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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, June 23, 2014, Vol. 17, No. 122
Headlines
A U S T R A L I A
HYDRAULIC MANIFOLD: Expressions of Interest Sought
LADY LAMINGTON: In Administration; First Meeting Set June 26
POWERSERVE PTY: In Receivership; 225 Jobs Axed
WIZARD PROJECTS: Worrells Solvency Appointed as Administrators
I N D I A
AGASTI SAHAKARI: CRISIL Assigns B- Rating to INR70MM Demand Loan
AIYAPPAN INDUSTRIES: CRISIL Rates INR15MM Cash Credit at 'B+'
ANANTHA BIOTECHNOLOGIES: CRISIL Ups Rating on INR70MM Loans to B
B. R. SPONGE: ICRA Reaffirms 'B' Rating on INR15cr Loans
CLASSIC PROMOTERS: CRISIL Cuts Rating on INR550M Loans to 'D'
CROSS COUNTRY: ICRA Assigns 'B-' Rating to INR13.45cr Loans
DEVNANDAN INFRA: CRISIL Cuts Rating on INR500MM Loans to 'B+'
EMERALD INDUSTRIES: ICRA Reaffirms 'B-' Rating on INR6cr Loans
EQUIPLUS (INDIA): ICRA Raises Rating on INR6.75cr Loans to 'B+'
GANGOTRI TEXTILES: CRISIL Suspends D Rating on INR2.95BB Loans
GEM POLYTECH: CRISIL Reaffirms 'B' Rating on INR98MM Loans
GOMATHI STEELS: CRISIL Reaffirms 'B+' Rating on INR130MM Loan
HASEEB PHARMA: CRISIL Upgrades Rating on INR147.5M Loans to 'B+'
JALARAM FLEXO: CRISIL Reaffirms 'B' Rating on INR145MM Loans
KABRA STEELS: CRISIL Puts 'D' Ratings on 'Notice of Withdrawal'
KASHI KANCHAN: CRISIL Ups Rating on INR105MM Loans to 'B+'
LOVE KUSH: CRISIL Reaffirms 'B' Rating on INR300MM Loans
MAHADEB RICE: CRISIL Ups Rating on INR50MM Loans to 'B'
MEDHASSU E: ICRA Reaffirms 'B' Rating on INR5.50cr Loans
MILLENNIUM CEMENT: CRISIL Reaffirms 'B' Rating on INR90MM Loans
MITTAPALLI AUDINARAYANA: CRISIL Reaffirms B+ INR560M Loan Rating
MOHIT ISPAT: ICRA Revises Rating on INR16.44cr Loans to 'B-'
NANDILATH G-MART: CRISIL Ups Rating on INR235MM Loan to 'B+'
NEETA CHEMICALS: CRISIL Suspends 'D' Rating on INR5.0BB Loans
NORTHERN POWER: CRISIL Puts 'D' Rating on Watch Developing
P M AGRO: CARE Assigns 'B' Rating to INR5.11cr Bank Loan
PRAGATI ELECTROCOM: CRISIL Cuts Rating on INR100MM Loan to 'B'
R. K. JEWELLERS: CRISIL Puts 'B+' Rating on INR120MM Loans
ROOPLAXMI INDUSTRIES: ICRA Reaffirms B- Rating on INR7.90cr Loans
SAWAN ENGINEERS: CRISIL Puts 'B' Rating on INR145MM Loans
SHREE SITA: ICRA Lowers Rating on INR38cr Loans to 'B+'
SHREE SITA AGRO: ICRA Reaffirms B+ Rating on INR10.35cr Loans
SHREE SITA UDYOG: ICRA Reaffirms B+ Rating on INR5.50cr Loans
SRI SAI KRISHNA: CRISIL Cuts Rating on INR100MM Loan to 'B'
SUDHAMA HOSIERIES: CRISIL Reaffirms C Rating on INR29.1MM Loan
SUKEE ENTERPRISES: CRISIL Assigns 'B+' Rating to INR95MM Loans
TBPR INFRA: ICRA Assigns 'B' Rating to INR27cr Loans
VASANTHA RICE: CRISIL Reaffirms 'B' Rating on INR101.5MM Loans
VEERAL CONTROLS: CRISIL Assigns 'B+' Rating to INR30MM Loan
WAVE INDUSTRIES: ICRA Reaffirms 'B' Rating on INR275cr Loans
I N D O N E S I A
PAKUWON JATI: Moody's Affirms B1 Corporate Family Rating
PAKUWON JATI: S&P Assigns 'B+' CCR; Outlook Stable
J A P A N
HUMMINGBIRD SECURITISATION: S&P Puts B+ Rating on CreditWatch Pos
S R I L A N K A
TOUCHWOOD INVESTMENT: High Court Appoints Liquidator
- - - - -
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A U S T R A L I A
=================
HYDRAULIC MANIFOLD: Expressions of Interest Sought
-----------------------------------------------------
Cliff Sanderson at dissolve.com.au reports that Ferrier Hodgson is
seeking expressions of interest from parties that want to take
part in Hydraulic Manifold Australia's financial restructuring.
Key assets included in the restructuring include ongoing contracts
and a national customer base. Suitable parties will also have an
opportunity to acquire a skilled labour force as well as equipment
and plant and the company's present order book, according to
dissolve.com.au.
Hydraulic Manifold Australia supplies standard and custom-designed
manifolds for hydraulic applications.
LADY LAMINGTON: In Administration; First Meeting Set June 26
------------------------------------------------------------
Bill Cotter -- bcotter@rcinsol.com.au -- and W. Roland Robson --
wrrobson@rcinsol.com.au -- of Robson Cotter Insolvency Group were
appointed as administrators of Lady Lamington Pty Ltd on June 16,
2014.
A first meeting of the creditors of the Company will be held at
Robson Cotter Insolvency Group, Suite 3, Factory 2, 97 Boundary
St, in West End Queensland, on June 26, 2014, at 11:00 a.m.
POWERSERVE PTY: In Receivership; 225 Jobs Axed
----------------------------------------------
Tony Yoo at CRN reports that PowerServe has stopped trading, with
the receivers terminating approximately 225 of the 240 employees.
"We appreciate this is a difficult time for all concerned, but
unfortunately due to the distressed nature of the business we have
been unable to continue to trade as a going concern," said
Deloitte's David Lombe, joint receiver and manager of PowerServe
Pty Ltd and PowerServe Communications Pty Ltd.
According to the report, Mr. Lombe said he is "currently
attempting to sell parts of the business to allow employees to be
offered new employment" and liaising with "interested parties to
facilitate any possible offers of employment".
The company listed Nortel, Alcatel, Nokia, Fujitsu, Marconi,
Nokia, Ericsson and Huawei as some of its partners. It is unknown
if any of the vendors are creditors, the report notes.
"It is still early days as far as our appointment is concerned and
our assessment of the financial position of the companies on
behalf of the secured creditor is still ongoing," the report
quotes Mr. Lombe as saying.
The receiver told CRN that he and Deloitte colleague Jason Tracy -
- jtracy@deloitte.com.au -- were appointed receivers and managers
of the infrastructure provider on June 7.
"We had initially hoped to continue to trade the business. However
it quickly became apparent that this would not be possible," Mr.
Lombe, as cited by CRN, said. "This was due to the distressed
nature of the business with insufficient working capital to allow
the business to continue to trade."
"Our initial view is that the failure of the business is
attributable to unprofitable contracts."
CRN says the staff terminations took place on June 10, while the
remaining employees continue work to assist the receivers "explore
sales opportunities and to realise plant and equipment as well as
winding up the affairs of the company".
"We are also urgently assessing whether parts of the business can
be offered for sale," Mr. Lombe told CRN.
He also said that the director of PowerServe had unsuccessfully
sought a buyer for the business for about six months before the
appointment of administrators.
Power Serve Group entered administration with Simon Cathro and
Adams Nikitins from Ernst & Young appointed as joint
administrators of the company on June 6, 2014.
PowerServe had operations in Sydney, Singleton, Mudgee, Gunnedah,
Hobart and Perth.
WIZARD PROJECTS: Worrells Solvency Appointed as Administrators
--------------------------------------------------------------
Stephen Hundy -- stephen.hundy@worrells.net.au -- & Aaron Lucan
-- aaron.lucan@worrells.net.au -- of Worrells Solvency & Forensic
Accountants were appointed as administrators of Wizard Projects
Pty Limited and Wizard Projects (NSW) Pty Limited on June 17,
2014.
A first meeting for each of the Companies will be held at Worrells
Solvency & Forensic Accountants, Suite 3, Level 3,
350 George Street, in Sydney,on June 26, 2014, at 8:30 a.m.
=========
I N D I A
=========
AGASTI SAHAKARI: CRISIL Assigns B- Rating to INR70MM Demand Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the long term
bank facility of Agasti Sahakari Sakhar Karkhana Ltd (ASSKL). The
rating reflects ASSKL's weak financial risk profile marked by
small net worth and high gearing, and large working capital
requirements. The ratings also factor in ASSKL's modest scale of
operations because of limited capacity and exposure to cyclicality
and regulatory risks in the sugar industry. These rating
weaknesses are partially offset by the company's long-standing
presence in the sugar industry and established relationship with
cane growers in its command area.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital
Demand Loan 70 CRISIL B-/Stable
Outlook: Stable
CRISIL believes that ASSKL will maintain its moderate business
risk profile backed by its long-standing presence in the sugar
industry and established relationship with farmers in its command
area. The outlook may be revised to 'Positive' in case of
significant improvement in ASSKL's financial risk profile,
particularly its liquidity, driven by sizeable increase in cash
accruals. Conversely, the outlook may be revised to 'Negative' in
case of deterioration in the company's financial risk profile,
especially liquidity, because of pressure on cash accruals on
account of continued subdued sugar realisations, low cane
crushing, or debt-funded capital expenditure.
ASSKL, set up in 1989, is a co-operative society manufacturing
sugar. It is based in Akole (Maharashtra) and has sugar cane
crushing capacity of 2500 tonnes per day.
AIYAPPAN INDUSTRIES: CRISIL Rates INR15MM Cash Credit at 'B+'
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Aiyappan Industries.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 35 CRISIL A4
Bank Guarantee 12.5 CRISIL A4
Cash Credit 15 CRISIL B+/Stable
The ratings reflect AI's modest scale of operations in the power-
related services industry and its below-average financial risk
profile, marked by weak debt protection metrics. These rating
weaknesses are partially offset by the extensive industry
experience of AI's partners.
Outlook: Stable
CRISIL believes that the AI will continue to benefit over the
medium term from the extensive experience of its partners in the
power-related services industry. The outlook may be revised to
'Positive' if the firm significantly scales up its operations and
operating profitability, or improves its working capital
management, resulting in a better financial risk profile.
Conversely, the outlook may be revised to 'Negative' if AI's
accruals decline, or if it has higher-than-expected working
capital requirements, or in case of significant capital withdrawal
by its partners, leading to weakening of its financial risk
profile.
AI is a Chennai-based proprietorship firm executing Engineering
Procurement Construction (EPC) contracts for Tamil Nadu
Electricity Board. The firm's day-to-day operations are managed by
its proprietor Mr. Gautham and his brother, Mr. Yashwanth Kumar.
For 2012-13 (refers to financial year, April 1 to March 31), AI
reported a profit of INR1.4 million on a gross turnover of INR110
million; for 2011-12, the company reported a profit of INR4.6
million on a gross turnover of INR124.9 million.
ANANTHA BIOTECHNOLOGIES: CRISIL Ups Rating on INR70MM Loans to B
-----------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Anantha
Biotechnologies & Allied Industries Pvt Ltd to 'CRISIL B/Stable'
from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 46.5 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Long Term Loan 23.5 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
The ratings upgrade is driven by an improvement in ABAIPL business
risk profile aided by increase in scale of operations. The company
is estimated to achieve revenues of around INR85 million for 2013-
14 (refers to financial year, April 1 to March 31), from around
INR29 million in 2012-13. The growth in revenues had been aided by
increased work orders. The operating profitability of the company
is estimated to remain moderate at around 19 per cent for 2013-14.
The ratings continue to reflect ABAIPL's below-average financial
risk profile marked by modest net worth and high gearing, its
small scale of operations and vulnerability to changes in
government policies on micro-irrigation systems (MIS). These
rating weaknesses are partially offset by the extensive experience
of the company's promoters in agribusiness.
Outlook: Stable
CRISIL continues to believe that ABAIPL will benefit over the
medium term from the extensive experience of its promoters in
agribusiness. The outlook may be revised to 'Positive' if the
company significantly increases its scale of operations and
manages its working capital efficiently, resulting in improvement
in its financial risk profile. Conversely, the outlook may be
revised to 'Negative' in case ABAIPL records lower-than-expected
cash accruals or in case of delay in receivables from the
government agencies or if the company undertakes any large, debt-
funded capital expenditure programme, resulting in significant
deterioration in its financial risk profile.
ABAIPL, incorporated in 2009, manufactures MIS, including drip
irrigation systems and sprinkler irrigation systems. It also
manufactures high-density polyethylene pipes, low-density
polyethylene pipes, linear low-density polyethylene pipes, and
polyvinyl chloride pipes. The company's day-to-day operations are
managed by Mr. K Radha Krishna Reddy and Mr. H Anandha Reddy.
ABAIPL commenced its commercial operations during May 2012.
ABAIPL, on a provisional basis, reported a profit after tax (PAT)
of INR2.6 million on net sales of INR85.7 million for 2013-14; it
reported a net loss of INR1.3 million on net sales of INR28.8
million for 2012-13.
B. R. SPONGE: ICRA Reaffirms 'B' Rating on INR15cr Loans
--------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B to the
INR15.00 crore cash credit facility (of which INR2.50 crore is
proposed) of B. R. Sponge & Power Limited. ICRA has also
reaffirmed the short term rating of [ICRA]A4 to the INR3.00 crore
fund based facility of the company. The fund based facility is a
sublimit of the cash credit facility.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit facility 12.50 [ICRA]B reaffirmed
Fund based facility 3.00 [ICRA]A4 reaffirmed
Proposed Cash Credit 2.50 [ICRA]B reaffirmed
The ratings continue to take into account the weak financial
profile of BRSPL characterized by a consistent decline in
operating profitability on account of increase in input costs,
which, coupled with a high working capital requirement has led to
low return indictors with RoCE at 4% in FY14. The high working
capital requirement also puts pressure on the liquidity of the
company. The rating also factors in the inherent cyclicality
associated with the steel industry, which is likely to keep the
profitability and cash flows volatile. The ratings, however,
favorably factor in the track record and the long presence of the
promoters in the sponge iron manufacturing business, the
comfortable capital structure (when adjusted for interest-free
loans from promoters), and the absence of long term loans, which
provides some financial flexibility to the company.
Incorporated in 2004, BRSPL is engaged in the manufacturing of
sponge iron with an annual installed capacity of manufacturing
60,000 MT of sponge iron. The plant of the company is located in
Rajamunda in the Sundergarh district of Odisha.
Recent Results
As per the provisional results, BRSPL registered a profit before
tax of INR0.41 crore on the back of OI of INR77.22 crore in 2013-
14. In 2012-13, the company registered a profit after tax of
INR0.31 crore on the back of OI of INR69.96 crore.
CLASSIC PROMOTERS: CRISIL Cuts Rating on INR550M Loans to 'D'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Classic Promoters and Builders Pvt Ltd to 'CRISIL D' from
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Term Loan 50 CRISIL D (Downgraded from
'CRISIL B/Stable')
Term Loan 500 CRISIL D (Downgraded from
'CRISIL B/Stable')
The rating downgrade reflects instances of delay by Classic in
servicing its term debt. The delays have been caused by the lack
of timely receipt of customer advances for its projects, leading
to weakening of the company's liquidity.
Classic continues to be exposed to risks related to completion ,
funding, and selling of its projects, and remains susceptible to
the cyclicality inherent in the Indian real estate industry, and
to geographical concentration in its revenue profile. However, the
company benefits from the extensive experience of its promoters in
the construction industry.
Classic, incorporated in 1980, undertakes residential and
commercial real estate development, mainly in Pune (Maharashtra).
The company is promoted by Mr. Ashok Chordia and his son, Mr. Atul
Chordia, and is part of the Chordia group. Classic also owns and
runs a 60-room luxury hotel, Hotel Ambience Executive, and a mall,
Good HomeStore, at Wakad in Pune.
CROSS COUNTRY: ICRA Assigns 'B-' Rating to INR13.45cr Loans
-----------------------------------------------------------
ICRA has assigned a long rating of [ICRA]B- to the INR13.45 Crore
fund based bank facilities of Cross Country Apparels. ICRA has
also assigned a short term rating of [ICRA]A4 to the INR4.55 Crore
fund based and non-fund based bank facilities of CCA.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 11.50 [ICRA]B- (Assigned)
Based Limits-
Cash Credit
Long Term-Fund 0.45 [ICRA]B- (Assigned)
Based Limits-
Term Loan
Long Term- 1.50 [ICRA]B- (Assigned)
Unallocated
Short Term-Fund 3.00 [ICRA]A4 (Assigned)
Based Limits-PC
Short Term-Fund 0.50 [ICRA]A4 (Assigned)
Based Limits-FDB
Short Term-Non 1.00 [ICRA]A4 (Assigned)
Fund Based Limits-
ILC
Short Term-Non 0.05 [ICRA]A4 (Assigned)
Fund Based Limits-
BG
The assigned ratings are constrained by the firm's modest scale of
operations in a fragmented domestic apparel export industry, which
coupled with large exposure to low value add trading operations
keeps the profitability under pressure. Moreover, ICRA notes that
profitability of Cross Country Apparels is adversely impacted by
sizeable low return yielding investments outside garment
manufacturing and trading operations, whereby the return on
capital employed has remained low at about 11%. The aforementioned
investments also reduce partner's capital (PC) towards funding of
large working capital requirements entailed by high inventory
levels, thus, increasing the firm's dependence upon external debt
as reflected in gearing of 1.96 times and TOL/PC of 2.7 times as
on March 2013. The low profitability coupled with adverse capital
structure have in-turn been resulting in inadequate debt metrics
like interest coverage of 1.2 times and Total Debt/OPBDITA of 8
times for FY2013. The ratings are also constrained by
vulnerability of earnings to fluctuation in foreign exchange rates
and volatility in raw material prices, given the low profitability
margins. The ratings however take into account long track record
of the promoters in garment manufacturing industry.
Going forward, the firm's ability to adequately capitalize the
core operations and grow while prudently managing working capital
intensity would remain key rating sensitivities besides the extent
of improvement in profitability.
Cross Country Apparels, a partnership firm set up in the year 2004
by Mr. Kamal Prakash Goyal and his brothers, manufactures knitted
hosiery garments such as T-shirts, dresses, pullovers, sweaters
etc. at its facility in Ludhiana (Punjab). These garments are sold
in both export as well as domestic market. The firm also
undertakes trading of knitted cloth, hosiery goods and yarn.
In FY2013, the firm reported an Operating Income (OI) of INR64.3
Crore, Operating Profit Before Depreciation Interest and Taxes
(OPBDITA) of INR2.7 Crore and Profit Before Tax (PBT) of INR0.6
Crore against OI of INR47.6 Crore, OPBDITA of INR1.9 Crore and PBT
of INR0.6 Crore in FY2012.
DEVNANDAN INFRA: CRISIL Cuts Rating on INR500MM Loans to 'B+'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Devnandan Infrastructure Pvt Ltd to 'CRISIL B+/Stable' from
'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 220 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
Term Loan 280 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The rating downgrade reflects lower-than-expected customer
receipts from DIPL's ongoing projects. As a result of the weak
economic scenario, customer advances as well as new bookings have
slowed down. CRISIL believes that any delay in receipt of customer
advances along with slow offtake may put pressure on DIPL's
liquidity and increase its reliance on other sources of funding,
such as bank debt and unsecured loans for its future projects.
The rating reflects DIPL's exposure to offtake related risks
associated with its ongoing projects and vulnerability to inherent
risks and cyclicality in the real estate sector. These rating
weaknesses are partially offset by the benefits that DIPL derives
from its promoters' extensive experience in the real estate
industry.
Outlook: Stable
CRISIL believes that DIPL will maintain its established regional
market position over the medium term, supported by its promoters'
experience in the real estate business. The outlook may be revised
to 'Positive' if the company receives more-than-expected customer
advances for its ongoing projects, thereby strengthening its
financial flexibility. Conversely, the outlook may be revised to
'Negative' if the offtake from its completed projects is
significantly below expectations, thus significantly constraining
its debt-servicing ability or if DIPL aggressively undertakes
large, debt-funded projects, leading to deterioration in its
financial risk profile.
DIPL has been developing various residential and commercial
projects, mainly in and around Ahmedabad (Gujarat) for more than
two decades. Presently, the company is promoted by Mr. Rajeshbhai
Thakker and Mr. Pareshbhai Thakker.
For 2013-14 (refers to financial year, April 1 to March 31), DIPL
reported, on a provisional basis, a net profit of INR15.8 million
on net sales of INR253.5 million; the company reported a net
profit of INR5.9 million on net sales of INR112 million for 2012-
13.
EMERALD INDUSTRIES: ICRA Reaffirms 'B-' Rating on INR6cr Loans
--------------------------------------------------------------
ICRA has reaffirmed the [ICRA] B- rating assigned to the INR1.30
crore term loan and INR4.70 crore fund based facilities of Emerald
Industries. ICRA has also reaffirmed the [ICRA] A4 rating assigned
to the INR0.80 crore non fund based facilities of EI.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 1.30 [ICRA]B- reaffirmed
Fund based Limits 4.70 [ICRA]B- reaffirmed
Non Fund based Limits 0.80 [ICRA]A4 reaffirmed
The rating reaffirmation reflects EI's established track record in
stone mining and crushing business, its experienced promoters and
presence of long term lease agreements with government for stone
quarry. The ratings also draw comfort from healthy revenue
visibility arising out of ~INR98 crore orders from Tata Aldesa JV
for supplying of aggregates over a period of next 15 months. ICRA
however notes that given the modest scale of operations of the
firm in the past its ability to execute such large orders remains
to be seen. The ratings continue to remain constrained by EI's
significant exposure to regulatory risks, high dependence on
construction industry, high order and client concentration given
significant dependence on Tata Aldesa orders for future revenues.
Further, the ratings are also inhibited by the high working
capital intensity in its operations primarily on account of
stretched receivables and high inventory. Going forward, ability
of the firm to successfully execute the orders at hand, manage its
working capital efficiently and to respond to changes in
regulations promptly will be the key rating sensitivities.
Emerald Industries is a partnership firm set up in 1974 and is
engaged in the mining and extraction of stone boulders and supply
of crushed stone aggregates. EI supplies the aggregates to a
number of local dealers as well as larger contractors who are
undertaking construction of state highways etc. The partners have
a leased stone quarry of 25 hectare in Sumerpada, Badagaon, Morar,
Gwalior and have installed machinery to support crushing upto 700
MT per hour.
Financial Results
For FY2014, EI reported operating income of INR12.78 crore, with
profit after tax of INR0.50 crore as against operating income of
INR13.82 crore and profit after tax of INR0.49 crore reported for
FY2013.
EQUIPLUS (INDIA): ICRA Raises Rating on INR6.75cr Loans to 'B+'
---------------------------------------------------------------
ICRA has upgraded the long-term rating from [ICRA]C to [ICRA]B+
and reaffirmed the short-term rating at [ICRA]A4 for the INR11.25
Crore bank facilities of Equiplus (India) Exports Private Limited
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Export Packing 3.50 Rating upgraded from
Credit Limit (EPC) [ICRA]C to [ICRA]B+
Foreign Bill 2.50 Rating upgraded from
Purchase Limit (FBP) [ICRA]C to [ICRA]B+
Standby Line of 0.75 Rating upgraded from
Credit (SLC) [ICRA]C to [ICRA]B+
Letter of Credit 4.50 Rating reaffirmed at
[ICRA]A4
The revision in ratings take into account the improvement in the
company's liquidity position which has led to regularization of
its debt servicing. The rating continues to factor in the long
standing experience of promoters in the leather goods
manufacturing business, EEPL's moderate financial risk profile
with low gearing and modest coverage indicators. However, the
rating is constrained by EEPL's high revenue dependence on the
European market which led to subdued sales in FY13, improved
domestic sales in FY14 (compared to FY13) mitigated the above risk
to an extent. Also, the operating profit margins remain vulnerable
to forex movement as well as inability to pass on the increase in
raw material cost entirely to its customers. Going forward, the
ability to increase its scale of operations and manage its working
capital requirement would remain the key rating sensitivities.
Recent Results
In FY13, EEPL's operating income at INR19.0 crore, declined by
26.0% compared to the corresponding previous period. The operating
profit before depreciation interest, tax and amortization
(OPBIDTA) increased from INR2.0 crore in FY12 to INR2.1 crore in
FY13. The profit after tax (PAT) stood at INR0.4 crore in FY13, up
from INR0.2 crore in FY12.
Incorporated in 2001, EEPL is engaged in the manufacture and
export of leather products like horse clothing and other leather
apparels. It manufactures products like sleeping bags, saddleries,
leggings, jackets, braces and bags etc. mainly for the export
market. These products are currently being manufactured at its
facility located at Panki, Kanpur (Uttar Pradesh). It is a closely
held company, being promoted by Mr. Upendra Singh.
GANGOTRI TEXTILES: CRISIL Suspends D Rating on INR2.95BB Loans
--------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Gangotri Textiles Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 176 CRISIL D Suspended
Long Term Loan 2237.9 CRISIL D Suspended
Working Capital
Term Loan 536.3 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by GTL
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, GTL is yet to
provide adequate information to enable CRISIL to assess GTL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
GTL was set up by Mr. Manoj Kumar Tibrewal in 1989. It spins open-
ended and ring-spun yarn, besides manufacturing fabric and
garments for the domestic market under the brand name, Tibre.
GEM POLYTECH: CRISIL Reaffirms 'B' Rating on INR98MM Loans
----------------------------------------------------------
CRISIL'S ratings continue to reflect Gem Polytech Industries Pvt
Ltd's relatively small scale of operations and weak financial risk
profile, marked by a small net worth and weak debt protection
metrics. These rating weaknesses are partially offset by the
extensive industry experience of GPL's promoters and its long
track record in the polymer compounds industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Reaffirmed)
Cash Credit 40 CRISIL B/Stable (Reaffirmed)
Letter of Credit 16 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 46.3 CRISIL B/Stable (Reaffirmed)
Standby Line of
Credit 6 CRISIL B/Stable (Reaffirmed)
Term Loan 5.7 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that GPL will benefit over the medium term from
its promoters extensive industry experience and its established
relationship with clients. The outlook may be revised to
'Positive' if GPL's revenue and profitability increase
significantly, thus improving its financial risk profile.
Conversely, the outlook may be revised to 'Negative' if the
company faces significant pressure on its revenues and
profitability, there are considerable delays in realisation of
receivables, or it undertakes a more than expected, debt funded
capital expenditure programme, thereby weakening its liquidity and
financial risk profile.
Incorporated in 1992, Gem Polytech Industries Pvt Ltd manufactures
polymer compounds. The facility, located in Kolkata (West Bengal),
is an ISO 9001:2008 certified unit. GPL mainly manufactures two
compounds ' Polyvinylchloride (PVC; capacity of 500 tonnes per
month [tpm]) and cross linked polyethylene (XLPE) (280 tpm). The
company has around 50 customers in the cables and shoes
industries. The company is managed by Mr. Sanjoy Kumar Ghosh and
his son Mr. Viswajoy Ghosh.
GOMATHI STEELS: CRISIL Reaffirms 'B+' Rating on INR130MM Loan
-------------------------------------------------------------
CRISIL's ratings on the bank loan facilities of Gomathi Steels
continue to reflect GS's modest scale of operations in the highly-
competitive steel products industry, and its below-average
financial risk profile, marked by a modest net worth, high
gearing, and weak debt protection metrics. These rating weaknesses
are partially offset by the extensive experience of the firm's
proprietor in the steel products industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 20 CRISIL A4 (Reaffirmed)
Cash Credit 130 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that GS will continue to benefit over the medium
term from the industry experience of its proprietor. The outlook
may be revised to 'Positive' if the firm substantially increases
its scale of operations while improving its margins and capital
structure. Conversely, the outlook may be revised to 'Negative' in
case of a significant decline in GS's revenue and margins or
lengthening of its working capital cycle, leading to further
deterioration in its financial risk profile.
GS is a proprietorship concern of Mr. Govindasamy established in
2003. The firm manufactures various steel products such as nails,
bolts, couplers, and mild steel wires, and also trades in steel
wire rods. Its manufacturing units are near Chennai (Tamil Nadu).
HASEEB PHARMA: CRISIL Upgrades Rating on INR147.5M Loans to 'B+'
----------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
Haseeb Pharmaceuticals Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL
B/Stable', while reaffirming its rating on the short-term bank
facility at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL A4 (Reaffirmed)
Cash Credit 60 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Foreign Letter of Credit 7.5 CRISIL A4 (Reaffirmed)
Foreign Letter of Credit 10 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 77.5 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The rating upgrade reflects an improvement in HPPL's liquidity
marked by an improving cushion between its cash accruals and debt
repayments. HPPL's accruals have increased sizeably over the past
two years, to an estimated INR20 million for 2013-14 (refers to
financial year, April 1 to March 31), up from INR9.8 million in
2011-12, backed by healthy growth in scale of operations and
moderate profitability levels because of higher realizations on
contracts executed during the year. Moreover, company's cash
accruals over the medium term are expected to be adequate at
around INR30 million to INR40 million vis-a-vis debt repayments of
INR12.5 million to INR14.1 million over the medium term. While the
company's working capital cycle remains high with gross current
assets estimated at 175 to 180 days its bank limit utilization is
moderate at around 85 per cent, backed by the growth in cash
accruals. CRISIL believes that HPPL's liquidity profile will
remain at similar levels over the medium term backed by improving
cash accruals in the absence of any major debt funded capital
expenditure (capex) plans.
Backed by increase in accretions to reserves, HPPL's financial
risk profile has also moderated in 2013-14, but remains below
average, marked by a highly leveraged capital structure. The
company's capital structure is expected to improve but remain high
at around 3.8 times as on March 31, 2014 from 6.9 times as on
March 31, 2013, due to healthy accretion to reserves during the
year. The debt protection metrics are moderate, reflected in
interest coverage and net cash accruals to total debt ratios
estimated at over 2 times and 0.16 times respectively in 2013-14.
In the absence of any debt funded capex plans, HPPL's financial
risk profile is likely to improve further over the medium term.
The ratings reflect HPPL's exposure to intense competition in the
fragmented pharmaceutical segment, its large working capital
requirements and its below-average, albeit improving, financial
risk profile. These rating weaknesses are partially offset by the
extensive experience of HPPL's promoters in the pharmaceutical
industry, and the expected increase in its operating profitability
with the addition of the form-fill-seal technology.
Outlook: Stable
CRISIL believes that HPPL will continue to benefit over the medium
term from its promoters' industry experience. The outlook may be
revised to 'Positive' in case of a greater-than-expected
improvement in the company's sales and operating profitability, or
reduction in working capital cycle, leading to strengthening of
its financial risk profile. Conversely, the outlook may be revised
to 'Negative' if HPPL generates lower-than-expected cash accruals,
or in case of a stretch in its working capital requirement, or if
it undertakes a larger-than-expected capex plan, leading to a
deterioration in its financial risk profile, specifically its
liquidity.
HPPL was established in 1990 as a proprietorship firm; it was
reconstituted as a private limited concern in 1999. HPPL
manufactures intravenous fluids in plastic bottles and small
volume parenterals. Its manufacturing facilities are in Nagpur
(Maharashtra). The company is promoted by Mr. Yusuf Badar, Mr.
Eirshad Mehri, and Mr. Anand Bharut.
HPPL reported a net loss of INR1.2 million on net sales of
INR213.6 million in 2012-13, as against a net profit of INR2.8
million on net sales of INR139.0 million for 2011-12.
JALARAM FLEXO: CRISIL Reaffirms 'B' Rating on INR145MM Loans
------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Jalaram Flexo
Laminates Pvt Ltd continues to reflect JFL's modest scale of
operations and weak financial risk profile, marked by high
gearing, low cash accruals, and weak debt protection metrics.
These weaknesses are partially offset by the extensive experience
of the company's promoters in the flexible packaging industry, and
its improving operating profitability.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60 CRISIL B/Stable (Reaffirmed)
Proposed Long Term 24.7 CRISIL B/Stable (Reaffirmed)
Bank Loan Facility
Term Loan 60.3 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that JFL will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' if the company reports
significantly higher-than-expected accruals, resulting in
improvement in its debt protection metrics and capital structure.
Conversely, the outlook may be revised to 'Negative' in case of a
significant decline in JFL's revenue or profitability, or any
substantial debt-funded capacity expansion, leading to further
weakening of its capital structure.
Update
JFL's net sales for 2012-13 (refers to financial year, April 1 to
March 31), at INR141.2 million, were lower than CRISIL's
expectations and also declined year-on-year. The decline was
because production was impacted by the capital expenditure
programme undertaken to initialise in-built processing capacities.
The company's sales are estimated at INR200 million to INR220
million for 2013-14. Its operating margin is expected to be
maintained at around 15 per cent over the medium term. It has set
up an integral processing capacity which is expected to support
its margins over the medium to long term.
JFL's financial risk profile is expected to remain weak over the
medium term with high gearing of over 3 times and interest
coverage ratio of less than 2 times. Its liquidity remains weak
with high utilisation of bank limits and stretch in debtors and
inventory days. The working capital requirements are expected to
remain high with increasing sales. JFL's accruals are expected to
remain sufficient to meet its term debt obligations of INR0.04
million in 2014-15.
JFL reported a profit after tax (PAT) of INR0.1 million on net
sales of INR141.2 million for 2012-13, as against a PAT of INR1.8
million on net sales of INR145.4 million for 2010-11.
JFL was incorporated in 1992 by Mr. Vasant Kumar Khakkhar and his
wife, Mrs. Renuka Khakkhar. The company manufactures plastic and
paper flexible packaging for a wide range of industries. Its
manufacturing facilities are in Nagpur (Maharashtra).
KABRA STEELS: CRISIL Puts 'D' Ratings on 'Notice of Withdrawal'
---------------------------------------------------------------
CRISIL has placed its ratings on the bank facilities of Kabra
Steels Ltd (Kabra Steels; part of the Kabra Group) on 'Notice of
Withdrawal' for 180 days at the company's request. The ratings
will be withdrawn at the end of the notice period, in line with
CRISIL's policy on withdrawal of its bank loan ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50 CRISIL D (Notice of Withdrawal)
Letter of Credit 250 CRISIL D (Notice of Withdrawal)
Proposed Short Term
Bank Loan Facility 50 CRISIL D (Notice of Withdrawal)
CRISIL has combined the financial and business risk profiles of
Kabra Brothers and Kabra Steels. This is because these entities,
together referred to as the Kabra group, have a common management
and operate in a similar line of business.
Kabra Brothers, incorporated in 1970 by Mr. Shyam Sunder Kabra, is
a part of the Kolkata (West Bengal)-based Kabra group. Kabra
Brothers trades in imported coal, while Kabra Steels trades in
coal, iron ore, and metals, and also undertakes mining and
crushing of stone.
KASHI KANCHAN: CRISIL Ups Rating on INR105MM Loans to 'B+'
-----------------------------------------------------------
CRISIL has upgraded its ratings on the long-term bank facilities
of Kashi Kanchan Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL
B/Stable' and reaffirmed its ratings on the short-term bank
facilities at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 35 CRISIL A4 (Reaffirmed)
Cash Credit 70 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term 5 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
Working Capital 30 CRISIL B+/Stable (Upgraded
Demand Loan from 'CRISIL B/Stable')
The upgrade reflects improvement in KKPL's liquidity with its
entire term debt repaid in 2013-14 (refers to financial year,
April 1 to March 31), higher cash accruals, better working capital
management, and fund infusion by the promoters along with
enhancement in its bank lines. The company generated about INR15
million of cash accruals from the business in 2013-14, which is an
improvement of about INR5 million over the previous year.
Furthermore, by streamlining the working capital cycle reflected
in gross current assets of 175 days as on March 31, 2014, as
against 357 days as on March 31, 2013, the company has utilised
its funds more efficiently, allowing the company to register
healthy growth in revenue without stress on liquidity. With steady
growth in revenue expected over the medium term, support in the
form of equity infusion and enhancement in bank lines to fund
incremental working capital requirements will continue to remain
key rating sensitivity factor over the medium term.
The ratings continue to reflect KKPL's improving though modest
scale of operations, fragmented nature of industry, large working
capital requirements, and its below-average financial risk
profile, marked by small net worth, high gearing, and average debt
protection metrics. These rating weaknesses are partially offset
by the extensive experience of the company's promoters in the
civil construction industry its average financial risk profile,
marked by moderate gearing and adequate debt protection metrics
though constrained by small net worth.
Outlook: Stable
CRISIL believes that KKPL will continue to benefit from the
extensive experience of the promoters in the civil construction
industry and its moderate order book. The outlook may be revised
to 'Positive' if the company generates higher-than-expected
accruals and improves its working capital management, thus
strengthening its liquidity. Conversely, the outlook may be
revised to 'Negative' if its liquidity weakens, most likely due to
stretch in its receivables cycle or in case of inventory pile-up
or large-than-expected debt-funded capital expenditure.
KKPL was set up as a partnership concern in 1974 by Mr. Surendra
Kumar Padhi and Mr. Abhimanyu Padhi; the firm was reconstituted as
a private limited company in 2005. KKPL undertakes civil
construction activities involving road, drainage, and building
construction, primarily in Odisha.
For 2013-14, KKPL provisionally reported profit after tax (PAT) of
INR10.4 million on revenue of INR292 million as against PAT INR6.1
million on revenue of INR152 million for 2012-13.
LOVE KUSH: CRISIL Reaffirms 'B' Rating on INR300MM Loans
--------------------------------------------------------
CRISIL's ratings on the bank facilities of Love Kush Foods Pvt Ltd
continue to reflect its weak financial risk profile, because of
large working capital requirements, and modest scale of operations
in the intensely competitive rice milling industry. The ratings
also factor in the company's exposure to risks relating to adverse
government regulations and to erratic rainfall. These rating
weaknesses are partially offset by the benefits that LKFPL derives
from its promoters' experience in the rice industry, and the
healthy growth prospects of the basmati rice industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 40 CRISIL B/Stable (Reaffirmed)
Warehouse Financing 200 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that LKFPL will continue to benefit over the
medium term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the company's financial
risk profile improves because of capital infusion by promoters or
substantial increase in cash accruals. Conversely, the outlook may
be revised to 'Negative' if LKFPL's financial risk profile weakens
further, most likely because of low cash accruals, large, debt-
funded capital expenditure, or significant increase in inventory
and bank borrowings.
Update
LKFPL's revenue grew 131 per cent to INR442.7 million in 2012-13
(refers to financial year, April 1 to March 31) from INR191.8
million in 2011-12, primarily on account of lower base (the
company's plant had been shut down for 6 months in 2011-12 for
repair and maintenance, leading to low revenue in 2011-12). The
revenue for 2013-14 has been estimated at INR550 million to INR600
million. The scale of operations is expected to grow at 10 to 15
per cent over the medium term, supported by healthy demand for
basmati rice.
Operating profitability is expected to remain subdued (it was
around 5 per cent in 2012-13) over the medium term due to intense
competition in the rice milling industry. The working capital
cycle remains stretched on account of sizeable gross current
assets (GCAs; of 175 days in 2012-13) driven by large inventory
and seasonal availability of paddy. As paddy is a seasonal crop,
LKFPL procures paddy during the peak Kharif season months (October
to February) for processing in the next two to three months. This
has resulted in large working capital requirements. The company
extends credit of around 10 days to customers, against which it
receives credit of around 7 days from suppliers. CRISIL believes
that LKFPL's operations will remain working capital intensive
owing to seasonal availability of key raw materials, leading to
sizeable inventory.
The financial risk profile remains weak, with low net worth of
INR26.9 million and high gearing of 6.53 times as on March 31,
2013, and weak interest coverage and net cash accrual to total
debt (NCATD) ratios at 1.22 times and around 2 per cent
respectively in 2012-13. CRISIL believes that LKFPL's financial
risk profile will remain weak over the medium term due to large
working capital requirements, seasonal availability of paddy, low
cash accruals, and high reliance on bank debt.
LKFPL, set up in 2002 by Mr. Sunil Kumar, Mr. Jiwan Kumar, Mr.
Navjot Garg, and Mr. Prem Chand, is in the basmati rice milling
business. Its manufacturing unit, located in Patran (Punjab), has
milling capacity of 6 tonnes per hour (tph) and a sorting capacity
of 3 tph.
LKFPL reported a profit after tax (PAT) of INR0.97 million on net
sales of INR442.7 million for 2012-13 (refers to financial year,
April 1 to March 31), against a PAT of INR0.79 million on net
sales of INR193 million for 2011-12.
MAHADEB RICE: CRISIL Ups Rating on INR50MM Loans to 'B'
-------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank loan
facilities of Mahadeb Rice Mill Pvt Ltd to 'CRISIL B/Stable' from
'CRISIL B-/Stable' and reaffirmed its rating on the company's
short-term bank facilities at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12.5 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
Inland/Import Letter
of Credit 2 CRISIL A4 (Reaffirmed)
Term Loan 37.5 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
The upgrade reflects improvement in MRML's business risk profile,
driven by stabilisation and ramp-up in operations, and increased
accruals. The rating was earlier constrained by the company's
nascent stage of operations and limited track record of timely
debt servicing. However, in 2013-14 (refers to financial year,
April 1 to March 31), the company demonstrated healthy debt
servicing ability. The installment due in December 2013 and March
2014 were prepaid on December 26, 2013, and March 10, 2014,
respectively. Furthermore, MRML stabilised its operations in 2013-
14. Its operating income is estimated to have increased to around
INR150 million in 2013-14 from INR31.4 million in 2012-13. CRISIL
believes that MRML's revenue may increase with better capacity
utilisation over the medium term, driven by continued focus on
addition of customers. The upgrade also factors in MRML's improved
liquidity on the back of efficient working capital management,
increased cash accruals, and absence of large debt-funded capital
expenditure (capex) plan.
The ratings reflect MRML's small scale of operations in the highly
fragmented rice industry, and its below-average financial risk
profile. These rating weaknesses are partially offset by the
diversified entrepreneurial experience of MRML's promoters.
Outlook: Stable
CRISIL believes that MRML will continue to benefit from its
promoters' entrepreneurial experience. The outlook may be revised
to 'Positive' in case of substantial increase in the company's
scale of operations, improvement in its working capital
management, or infusion of capital by its promoters, leading to
significant improvement in its financial risk profile. Conversely,
the outlook may be revised to 'Negative' if MRML generates low
cash accruals, or if its working capital management weakens, or if
it undertakes a large debt-funded capex programme, leading to
deterioration of its financial risk profile, particularly
liquidity.
MRML, incorporated in 2011, is engaged in milling and processing
of paddy into rice; in the process, it also produces by-products
such as broken rice, bran, and husk. The company has installed
paddy milling capacity of 24,000 tonnes per annum at its facility
in Burdwan (West Bengal). MRML is promoted by Mr. Kartik Chandra
Ghosh and his associates.
MEDHASSU E: ICRA Reaffirms 'B' Rating on INR5.50cr Loans
--------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B for the
INR2.50 crore fund based limits and the INR3.00 crore unallocated
limits of Medhassu e Solutions (India) Pvt. Ltd. ICRA has also
reaffirmed the short term rating of [ICRA]A4 assigned to the
INR4.50 crore non fund based limits of MSIPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 2.50 [ICRA]B (reaffirmed)
Unallocated 3.00 [ICRA]B (reaffirmed)
Non-fund based limits 4.50 [ICRA]A4 (reaffirmed)
The rating reaffirmation factors in successful completion of the
pilot project which entailed implementing e-governance modules in
two districts of Assam, post which the company has been awarded
the full scale contract to implement these modules in the balance
25 districts of the state providing good revenue visibility in the
near term with an Unexecuted Orderbook/FY 14 Operating Income
ratio of 6.66 times as on March 31, 2014. The rating also factors
in MSIPL's collaboration with IL & FS Technologies Ltd. as the
technology partner for supplying the hardware requirements for the
project as a back to back subcontractor which also lends support
in terms of creditor payments to a large extent considering the
high share of hardware in the overall costs. The rating however,
is constrained by the stretched liquidity profile of the company
primarily due to high outstanding receivables from both its key
customers - Assam Electronic Development Corporation Ltd (AMTRON)
and Central University of Jharkhand (CUJ), with receivables from
CUJ being overdue for more than a year. The rating also factors in
that since MSIPL is a growing company in a tender based industry,
its financial profile is characterized by volatility in revenues
and profitability and high dependence on orders in hand at a given
point in time currently, MSIPL is fully dependent on the AMTRON
project for all its revenues exposing the company to project
concentration risks.
Going forward, recovery of dues from customers and MSIPL's ability
to scale up the operations and raise adequate funds to meet the
consequent increase in working capital requirements will remain
the key rating sensitivities.
MSIPL provides turnkey software solutions that help in automation
of business processes. The company offers software solutions in
the following verticals 1.) Government to Customers Service
Frameworks (e-governance solutions) 2.) Fleet Management and
Supply Chain Solutions 3.) Health Care Solutions 4.) Educational
and e-Learning Solutions. Operations of the company are managed by
Mr. V Gopinatha Rao and Mrs. Neerja Nalla.
Recent Results (Provisional)
MSIPL has, for the year ended March 31, 2014, reported an
operating income of INR10.25 crore and an operating income of
INR1.91 crore as against INR5.20 crore and INR0.87 crore
respectively for 2012-13.
MILLENNIUM CEMENT: CRISIL Reaffirms 'B' Rating on INR90MM Loans
---------------------------------------------------------------
CRISIL's rating on the bank facilities of Millennium Cement
Company Pvt Ltd reflect the company's moderate financial risk
profile, marked by modest net worth, and high gearing. The ratings
also reflect the susceptibility of the margins to cyclicality in
the end-user industry and volatility in raw material prices. These
rating weaknesses are partially offset by MCCPL's established
market position and the promoters' extensive experience in the
cement industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 80 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 10 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that MCCPL will continue to benefit over the
medium term from its established market position and its
promoters' extensive experience in the cement business. The
outlook may be revised to 'Positive' in case of significant
improvement in its capital structure while maintaining steady
growth in revenue and net cash accruals. Conversely, the outlook
may be revised to 'Negative' if it faces a decline in its
operating margin or debt protection metrics or stretch in its
working capital cycle or if the company undertakes larger-than-
expected capital expenditure leading to weak liquidity.
Update
MCCPL's operating revenue declined to INR228.5 million in 2013-14
from INR315.9 million in 2012-13 (refers to financial year, April
1 to March 31) on account of slower execution of projects of its
key customers LANCO Infratech, Hindustan Construction Company, and
GATI Infra in the northeastern region. Operating margin of the
company had declined in 2012-13 to 9.11 per cent over the previous
year on account of high trial sales of its product ordinary
portland cement at lower margins. Operating margin is estimated to
have improved to 15.5 per cent in 2013-14.
The operations of MCCPL continue to remain working capital
intensive as reflected in the estimated gross current assets
(GCAs) of 224 days in 2013-14 as against 164 days in 2012-13. This
has been mainly on account of high year-end inventory of around 54
days as on March 31 2014. This, coupled with delays in payment
from its customers as reflected in the receivable cycle of around
154 days in 2013-14 as against 75 days in 2012-13, has led have
led to high bank limit utilisation of 99.3 per cent for the 6
months ended March 31, 2014. Against this, the company does not
receive any credit from its raw material suppliers.
MCCPL's financial risk profile is moderate, marked by gearing in
the range of 1.6 to 2 times over the 3 years ended March 31, 2014.
The company's debt protection metrics were also moderate with
interest coverage and net cash accruals to total debt (NCATD)
ratios of 2.2 times and 18 per cent, respectively, for 2013-14.
The company has generated cash accruals of around INR19 million
against which it had debt obligations of INR5.8 million in 2013-14
The company is estimated to have a current ratio of 1.3 times as
on March 31 2014. Small estimated net worth of INR66.6 million
further constrains the company's ratings.
MCCPL was incorporated in 1999 and promoted by Mr. Sushil Agarwal
of Siliguri (West Bengal)-based Agarwal family. The company
manufactures ordinary pozzolona cement and portland pozzolona
cement from clinker.
MITTAPALLI AUDINARAYANA: CRISIL Reaffirms B+ INR560M Loan Rating
----------------------------------------------------------------
CRISIL's rating on the long-term bank facility of Mittapalli
Audinarayana Enterprises Pvt Ltd continues to reflect Mittapalli's
below-average financial risk profile marked by its modest net
worth, high gearing, and below average debt protection metrics.
The ratings of the company are also constrained on account of its
large working capital requirements, its exposure to intense
competition and regulatory risks in the tobacco industry, and the
susceptibility of its profitability margins to fluctuations in
foreign exchange rates. These rating weaknesses are partially
offset by the extensive experience of the company's promoters in
the tobacco-processing industry, and its established relationship
with customers.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Open Cash Credit 560 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that Mittapalli will continue to benefit over the
medium term from its promoters' extensive industry experience and
its established relationship with customers. The outlook may be
revised to 'Positive' if the company registers a sustained
improvement in its working capital cycle, or there is a
substantial improvement in its capital structure on the back of
sizeable equity infusion by its promoters. Conversely, the outlook
may be revised to 'Negative' in case of a steep decline in the
company's profitability, or significant deterioration in its
capital structure caused most likely because of a large debt-
funded capital expenditure or a stretch in its working capital
cycle.
Mittapalli was set up as a partnership firm in 1964 and
reconstituted as a private limited company in 2006. The company is
promoted by Mr. Mittapalli Rama Rao and his sons - Mr. Mittapalli
Umamaheswar Rao and Mr. Mittapalli Siva Kumar. The company
processes tobacco leaves.
MOHIT ISPAT: ICRA Revises Rating on INR16.44cr Loans to 'B-'
------------------------------------------------------------
ICRA has revised the long-term rating to the INR15.0 crore
(enhanced from INR10.00 crore) fund-based bank facilities and the
INR1.44 crore (reduced from INR3.86 crore) term loan of Mohit
Ispat Limited to [ICRA]B from [ICRA]B-. ICRA has also reaffirmed
the [ICRA]A4 rating to the INR13.5 crore (enhanced from INR11.0
crore) non-fund based bank facilities of MIL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund- 15.00 Revised to [ICRA]B
based Limit from [ICRA]B-
Term Loan 1.44 Revised to [ICRA]B
from [ICRA]B-
Short-term Non- 13.50 [ICRA]A4 reaffirmed
fund based Limit
The revision in long-term rating and reaffirmation of short-term
rating take into account a significant revenue growth in 2013-14
backed by an increase in the rolling mill capacity to 84,000
metric tonnes per annum (MTPA) from 45,000 MTPA and improvement in
capital structure and coverage indicators of MIL due to an equity
infusion by the promoters of INR4.87 crore in 2012-13 and
increased accretion to reserves in 2013-14. However, the ratings
are constrained by reduced operating margins of the company in
2013-14 following a decline in sales realisations and the fact
that the gearing levels of the company continued to remain high at
an absolute level despite witnessing an improvement in the last
two years. ICRA also notes that the liquidity profile of MIL
continues to remain under pressure even after an enhancement in
bank limits in 2013-14, as the company almost fully utilises the
sanctioned bank limits to fund its revenue growth. The ratings
also take into account the intensely competitive nature of the TMT
bar manufacturing business, which exerts pricing pressures and the
company's exposure to cyclicality inherent in the steel industry,
which is likely to keep the company's cash flows volatile.
Nevertheless, the ratings favourably factor in the extensive
experience of the promoters of MIL in the iron and steel industry
and partially integrated nature of its operations, leading to
increased raw material security.
Incorporated in 1997, MIL is engaged in the manufacture of ingots
and TMT bars at its plants in Goa. The company has an ingot
manufacturing facility at Kundaim (Goa), with an installed
capacity of 19,200 MTPA. A large portion of ingots manufactured is
captively consumed by the TMT manufacturing facility located at
Navelim (Goa), which has an installed capacity of 84,000 MTPA. MIL
sells TMT bars to both real estate developers and steel traders
located in the states of Goa, Maharashtra, Karnataka, Gujarat and
Kerala.
Recent Results
As per the audited results of 2012-13, MIL reported a profit after
tax (PAT) of INR0.7 crore on an operating income of INR176.7
crore. As per the provisional results for 2013-14, MIL reported a
profit before tax of INR2.3 crore on the back of an operating
income of INR224.2 crore.
NANDILATH G-MART: CRISIL Ups Rating on INR235MM Loan to 'B+'
------------------------------------------------------------
CRISIL has upgraded its ratings on the long term bank facilities
of Nandilath G-Mart (NGM; part of the Nandilath group) to 'CRISIL
B+/Stable' from 'CRISIL B/Stable'. The rating upgrade reflects
sustainable improvement in the Nandilath group's financial risk
profile and liquidity, coupled with the group's continuing healthy
business risk profile.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 235 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
During 2013-14 (refers to financial year, April 1 to March 31),
the Nandilath group's financial risk profile improved, driven by
an infusion of capital by the promoter into the group, amounting
to INR60 million. As a result of the capital infusion, the group's
net worth, and consequently, its total outside liabilities to
tangible net worth (TOLTNW) ratio have improved significantly over
2013-14. The capital infusion has also supported the group's
liquidity, by aiding it in meeting its large working capital
requirements.
The group's business risk profile remains healthy; although the
group recorded lower-than-expected revenues of around INR2.3
billion in 2013-14, its operating profitability was higher than
expectations at about 3.4 per cent. The group opened three new
stores during 2013-14 in Kerala; the expansion was entirely funded
through internal accruals and promoters' funds. The group plans to
open three more stores during the current year. CRISIL believes
that the Nandilath group will continue to benefit from its
expanding network of stores and the consequent healthy scale of
operations.
The ratings continue to reflect the Nandilath group's large
working capital requirements and its exposure to intense
competition in the consumer durables business. These rating
weaknesses are partially offset by the group's established
position in the consumer durables market in Kerala, and its above-
average financial risk profile, marked by a low TOLTNW ratio.
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of NGM and Nandilath Agencies, This is
because both entities, together referred to as the Nandilath
group, are in the same line of business, share a common
management, and have significant financial and operational
linkages.
Outlook: Stable
CRISIL believes the Nandilath group will continue to benefit over
the medium term from its established market position as a retailer
of consumer durables in Kerala. The outlook may be revised to
'Positive' in case of substantial increase in the group's scale of
operations and profitability, resulting in higher-than-expected
cash accruals and hence improvement in its liquidity. Conversely,
the outlook may be revised to 'Negative' in case of slowdown in
the consumer durables retail industry, or if the Nandilath group
undertakes any large, debt-funded capital expenditure programme,
or its promoters withdraw substantial capital, leading to
deterioration in its financial risk profile.
NGM, set up in 2004, is a sole proprietorship concern, engaged in
retail of consumer durables across Kerala. Nandilath Agencies, set
up in 1986 as a partnership firm, also operates retail outlets for
consumer durables in Kerala. The group's day-to-day operations are
managed by its promoter-director, Mr. N Gopalakrishnan.
The Nandilath group reported, on a provisional basis, a profit
after tax (PAT) of INR13.7 million on net sales of INR2.3 billion
for 2013-14, against a PAT of INR11.3 million on net sales of
INR1.9 billion for 2012-13.
NEETA CHEMICALS: CRISIL Suspends 'D' Rating on INR5.0BB Loans
-------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Neeta Chemicals (India) Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 330 CRISIL D Suspended
Cash Credit 1050 CRISIL D Suspended
Letter of Credit 1030 CRISIL D Suspended
Proposed Cash Credit Limit 2540 CRISIL D Suspended
Standby Line of Credit 50 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by
NCIPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, NCIPL is yet to
provide adequate information to enable CRISIL to assess NCIPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
NCIPL was set up in March 2009 by Mr. Batukrai Trivedi and his
family members to take over the business of Neeta Chemical
Agencies (NCA), a partnership firm. NCA was set up in 1972 and
traded basic chemicals, polymers, and petrochemicals, with
methanol and toluene accounting for a major share of its total
sales by value. NCIPL has marketing offices across India.
NORTHERN POWER: CRISIL Puts 'D' Rating on Watch Developing
----------------------------------------------------------
CRISIL has placed its ratings on the bank loan facilities of
Northern Power Distribution Company of Andhra Pradesh Ltd
(Northern Discom) on 'Rating Watch with Developing Implications'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 350 CRISIL BB+/Watch Developing
Letter of Credit 510 CRISIL A4/Watch Developing
Rupee Term Loan 9173 CRISIL BB+/Watch Developing
Short Term Loan 4750 CRISIL D
The rating watch follows the carving out of a new state,
Telangana, from Andhra Pradesh on June 2, 2014. The bifurcation of
Andhra Pradesh has resulted in the need to reconstitute Andhra
Pradesh Power Coordination Committee (APPCC) and effect power-
sharing between the newly formed Telangana and Andhra Pradesh
which are yet to be concluded and operationalized. CRISIL will
evaluate any change in the structure of APPCC and directives with
respect to power-sharing between Andhra Pradesh and Telangana. The
ratings will be removed from watch and a final rating view will be
taken once there is adequate clarity regarding these parameters.
CRISIL expects Northern Discom to be located in its entirety in
Telangana as articulated in 'The Andhra Pradesh Reorganisation
Act, 2014'; no change is expected either in its license area or
consumer profile. The APPCC, which oversaw the coordination of
funds for working capital and the allocation of power to each of
the four distribution companies of the erstwhile Andhra Pradesh,
has been reconstituted. Similarly, the power-sharing formula
between Telangana and Andhra Pradesh has been conceptualized as
per the provisions in the Andhra Pradesh Reorganization Act, 2014.
However, both these measures are yet to be operationalized leading
to lack of clarity on the working capital management and the power
procurement position of Northern Discom.
The ratings continue to reflect Northern Discom's monopoly in the
power distribution business in its service area; its steady cash
flows, driven by a regulated tariff regime; and moderate
distribution losses. These rating strengths are offset by its sub-
par financial risk profile, principally on account of arrears and
delay in subsidy receipt from the government of Andhra Pradesh.
Northern Discom distributes and supplies power in its operating
circles of Warangal, Karminagar, Khammam, Nizamabad, and Adilabad.
The company supplies power to over a million consumers across
categories, through a network of 1,003 sub-stations, about 199,549
kilometre lines, and over 187,743 distribution transformers.
For 2012-13 (refers to financial year, April 1 to March 31),
Northern Discom reported a net loss of INR34.76 billion on an
operating income of INR52.62 billion, against a net loss of
INR0.32 billion on an operating income of INR53.88 billion for the
previous year.
P M AGRO: CARE Assigns 'B' Rating to INR5.11cr Bank Loan
--------------------------------------------------------
CARE assigns 'CARE B' rating to the bank facilities of P M AGRO
Products Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank Facilities 5.11 CARE B Assigned
Rating Rationale
The rating assigned to the bank facilities of P M Agro Products
Pvt. Ltd. is primarily constrained on account of its
modest scale of operations in the highly competitive and
fragmented agro processing industry and its weak financial risk
profile marked by thin profitability, highly leveraged capital
structure and weak debt coverage indicators and liquidity
position. Furthermore, the rating is also constrained on account
of working capital intensive nature of operations and
commodity price fluctuation risk. The rating, however, derives
strength from the long experience of promoters and long track
record of operations.
The ability of PAPL to increase its scale of operations, improve
its profitability and capital structure along with efficient
working capital management would be the key rating sensitivities.
PM Agro Products Private Limited was setup in 2010 and had taken
over the proprietorship business of M/s PM Dal Udyog (PDU). PAPL
is engaged in the processing and trading of Arhar Dal (Toor dal)
and trading of dal chuni (used as cattle feed) and sells its
product under the brand name Baba Gold, Rasoi Gold, Son Pari and
Ganga Yamuna.
The company's plant is located at Katni, Madhya Pradesh with
installed capacity of 7,500 metric tonnes per annum (MTPA) as on
March 31, 2014 and carries cleaning, splitting and grading
operations. PAPL procures raw material from local market and sells
it in Maharashtra and Madhya Pradesh through a network of agents.
In FY13 (refers to the period April 01 to March 31), PAPL reported
a total operating income of INR33.91 crore (FY12: INR32.46 crore)
and net profit of INR0.11 crore (FY12: INR0.09 crore). As per
provisional results for FY14, PAPL registered the turnover of
INR36.73 crore.
PRAGATI ELECTROCOM: CRISIL Cuts Rating on INR100MM Loan to 'B'
--------------------------------------------------------------
CRISIL has downgraded its rating on the long term bank facilities
of Pragati Electrocom Private Limited from 'CRISIL B+/Stable' to
CRISIL B/Stable, while reaffirming the rating on the short term
bank facilities at CRISIL A4.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 70 CRISIL A4 (Reaffirmed)
Cash Credit 100 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Letter of Credit 45 CRISIL A4 (Reaffirmed)
The downgrade reflects deterioration in PEPL's business and
financial risk profile marked by decline in its revenues and
stretch in its liquidity profile. The company's revenues declined
by 26 per cent in 2013-14 (refers to financial year, April 1 to
March 31) on account of slowdown in flow of orders from its key
customer, Indian Railways. The company's revenue is expected to
increase in 2014-15, backed by current order book of around INR
150 million. The working capital cycle of the company continued to
remain stretched with gross current asset at 416 days as on March
31, 2014. PEPL's liquidity is stretched marked by consistent high
utilisation in bank lines leaving little headroom to absorb any
further spikes in working capital requirements. The cash credit
facility has been utilised fully for the past 12 month with
instances of overdrawls in the account. There have also been
numerous instances of devolvement of letter of credit in the past
9 months, which have been regularised within 30 days. CRISIL
believes that PEPL's liquidity remain stretched over the medium
term on account of stretched realisations in the highly working
capital intensive industry.
The ratings continue to reflect PEPL's moderate financial risk
profile marked by modest networth and weak debt protection metrics
and working capital intensive nature of operations. These
weaknesses are partially offset by the extensive experience of
promoters in the industry.
Outlook: Stable
CRISIL expects PEPL to maintain its credit risk profile over the
medium term on the back of its promoters' extensive experience.
The outlook may be revised to 'Positive' if the company reports
substantial improvement in revenues and margins and improving its
working capital cycle. Conversely, the outlook could be revised to
'Negative' in case the company reports lower than expected
revenues or margins or if there is a further stretch in its
working capital cycle and/or if undertakes a large debt funded
capex thereby leading to deteriorating in its financial risk
profile.
Incorporated in 2002 by Mr. Virender Kumar, PEPL manufactures and
supplies power conditioning instruments, automation, energy
management, power protection products, telecom and transmission
towers for various industries. The company is based out of Gurgaon
(Haryana).
PEPL reported a profit after tax of INR 41.8 million on net sales
of INR 278 million for 2012-13, against a net loss of INR41.8
million on net sales of INR 211.4 million for 2011-12.
R. K. JEWELLERS: CRISIL Puts 'B+' Rating on INR120MM Loans
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of R. K. Jewellers.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 52.5 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 67.5 CRISIL B+/Stable
The rating reflects RKJ's weak financial risk profile marked by a
small net worth, below-average capital structure and weak debt
protection metrics. The rating also factors in the firm's exposure
to gold price volatility and government regulations. These rating
weaknesses are partially offset by its proprietor's extensive
experience in the gold jewellery industry and his funding support
to the firm.
For arriving at the rating, CRISIL has treated unsecured loans of
INR52.8 million extended to RKJ by its proprietor and his
relatives as neither debt nor equity as these are interest-free
and are expected to be retained in the business over the medium
term.
Outlook: Stable
CRISIL believes RKJ will benefit from its proprietor's extensive
experience of the proprietor in the gold jewellery industry. The
outlook may be revised to 'Positive' in case of significant and
sustained increase in firm's scale of operation and profitability
leading to higher cash accruals and improved capital structure.
Conversely, the outlook may be revised to 'Negative' in case of
further deterioration in its financial risk profile and liquidity
due to low cash accruals, higher-than-expected working capital
requirements or any large investment in real estate.
RKJ is a proprietorship firm set up in 2000 by Mr. Rajkapoor
Gupta. It manufactures gold jewellery and operates from its Mumbai
office. It sells its jewellery items to wholesalers and retailers
in Mumbai and Lucknow (Uttar Pradesh).
RKJ reported a profit after tax (PAT) of INR2.8 million on a net
operating income of INR329.4 million for 2012-13 (refers to
financial year, April 1 to March 31), against a PAT of INR1.6
million on a net operating income of INR260.6 million for 2011-12.
ROOPLAXMI INDUSTRIES: ICRA Reaffirms B- Rating on INR7.90cr Loans
-----------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B- to the
INR5.00 crore cash credit facility and the INR2.90 crore term loan
of Rooplaxmi Industries India Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 5.00 [ICRA]B- reaffirmed
Term Loan 2.90 [ICRA]B- reaffirmed
The rating continues to factor in the weak financial profile of
RIIPL, characterized by the low profitability, high gearing and
depressed coverage indicators, the non-integrated nature of
operations exposing the company's profitability and cash flows to
variations in input and output prices and the cyclicality inherent
in the steel business, which is passing through a difficult phase
at present. The rating also factors in the large scale debt funded
capital expenditure being envisaged by the company, which is
expected to adversely impact the capital structure in the near
term, although it would enable the company to scale up its
operations over the long term. The ratings, however, favourably
factor in the strategic location of the manufacturing unit that is
in close proximity to raw material sources and key customers, thus
reducing freight costs.
RIIPL was incorporated in June 2011 and is engaged in the
manufacturing of ingots. RIIPL's plant is located in Raipur in
Chhattisgarh, and has an annual capacity of 30,000 MT.
Recent Results
As per the provisional results, RIIPL registered a profit after
tax of INR0.76 crore on the back of OI of INR96.64 crore in 2013-
14. In 2012-13, the company registered a profit after tax of
INR0.54 crore on the back of OI of INR101.13 crore.
SAWAN ENGINEERS: CRISIL Puts 'B' Rating on INR145MM Loans
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the
bank facilities of Sawan Engineers Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 40 CRISIL B/Stable
Inland/Import Letter
of Credit 50 CRISIL A4
Bank Guarantee 65 CRISIL A4
Cash Credit 105 CRISIL B/Stable
The ratings reflect SEPL's large working capital requirements,
modest scale of operations, and exposure to risks inherent in
tender-based contracts. These rating weaknesses are partially
offset by the extensive experience of the company's promoter in
the pipe fittings industry, its healthy operating margin, and it's
improving financial risk profile marked by moderate gearing and
debt protection metrics.
Outlook: Stable
CRISIL believes that SEPL will continue to benefit over the medium
term from its promoter's extensive industry experience and its
healthy operating profitability. The outlook may be revised to
'Positive' in case of a sustainable improvement in the company's
liquidity, backed by prudent inventory management or a sizeable
growth in its accruals. Conversely, the outlook may be revised to
'Negative' if SEPL's revenues or profitability are significantly
lower than expected, or if its working capital cycle is stretched
further, resulting in weakening of its financial risk profile,
especially its liquidity.
SEPL, based in the Vadodara district of Gujarat, was set up in
2007, with Mr. J C Jagwani as its managing director. In 2010, the
company took over the operation of Sawan Engineers, which was
established as a proprietorship firm in 1991 by Mr. Jagwani. SEPL
manufactures pipe fittings, which are used in the oil and gas,
petrochemical, power, fertiliser, and other industries. It caters
to various customers located across India and also in the United
Arab Emirates.
SEPL reported a net profit of INR14 million on net sales of INR389
million for 2012-13 (refers to financial year, April 1 to March
31), against a net profit of INR15 million on net sales of INR380
million for 2011-12.
SHREE SITA: ICRA Lowers Rating on INR38cr Loans to 'B+'
-------------------------------------------------------
ICRA has revised downwards the long term rating of [ICRA]BB- to
[ICRA]B+ to the INR13.95 crore term loan (increased from INR10.95
crores) and INR24.05 crore cash credit facility (increased from
INR14.05 crore) of Shree Sita Edibles Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limits 24.05 Revised downward
to [ICRA]B+
Term Loan Limits 13.95 Revised downward to
[ICRA]B+
The revision in rating takes into account the higher than
anticipated increase in the working capital intensity of
operations which has exerted pressure on the liquidity position of
the company. Though the increase in working capital intensity has
been funded by increased bank borrowings, induction of equity
capital and unsecured loans, the higher quantum of loan has
resulted in a weaker capital structure that what was envisaged
earlier. The rating is also constrained by the low profitability
of the oil processing business and intense competition in the
industry due to the fragmented nature, the exposure of the
profitability margins to the volatilities of the prices of raw-
material feedstock. The rating however takes into consideration
the experience of the promoters of SSEPL, who have been engaged in
the business of edible oil refining through a group company, and
the established brand names of the group's products along with a
ready distribution network. ICRA also notes that the company has
associated group entities which operates rice mills and hence
eases the access to a raw-material, i.e. rice bran.
Shree Sita Edibles Private Limited is engaged in the extraction
and refining of edible oil. It belongs to the Shree Sita group of
companies near Durg, Chhattisgarh. The group has presence in rice
mills and edible oil refining business. Their products are sold
under the brand name 'Hareli' (rice bran oil) and 'Subh Kamna'
(refined soya oil).
Recent Results
The company has reported a provisional net profit after tax (PAT)
of INR0.22 crore in FY14 on an provisional operating income (OI)
of INR76.73 crore. The company had made a net loss of INR0.63
crore on an OI of INR50.37 crore in FY13.
SHREE SITA AGRO: ICRA Reaffirms B+ Rating on INR10.35cr Loans
-------------------------------------------------------------
ICRA has reaffirmed the '[ICRA]B+' rating assigned to the INR0.85
crore (enhanced from INR0.40 crore) term loan and INR9.50 crore
(enhanced from INR7.00 crore) fund based limits of Shree Sita Agro
Foods Private Limited. ICRA has assigned an [ICRA]A4 rating to the
INR1.5 crore non-fund based limit of the company. The entire non-
fund limit is the sublimit of the fund based limits.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limit 9.50 [ICRA]B+ reaffirmed
Term Loan 0.85 [ICRA]B+ reaffirmed
Non-fund based limits-
Bank Guarantee (BG) (1.50) [ICRA]A4 assigned
The ratings take into consideration SSAFPL's small scale of
current operations in a highly competitive industry characterised
by presence of number of small players, which adversely impacts
the profitability, low levels of capacity utilisation of
facilities at present with average capacity utilisation of around
30% during the last three financial years and high dependence on
group companies with significant proportion of the total revenue
being generated from sales to group companies. Also the operation
of the company remains highly working capital intensive with
purchase of paddy, the major raw material being made mostly on
cash basis coupled with maintenance of large inventory levels,
thus adversely impacting liquidity. The capital structure of the
company remained adverse as reflected by a high gearing of around
3.10 times as on 31st March, 2014. However, ICRA notes, that the
major debt was primarily on account of high working capital
borrowings and interest bearing unsecured loans from related
parties. The rating also factors in the agro climatic risks, which
can impact the availability of the paddy in adverse weather
conditions. The rating, however, also takes into account the
experience of the promoters in the rice milling business, its
presence in the major paddy growing area viz. Chhattisgarh
resulting in easy availability of paddy and wide spread
distribution of rice on a pan India basis through a network of
dealers, retailers etc.
SSAFPL is a part of the Shree Sita Group in Chhattisgarh. The
company has two paddy milling unit at Durg District, Chhattisgarh
having paddy milling capacity of 8 TPD per unit, resulting in the
total installed capacity of 96000 MTPA. The company can produce
both raw rice and parboiled variety of rice.
Recent Results
As per provisional numbers, the company registered a profit before
tax (PBT) of INR0.17crore on an operating income of around
INR43.57 crore in FY 2014. In FY 2013, SSAFPL reported a profit
after tax (PAT) of INR0.12 crore on an operating income (OI) of
INR52.42 crore.
SHREE SITA UDYOG: ICRA Reaffirms B+ Rating on INR5.50cr Loans
-------------------------------------------------------------
ICRA has reaffirmed the [ICRA]B+ rating assigned to the INR1.50
crore term loan and INR4.00 crore fund based limits of Shree Sita
Udyog.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limit 4.00 [ICRA]B+ reaffirmed
Term Loan 1.50 [ICRA]B+ reaffirmed
The rating takes into consideration SSU's small scale of current
operations in a highly competitive industry characterised by
presence of number of small players, which adversely impacts the
profitability, low levels of capacity utilisation of facilities at
present with average capacity utilisation of around 30% during the
last three financial years and high dependence on group companies
with significant proportion of the total revenue being generated
from sales to group companies. Also the operation of the company
remains highly working capital intensive with purchase of paddy,
the major raw material being made mostly on cash basis coupled
with maintenance of large inventory levels, thus adversely
impacting liquidity. The capital structure of the company remained
adverse as reflected by a high gearing of around 7.24 times as on
31st March, 2014. However, ICRA notes, that the major debt was
primarily on account of high working capital borrowings and
interest bearing unsecured loans from related parties. The rating
also factors in the agro climatic risks, which can impact the
availability of the paddy in adverse weather conditions and the
risk associated with the status of the entity as partnership firm,
including the risk of capital withdrawal. The rating, however,
also takes into account the experience of the promoters in the
rice milling business, its presence in the major paddy growing
area viz. Chhattisgarh resulting in easy availability of paddy and
wide spread distribution of rice on a pan India basis through a
network of dealers, retailers etc.
SSU is a part of the Shree Sita Group in Chhattisgarh. The firm
has paddy milling unit at Durg District, Chhattisgarh having paddy
milling capacity of 86400 MTPA. The firm can produce both raw rice
and parboiled variety of rice.
Recent Results
As per provisional numbers, the company registered a profit before
tax (PBT) of INR0.13 crore on an operating income of around
INR28.19 crore in FY 2014. In FY 2013, SSAFPL reported a profit
after tax (PAT) of INR0.13 crore on an operating income (OI) of
INR36.41 crore.
SRI SAI KRISHNA: CRISIL Cuts Rating on INR100MM Loan to 'B'
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sri Sai Krishna Constructions (SSKC) to 'CRISIL B/Stable' from
'CRISIL B+/Stable' while reaffirming its rating on the firm's
short-term bank facilities 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 30 CRISIL A4 (Reaffirmed)
Cash Credit 100 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
The rating downgrade reflects the weakening in SSKC's liquidity
with a stretch in its working capital cycle resulting in full
utilisation of its bank limits over the last six months ended May
30, 2014. There have also been instances of overdrawls in the
firm's bank limits; the overdrawls are regularized within two
weeks. CRISIL believes that SSKC will need fresh capital from its
partners, or will have to register a sustained improvement in its
working capital cycle, to alleviate the pressure on its liquidity.
There has been a stretch in the firm's working capital cycle as
reflected in an increase in its gross current asset (GCA) to 252
days as on March 31, 2014 from 209 days as on March 31, 2013. The
GCA days have increased on account of stretch is the firm's
receivables cycle. As a result, the bank limits of the firm have
remained fully utilised over the six months ended May 30, 2014.
The ratings continue to reflect SSKC's large working capital
requirements, high degree of geographic concentration in its
order-book, and its modest scale of operations in the intense
competitive civil construction industry. The ratings of the firm
are also constrained on account of its below-average financial
risk profile marked by its small net-worth, high gearing, and
moderate debt protection metrics. These rating weaknesses are
partially offset by the extensive experience of SSKC's promoters
in the civil construction industry, and the firm's healthy order
book providing medium-term revenue visibility.
Outlook: Stable
CRISIL believes that SSKC will continue to benefit over the medium
term from its promoters' extensive industry experience and its
healthy order book. The outlook may be revised to 'Positive' if
there is a sustained improvement in the firm's working capital
cycle, or if there is substantial improvement in its capital
structure on the back of sizeable capital infusion by its
partners. Conversely, the outlook may be revised to 'Negative' in
case of steep decline in the firm's profitability margins, or
significant deterioration in its capital structure caused most
likely because of a stretch in its working capital cycle.
SSKC was set up in 2011 as a partnership firm. The firm undertakes
infrastructure development projects, which includes construction
of roads, bridges, reservoirs, and canals. It mainly undertakes
sub-contracted projects from other engineering, procurement, and
construction contractors. The firm is based out of Hyderabad and
has four partners - G. Audisesha Reddy, G. Prathima Reddy, G.
Yashwant Reddy, and G. Sai Mounica.
SUDHAMA HOSIERIES: CRISIL Reaffirms C Rating on INR29.1MM Loan
--------------------------------------------------------------
CRISIL's ratings on the bank facilities of Sudhama Hosieries
(Sudhama; part of the Sudhama group) continue to reflect the
Sudhama group's modest scale of operations with customer
concentration risk in the textile industry, and its working-
capital-intensive operations. These rating weakness are partially
offset by the extensive industry experience of its promoters.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Packing Credit 25 CRISIL A4 (Reaffirmed)
Foreign Bill
Discounting 5 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 29.1 CRISIL C (Reaffirmed)
Standby Line of Credit 5 CRISIL A4 (Reaffirmed)
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of Sudhama and Krishna Textile Process
(KTP). This is because the two entities, together referred to as
the Sudhama group, have a common management, are in the same line
of business, and have strong operational and financial linkages
with each other.
Set up in 1978 by Mr. P Gopalakrishnan, Sudhama manufactures
knitted garments and exports the same to European countries. Set
up in 2002, KTP is involved in dyeing of polyester, cotton and
viscose fabrics.
SUKEE ENTERPRISES: CRISIL Assigns 'B+' Rating to INR95MM Loans
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Sukee Enterprises (SE).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL B+/Stable
Long Term Loan 65 CRISIL B+/Stable
The rating reflects SE's modest scale of operations in the highly
fragmented paper packaging industry, its weak financial risk
profile marked by a small net worth and high gearing, and its
exposure to risks related to stabilisation of its printing press
project. These rating weaknesses are partially offset by the
extensive experience of the firm's promoters in the paper
packaging industry, and its established relationships with major
customers and suppliers.
Outlook: Stable
CRISIL believes that SE will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' in case of a sustainable
increase in the firm's revenue and profitability, leading to an
improvement in its financial risk profile. Conversely, the outlook
may be revised to 'Negative' in case of any significant time or
cost overrun in SE's project, lower-than-anticipated cash
accruals, or substantial debt-funded capital expenditure,
resulting in weakening of its financial risk profile.
Set up in 1968 as a proprietorship firm, SE manufactures
corrugated paper boxes using kraft paper. The firm also undertakes
offset printing. It is based in Bengaluru (Karnataka) and is
promoted by Mr. V S Sukananda.
SE, on a provisional basis, reported a profit after tax (PAT) of
INR4.0 million on net sales of INR135 million for 2013-14 (refers
to financial year, April 1 to March 31), against a PAT of INR4.1
million on net sales of INR122.6 million for 2012-13.
TBPR INFRA: ICRA Assigns 'B' Rating to INR27cr Loans
----------------------------------------------------
ICRA has assigned long term rating of '[ICRA]B' to the INR4.50
crore (INR24.50 crore enhanced from INR20.00 crore) non-fund based
facilities and INR2.50 crore unallocated limits of TBPR Infra
Projects Private Limited. ICRA has an outstanding rating of
[ICRA]B on INR7.00 crore fund based and INR20.00 crore non-fund
based facilities of TIPPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 7.00 [ICRA]B outstanding
Non-fund based limits 24.50 [ICRA]B assigned/outstanding
Unallocated 2.50 [ICRA]B assigned
ICRA's rating factors in the delays in the execution of the
ongoing projects by the company resulting in decline in operating
income from INR72.72 crores in FY2012 to INR65.07 crores in FY2013
and further to INR34.91 crores during the first nine months of
FY2014. The rating is also constrained by the high geographic
concentration risk with all the projects being executed in Andhra
Pradesh exposing the company to political and economic risks in
the region. Further, the rating is tempered by the high customer
concentration risk with a single customer accounting for 54% of
the outstanding order book. ICRA also takes note of the working
capital intensive nature of operations as reflected by the high
utilization of fund based limits. However, the rating takes
comfort from the established track record of the promoter in
execution of irrigation projects in Andhra Pradesh. ICRA also
takes into consideration the outstanding order book of INR159.21
crores (2.45 times the operating income in FY2013) as on December
31, 2013, which provides for revenue visibility in the near term.
TBPR Infra Projects Private Limited was incorporated in the year
2007 by Mr. Bhanu Prakash Reddy, who has more than 20 years of
experience in the civil construction space. The company is engaged
in execution of irrigation projects, road works and building
works. TIPPL primarily operates in Andhra Pradesh.
Recent Results
For the nine months ending December, 2013 in FY2014, the company
reported an operating income of INR34.91 crores with profit after
tax of INR1.54 crores.
VASANTHA RICE: CRISIL Reaffirms 'B' Rating on INR101.5MM Loans
--------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Vasantha Rice
Industries continue to reflect its below-average financial risk
profile marked by its small net worth, high gearing and below-
average debt protection metrics.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 35 CRISIL B/Stable (Reaffirmed)
Proposed Working
Capital Facility 15 CRISIL B/Stable (Reaffirmed)
SME Credit 5 CRISIL B/Stable (Reaffirmed)
Term Loan 46.5 CRISIL B/Stable (Reaffirmed)
The ratings of the firm are also constrained on account of its
small scale of operations in the intensely competitive rice
milling industry, and susceptibility of its profitability margins
to changes in paddy prices and government regulations. These
rating weaknesses are partially offset by the extensive experience
of VRI's promoters in the rice industry, and the assured off-take
by Food Corporation of India (FCI).
Outlook: Stable
CRISIL believes that VRI will continue to benefit over the medium
term from its promoters' extensive experience in the rice
industry. The outlook may be revised to 'Positive' if the firm
registers a substantial increase in its scale of operations, while
maintaining its profitability margins, or there is a substantial
increase in its net-worth on the back of sizeable capital
additions by its partners. Conversely, the outlook may be revised
to 'Negative' in case of a steep decline in the firm's
profitability margins, or significant deterioration in its capital
structure caused most likely because of a large debt-funded
capital expenditure or stretch in its working capital cycle.
VRI was set up as a partnership firm in 2009 by Mr. Chenna Krishna
Reddy and his family members. The firm mills and processes paddy
into rice; the firm also generates by-products, such as broken
rice, bran, and husk. Its rice mill is located in Nalgonda
district in Andhra Pradesh.
VEERAL CONTROLS: CRISIL Assigns 'B+' Rating to INR30MM Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Veeral Controls Pvt Ltd (VCPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL B+/Stable
Inland/Import
Letter of Credit 55 CRISIL A4
The ratings reflect VCPL's weak financial risk profile, marked by
high gearing and weak debt protection metrics. The ratings also
factor in the company's modest scale of, and working capital
intensity in, operations. These rating weakness are partially
offset by the extensive experience of VCPL's promoters in the
electric components and instrumentation industry.
Outlook: Stable
CRISIL believes that VCPL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if there is substantial
improvement in the company's scale of operations and
profitability, or if sizeable equity infusions lead to a stronger
financial risk profile. Conversely, the outlook may be revised to
'Negative' if the company reports decline in revenue or
profitability, or if its financial risk profile weakens
significantly because of stretch in working capital cycle or large
debt-funded capital expenditure.
Set up as a partnership firm in 1981, VCPL was reconstituted as a
private limited company in 1993. The company is promoted by the
Prasad and Jain families, and manufactures precision power
supplies, inverters, drives, and power controllers at its facility
at Gandhinagar, Gujarat.
For 2012-13 (refers to financial year, April 1 to March 31), VCPL
reported a profit after tax (PAT) of INR0.19 million on net sales
of INR42.7 million, against a PAT of INR1.2 million on net sales
of INR35.2 million for 2011-12. For 2013-14, VCPL reported, on
provisional basis, net sales of INR139.5 million.
WAVE INDUSTRIES: ICRA Reaffirms 'B' Rating on INR275cr Loans
------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B assigned to
the INR375 crore (enhanced from INR219.42 crore) fund based and
non fund based limits of Wave Industries Private Limited
Industries. The rating watch with negative implications has been
removed.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based limits 275 [ICRA]B reaffirmed
Non-fund Based limits 100 [ICRA]B assigned
The rating reaffirmation takes into account continued pressures on
the operating profitability of Uttar Pradesh (U.P.) based sugar
mills, including WIPL, arising mainly on account of high cane
costs in the state in relation to prevailing domestic sugar
prices. These pressures have resulted in significant financial
losses in the sugar division of WIPL during FY14. While ICRA has
taken note of some improvement in sugar realizations since March
2014, ICRA expects that it is unlikely to be sustained given the
scenario of falling international prices and expectations of
domestic oversupply. Nevertheless, the overall profitability of
WIPL during FY2014 has been moderate owing to healthy profits in
its liquor trading division as the company continues to enjoy a
dominant position in the wholesale liquor business across the
state of U.P. The rating also reflects the risks arising out of
the inherent cyclicality in the sugar business, agro-climactic
risks related to cane product. Further, ICRA expects its debt
repayments (arising from debt funded capex for acquisition of four
sugar mills) falling due till FY17 to be significant in relation
to expected accruals, thus keeping its debt coverage indicators
and liquidity under pressure in the medium term. The ratings also
reflect high financial risk on account to high gearing and
moderate coverage indicators. Although the gearing has improved
post equity infusion done by promoters; it still remains on a
higher side.
The ratings however continue to derive comfort from the company's
long track record in the sugar business, adequate size of
operations with enhanced crushing capacity of 18800 tcd and
partial forward integration into cogeneration, which is expected
to provide some cushion to the company's revenues and
profitability against cyclicality in the sugar industry. Further,
company's foray in TMT Bar manufacturing augurs well for its
revenues and profitability once the operations gets stabilised.
Wave Industries Private Limited is a group company of the Chadha
Group. It was originally incorporated as Chadha Sugars Private
Limited in the year 1997 by acquisition of a 2500 TCD running
sugar mill from Oswal Agro Mills Ltd., (Abhey Oswal Group Company)
for a consolidated price of INR25 crore. The sugar mill is located
in the midst of the cane belt in Dhanaura Tehsil of Jyoti ba
Phoole Nagar (Amroha) District of Uttar Pradesh. Subsequent to the
acquisition, the crushing capacity was expanded to 5000 tcd during
1999-2000 with financial assistance from IFCI. Since then, the
company has expanded its crushing capacity several times.
Currently, WIPL is operating with a crushing capacity of 18800
tons per day (TCD) (expanded from 8,300 tcd during August, 2010)
along with a biomass based co-generation plant of 33 MW (10 MW for
catering to the captive power needs of the sugar unit). Other
business segments of the company includes Liquor trading, TMT bar
manufacturing, Film distribution etc.
=================
I N D O N E S I A
=================
PAKUWON JATI: Moody's Affirms B1 Corporate Family Rating
--------------------------------------------------------
Moody's Investors Service has affirmed the B1 corporate family
rating of PT Pakuwon Jati Tbk.
At the same time, Moody's has assigned a provisional (P)B1 senior
unsecured rating to the proposed senior unsecured notes to be
issued by Pakuwon Prima Pte Ltd and guaranteed by Pakuwon Jati and
some of its subsidiaries.
The outlook for the ratings is stable.
The provisional status of the senior unsecured bond rating will be
removed upon completion of the bond issuance with all satisfactory
terms and conditions met.
Ratings Rationale
Pakuwon Jati announced a proposed bond issuance on 19 June 2014,
intending to raise up to USD175 million, for the repayment of
outstanding loan amounts, acquisition transactions and working
capital purposes.
"If the planned bond issuance is successful, Pakuwon Jati will
extend its debt maturity profile to 2019, and strengthen its
ability to finance and execute its expansion strategy," says
Jacintha Poh, a Moody's Analyst.
"However, total debt and interest expenses will rise in the near
term, negatively affecting its financial metrics in 2014.
Nonetheless, Moody's expect its financial metrics to remain well
within Moody's rating parameters," adds Poh, who is also the Lead
Analyst for Pakuwon Jati.
As of 31 March 2014, the company had an adjusted debt/book
capitalization of 33.7%, adjusted debt/EBITDA of 1.1x, and
adjusted EBITDA/interest expense of 8.9x. It also had cash and
cash equivalents of IDR2.2 trillion, which are sufficient to cover
5.5x of its short-term debt.
Pakuwon Jati's B1 corporate family rating is supported by its
well-balanced portfolio of development and investment properties.
The investment properties which comprise retail malls, offices and
hotels, provide a stable recurring income, mitigating the higher
risks from its property development segment.
The rating also reflects Pakuwon Jati's established position in
Surabaya and increased presence in Jakarta, the two largest cities
in Indonesia. The property developer is well-poised to benefit
from the rising numbers of middle-class consumers and
urbanization, given that its superblocks are strategically located
near the central business districts of their respective cities.
Moody's expect Pakuwon Jati's revenue to grow approximately 15%
this year, with the growth in its development revenue supported by
progressive recognition of the marketing sales achieved in
previous years.
Meanwhile, the growth in its recurring revenue will be supported
by high occupancy rates of over 90% and gradual increases in
rental rates across its three large shopping malls -- Tunjungan
Plaza in Central Surabaya and Gandaria Mall and Kota Kasablanka
Mall in South Jakarta.
The stable outlook reflects Moody's expectation that Pakuwon will
be well-supported by the recurring income from its investment
properties, as well as its disciplined approach to growth.
Upward rating pressure is unlikely over the near to medium term,
but could emerge if Pakuwon successfully implements its business
plans with sustained improvements in sales and cash flow
generation and also grows its recurring income base, while
maintaining solid liquidity in the form of cash balances and
committed facilities.
Specific credit metrics that Moody's consider as indicative of an
upgrade include: (1) EBITDA/interest coverage above 4.5x-5.0x, (2)
recurring EBITDA/interest above 3.0x, (3) adjusted debt/book
capitalization below 35%-40%; and (4) adjusted debt/EBITDA below
2.5x on a sustained basis.
On the other hand, Pakuwon's rating could face downward pressure
if: (1) the company fails to implement its business plans; and (2)
there is a deterioration in the property market, leading to
protracted weakness in its operations and credit profile.
Specific credit metrics that Moody's consider as indicative of a
downgrade include: (1) EBITDA/Interest coverage of less than 3.0x,
(2) recurring EBITDA/Interest of less than 2.0x, (3) adjusted
debt/book capitalization above 45%-50%; and (4) adjusted
debt/EBITDA above 3.5x on a sustained basis.
The principal methodology used in these ratings was the Global
Homebuilding Industry published in March 2009.
Pakuwon Jati Tbk listed on the Jakarta Stock Exchange and majority
owned by the Tedja family, is engaged in the development,
management and operation of shopping centers, office buildings,
hotels, condominium towers and residential townships in Surabaya
and Jakarta. Its projects include Superblock Tunjungan City,
Pakuwon City township and Grand Pakuwon township in Surabaya, as
well as Superblock Gandaria City (83.3% shareholding) and
Superblock Kota Kasablanka in South Jakarta.
PAKUWON JATI: S&P Assigns 'B+' CCR; Outlook Stable
--------------------------------------------------
Standard & Poor's Ratings Services said that it had assigned its
'B+' long-term corporate credit rating to Indonesia-based property
developer PT Pakuwon Jati Tbk. (Pakuwon). The outlook is stable.
At the same time, S&P assigned its 'axBB' long-term ASEAN regional
scale rating to the company.
S&P also assigned its 'B+' long-term issue rating to a proposed
issue of senior unsecured notes by Pakuwon Prima Ltd. Pakuwon
guarantees the notes. The issue rating is subject to S&P's review
of the final issuance documentation.
"The rating reflects Pakuwon's untested financial discipline,
execution risks stemming from rapid expansion, and concentration
risk due to a small number of projects," said Standard & Poor's
credit analyst Kah Ling Chan. "We also note Pakuwon's bond
exchange in 2009, which we might have considered as a distressed
exchange based on our criteria. The company's established brand in
superblock development, retail mall development and management,
and significant recurring rental revenue temper these weaknesses."
Pakuwon's "weak" business risk profile reflects the execution risk
surrounding the company's rapid expansion and its small operating
scale (three superblocks and two townships). Pakuwon also faces
some project concentration, given that its Kota Kasablanka project
will likely contribute 40%-45% of its overall revenue from
property development. S&P expects Pakuwon's growth appetite to
remain high. The company's land bank is small because of its
strategy to expand its existing brownfield developments. S&P
believes Pakuwon could spend a substantial amount to acquire land
over the next two years to support its aggressive expansion.
"We expect Pakuwon's leverage to increase in 2014 due to debt-
funded expansion, and therefore view its financial risk profile as
"significant." In our base case, we project the company's debt-
to-EBITDA ratio to increase to 2.0x-2.5x from 1.5x in 2013. Our
projections factor in the notes issuance, with Pakuwon using the
bulk of the proceeds for acquisitions. The company's cash flows
are volatile because property sales are sensitive to economic
cycles and domestic demand. In addition, superblock developments,
consisting of mostly high-rise buildings, require intensive
capital expenditure. Superblocks are integrated developments that
include retail malls, condominiums, commercial offices, and
hotels," S&P said.
Pakuwon benefits from its good brand recognition in Jakarta and
Surabaya. S&P expects the company to maintain good profit margins
due to its mid- to high-end market positioning. Pakuwon's
recurring income is likely to continue to improve over the next
two to three years and contribute 40%-45% of overall revenue.
Healthy cash flows from rental incomes provide a buffer for the
company because rents are pegged to the U.S. dollar and provide a
natural currency hedge.
S&P expects business conditions to remain favorable in Indonesia
for the company's core businesses. In S&P's base-case scenario,
it expects Pakuwon's property sales to remain steady at Indonesian
rupiah (IDR) 2.5 trillion-IDR3 trillion in 2014 and 2015 with
moderately higher selling prices. S&P expects EBITDA margin to
remain 52%-57%.
Pakuwon's short track record of consistently managing its
financial performance, especially after the bond exchange in 2009,
is a rating constraint. The company has a history of debt
restructuring, its recent rapid growth has been fueled by "lumpy"
property sales proceeds, and management's appetite for expansion
is untested. S&P believes these factors more than offset
Pakuwon's good projected credit ratios in 2014-2015. The rating
on Pakuwon is one notch lower than the 'bb-' anchor to reflect
S&P's negative score on the company's financial policy.
"The stable outlook reflects our view that Pakuwon's property
sales and EBITDA margins will meet our expectation," said
Ms. Chan. "The outlook also reflects our view that the recurring
income from the company's rental properties will help offset
higher debt over the next 12 months."
S&P may lower the rating if Pakuwon deviates from its core
business and strategy, makes larger-than-expected land
acquisitions, or falls substantially short of its expected
contract sales in 2015. S&P could also lower the rating if the
company increases its appetite for debt beyond our expectation and
its articulated financial policies such that the debt-to-EBITDA
ratio is more than 2.5x or EBITDA interest coverage weakens to
less than 5x.
Rating upside in the coming 12 months is limited, given that
Pakuwon will likely increase its debt to fund land acquisitions
and project expansion. However, S&P may raise the rating if the
company expands its operations and improves its scale and
diversity while remaining within its articulated financial
parameters.
=========
J A P A N
=========
HUMMINGBIRD SECURITISATION: S&P Puts B+ Rating on CreditWatch Pos
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its rating on one
Japanese synthetic collateralized debt obligation (CDO)
transaction on CreditWatch with positive implications.
The CreditWatch positive placement reflects the tranche's
synthetic rated overcollateralization (SROC) level, which exceeded
100% with a sufficient SROC cushion at a higher rating than the
current rating as of May 31, 2014.
S&P intends to review this tranche by the end of this month.
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 Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
RATING PLACED ON CREDITWATCH POSITIVE
Hummingbird Securitisation Ltd.
Series 2 loan
To From Amount
B+ (sf)/Watch Pos B+ (sf) JPY3.0 bil.
================
S R I L A N K A
================
TOUCHWOOD INVESTMENT: High Court Appoints Liquidator
----------------------------------------------------
Cliff Sanderson at dissolve.com.au reports that a liquidator has
been appointed by Columba Commercial High Court to Touchwood
Investment PLC. The appointment came after an order issued by the
court on June 5 based on the Companies Act's Section 290, the
report says.
G.K.S. Kumar, the appointed liquidator will reportedly take
control of all of the company's property and moving things to
which it is entitled, dissolve.com.au relates.
Based in Colombo, Sri Lanka, Touchwood Investments PLC engages in
the private agro forestry business. The company also sells plants
as an investment to local and foreign investors. The products
include agarwood, bamboo, mahogany, sandalwood, vanilla, jatropha,
and white gum plantations. The company offers agarwood, bamboo,
mahogany, sandalwood, vanilla, jatropha, and white gum
plantations.
*********
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 ***