner repeat orders over the years. The ratings are, however, constrained by the consistent decline in operating income over the last three years due to a decline in the order inflow, and execution related issues in respect of orders in hand. The unexecuted order book of the firm stood at INR18.43 crore (0.35x FY13 operating income) due to which the firm needs to ensure new order inflow for revenue visibility. The firm has also witnessed margin pressures due to high input costs. Furthermore, it has high working capital intensity of operations due to sluggishness in debtor realization and delayed execution, resulting in inventory pile-up. The firm is also exposed to project and geographical concentration risks, given that 63% of the order book, as of November 14, 2013, is attributable to the largest order, and it operations are focused on Mumbai. The ratings are also constrained by the risk of capital withdrawal inherent in a partnership firm, which could have a material impact on the firm's credit quality. Incorporated in 1986, Navdeep Construction Company is a partnership firm, based out of Mumbai. Promoted by Shri Shantilal Shah and the Late Shri Babulal Mehta, the firm is presently managed by Shri Shantilal Shah. NCC has two business segments -- civil construction, and the manufacturing and sale of ready-mix concrete. The firm commenced business operations as a civil contractor, and specializes in the construction and repairing of buildings, roads, nallas and drains. The operations of the firm are mainly concentrated on Mumbai and its suburbs, primarily undertaking projects for the Municipal Corporation of Greater Mumbai (MCGM). Apart from operating as an independent contractor, NCC also works as a sub-contractor for other civil contractors. NCC started its ready-mix concrete (RMC) business in 2007, and owns four RMC plants. The company entered into joint ventures to undertake projects in the past, to meet the qualification requirements to bid for larger projects. OYSTER STEEL: CRISIL Reaffirms 'B+' Rating on INR600MM Loan ----------------------------------------------------------- CRISIL's ratings on the bank facilities of Oyster Steel & Iron Pvt Ltd continue to reflect OSIPL's working-capital-intensive operations, and weak financial risk profile, marked by a weak capital structure and average interest coverage ratio. These rating weaknesses are partially offset by the extensive experience of OSIPL's promoter in the aluminium trading industry, and the expected improvement in its scale of operations. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 100 CRISIL A4 (Reaffirmed) Cash Credit 600 CRISIL B+/Stable (Reaffirmed) Outlook: Stable CRISIL believes that OSIPL will continue to benefit over the medium term from its promoter's extensive experience in the aluminium trading industry and its established relationships with its customers and suppliers. CRISIL, however, also believes that the company's financial risk profile will remain below average over this period because of its working-capital-intensive operations. The outlook may be revised to 'Positive' if OSIPL's operating margin improves, leading to an improvement in its interest coverage ratio, or in case of infusion of fresh equity into the company, resulting in a better capital structure. Conversely, the outlook may be revised to 'Negative' if the company's profitability is lower than expected, or there is a more-than-expected increase in its working capital requirements, resulting in deterioration in its financial risk profile. Update: OSIPL has a stable business risk profile, marked by high revenue growth and stable profitability. The company has recorded revenues of INR1380.9 million in 2012-13 (refers to financial year, April 1 to March 31), almost double its previous year's revenues of INR706.5 million. Earlier, the company derived its maximum revenues from North India, but over the past 18 months it has ventured into West India, Central India, and some parts of South India. OSIPL booked revenues of about ~Rs.650 million for the six months ended September 30, 2013, and is expected to book revenue of ~Rs.1600 million to ~Rs.1700 million in 2013-14. The company had an operating margin of 4.3 per cent in 2012-13, about 20 bps higher than 4.1 per cent in 2011-12. Though OSIPL's topline has improved, accretion to reserves remains subdued because of high interest and financial cost and low operating profitability. OSIPL's financial risk profile continues to be weak, marked by a below-average total outside liabilities to tangible net worth ratio of 9.7 times as on March 31, 2013, in line with historical levels, due to the high quantum of short-term loans to support its working-capital-intensive operations. Its interest coverage ratio remained average at 1.1 times in 2012-13. Its net worth too was average, at INR58.7 million as on March 31, 2013. OSIPL's financial risk profile is expected to improve over the medium term, backed by the proposed infusion of equity by its promoters in 2013-14. OSIPL's financial flexibility continues to be stretched, with low but sufficient net cash accruals of INR3.4 million to INR4.0 million expected in 2013-14, which are likely to be sufficient to meet its debt obligations of INR1.5 million during the year. However, the company's financial flexibility is largely constrained by almost full utilisation of its bank lines over the 10 months through October 2013, to support its working-capital- intensive operations. OSIPL reported, on a provisional basis, a profit after tax (PAT) of INR4.6 million on net sales of INR1380.9 million for 2012-13; it had reported a PAT of INR2 million on net sales of INR706.5 million for 2011-12. OSIPL was established in 2008 by Mr. Prem Chand Gupta. It trades in aluminium in the form of scrap, sheets, and ingots. The company is based in New Delhi. P.S.A. CONSTRUCTION: CRISIL Reaffirms B Rating on INR27.5MM Loan ---------------------------------------------------------------- CRISIL's ratings on the bank facilities of P.S.A. Construction continue to reflect PSA's small scale of operations in the intensely competitive civil construction industry, high geographical concentration, and large working capital requirements. These rating weaknesses are partially offset by the extensive experience of PSA's promoters in the civil construction industry and the firm's healthy order book leading to revenue visibility over the medium term. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 80 CRISIL A4 (Reaffirmed) Cash Credit 27.5 CRISIL B/Stable (Reaffirmed) Proposed Short Term Bank Loan Facility 7.5 CRISIL A4 (Reaffirmed) Outlook: Stable CRISIL believes that PSA will continue to benefit over the medium term from its healthy order book and its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the company's revenues improve substantially, while maintaining healthy profitability and capital structure with sufficient cushion in its liquidity. Conversely, the outlook may be revised to 'Negative' if PSA registers lower profitability, leading to deterioration in the company's financial risk profile and liquidity. Update PSA's business risk profile has remained moderate with stable growth in revenues and healthy profitability but is partly constrained by high working capital requirements. The firm, on a provisional basis, reported revenue of INR263 million for eight months through November 2013. PSA is likely to report revenue of over INR400 million in 2013-14 (refers to financial year, April 1 to March 31) an increase of 58 per cent from INR291 million in 2012-13 backed healthy growth in orders. CRISIL believes that PSA revenue will continue to grow at a moderate rate on account of extensive experience of the promoters and healthy order book of INR1.24 billion (as on January 8, 2014). PSA's operating profitability at 15.6 per cent in 2012-13 was lower than 18.4 per cent a year ago. CRISIL believes that PSA's operating margin will remain at existing levels around 15 per cent over the medium term. The company's working capital requirement continues to remain high with GCA (Gross Current Assets) of 156 days in 2012-13. The firm maintains 15 to 25 days of inventory to keep its operations running smoothly, despite low inventory and receivables of 30 to 45 days, the firm's funds are blocked as security deposits, performance guarantees and retention money for projects resulting in large working capital requirements. CRISIL believes that PSA's operations are expected to remain working capital intensive over the near term. PSA's financial risk profile remains modest, marked by its small net worth and high gearing, though supported by healthy debt protection metrics. PSA's net worth stood at INR59 million as on March 31, 2013. Small net worth restricts PSA's ability to raise further debt in case of exigencies. Gearing of the company has increased to 2.1 times as on March 31, 2013, from 1.5 times in a year ago on account of incremental debt contracted for the purchase of vehicles and equipments. However, the debt protection metrics are expected to remain comfortable over the medium term. Its net cash accrual to total debt (NCATD) and interest coverage ratios are expected to be 40 per cent and 4 times, respectively, in 2013-14. CRISIL believes that PSA's financial risk profile will remain moderate over the medium term supported by moderate accretion to reserves. Liquidity of the company is stretched on account of the working capital intensive nature of the operations. Its bank limit utilisation remains fully utilized on a limit of INR25 million with instances of overutilisation. It is expected to generate accruals in the range of INR37 million to INR40 million in 2013- 14, which will be just sufficient to repay its term debt obligations repayments of INR38 million over the medium term. PSA reported profit after tax (PAT) of INR11 million on net sales of INR291 million for 2012-13 and PAT of INR12 million on net sales of INR185 million for 2011-12. About the Firm PSA was set up as a partnership firm in 2004 by Mr. Sanjay Singhal and his cousin, Mr. Rajesh Singhal. Mr. Brijbhushan Singhal has replaced Mr. Rajesh Singhal as one of the partners in the firm. PSA primarily constructs roads. The firm is registered as a Class- 5 contractor for construction of roads for Public Works Department, Chhattisgarh. PACT INDUSTRIES: CARE Assigns 'B+' Rating to INR10.59cr LT Loans ---------------------------------------------------------------- CARE assigns 'CARE B+' and 'CARE A4' ratings to the bank facilities of Pact Industries Ltd. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 10.59 CARE B+ Assigned Short-term Bank Facilities 4.00 CARE A4 Assigned Rationale The ratings assigned to the bank facilities of Pact Industries Ltd are primarily constrained by its weak financial risk profile marked by the small scale of operations, low profitability margins, leveraged capital structure and low debt service coverage indicators. The ratings are further constrained by the susceptibility of its margins to fluctuation in raw material prices and presence in a highly fragmented industry characterized by intense competition. The ratings, however, draw comfort from PIL's experienced promoter, its growing scale of operations and moderate operating cycle. Going forward, PIL's ability to scale up its operations while improving its profitability margins and capital structure shall be the key rating sensitivities. Ludhiana-based (Punjab) Pact Industries Limited was initially established as a partnership firm 'Preet Hosieries' in 1991 by Mr Avtar Singh and his sons, Mr Gurdeep Singh and Mr Harpreet Singh as its partners. Later on in 1993, the constitution of the firm was changed to a public limited company. The company is engaged in the trading and manufacturing of hosiery products and mild steel (MS) ingots with an installed capacity of 6.5 lakh kilogram per annum and 13,500 tones per annum (TPA) respectively. The manufacturing facility is located at Ludhiana (Punjab). The company sells MS ingots locally to rolling mills and auto component manufacturers. The hosiery products are sold locally to garment manufacturer and traders. The sales from the manufacturing and trading of hosiery products comprise approximately 40% of its total operating income (TOI) during FY13 (refers to the period April 01 to March 31). During FY13, PIL achieved a total operating income (TOI) of INR50.42 crore with a profit after tax (PAT) of INR0.05 crore. In FY14 (till December 31, 2013), the company achieved a TOI of INR41 crore. PAWAN AUTOWHEELS: CARE Reaffirms 'B' Rating on INR10.3cr LT Loan ---------------------------------------------------------------- CARE reaffirms the rating assigned to the bank facilities of Pawan autowheels private limited. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 10.30 CARE B Reaffirmed Rating Rationale The rating assigned to the bank facilities of Pawan Autowheels Private Limited continues to be constrained by the short track record of operations, low profitability margins, leveraged capital structure and weak debt service coverage indicators. The rating is further constrained by the risk of non-renewal of dealership agreement with Hyundai Motor India Ltd, geographical concentration risk & linkage to the fortunes of HMIL, and pricing constraints & margin pressure arising out of competition from other auto dealers in the market and recent sluggishness in car sales in the Indian market. The rating, however, continues to favorably take into account the experience of the promoters and authorized dealership of HMIL with the integrated nature of business. The ability of PAPL to increase its scale of operations along with improvement in profitability margins and capital structure and effective management of working capital requirements are the key rating sensitivities. Pawan Autowheels Private Limited incorporated in March 2009 was promoted by Mr Ashok Kumar Garg and his son, Mr Shobit Garg of Ghaziabad, Uttar Pradesh. It commenced operations in April 2011. Since inception, the company has entered into an authorized dealership agreement with Hyundai Motors India Ltd. PAPL has a Hyundai car showroom at Ghaziabad, where it also provides repair and maintenance services for Hyundai cars. At present, PAPL's product portfolio consists of popular Hyundai cars like 'Eon', 'Santro', 'i10', 'i20', 'Accent', 'Verna', 'Sonata' and 'Elantra' in different category and colours. PAPL receives a small portion of its revenue from finance and insurance companies in the form of commission for bundled marketing of their products. During FY13 (refers to the period April 1 to March 31), PAPL achieved a total operating income of INR46.57 crore with a net profit of INR0.12 crore. The company achieved a total operating income of INR28.66 crore in FY14 till December 2014. PRANAVADITYA SPINNING: CARE Assigns 'B+' Rating to INR14cr Loan --------------------------------------------------------------- CARE assigns 'CARE B+' and 'CARE' A4 to the bank facilities of Pranavaditya Spinning Mills Limited. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 14.00 CARE B+ Assigned Short term Bank Facilities 1.00 CARE A4 Assigned Rating Rationale The ratings of Pranavaditya Spinning Mills Limited are constrained by the small scale of operations, volatile profitability margins, and moderate financial profile of holding company and recent regularisation of its debt servicing track record. The ratings however take into consideration the experience of promoters in the textile industry and modest debt coverage indicators of PSML. The ability of the company to increase its scale of operations and sustain its profitability amidst volatile raw material prices is the key rating sensitivity. Incorporated as a public limited company in 1990, PSML is primarily enagaged in the manufacture of cotton yarn. The company was promoted by the Keshavlal Talakchand (KT) group, which is engaged in the manufacturing and exporting of cotton yarn, textiles, knitwear and garments. However due to erosion of Networth, the company was declared sick in 2006. With a view to earn synergistic benefits, IndoCount Industries Limited (ICIL-is the holding company of PSML with an equity stake of 74.53% as on September 2013 and is rated CARE C/A4 for its bank facilities) in 2007, associated itself with the revival of PSML by lending management and financial support through equity infusion of INR18.04 crore (1,80,41,280 shares of INR10 each). Subsequently in September, 2010, the Board for Industrial and Financial Reconstruction (BIFR) discharged the company from the purview of BIFR as its Networth had become positive. The company has its plant in Kolhapur with an installed capacity of 20,400 spindles as on March 31, 2013. Cotton yarn manufactured by PSML is sold both in the domestic markets as well as exported to countries like China, Korea, Egypt, Bangladesh, Turkey, Vietnam, Poland, Hong Kong and Japan. In FY13 (refers to the period April 01 to March 31), sales of INR34 crore was generated from exports (i.e. about 56% of the total operating income) as compared to INR12.85 crore (i.e. about 27% of the total operating income in FY12). The company achieved a PAT of INR2.88 crore on a total operating income of INR61.26 crore in FY13 as compared to loss after tax of INR2.11 crore on a total operating income of INR47.96 crore in FY12. Further the company achieved a PAT of INR1.64 crore on a total operating income of INR34.71 crore in H1FY14. PSV INFRASTRUCTURES: CRISIL Cuts Rating on INR70MM Loans to 'D' --------------------------------------------------------------- CRISIL has downgraded its rating on the bank facilities of PSV Infrastructures Limited to 'CRISIL D' from 'CRISIL B/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 15 CRISIL D (Downgraded from 'CRISIL A4') Cash Credit 50 CRISIL D (Downgraded from 'CRISIL B/Stable') Term Loan 5 CRISIL D (Downgraded from 'CRISIL B/Stable') The rating downgrade reflects the deterioration in company's liquidity position, reflected in persistent irregularities in its cash credit account and delays in repayment of term debt obligations. The ratings reflect below average financial risk profile marked by low networth, high gearing and subdued debt protection metrics, working-capital-intensive nature of operations and modest scale of operations in a highly fragmented industry. These rating weakness are partially offset by extensive experience of PSV's promoters in the civil construction industry. Incorporated in 2010, PSV Infrastructure Limited undertakes civil construction projects on turnkey basis primarily for companies in power sector. Mr. Virendra Singh oversees the day-to-day operations of the firm. The registered office is located at Bhopal, Madhya Pradesh. SACHDEVA RICE: CRISIL Reaffirms 'B' Rating on INR70MM Loans ----------------------------------------------------------- CRISIL's rating on the bank facilities of Sachdeva Rice and General Mills continues to reflect SRGM's weak financial risk profile, marked by a highly leveraged capital structure and weak debt protection metrics. This rating weakness is partially offset by the benefits that SRGM derives from its partners' extensive experience in the rice industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 60 CRISIL B/Stable (Reaffirmed) Term Loan 10 CRISIL B/Stable (Reaffirmed) Outlook: Stable CRISIL believes that SRGM will continue to benefit over the medium term from its partners' extensive experience in the rice industry. The outlook may be revised to 'Positive' if the SRGM registers significant increase in its revenue and profitability, leading to improvement in its financial risk profile, or benefits from significant infusion of capital, resulting in improvement in its capital structure. Conversely, the outlook may be revised to 'Negative' if SRGM undertakes any aggressive, debt-funded expansion, or if its revenue and profitability decline substantially, resulting in deterioration in its financial risk profile. Update: For 2012-13 (refers to financial year, April 1 to March 31), SRGM has undertaken a sale of INR230.7 million against CRISIL's expectation of INR160.7 million. For 2013-14, SRGM had a sale of INR270 million till Dec 2013. Operating margin in 2012-13 was 6.7 per cent lower than CRISIL's expectation. Operating margin is lower than expected on account of decline in prices of rice in the last quarter of 2012-13 and thus, to protect against the price risk on inventory, SRGM sold the inventory at lower operating margin. Over the medium term, CRISIL believes that SRGM's operating margin will be in the range of 7 to 8 per cent as SRGM is in the basmati rice segment, which is a higher-margin business compared to processing of non-basmati rice. SGRM's business continues to be working capital intensive with gross current assets (GCAs) of 137 days against the CRISIL expectation of 238 days for 2013-14. The GCAs are lower than expected on account of larger-than-expected sale in the last quarter of 2012-13 resulting in lower inventory of 94 days against CRISIL expectation of 230 days as on March 31, 2013. Over the medium term, CRISIL believes that SRGM's operations will continue to be working capital intensive driven by large inventory days of ~180 days and moderate debtor days. SGRM financial risk profile continues to remain weak with small net worth of INR10 million in line with CRISIL expectations. The capital structure continues to remain leveraged with gearing of 9 times as on March 31, 2013, on account of short-term debt availed by the firm to meet the working capital requirement. SGRM's liquidity remains weak with working-capital-intensive operations leading to average bank limit utilisation of 70 per cent, with instances of 100 per cent utilisation. CRISIL believes that SGRM financial risk profile will remain weak with leveraged capital structure on account of small net worth and working-capital- intensive operations. SRGM was set up in 2008 by Mr. Sachit Sachdeva and his family. It is a partnership firm based in Fazilka (Punjab), engaged in the processing of paddy into basmati rice. For 2012-13, SRGM reported a book profit of INR1.5 million on net sales of INR230.7 million, against a book profit of INR0.6 million on net sales of INR138.2 million for the previous year. SALSAN STEELS: ICRA Suspends 'B' Rating on INR16cr Bank Loans ------------------------------------------------------------- ICRA has suspended the '[ICRA]B' rating assigned to INR16.00 crore bank lines of Salsan Steels Private Limited . The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise." SHIVA WHEELS: CRISIL Reaffirms 'B-' Rating on INR57.7MM Loans ------------------------------------------------------------- CRISIL's ratings on the bank facilities of Shiva Wheels Pvt Ltd continue to reflect SWPL's weak financial risk profile, constrained by small net worth, high total outside liabilities to tangible net worth (TOLTNW) ratio, and weak debt protection metrics, its low bargaining power with its principal, and exposure to intense competition in the automotive dealership market. These rating weaknesses are partially offset by the promoters' extensive experience in the two-wheeler dealership business. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 15 CRISIL B-/Stable (Reaffirmed) Inventory Funding Facility 25 CRISIL B-/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 11.1 CRISIL B-/Stable (Reaffirmed) Standby Line of Credit 2.3 CRISIL A4 (Reaffirmed) Term Loan 6.6 CRISIL B-/Stable (Reaffirmed) Outlook: Stable CRISIL believes that SWPL's financial risk profile will remain constrained over the medium term. The outlook may be revised to 'Positive' if the company registers significant improvement in its profitability, or receives substantial equity infusion, which enhances its capital structure and liquidity. Conversely, the outlook may be revised to 'Negative' if SWPL's profitability declines further or there is deterioration in its working capital management. Update Due to competitive pressure, SWPL's revenue of INR303.1 million in 2012-13 (refers to financial year April to March) remained stagnant compared with the previous year while operating margin at 2.8 per cent was also marginally lower. In 2013-14, the company started an additional showroom in December 2013, which is expected to provide impetus to growth in revenue in 2013-14; however, margins are expected to be sustained around 3 per cent levels. SWPL's has a weak financial risk profile marked by small net worth of INR11 million and high gearing of 4.7 times as on March 31, 2013, and low average interest coverage ratio of 1.3 times for 2012-13. Moreover, as the cash accruals are low, the company will continue to rely on borrowings to fund large incremental working capital requirements and, consequently, gearing will remain high over the medium term. The high reliance on bank lines has translated into bank limit utilisation in excess of 90 per cent for trailing 12 months through December 2013. The net cash accruals are expected to tightly match the repayment obligations of INR3 million in 2013-14. The accruals were low even in the previous year. However, the unsecured loans from the promoters, which stood at INR4 million in March 31, 2013, ensured timely repayment of the obligations. CRISIL believes that timely fund support from promoters will be crucial in maintaining SWPL's financial risk profile over the medium term. For 2012-13, SWPL reported net profit of INR0.7 million on net sales of INR303.1 million vis-a-vis net profit of INR1.6 million on net sales of INR285.8 million for 2011-12. SWPL was incorporated in 1988 and promoted by Mr. Shib Jivan Paul as a multi-brand sub-dealer in two-wheelers. The company is an authorised dealer in two-wheelers of Honda Motorcycle & Scooter India Pvt Ltd (HML) and also operates as a sub dealer for other two-wheeler manufacturers like TVS Motor Company Ltd. Currently, SWPL's day-to-day operations are being managed by Mr. Shib Jivan Paul's two sons, Mr. Sanjib Paul and Mr. Kaushik Paul. SONA BISCUITS: ICRA Suspends 'B+' Rating on INR24.15cr Loans ------------------------------------------------------------ ICRA has suspended the [ICRA]B+ rating assigned to the INR23.35 crore fund based bank limits and INR0.80 crore non fund based bank facilities of Sona Biscuits Limited. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. According to its suspension policy, ICRA may suspend any rating outstanding if in its opinion there is insufficient information to assess such rating during the surveillance exercise. SULAKSHANA AGENCIES: CRISIL Assigns 'B' Rating to INR60MM Loan -------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facilities of Sulakshana Agencies. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 60 CRISIL B/Stable The rating reflects SA's modest scale of operations in the intensely competitive electronic equipment trading industry, and below-average financial risk profile, marked by a high ratio of total outside liabilities to tangible net worth and average debt protection metrics. These rating weaknesses are partially offset by the extensive industry experience of SA's partners. Outlook: Stable CRISIL believes that SA will continue to benefit over the medium term from its partners' extensive industry experience. The outlook may be revised to 'Positive' if the firm registers significant improvement in its scale of operations and profitability, or in case of substantial equity infusion by its promoters, leading to improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if SA's working capital requirements increase, leading to deterioration in its liquidity, or if the firm undertakes a large debt-funded capital expenditure programme, resulting in weakening of its capital structure. SA was originally established as a proprietorship firm in 1994 by Mr. Sridhar Kamath; it was reconstituted as a partnership firm in 2010. SA, based in Mangalore (Karnataka), is currently engaged in distribution of the Samsung brand of consumer durables over three districts of Karnataka' Dakshina Kannada, Udupi, and North Kanara. SA reported a net profit of INR0.9 million on net sales of INR302.55 million for 2012-13 (refers to financial year, April 1 to March 31), against a net profit of INR0.6 million on net sales of INR255.2 million for 2011-12. THAKOR REDUCTANTS: ICRA Assigns 'B+' Rating to INR5cr Loans ----------------------------------------------------------- ICRA has assigned '[ICRA]B+' rating to the INR5 crore fund based cash credit facilities of Thakor Reductants Private Limited. ICRA has also assigned '[ICRA]A4' rating to the INR1 crore non-fund based facilities of TRPL. The ratings are constrained by the high competitive intensity in the company's businesses leading to low profitability and weak debt protection metrics; the high working capital intensity of operations with considerable debtor build-up; the small scale of business currently and the exposure of its profitability to the raw material price fluctuations. The ratings, however, favorably factor in the long track record of TRPL's promoters in the trading of textile chemicals & grey cloth and manufacturing of printing gum. Thakor Reductants Private Limited was incorporated in 1992 and was jointly promoted by Mr. Naresh Mandlewala, Mr. Rakesh Mandlewala, Mr. Yogesh Mandlewala and Mr. Hemant Mandlewala. The company is based out of Surat and is the business of trading of grey cloth, and textile chemicals, and aluminium foiling and jari printing on job work basis. It also manufactures Khadi (printing gum), a textile pigment used for foiling purposes. The promoters hold interest in a few other group entities, which are in similar line of business and have similar dealer and supplier network. Recent Results During financial year 2012-13, the company reported an operating income of INR33.4 crore and profit after tax of INR0.11 crore as against INR0.13 crore of operating income and INR23.3 crore of profit after tax for the financial year 2011-12. UNITED INDUSTRIES: CRISIL Puts 'B+' Rating on INR190MM Loans ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term bank facilities of United Industries. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 34 CRISIL B+/Stable Term Loan 156 CRISIL B+/Stable The rating reflects UI's modest scale of operations in the intensely competitive automobile ancillary industry, customer concentration in its revenue profile and weak financial risk profile marked by high gearing and small net worth. These rating weaknesses are partially offset by the extensive experience of the firm's promoters in the plastic components manufacturing industry, and its established relationships with key clients. Outlook: Stable CRISIL believes that UI will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the firm scales up its operations and improves its operating profitability, while diversifying its product portfolio leading to an improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if UI undertakes a larger-than-expected debt-funded capital expenditure programme, or if its revenues and profitability decline, thereby weakening its financial risk profile. UI was originally established in 1986 as a proprietary concern by Mr. Mahalingam; it was reconstituted as a partnership firm in September 2012. UI manufactures injection-moulded plastic components, primarily for the automobile industry. For 2012-13 (refers to financial year, April 1 to March 31), UI reported a profit after tax (PAT) of INR22 million on net sales of INR594 million, against a PAT of INR16 million on net sales of INR424 million for 2011-12. V.T. FOODS: ICRA Assigns 'B+' Rating to INR5cr Long Term Loan ------------------------------------------------------------- ICRA has assigned an '[ICRA]B+' rating to the INR5.00 crore cash credit facility of V.T. Foods Pvt Ltd. ICRA has also assigned rating of '[ICRA]A4' to the INR0.20 crore non fund-based short term facility of VTFPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term fund 5.00 [ICRA]B+ assigned based-Cash Credit Short term Non 0.20 [ICRA]A4 assigned fund based-CEL The ratings are constrained by company's small scale of operations and weak financial profile as reflected by low profitability and stretched liquidity on account of seasonal inventory procurement. The ratings also take into account the intense competition on account of fragmented nature of the industry which exerts pressure on profitability. The ratings further incorporate the vulnerability of profitability to government regulations on onion prices and exports and raw material price movements which are subject to seasonality and crop harvest. However, the ratings positively consider the extensive experience of promoters in dehydrated products and advantage due to its location in Mahuva providing easy access to quality raw material. Incorporated in 2003 by Mr. Jitubhai Vaghela, VTFPL commenced production in FY 2006. It is engaged in preparation and export of dehydrated onion & garlic products with onion being the major product of the company. V.T. Foods Private Limited has annual processing capacity of 1000 tonnes with 3 automated dryer machines. ========= J A P A N ========= SOJITZ CORP: Moody's Lowers Issuer Rating to Ba1; Outlook Stable ---------------------------------------------------------------- Moody's Japan K.K. has downgraded Sojitz Corporation's issuer rating to Ba1 from Baa3. The rating outlook is stable. Ratings Rationale The downgrade reflects Moody's view that Sojitz's high debt leverage and weak profitability, while expected to improve, is anticipated not to be sufficient to support the investment grade rating of Baa3. The downgrade also reflects its relatively weak franchise, as the smallest of the seven Moody's rated Japanese trading companies by revenues. The stable outlook reflects Moody's view that Sojitz will continue to make steady progress in enhancing and stabilizing its earnings through its machinery, chemicals and consumer lifestyle businesses, while reducing its reliance on market sensitive commodities. In addition, the rating outlook incorporates Moody's assessment that Sojitz will maintain a stable funding and liquidity profile. While the company has made progress in lowering its total debt levels over the last several years, its leverage remains high when compared with other investment grade global corporate issuers. Its adjusted net debt/EBITDA was 6.5x as of FYE03/2013 (the fiscal year ended March 2013), versus a median net debt/EBITDA of 2.3x at end-2012 for Baa rated issuers worldwide. In addition, while Sojitz's profitability has been steadily improving, it is still low, as demonstrated by its adjusted EBITA margin of 4.8% for FYE03/2013. By contrast, the median EBITA margin for Baa rated issuers was 13.7%. Other Japanese trading companies also generally post higher margins than Sojitz. Moreover, Sojitz's adjusted return on assets (ROA) of around 1.06% in FYE03/2013 was the lowest among Japanese trading companies. Moody's therefore believes Sojitz's financial metrics are inconsistent with an investment grade rating. The revised rating of Ba1 also reflects Sojitz's position as the smallest of Japan's major trading companies in terms of revenue, as a trading company's size and financial strength are important in carrying out their role as intermediaries and counterparties in trade transactions and projects. In addition, while the company maintains a close relationship with its main bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., it is not a core member of either the Mitsubishi or any other Japanese industrial group. This reduces access to business opportunities compared to firms that have closer linkages, therefore limiting its earnings and could result in earnings volatility. Upward pressure on the rating could emerge if Sojitz can: 1) further reduce its leverage; 2) improve and stabilize its earnings, and 3) achieve an adjusted ROA of 2% . On the other hand, downward pressure on the rating could result from: 1) a further deterioration in its net debt/EBITDA from current levels, 2) large losses on investments, due to the failure to manage risks, and 3) a worsening of its liquidity profile. Sojitz Corporation's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Sojitz Corporation's core industry and believes Sojitz Corporation's ratings are comparable to those of other issuers with similar credit risk. Sojitz Corporation, headquartered in Tokyo, is one of Japan's major trading companies. * S&P Raises Ratings on 3 Japanese Synthetic CDO Tranches --------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on three Japanese synthetic collateralized debt obligation (CDO) transactions, and removed the ratings from CreditWatch with positive implications. The upgrades reflect the tranches' synthetic rated overcollateralization (SROC) levels as well as S&P's sensitivity analyses in line with its criteria. S&P also reviewed the counterparty risk in cases where the creditworthiness of a tranche relies on a swap counterparty and/or collateral asset. S&P has raised its ratings to the levels at which the SROC levels exceed 100% and meet its minimum cushion requirements as of this month's review date. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this credit rating report are available at: http://standardandpoorsdisclosure-17g7.com RATINGS RAISED, REMOVED FROM CREDITWATCH POSITIVE Corsair (Jersey) No. 2 Ltd. Series 46 credit default swap To From Amount BBB+srp (sf) BBB-srp (sf)/Watch Pos JPY3.0 bil. Fixed rate credit-linked loan series 58 To From Amount BB (sf) BB- (sf)/Watch Pos JPY3.0 bil. Signum Vanguard Ltd. Class A secured floating rate credit-linked loan series 2005-06 To From Amount BBp (sf) BB-p (sf)/Watch Pos JPY3.0 bil. ============================= P A P U A N E W G U I N E A ============================= PAPUA NEW GUINEA: S&P Affirms Currency LT Ratings at 'B+' --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its foreign and local currency long-term ratings on Papua New Guinea (PNG) at 'B+', and the respective short-term ratings at 'B'. The long-term rating outlooks remain stable. The Transfer and Convertibility (T&C) assessment remains 'BB'. RATIONALE The sovereign ratings on PNG reflect structural constraints that are inherent in a lower middle-income economy that is dependent on extractive industries and served by weak institutions. PNG's economy additionally faces external and fiscal imbalances linked to bringing on line a US$19 billion liquefied natural gas (LNG) project. However, the LNG project and related economic growth could also lead to the unwinding of PNG's related imbalances in a few years' time. Papua New Guinea has pressing development needs. It has a per capita GDP of US$2,200 in 2013 and is ranked 156 out of 187 on the United Nations Development Programme's Human Development Index. Moreover, the prevalence of urban crime in the country deters investment, while governmental checks and balances are limited. In addition, there are gaps and lags in economic and external data, as well as a lack of transparency in public sector fiscal affairs--all of which render credit analysis relatively difficult. That said, PNG's economic output will soon be boosted by as much as 20% by its new LNG plant. The integrated LNG plant will have a production capacity of 6.9 million tons per year, and will continue to be operated by ExxonMobil PNG Ltd. (formerly Esso Highlands Ltd.), a subsidiary of ExxonMobil Corp. The project is 33% owned by ExxonMobil, 29% by Oil Search, and 17% by the PNG government. The government also has an indirect interest through its equity stake in Oil Search. Although S&P expects economic growth to slow to about 5.5% this year as construction on the facility winds down, it notes that it has averaged more than 8% since the project began. S&P believes robust economic growth will continue after the project comes fully on line in 2015. The sheer size of the PNG LNG project has engendered economic imbalances. Between 2010 and 2012, PNG ran current account deficits of more than 30% of GDP. S&P expects double-digit current account deficits in 2013 and 2014. A combination of external debt and foreign direct investment has financed these deficits. PNG's net external liabilities have risen to more than 440% of current account receipts (CAR) in 2013 from 55% of CAR in 2007. S&P expects this ratio has peaked and will decline steadily from 2014, in line with the project's expected profitability and export performance. Managing the economy and public expectations with such a large project underway would be a challenge for any government. Nevertheless, improving prospects for political stability following the general elections in July 2012 will provide PNG with a supportive environment for managing these expectations. Prime Minister Peter O'Neill's People's National Congress Party and his coalition partners control 105 of the 111 seats in Parliament. Additionally, PNG recorded fiscal surpluses in five of the seven years up through 2012. This was due to mining tax receipts that were bolstered by favorable terms of trade, and expenditure restraint. The surpluses have lowered PNG's ratio of net general government debt to GDP to 19% in 2012 from 31% in 2006. For 2014 and 2015, the government has plans to incur large budget deficits temporarily by lifting spending because of development priorities and to support economic growth until LNG production commences. Despite these larger fiscal deficits, S&P expects PNG's net debt levels to remain less than 30% of GDP and to resume declining once LNG production starts. Nevertheless, PNG's budget performance will remain vulnerable to volatility in commodity prices. And the large share of PNG's domestic banks' assets already being government debt would constrain their ability to fund further government borrowing. PNG's debt management is still developing, in S&P's view. Small, temporary payment arrears to official creditors within 2010 to 2012 have been cured. S&P expects the government, through its public enterprise Independent Public Business Corp. (IPBC), to refinance a A$1.68 billion bond (equivalent to 8% of GDP) due to the International Petroleum Investment Company (IPIC), Abu Dhabi, in March 2014. The bond is exchangeable into the government's stake in Oil Search if not refinanced prior to maturity, which would reduce the government's overall equity in the LNG project. OUTLOOK The stable outlook assumes: that the PNG LNG project will come on stream on time; the government will retain its stake in the project and refinance its related debt; and external and fiscal imbalances will ease with the increased output. If these assumptions do not hold, the rating could come under downward pressure. Conversely, if the PNG LNG project boosts the country's economic performance significantly and maintains growth on a higher trajectory, resulting in economic development and better fiscal and external positions, upward pressure on the rating could emerge. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. RATINGS LIST Ratings Affirmed Papua New Guinea (Independent State of) Sovereign Credit Rating B+/Stable/B Transfer & Convertibility Assessment Local Currency BB ===================== P H I L I P P I N E S ===================== RURAL BANK OF SUBANGDAKU: PDIC Files Charges v. Ex-Bank President ----------------------------------------------------------------- The Philippine Deposit Insurance Corporation (PDIC), statutory receiver of the closed Rural Bank of Subangdaku, Inc. (RBSI) in Cebu, filed on January 13 with the Department of Justice (DOJ) a criminal complaint against the former President and the former Loans Manager of the closed bank for the creation of fictitious loans and for conducting business in an unsafe and unsound manner. The RBSI was placed under PDIC receivership by the Monetary Board on Jan. 8, 2009. In its complaint, PDIC alleged that respondents Paz Radaza (President and Member of the RBSI Credit Committee) and Julius Eullaran (bankwide Loans Manager) conspired and caused the creation of 6,051 fictitious loans amounting to almost PHP2.6 billion from 2004 to 2008 and comprised about 97% of all the loans supposedly released by the RSBI Head Office during the said period. The complaint further stated that the respondents orchestrated the creation of official receipts and made it appear that payments were being made to the Bank, when in fact, no payment was being received. These supposed payments were used to provide the purported source of the fictitious loan proceeds. Based on the sworn affidavit of the Bank's former Loan Officer, respondents Eullaran and Radaza ordered their subordinates to create fictitious loans, "no questions asked" based on the list that respondent Eullaran provided, which contained information to be used in creating the fictitious loans. This claim was supported by the findings of the expert forensic accounting team from Alba Romeo & Co. that PDIC engaged to assist in the investigation. Results of the forensic investigation showed that 5,470 of the 6,051 fictitious loans did not contain the required credit information. In addition, 581 of these loans did not have any supporting documents. Consequently, demand letters to the named borrowers of these loans were returned because of unknown addresses or because the borrowers did not exist. The Corporation continues to pursue legal actions against bank officials and personnel who have been found to have engaged in unsafe and unsound banking practices. These activities pose grave threats to the stability of the country's banking system. As co- regulator of banks, deposit insurer and receiver/liquidator of closed banks, the PDIC is authorized to conduct investigations and file appropriate cases against erring bank officials and individuals who are found to have violated banking laws. The pursuit for justice against erring bank owners, officers and employees is an important undertaking of PDIC to protect the Deposit Insurance Fund, PDIC's funding source for payment of insured deposits, as well as to maintain financial stability. ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* 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. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, and Peter A. Chapman, Editors. Copyright 2014. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***