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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, July 27, 2015, Vol. 18, No. 146
Headlines
A U S T R A L I A
DFM UNLEY: First Creditors' Meeting Slated For August 3
JESAM CONTRACTING: First Creditors' Meeting Set For August 3
MATRIX COMPLIANCE: First Creditors' Meeting Set For July 31
TALISMAN TRADING: First Creditors' Meeting Set For July 30
TGHA AVIATION: GE Seeks to Bankrupt Owner Over Jet Sale
C H I N A
CHINA: Defaults to Rise as Corporate Debt Burden Climbs, S&P Says
UTSTARCOM HOLDINGS: GHP Horwath Replaces PwC as Accountants
I N D I A
A S CHATTHA: CRISIL Reaffirms B Rating on INR60MM Cash Loan
ADITYA SALES: CRISIL Reaffirms B- Rating on INR90MM Term Loan
AIR INDIA: Facing Tremendous Financial Stress, Government Says
ALLIED RECYCLING: CRISIL Reaffirms B+ Rating on INR250MM Loan
B.D. OVERSEAS: ICRA Assigns B+ Rating to INR2.0cr Cash Credit
BASANT ENTERPRISE: ICRA Suspends B+ Rating on INR5.0cr LT Loan
BTC TRADING: ICRA Suspends B+ Rating on INR8.0cr LT Loan
CELCON GREEN: ICRA Revises Rating on INR19.50cr Term Loan to C
DDR AND COMPANY: ICRA Reaffirms B+ Rating on INR0.50cr Cash Loan
G.B. COTTON: CRISIL Assigns B+ Rating to INR100MM Cash Loan
G.R.S. ISPAT: ICRA Suspends B/A4 Rating on INR15cr Loan
GOVIND AGRO: CRISIL Reaffirms B+ Rating on INR180MM Cash Credit
HARITHA FERTILISERS: CRISIL Reaffirms B Rating on INR350MM Loan
HYDERABAD EDUCATIONAL: Ind-Ra Cuts Rating on INR689.7MM Loan to D
JYOTI TIMBER: CRISIL Reaffirms B- Rating on INR30MM Cash Loan
K. K. CONSTRUCTION: CRISIL Reaffirms B+ Rating on INR26.5MM Loan
KASA ANLAGEN: CRISIL Assigns B+ Rating on INR25MM Cash Loan
KOTKAPURA MUKTSAR: Ind-Ra Lowers Rating on INR750MM Loan to BB+
KRISHNA INFRASTRUCTURE: ICRA Rates INR7.0cr Term Loan at 'D'
LALIT SYNTHETICS: ICRA Suspends 'B/A4' Rating on INR9cr Bank Loan
LILASONS INFRASTRUCTURE: Ind-Ra Withdraws 'IND B-' Issuer Rating
MAHAVIR RICE: ICRA Assigns B+ Rating to INR2.0cr Cash Credit
MOHAN TRACTORS: CRISIL Reaffirms B+ Rating on INR355MM Cash Loan
ORIENTAL BANK: Moody's Cuts Adjusted BCA Rating to ba3
OSWAL MOTELS: CRISIL Assigns B- Rating to INR150MM Term Loan
POPPYS KNITWEAR: CRISIL Reaffirms B+ Rating on INR230MM Loan
PRESTIGIOUS SCORS: CRISIL Assigns B+ Rating to INR25MM Loan
R. B. CHAVAN: CRISIL Reaffirms B+ Rating on INR90MM Cash Loan
R.K. AGARWAL: Ind-Ra Assigns IND B+ LT Rating on INR100MM Loan
RADHE COTTON: CRISIL Raises Rating on INR75MM Cash Loan to B+
RAJ KUMARI: CRISIL Ups Rating on INR119MM LT Loan to 'B'
ROHIT FERRO: ICRA Lowers Rating on INR901.63cr Term Loan to 'B'
S.R. FOILS: Ind-Ra Suspends 'IND D' Long-Term Issuer Rating
SARLA HANDICRAFTS: CRISIL Ups Rating on INR30MM Loan to 'B+'
SHIVAM COTTON: ICRA Reaffirms B+ Rating on INR9.70cr Cash Credit
SINGH CONSTRUCTION: CRISIL Reaffirms 'C' Rating on INR40MM Loan
SINGHANIA BUILDCON: ICRA Ups Rating on INR21.72cr Loan to B-
SOMA ISOLUX: CRISIL Reaffirms D Rating on INR36.46BB Term Loan
SRI SRINIVASA: ICRA Reaffirms B+ Rating on INR6.25cr Loan
SUPREME VASAI: Ind-Ra Lowers Rating on INR1.54BB Loan to BB+
SURYACHAKRA POWER: Ind-Ra Withdraws D Rating on INR120MM Loan
SVASCA INDUSTRIES: CRISIL Reaffirms 'B' Rating on INR130MM Loan
TRISHAN METALS: CRISIL Assigns 'B' Rating to INR81.1MM Loan
VISHAL PAPER: CRISIL Assigns B+ Rating to INR62.5MM Bank Loan
WEB TECH: CRISIL Assigns 'D' Rating to INR65MM Cash Loan
WELCOME MINERAL: ICRA Reaffirms 'B' Rating on INR6.0cr Term Loan
WELMECH ENGINEERING: CRISIL Reaffirms B- Rating on INR64.2MM Loan
J A P A N
TOSHIBA CORP: Foreign Investors Want Tougher Governance in Japan
TOSHIBA CORP: Muromachi to Lead Recovery Amid Accounting Scandal
M A L A Y S I A
1MALAYSIA DEVELOPMENT: PAC Summons Jho Low Over 1MDB Controversy
N E W Z E A L A N D
623 ON THE ROCKS: Goes Into Liquidation
GLOBAL DEVELOPMENTS: Goes Into Liquidation
S I N G A P O R E
GLOBAL A&T: Moody's Affirms Caa3 Corporate Family Rating
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A U S T R A L I A
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DFM UNLEY: First Creditors' Meeting Slated For August 3
-------------------------------------------------------
Stuart Otway and Alan Scott of BRI Ferrier were appointed as
administrators of DFM Unley Pty Ltd, formerly trading as
'Destination for Men' on July 22, 2015.
A first meeting of the creditors of the Company will be held at
Level 4, 12 Pirie Street, in Adelaide, on Aug. 3, 2015, at
11:00 a.m.
JESAM CONTRACTING: First Creditors' Meeting Set For August 3
------------------------------------------------------------
Nick Combis of Vincents Chartered Accountants was appointed as
administrators of Jesam Contracting Pty Ltd on July 22, 2015.
A first meeting of the creditors of the Company will be held at
Vincents Chartered Accountants, Level 34, 32 Turbot Street, in
Brisbane, Queensland, on Aug. 3, 2015, at 11:00 a.m.
MATRIX COMPLIANCE: First Creditors' Meeting Set For July 31
-----------------------------------------------------------
Frank Lo Pilato of RSM Bird Cameron Partners was appointed as
administrator of Matrix Compliance Management Pty Ltd on July 21,
2015.
A first meeting of the creditors of the Company will be held at
RSM Bird Cameron Partners, Level 1, 103 Northbourne Avenue, in
Turner, on July 31, 2015, at 11:00 a.m.
TALISMAN TRADING: First Creditors' Meeting Set For July 30
----------------------------------------------------------
Sule Arnautovic, Malcolm Kimbal Howell and Chris Baskerville of
Jirsch Sutherland were appointed as administrators of Talisman
Trading Pty Ltd on July 20, 2015.
A first meeting of the creditors of the Company will be held at
will be held at Jirsch Sutherland, Level 4, 55 Hunter Street, in
Sydney, on July 30, 2015, at 10:00 a.m.
TGHA AVIATION: GE Seeks to Bankrupt Owner Over Jet Sale
-------------------------------------------------------
Donna Page at Newcastle Herald reports that high-flying former
billionaire Nathan Tinkler is facing bankruptcy over
AUD2.8 million owed from the forced sale of his luxury private
jet.
In a week of high drama for the former mining tycoon, it has been
revealed GE Commercial Australasia slapped Mr Tinkler with a
bankruptcy notice on June 25, the report relates.
Newcastle Herald, citing Federal Court records, discloses that the
lender applied for a sequestration order against Mr Tinkler,
claiming he owes US$2.3 million which he was ordered to pay by the
NSW Supreme Court on May 19.
Court documents state that the outstanding amount is now
AUD2.8 million, according to Newcastle Herald.
Newcastle Herald notes that Mr Tinkler left the private jet set in
November 2012 when GE Australasia appointed Sydney's Taylor
Woodings as receiver of TGHA Aviation. Days later the receiver
impounded Mr Tinkler's Dassault Falcon 900C in Singapore and
Agusta A109S helicopter in Brisbane, the report recalls.
The report relates that a former Tinkler staffer said at the time
his boss "loved the jet like a child" and "used the helicopter
like a taxi".
The bankruptcy case has been listed for a directions hearing in
the Federal Court on September 2, Newcastle Herald notes.
Battling Mr. Tinkler is being circled by hostile creditors and on
July 20 the Adelaide Supreme Court ordered a warrant for his
arrest over the liquidation of his Patinack Farm equine empire,
the report states.
On July 23, the fallen tycoon dismissed concerns about the
collapse of his once vast empire, says Newcastle Herald.
According to the report, Mr Tinkler said that he had made a deal
with the Patinack liquidator to pay AUD700,000, he's given
AUD450,000 and would pay the rest soon.
"At the end of the day I've lost my own money," the report quotes
Mr. Tinkler as saying. "I haven't ripped anyone off, I haven't
stolen anything, there never was any warrant and I certainly
haven't been concerned at all about this."
As reported in the Troubled Company Reporter-Asia Pacific on
Dec. 12, 2012, smh.com.au related that former billionaire
Nathan Tinkler's legal battles continue, with the Australian Tax
Office confirming it will seek to wind up one of his main private
entities, Tinkler Group Holdings Administration, over unspecified
debts. Two of Mr. Tinkler's companies, Mulsanne Resources and
Patinack Farm Administration, are in liquidation and another, TGHA
Aviation, is in receivership. The ATO has also filed wind-up
proceedings against Queen St Capital.
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C H I N A
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CHINA: Defaults to Rise as Corporate Debt Burden Climbs, S&P Says
-----------------------------------------------------------------
Reuters reports that China's corporate debt market, already the
largest in the world, has continued to worsen as the world's
second-largest economy slows, and defaults are expected to
increase, rating agency Standard & Poor's said in a report on July
16.
Reuters relates that sovereign support could be forthcoming in the
case of state-owned enterprises but its scope and effectiveness
was uncertain, S&P said, while pointing to the recent state
intervention during the stock market turmoil. "The Chinese central
government's 'capitalism with Chinese characteristics' has led to
the corporate sector (including state-owned enterprises) incurring
more debt than the sovereign," the agency said in a report, noting
that the corporate debt burden was eight times government debt,
Reuters relays.
According to Reuters, China's corporate debt-to-GDP rose to 160
per cent to US$16.1 trillion in 2014, twice that of the United
States, from about 120 per cent in 2013, and was expected to
worsen since corporate debt would outpace GDP growth in coming
years.
China's corporate debt would further rise to US$28.5 trillion in
2019 and could destabilise financial markets, Reuters says. "Rapid
debt growth, opacity of risk and pricing (partly due to bank loans
dominating funding), very high debt to GDP, and the moral hazard
risk of the Chinese market make it a high risk to credit," S&P, as
cited by Reuters, said.
Even though the credit cycle was slowing in China, the credit
growth rate remained faster than most countries, S&P said.
According to Reuters, data released mid-July showed China's banks
made CNY1.28 trillion (SGD280 billion) in new loans in June,
handily topping market expectations. Broad money supply growth
quickened last month, thanks to the central bank loosening policy
to support the slowing economy, the report notes.
This follows four rate cuts made by the central bank in the past
seven months and loosening of cash reserve requirements, says
Reuters.
S&P estimates that globally, companies may seek up to US$57
trillion over 2015-2019, with China consuming US$23 trillion or 40
per cent of global demand, Reuters reports. Outstanding corporate
debt globally would grow 40 per cent to US$71 trillion by 2019, 40
per cent of which would be China's share, adds Reuters.
UTSTARCOM HOLDINGS: GHP Horwath Replaces PwC as Accountants
-----------------------------------------------------------
UTStarcom announced that it has dismissed PricewaterhouseCoopers
Zhong Tian LLP and appointed GHP Horwath, P.C. as the Company's
independent auditor effective July 21, 2015. The Company's Audit
Committee and Board of Directors participated in and approved the
decision to change the Company's independent registered public
accounting firm.
During the two most recent fiscal years and through the date of
termination, there were no disagreements between the Company and
PwC on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.
The Company said it will endeavor to work with GHP Horwath to
complete interim procedures in conjunction with the Company's
second quarter earnings announcement. The Company is currently
working with PwC and GHP Horwath to ensure a smooth transition.
Mr. William Wong, UTStarcom's chief executive officer, commented,
"PwC has been the Company's auditor since its IPO in 2000. We
would like to thank them for the quality service they have
provided and the professionalism they have demonstrated over many
years. We look forward to working with GHP Horwath going forward
and do expect to effect a smooth transition with the assistance of
both firms."
About UTStarcom, Inc.
UTStarcom, Inc. (Nasdaq: UTSI) -- http://www.utstar.com/-- is a
global leader in IP-based, end-to-end networking solutions and
international service and support. The Company sells its
solutions to operators in both emerging and established
telecommunications markets around the world. UTStarcom enables
its customers to rapidly deploy revenue-generating access services
using their existing infrastructure, while providing a migration
path to cost-efficient, end-to-end IP networks. The Company's
headquarters are currently in Alameda, California, with its
research and design operations primarily in China.
UTStarcom reported a net loss of $30.3 million in 2014, a net loss
of $22.7 million in 2013 and a net loss of $34.4 million in 2012.
As of March 31, 2015, the Company had $258 million in total
assets, $150 million in total liabilities, and $108 million in
total equity.
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I N D I A
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A S CHATTHA: CRISIL Reaffirms B Rating on INR60MM Cash Loan
-----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on
the bank facilities of A S Chattha Exim Pvt Ltd (ASCEPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Reaffirmed)
Cash Credit 60 CRISIL B/Stable (Reaffirmed)
Proposed Short Term
Bank Loan Facility 29 CRISIL A4 (Reaffirmed)
Letter of Credit 10 CRISIL A4 (Reaffirmed)
The ratings continue to reflect ASCEPL's below-average financial
risk profile, marked by a highly leveraged capital structure and
weak interest coverage ratio, and its large working capital
requirements. These rating weaknesses are partially offset by the
extensive experience of the company's promoters in the leather
chemicals trading business, and their established relationships
with customers and suppliers.
Outlook: Stable
CRISIL believes that ASCEPL will continue to benefit over the
medium term from its promoters' extensive industry experience and
their established relationships with customers and suppliers. The
outlook may be revised to 'Positive' if the company reports
substantially higher revenue and accruals, or improves its working
capital management and capital structure, leading to an
improvement in its business and financial risk profiles.
Conversely, the outlook may be revised to 'Negative' if ASCEPL
undertakes a large debt-funded capital expenditure programme, if
its working capital cycle lengthens further, or if it generates
low cash accruals, leading to weakening of its financial risk
profile, particularly its liquidity.
ASCEPL was originally set up as a proprietorship concern by the
late Mr. Ajit Singh Chattha in 1958 in Kolkata; the firm was
reconstituted as a private limited company with the current name
in 1997. Currently, ASCEPL is being managed by the founder's sons
Mr. Tejvinder Singh Chattha and Mr. Ravinder Singh Chattha, and
other family members. The company imports leather chemicals -
basic, fat liquors, dyes, and finishing chemicals - which it sells
in the domestic market. It has a warehouse in Banathalla (West
Bengal).
ADITYA SALES: CRISIL Reaffirms B- Rating on INR90MM Term Loan
-------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Aditya Sales
(AS) continues to reflect AS's moderate scale of operations, and
below-average financial risk profile marked by high gearing and
average debt protection metrics. The rating also factors in AS's
susceptibility to risks arising from cyclicality in the automobile
industry. Theses weaknesses are partially offset by AS's tie-up
with a reputed auto manufacturer in the two-wheeler passenger
segment.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL B-/Stable (Reaffirmed)
Term Loan 90 CRISIL B-/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that AS will remain exposed to the risk of
business stabilisation due to its initial stage of operations. The
outlook may be revised to 'Positive' if AS reports better-than-
expected revenue and operating profitability, while efficiently
maintaining its working capital management, thus improving its
financial risk profile. Conversely, the outlook may be revised to
'Negative' if AS reports low revenues, resulting in insufficient
accruals, thus pressurising its financial flexibility.
AS, a partnership firm incorporated by Mr. Shailendra Agarwal and
Ms. Abhilasha Agarwal, is an auto-dealer for Honda's two-wheeler
passenger segment in Lucknow (Uttar Pradesh). AS commenced its
commercial operations from April 1, 2014.
AIR INDIA: Facing Tremendous Financial Stress, Government Says
--------------------------------------------------------------
Press Trust of India reports that Air India is under "tremendous"
financial stress and needs to ensure that its team works in a more
"cohesive" manner, civil aviation minister Ashok Gajapathi Raju
said on July 23.
"Financially, if you look at Air India, it is under tremendous
stress. Historically, it has got a legacy and we need to outgrow
it," PTI quotes Mr. Raju as saying.
Air India, which is in the red, has a debt burden of around
INR40,000 crore and is surviving on a bailout package approved in
2012.
The news agency relates that noting that are plus and minus
points, Raju said, "in certain ways, it has to still pull up its
socks."
"I, for one, wish them well. We would wish and are trying to make
their team more cohesive because ultimately it is the team that
delivers. Unfortunately for us . . . Indians are excellent in
thought and very difficult to work as a team," PTI quotes the
minister as saying at an event.
He applauded Air India's efforts in the recent massive evacuation
of Indian citizens abroad from war zones.
In April 2012, the UPA government had approved Air India's
turnaround plan with a committed public funding of INR30,231
crore, staggered over a period of nine years, with some specific
riders, the report notes.
About Air India
Air India Ltd -- http://www.airindia.com/-- is the flag carrier
airline of India owned by Air India Limited (AIL), a Government of
India enterprise. The airline operates a fleet of Airbus and
Boeing aircraft serving various domestic and international
airports. It is headquartered at the Indian Airlines House in
New Delhi.
As reported in the Troubled Company Reporter-Asia Pacific on
March 28, 2014, The Times of India said Air India got a breather
in the form of INR1,000-crore equity infusion from the government
on March 26, 2014. According to the report, the airline's
unending financial stress had got worse as the Centre had so far
given INR6,000 crore instead of the promised INR8,500 crore for
the fiscal. As a result, AI had to bridge this gap by borrowing
money from banks at 11%-12%, which increased its debt servicing
burden, the report said. Before the infusion, the government had
injected INR12,200 crore into AI and there was a shortfall in
equity to the tune of INR3,574 crore -- despite the airline
meeting most of the milestone-linked equity targets -- leading to
a liquidity crunch, the report related. TOI said the airline's
aircraft and working capital debt was INR26,033 crore and
INR21,125 crore respectively on December 31, 2013. The airline is
expected to lose INR3,990 crore this fiscal.
Air India has posted continuous losses since 2007, according to
The Economic Times.
ALLIED RECYCLING: CRISIL Reaffirms B+ Rating on INR250MM Loan
-------------------------------------------------------------
CRISIL's ratings on the bank facilities of Allied Recycling Ltd
(ARL) continue to reflect the extensive experience of ARL's
promoter in the structural products industry, the company's
moderate operating efficiency driven by partially integrated
operations, and successful forward integration (into wire rods).
These rating strengths are partially offset by ARL's modest scale
of operations and average debt protection metrics.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 250 CRISIL B+/Stable (Reaffirmed)
Proposed Short Term
Bank Loan Facility 20 CRISIL A4 (Reaffirmed)
Term Loan 80 CRISIL B+/Stable (Reaffirmed)
CRISIL had, on June 25, 2015, upgraded its rating on the long-
term bank facilities of ARL to 'CRISIL B+/Stable' from 'CRISIL B-
/Stable', while reaffirming its rating on short-term bank facility
to 'CRISIL A4.' The rating upgrade reflects CRISIL's expectation
of improvement in ARL's liquidity marked by increasing cushion
between the company's cash accruals and short-term debt
obligations driven by expected moderate revenue growth and
sustained operating profitability. The rating upgrade also factors
in the absence of any major debt-funded capital expenditure plan
and low expected incremental working capital requirements because
of revenue growth being in-line with expectations over the medium
term.
Outlook: Stable
CRISIL believes that ARL will continue to benefit over the medium
term from its promoters' extensive steel industry experience. The
outlook may be revised to 'Positive' if ARL achieves significant
improvement in operating revenue and profitability while
maintaining its working capital requirements, leading to
substantial cash accruals and better liquidity. Conversely, the
outlook may be revised to 'Negative' in case of weakening of ARL's
liquidity, most likely on account of increase in working capital
cycle, low cash accruals, or large debt-funded capital
expenditure.
Set up in 2003 by Mr. Vijay Kumar Abrol, ARL manufactures billets
at its facility in Ludhiana (Punjab). While 50 per cent of the
billets are used for manufacturing wire rods, the rest are sold.
Till June 2009, it manufactured ingots and traded in hot-rolled
(HR) and cold-rolled (CR) sheets. The manufacturing of ingots has
been discontinued; however, trading activities generate about 30
per cent of the total revenue reported.
ARL reported profit after tax (PAT) of INR5.3 million on net sales
of around INR2.0 billion for 2013-14 (refers to financial year,
April 1 to March 31), against a PAT of INR11.1 million on net
sales of INR1.7 billion for 2012-13.
B.D. OVERSEAS: ICRA Assigns B+ Rating to INR2.0cr Cash Credit
-------------------------------------------------------------
ICRA has assigned its rating of [ICRA]B+ to the INR2.0 crore long-
term fund based bank facility of B.D. Overseas. ICRA has also
assigned its rating of [ICRA]A4 to the INR10.0 crore short-term
fund based bank facility of BDO.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund Based
Facilities- Cash
Credit 2.00 [ICRA]B+; Assigned
Short-term Fund Based
Facilities- Bill
Discounting 10.00 [ICRA]A4; Assigned
ICRA's ratings take into account the high competitive intensity in
the rice milling industry, as well as the high proportion of
trading revenues in BDO's overall revenues, which keep the firm's
profitability thin and range bound. ICRA's rating also takes into
account the firm's weak financial profile characterized by
elevated gearing and weak debt coverage indicators. The ratings
also factor in agro climatic risks which can affect the
availability of paddy in adverse weather conditions. ICRA takes
cognizance of the risks inherent in a partnership firm such as
risk of capital withdrawal, limited ability to raise equity
capital, and risk of dissolution. However, the ratings favorably
take into account the extensive experience of the promoters in the
rice industry along with their strong relationships with various
customers and suppliers. ICRA also takes into account the
proximity of the manufacturing facility to major rice growing
areas, which results in easy availability of paddy.
Going forward, a sustained improvement in profitability along with
an improvement in the firm's leverage and coverage indicators will
be the key rating sensitivities.
Established in January 2007, BDO is promoted by Mr. Praveen Kumar,
Mr. Naresh Kumar and Mr. Rakesh Kumar. The firm is engaged in
milling, processing and trading of basmati and non basmati rice,
with bulk of its revenues derived from the export of basmati rice
to the Middle East and Iran. The firm's plant is located at
Taraori, Karnal (Haryana) and has a milling capacity of 4 Tonnes
Per Hour(TPH) and has a sorting capacity of 4 TPH. A group
concern, Mahavir Rice Mills, is also engaged in the same business.
Recent results
BDO reported an Operating Income (OI) of INR85.47 crore and a
Profit After Tax (PAT) of INR0.38 crore for 2013-14, as against an
OI of INR92.88 crore and a PAT of INR0.07 crore in the previous
year. For the nine months ended December 31, 2014, the firm
reported, on a provisional basis, an OI of INR58.71 crore.
BASANT ENTERPRISE: ICRA Suspends B+ Rating on INR5.0cr LT Loan
--------------------------------------------------------------
ICRA has suspended the [ICRA]B+ rating assigned to the INR5.00
crore long term fund based facilities of Basant Enterprise. The
suspension follows ICRAs inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
Established in 2007 as a proprietorship firm, Basant Enterprise
(BE) is currently operated by Mr. Mohit Jalan and is engaged in
the business of trading various agro commodities as well as
precious metals like gold, silver, diamond, etc. BE belongs to the
Basant Group of Ahmedabad which has its existence for more than
100 years and have several other entities operating in similar
line of businesses. The other group concerns include BTC Trading
Co., Basant Global Trade Private Limited, Basant Trading Co.,
Basant Traders, Maruti Century Finance Limited, Basant Agro, Mohit
Textile, Basant Corp, among others.
BTC TRADING: ICRA Suspends B+ Rating on INR8.0cr LT Loan
--------------------------------------------------------
ICRA has suspended the [ICRA]B+ rating assigned to the INR8.00
crore long term fund based facilities of BTC Trading Co. The
suspension follows ICRAs inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
Established in 2006 as a proprietorship firm, BTC Trading Co.
(BTC) is currently operated by Mr. Prakash Jalan and is engaged in
the business of trading various agro commodities and precious
metals like gold, silver, diamond, etc. BTC belongs to the Basant
Group of Ahmedabad which has been in existence for more than 100
years and has several other entities operating in similar lines of
business. The other group concerns include Basant Enterprise,
Basant Global Trade Private Limited, Basant Trading Co., Basant
Traders, Maruti Century Finance Limited, Basant Agro, Mohit
Textile, and Basant Corp.
CELCON GREEN: ICRA Revises Rating on INR19.50cr Term Loan to C
--------------------------------------------------------------
ICRA has revised the long-term rating assigned to the Rs 19.50
crore term loan facility of Celcon Green Limited from [ICRA]B+ to
[ICRA]C.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund Based 19.50 Revised to [ICRA]C
Term Loan from [ICRA]B+
The rating revision takes into account the significant delays in
the commencement of operations vis-a-vis expected date of
commencement of operations (July 2014) as well as risks associated
with stabilization of the plant as per expected operating
parameters. The rating revision continues to factor in the
sensitivity of the company's debt servicing ability to capacity
utilization and margins and possible stress on debt servicing
ability in case ramp up of cash flows is lower than anticipated.
The rating also takes into account the low entry barriers in the
business, which could lead to increased competitive pressures
going forward, which coupled with the ease of availability of
cheaper established substitute in the form of clay bricks, which
may affect the expected profitability. Further ICRA also considers
the exposure of operations to the cyclicality associated with the
real estate industry which is its key end-customers.
The rating however takes comfort from the advantages that AAC
blocks offer over its substitutes which in turn are expected to
keep demand potential favorable in the long run and the locational
benefits arising from the company's proximity to raw material
sources and consumer centres.
Celcon Green Limited was incorporated in 2013 as a public limited
company by the Servoday, Pitroda and Bansal groups to manufacture
Autoclaved aerated concrete blocks (AAC), also known as cellular
concrete. The company has set up a 1000 cubic meters per day
manufacturing facility at Jamnagar (Gujarat); the unit is
scheduled to commence commercial operations from July 20, 2015.
DDR AND COMPANY: ICRA Reaffirms B+ Rating on INR0.50cr Cash Loan
----------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ to Rs 0.50
crore fund based limits of DDR and Company. ICRA has also
reaffirmed the short-term rating of [ICRA] A4 to its INR5.00 crore
non-fund based limits.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 0.50 [ICRA] B+ reaffirmed
Bank Guarantee 5.00 [ICRA] A4 reaffirmed
The reaffirmation of ratings continues to be constrained by
significant sector concentration risk owing to the firm's sole
focus on road sector and high geographic concentration risk as the
operations of the firm are limited only to Andhra Pradesh. The
reaffirmation also continues to be constrained by modest scale of
operations of the firm, highly fragmented nature of the industry
attributable to low entry barriers that leads to intense
competition among various players, and the risks associated with
the partnership nature of the firm.
The reaffirmation of ratings, however, continue to derive comfort
from vast experience of the promoters in the road sector, the
firm's established client base consisting primarily of government
departments in Andhra Pradesh and the firm's status as a special
class contractor which allows it to bid for large contracts
floated by government departments. The ratings also obtain comfort
from the financial profile of the firm characterized by favorable
capital structure and coverage indicators.
DDR and Company was established as a partnership firm in 1997 in
Tirupati in Andhra Pradesh. The firm is primarily involved in
laying, strengthening, improving and maintaining roads in various
districts in Andhra Pradesh. It is managed by Mr. Shahul Hameed
who has vast experience in Finance and Business Management. He and
his family were formerly involved in Auto Finance business before
the inception of this venture.
Recent Results
For FY2014, DDR reported an operating income of INR34.45 crore and
a net profit of INR1.54 crore as compared to an operating income
of INR19.77 crore and a net profit of INR0.84 crore for FY2013.
G.B. COTTON: CRISIL Assigns B+ Rating to INR100MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of G.B. Cotton Industries (GBCI). The rating
reflects the firm's working-capital-intensive operations and
average net worth.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 100 CRISIL B+/Stable
The rating is further constrained by unfavourable government
policy regarding minimum support prices, fragmentation in the
cotton ginning industry resulting in intense competition, and
adverse movements in raw material (cotton) prices. These rating
weaknesses are partially offset by the promoters' long-standing
experience in the cotton industry and their support in the form of
unsecured loans, and favourable location of plant which gives
access to high-quality raw cotton.
Outlook: Stable
CRISIL believes that GBCI will maintain its financial risk profile
over the medium term backed by the promoters' industry experience
and their established relations with customers and procurement
centres (suppliers). The outlook may be revised to 'Positive' if
the firm registers a steady year-on-year sales growth in volume
terms while it maintains its bottom line margins. Conversely, the
outlook may be revised to 'Negative' if GBCI's financial risk
profile deteriorates on account of a sharp decline in revenue and
profitability or a stretch in its working capital cycle leading to
pressure on liquidity.
Set up in 1999 as a partnership firm, GBCI is engaged in cotton
ginning and pressing, and extraction of edible oil from cotton
seeds. The firm is promoted by Mr. Khodabhai Harjivandas and his
family members. Its processing unit is located in Mehsana
(Gujarat), with total installed capacity of around 400 bales per
day and cotton seed crushing capacity of around 700 cotton seed
cakes.
G.R.S. ISPAT: ICRA Suspends B/A4 Rating on INR15cr Loan
-------------------------------------------------------
ICRA has suspended [ICRA]B/[ICRA]A4 rating assigned to the
INR15.00 crore fund based and non-fund based limits of G.R.S.
Ispat Company Pvt. Ltd. (GICPL). The suspension follows ICRA's
inability to carry out a rating surveillance in the absence of the
requisite information from the company.
GICPL was initially incorporated in the year 1995 by the name of
Solo Farms Pvt. Ltd. The company's name was changed to GICPL in
the year 2012, and it began commercial operations in March 2013.
The Saroha Family is involved in the mild steel business since the
year 2005, initially through a partnership firm: Solo Steels and
later through a private limited company Solo Metals Pvt. Ltd. Solo
Metals Pvt. Ltd. began commercial production in the year 2009 and
is engaged in the manufacturing of MS billets using scrap, sponge
iron and silico manganese as key raw materials.
GOVIND AGRO: CRISIL Reaffirms B+ Rating on INR180MM Cash Credit
---------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Govind Agro
Foods (GAF) continues to reflect GAF's weak financial risk
profile, marked by a small net worth, high gearing, and weak debt
protection metrics.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 180 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 53.5 CRISIL B+/Stable (Reaffirmed)
Term Loan 16.5 CRISIL B+/Stable (Reaffirmed)
The rating also factors in the firm's large working capital
requirements, small scale of operations, and susceptibility to
changes in government policies and to erratic rainfall. These
rating weaknesses are partially offset by the extensive industry
experience of GAF's promoters and benefits expected from the
healthy growth prospects for the basmati rice industry.
Outlook: Stable
CRISIL believes that GAF will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the firm's capital
structure improves significantly, most likely because of higher
accruals or substantial equity infusion. Conversely, the outlook
may be revised to 'Negative' if GAF's liquidity deteriorates with
an increase in its working capital requirements or larger-than-
expected debt-funded capital expenditure.
GAF was set up in July 2009 as a partnership firm by Mr. Subhash
Chand and his son, Mr. Neeraj Kumar. It processes basmati rice and
sells to domestic companies, most of which export to the Middle
East.
HARITHA FERTILISERS: CRISIL Reaffirms B Rating on INR350MM Loan
---------------------------------------------------------------
CRISIL's rating on the long-term bank facility of Haritha
Fertilisers Ltd (HFL) continues to reflect HFL's below-average
financial risk profile marked by a small net worth, high gearing,
and weak debt protection metrics.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 350 CRISIL B/Stable (Reaffirmed)
The rating also factors in the company's large working capital
requirements, and the susceptibility of its revenue and
profitability margins to changes in government policy and to
erratic monsoons. These rating weaknesses are partially offset by
the extensive experience of HFL's promoters in the fertiliser
industry.
Outlook: Stable
CRISIL believes that HFL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if there is a substantial and
sustained increase in the company's revenue and profitability
margins, or a sustained improvement in its working capital
management. Conversely, the outlook may be revised to 'Negative'
if HFL's operations are adversely impacted by any regulatory
changes, or there is significant deterioration in its capital
structure caused most likely by a stretch in its working capital
cycle.
HFL, incorporated in 2006, is promoted by Mr. Ravindranath Reddy,
Mr. Gangi Reddy, and their family members. The company
manufactures nitrogen-phosphorous-potassium (NPK) mixture
fertilisers at its units in Keesara and Damarchela (both in
Telangana).
HYDERABAD EDUCATIONAL: Ind-Ra Cuts Rating on INR689.7MM Loan to D
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Hyderabad
Educational Institutions Private Limited's (HEIL) INR689.7 mil.
bank loans to Long-Term 'IND D' from 'IND B(suspended)'.
KEY RATING DRIVERS
The downgrade reflects HEIL's delays in debt repayment during the
four months ended June 2015 due to inadequate cash flow. At FY13
(year end March), HEIL's term loan account was restructured and
all accrued interests on the term loans were transferred to funded
interest term loan account.
The rating also reflects tight liquidity profile of HEIL.
Although HEIL's available funds increased to INR60.03 mil. in FY14
from INR48.36 mil. in FY13, they did not provide adequate cushion
to its financial leverage. Available funds cover to debt was
7.31% in FY14 (FY13: 5.91%).
HEIL's debt burden is high as reflected in debt/current balance
before interest and depreciation (CBBID) of 2,022.31x in FY14
(FY13: 688.15x). Also, HEIL's debt in relation to income was
698.84% in FY14 (FY13: 730.91%).
RATING SENSITIVITIES
Timely debt service for three consecutive months will result in a
positive rating action.
COMPANY PROFILE
The Indus International School, Hyderabad, was set up by HEIL in
August 2008. HEIL was formed under the Companies Act 1956, as a
for-profit organization for providing quality infrastructure for
the educational sector in India. HEIL was acquired by Indus
Group, Bangalore, in March 2012.
JYOTI TIMBER: CRISIL Reaffirms B- Rating on INR30MM Cash Loan
-------------------------------------------------------------
CRISIL's ratings on the bank facilities of M/s. Jyoti Timber -
Nagpur (JT) continue to reflect the firm's modest scale of
operations, subdued financial risk profile, marked by high gearing
and weak debt protection metrics, and its large working capital
requirements. These rating weaknesses are partially offset by the
proprietor's extensive experience in the timber segment and
funding support.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL B-/Stable (Reaffirmed)
Letter of Credit 35 CRISIL A4 (Reaffirmed)
Outlook: Stable
CRISIL believes that JT will continue to benefit from the
proprietor's extensive industry experience over the medium term.
The outlook maybe revised to 'Positive' if the firm's financial
risk profile improves due to significant increase in cash accruals
or due an equity infusion by the proprietor and improvement in its
working capital management. Conversely, the outlook maybe revised
to 'Negative' if JT reports significantly lower cash accruals or
there is a substantial increase in working capital requirements
leading to further stretch in liquidity.
JT is a proprietorship firm founded by Mr. Nanji Arjunbahi Patel
in Nagpur (Maharashtra) in 1999. The firm trades in, and saws,
imported timber.
K. K. CONSTRUCTION: CRISIL Reaffirms B+ Rating on INR26.5MM Loan
----------------------------------------------------------------
CRISIL's ratings on the bank facilities of K. K. Construction
Company (KKCC) continue to reflect KKCC's modest scale of
operations in the highly competitive electrical contractor
industry, with geographical concentration in its revenue, and its
large working capital requirements.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 27 CRISIL A4 (Reaffirmed)
Cash Credit 26.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 18.6 CRISIL B+/Stable (Reaffirmed)
Term Loan 2.9 CRISIL B+/Stable (Reaffirmed)
These rating weaknesses are partially offset by the extensive
experience of KKCC's promoters in the electrical contractor
industry and their funding support to the firm.
Outlook: Stable
CRISIL believes that KKCC will continue to benefit over the medium
term from its promoters' extensive experience in executing turnkey
projects involving erection of sub-stations and electrification.
The outlook may be revised to 'Positive' if the firm scales up its
operations significantly and improves its working capital
management, leading to a better financial risk profile.
Conversely, the outlook may be revised to 'Negative' in case of
delays in project execution leading to a stretch in KKCC's working
capital cycle, weakening its financial risk profile, particularly
liquidity.
KKCC, a partnership firm, was formed by the Khoobchandani and
Daryani families in 2002. The firm is engaged in the electrical
contractor business, primarily for the Chhattisgarh State
Electricity Board. KKCC has two factories, in Mova and Nainpur
(both in Chhattisgarh), for manufacturing plain cement-concrete
poles. Its day-to-day operations are managed by Mr. Ashok
Khoobchandani.
KASA ANLAGEN: CRISIL Assigns B+ Rating on INR25MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Kasa Anlagen India Private Limited (KA).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 10 CRISIL B+/Stable
Cash Credit 25 CRISIL B+/Stable
Bank Guarantee 45 CRISIL A4
Bill Discounting
under Letter of
Credit 10 CRISIL A4
The rating reflects KA's below-average financial risk profile
marked by high gearing and weak debt protection metrics, and its
modest scale of operations. However, these rating weaknesses are
partially offset by the extensive experience of KA's promoters in
the electrical equipment industry and the company's joint venture
with Kasa Companies Inc, USA.
Outlook: Stable
CRISIL believes that KA 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 sustained
increase in profitability and scale of operations, or improved
working capital management, leading to improvement in its
liquidity. Conversely, the outlook may be revised to 'Negative' on
account of low profitability, or deterioration in working capital
management leading to deterioration in its liquidity.
KA, formerly known as Elektro Anlagen (EA), manufactures power and
control panels as per customer specifications, and provides
solutions in application study and development, software
development, commissioning, training, after-sales service system
integration and start-up, and turnkey project management. During
January 2011, EA entered into a joint venture with Kasa Companies
Inc, USA, to form KA. KA is promoted by Mr. MS Balaji and is
located in Chennai.
For 2014-15 (refers to financial year, April 1 to March 31), KA,
on a provisional basis, reported a net loss of INR2.2 million on
revenue of INR177 million as against a net loss of INR1.2 million
on revenue of INR142 million for 2013-14.
KOTKAPURA MUKTSAR: Ind-Ra Lowers Rating on INR750MM Loan to BB+
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Kotkapura
Muktsar Tollways Private Limited's (KMTPL) INR750 mil. (reduced
from INR800 mil.) long-term senior project bank loan to 'IND BB+'
from 'IND BBB-'. The Outlook is Stable.
PROJECT PROFILE
KMTPL is an SPV, promoted by Supreme Infrastructure BOT Holdings
Private Limited (48%), Supreme Infrastructure India Limited's
(SIIL; 'IND BB'/Negative; 26%) and SPML Infra Limited (26%). It
has been set up to build, operate and maintain a 30km stretch on
State Highway 16. The corridor connects Faridkotwala chowk in
Kotkapura town with Kher Singh Sidhu Chowk in Muktsar in Punjab.
The project is under a concession from the Public Works
Department, the government of Punjab. The project cost of
INR1,030 mil. is being funded by INR280 mil. equity (100% infused)
and INR750 mil. debt (INR337.7 mil. drawn down at end-May 2015).
KEY RATING DRIVERS
The downgrade reflects the likely slippages in the scheduled
commercial operations date (SCOD: Nov. 2015) due to the sluggish
physical progress. According to the May 2015 lenders' independent
engineer's report, the project has lagged in construction
milestones, leaving around 50% of the work to be completed before
the SCOD. Although a 2% land parcel is yet to be handed over to
KMTPL, the agency believes this is not a risk at this point in
terms of revenue visibility. Though the concession agreement
allows tolling on completion of 75% construction, Ind-Ra believes,
at the current pace that could be a challenge especially with the
advent of monsoon.
The rating reflects the weak credit profile of SIIL. KMPTL has a
fixed-price engineering, procurement and construction contract
with the ultimate sponsor - SIIL.
This being a toll road project has an inherent traffic-related
revenue risk. However, the traffic study does not indicate any
alternate routes. Heavy passenger traffic (62%) along the stretch
is an indicator of local patronage and lower elasticity of the
cash flow to the economic cycles. Ind-Ra's base case projections
factor in modest yoy revenue growth of 5% and a delay of three
months in achieving the COD.
The toll rates are pre-determined for the entire concession
period. The concession agreement allows an annual toll rate
increase of 10% till April 2018, which is higher than peers' where
the toll rate increases are fully or partially linked to inflation
rates.
The debt component has reduced to INR750 mil. from the original
INR800m due to a revision in the project cost, which is reflected
in the projections. The debt is scheduled to amortize in 44
unequal quarterly installments. The repayment will commence in
November 2016, post a moratorium of one year, which provides a
cushion in case of the likely delay in commencing operations.
Debt service reserve account, equivalent to one quarter's
principal and interest payments, not being part of the project
cost is a structural weakness. Equity risk is mitigated by the
fact that the sponsor has already injected the entire equity into
the project.
Ind-Ra's base case estimates sponsor support of INR64.9m by FYE16.
The coverage metrics during the rest of the years remain
comfortable. However, undue delays in achieving commercial
operations and material traffic underperformance could debilitate
the coverage metrics.
RATING SENSITIVITIES
Positive: The timely completion of the project, a satisfactory
ramp-up experience, supported by the initial traffic data
consistently exceeding base case forecasts could result in a
rating upgrade.
Negative: Any material delays in project completion, absent
sponsor support, and/or any significant traffic underperformance
could result in a rating downgrade.
KRISHNA INFRASTRUCTURE: ICRA Rates INR7.0cr Term Loan at 'D'
------------------------------------------------------------
The long term rating of [ICRA]D has been assigned to the INR7.00
crore term loan facility and INR4.75 crore cash credit facility of
Krishna Infrastructure. ICRA has also assigned the short term
rating of [ICRA]D to the INR2.62 crore non-fund based facility of
KI.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loan 7.00 [ICRA]D assigned
Cash Credit 4.75 [ICRA]D assigned
Bank Guarantee 2.62 [ICRA]D assigned
The assigned ratings primarily takes into account KI's
unsatisfactory track record in timely servicing of debt
obligations, leading to overdue interest and principal on the term
loan. The ratings also consider the significant delays witnessed
in the ongoing projects in the current order book and are further
constrained by the firm's stretched financial risk profile
characterized by weak profitability, aggressive capital structure,
inadequate coverage indicators and relatively small scale of
operations. Given the large sized orders currently under
implementation and the delays observed in projects in the past
period, the firm's ability to execute the same within the budgeted
costs and in a timely manner remains critical from the credit
perspective. ICRA also notes that KI is a partnership firm and any
significant withdrawals from the capital account would affect its
net worth and thereby have an adverse impact on the capital
structure.
The ratings, however, favourably factor in the past experience of
the partners and their track record of project execution in the
civil construction industry. The ratings also favorably consider
the firm's healthy order book of INR101.23 crore, which is to be
executed over next 12 to 15 months, thereby lending visibility to
the revenues of the firm for the current fiscal FY16.
Krishna Infrastructure (KI) was established in 2001 as a
proprietorship firm of Mr. Karsanbhai Karmur and was later
converted to partnership firm in 2009 with Mrs. Shilpaben Karmur
and Mr. Devabhai Karmur joining as partners. KI is engaged in
civil construction work related to road construction, canal
construction, quarrying-crushing, overburden removal and
transportation of coal/aggregate. The firm mainly engages itself
as a sub-contractor.
Recent Results
For the year ended 31st March 2015 (provisional financials), the
firm reported operating income of INR25.12 crore and net loss of
INR10.83 crore , as against an operating income of INR17.67 crore
and net loss of INR3.42 crore for the year ended 31st March 2014.
LALIT SYNTHETICS: ICRA Suspends 'B/A4' Rating on INR9cr Bank Loan
-----------------------------------------------------------------
ICRA has suspended the [ICRA]B/ICRA]A4 rating for the INR9.00
Crore bank facilities of Lalit Synthetics Private Limited. The
suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
LILASONS INFRASTRUCTURE: Ind-Ra Withdraws 'IND B-' Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Lilasons
Infrastructure Pvt Ltd's (LIPL) 'IND B-' Long-Term Issuer Rating.
The Outlook was Negative. The agency has also withdrawn the
'IND B-' rating on the company's INR120 mil. fund-based limits.
The bank loan rating has been withdrawn as the debt has been paid
in full. Consequently, Ind-Ra has withdrawn the Long-Term Issuer
Rating. Ind-Ra will no longer provide ratings or analytical
coverage for LIPL.
MAHAVIR RICE: ICRA Assigns B+ Rating to INR2.0cr Cash Credit
------------------------------------------------------------
ICRA has assigned its long term rating of [ICRA]B+ to the INR2.00
crore fund based bank facilities of Mahavir Rice Mills. ICRA has
also assigned its short term rating of [ICRA]A4 to the INR12.00
crore fund based bank facilities of the firm.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 2.00 [ICRA]B+; assigned
Packing Credit 12.00 [ICRA]A4; assigned
ICRA's ratings are constrained by the firm's modest scale of
operations, which coupled with high competitive intensity in the
rice milling industry and trading nature of the business, has led
to subdued profitability margins in the past. The ratings also
take into account the high gearing and modest coverage indicators
of the firm due to substantial debt funding of its large working
capital requirements and low profitability. The ratings also
factor in agro climatic risks which can affect the availability of
paddy in adverse weather conditions. ICRA also takes note of the
partnership constitution of the firm which exposes it to risks
related to withdrawal of capital, risk of dissolution etc.
However, the ratings favorably take into account the extensive
experience of the promoters in the rice industry, along with their
strong relationships with various customers and suppliers.
Further, the ratings also factor in the healthy growth in the
firm's operating income in the past, as also the proximity of the
manufacturing facility to major rice growing areas, which results
in easy availability of paddy.
Going forward, a sustained improvement in scale, along with
improved coverage indicators will be the key rating sensitivities.
Recent Results
MRM reported a net profit of INR0.36 crore on an operating income
of INR67.43 crore for the year ended March 31, 2014, as compared
to a net profit of INR0.20 crore on an operating income of
INR52.69 crore for the previous year. The firm reported, on a
provisional basis, an operating income of INR79.00 crore for the
year ended March 31, 2015.
Incorporated in 1984, MRM was promoted by Mr. Parveen Kumar, Mr.
Naresh Kumar and Mr. Rakesh Kumar. The firm is involved in
milling, sorting, and grading of basmati and super fine rice in
India and abroad. The partners of the firm are well experienced
and have past experience in a similar line of businesses. The
partners have set up another firm, namely B.D. Overseas, which is
engaged in a similar line of business. MRM's plant is located in
Taraori, Haryana and has a milling capacity of 4 Metric Tonnes per
Hour (MTPH) and a sorting capacity of 4 MTPH.
MOHAN TRACTORS: CRISIL Reaffirms B+ Rating on INR355MM Cash Loan
----------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Mohan Tractors
Pvt Ltd (MTPL) continues to reflect MTPL's weak financial risk
profile, with significantly high total outside liabilities to
tangible net worth (TOLTNW) ratio and average debt protection
metrics, and its susceptibility to intense competition in the
automobile dealership market.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 355 CRISIL B+/Stable (Reaffirmed)
These weaknesses are partially offset by the extensive industry
experience of MTPL's promoters, and its diversified supplier base
including Ashok Leyland Ltd (ALL), Eicher Motors Ltd (EML), and
JCB India Ltd (JCB).
Outlook: Stable
CRISIL believes that MTPL will continue to benefit, over the
medium term, from its association with ALL, EML, and JCB; however
its financial risk profile is expected to remain weak over this
period due to its extremely high TOLTNW ratio. The outlook may be
revised to 'Positive' if MTPL reports significant improvement in
its capital structure, leading to a better financial risk profile.
Conversely, the outlook may be revised to 'Negative' if MTPL
reports further weakening of its financial risk profile, driven
most likely by implementing further debt-funded capital
expenditure or weakening of its working capital management.
MTPL was originally set up in 1978 by Mr. Jagmohan Mittal as a
partnership firm; it was reconstituted as a private-limited
company in 1991. MTPL is currently managed by Mr. Gopal Mittal,
son of Mr. Jagmohan Mittal. The company is an authorised dealer
for ALL (light, medium, and heavy commercial vehicles) in Haryana
and New Delhi. In addition, it is a dealer for JCB and EML
(trucks), and is also into logistic business wherein it provide
transportation and logistics services.
ORIENTAL BANK: Moody's Cuts Adjusted BCA Rating to ba3
------------------------------------------------------
Moody's Investors Service affirmed Oriental Bank of Commerce's
(OBC) Baa3/P-3 global local currency and foreign currency bank
deposit ratings.
At the same time, Moody's has downgraded the bank's baseline
credit assessment (BCA) and adjusted BCA to ba3 from ba2.
Furthermore, Moody's has assigned a Counterparty Risk Assessment
(CR Assessment) of Baa3(cr)/P-3(cr) to OBC.
The outlooks on all the ratings, where applicable, continue to be
Positive.
The full list of affected ratings is provided at the end of the
press release.
RATINGS RATIONALE
AFFIRMATION OF LONG-TERM RATING; DOWNGRADE OF BCA AND ADJUSTED BCA
OBC's BCA and adjusted BCA have both been downgraded to ba3 from
ba2. The bank's asset quality saw a significant deterioration in
financial year ending March 2015, with the impaired loan ratio
increasing to 18.7% of gross loans at end-March 2015 from 14.8% a
year earlier. In addition, although its core Tier 1 ratio of 8.09%
at end-March 2015 is relatively healthy compared to public sector
peers, the bank's impaired loans as a proportion of equity and
loan loss reserves is the highest among rated Indian banks.
On the other hand, the bank's BCA is supported by the bank's
stable funding base and relatively high core profitability
compared to peers.
The deposit rating of the bank has been affirmed at Baa3, in line
with the sovereign rating, by factoring in three notches of
systemic support. We expect OBC to enjoy a very high level of
systemic support, given that it is mandated by law that the bank
be majority owned by the government.
ASSIGNING OF COUNTERPARTY RISK ASSESSMENTS
The CR Assessment is an opinion of the counterparty risk related
to a bank's covered bonds, contractual performance obligations
(servicing), derivatives (e.g. swaps), letters of credit,
guarantees and liquidity facilities.
CR assessments reflect Moody's opinion of how counterparty
obligations are likely to be treated if a bank fails, and are
distinct from debt and deposit ratings in that they (1) consider
only the probability of default, rather than the expected loss;
and (2) apply to counterparty obligations and contractual
commitments rather than to debt or deposit instruments.
For OBC, the CR Assessment, prior to government support, is
positioned one notch above the Adjusted BCA at ba2. The CR
Assessment of OBC benefits from two notches of systemic support.
These support assumptions are in line with our support assumptions
on deposits and senior unsecured debt. This reflects our view that
any support provided by governmental authorities to a bank which
benefits senior unsecured debt or deposits is very likely to
benefit operating activities and obligations reflected by the CR
Assessment as well, consistent with our belief that governments
are likely to maintain such operations as a going-concern in order
to reduce contagion and preserve a bank's critical functions
WHAT COULD CHANGE THE RATING UP:
OBC's senior unsecured debt and deposit ratings could be upgraded
if the India sovereign rating (Baa3, Positive) is upgraded.
WHAT COULD CHANGE THE RATING DOWN:
Downward pressure on OBC's BCA could develop from a continued
deterioration in impaired loans. A material decline in the
combination of profits, loan-loss reserves and capital, relative
to impaired assets would also put pressure on its ratings.
Any downgrade of the India sovereign rating (Baa3, Positive) will
lead to a downgrade of the bank's supported rating.
Additionally, any indications that support from the Government of
India (Baa3 Positive) had diminished or that additional capital
requirements may arise beyond the government's budgeted amount
could put the bank's deposit and senior unsecured debt ratings
under pressure.
Any downward changes in the sovereign ceilings could also affect
the bank's deposit and senior unsecured debt ratings.
Following this action, OBC's ratings are as follows:
-- Long-term Local and Foreign currency Bank Deposit ratings
affirmed at Baa3; outlook positive
-- Short-term Local and Foreign currency Bank Deposit ratings
affirmed at P-3
-- BCA and Adjusted BCA downgraded to ba3 from ba2
-- Assign Counterparty Risk Assessment of Baa3(cr)/P-3(cr)
Headquartered in New Delhi, OBC had total assets of INR2.31
trillion at end-March 2015.
OSWAL MOTELS: CRISIL Assigns B- Rating to INR150MM Term Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the bank
facilities of Oswal Motels and Resorts Ltd (OMRL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Term Loan 100 CRISIL B-/Stable
Term Loan 150 CRISIL B-/Stable
The rating reflects OMRL's exposure to risks related to funding,
implementation and stabilisation of its ongoing new 4-star hotel
project in Orchha in Madhya Pradesh. The rating also factors in
the company's modest scale of operations and geographic
concentration of its revenue profile. These rating weaknesses are
partially offset by the extensive experience of OMRL's promoters
in the hospitality industry, funding support from promoters, and
moderate demand prospects for hotels in Orchha.
Outlook: Stable
CRISIL believes that OMRL will benefit from its promoters'
extensive experience and their committed funding support over the
medium term. The outlook may be revised to 'Positive' if OMRL
completes the project in time within the budgeted cost, and ramps-
up its operations, leading to sufficient cash accruals to meet its
debt obligations. Conversely, the outlook may be revised to
'Negative' if the company faces time or cost overrun in the
completion of its project or delay in stabilisation of operations.
OMRL was incorporated in June 1995 in Orchha. The company has been
operating a 32- room resort in Orchha since 1997. OMRL is setting
up a new 4-star hotel in Orchha which will have 98 rooms. The new
hotel is expected to commence full-fledged operations by
April 2016. The company is promoted by Mr. Ashok Jain and his wife
Ms. Usha Jain.
POPPYS KNITWEAR: CRISIL Reaffirms B+ Rating on INR230MM Loan
------------------------------------------------------------
CRISIL's ratings on the bank facilities of Poppys Knitwear Pvt Ltd
(PKPL) continue to reflect customer concentration in PKPL's
revenue and its below-average financial risk profile marked by
high gearing. These rating weaknesses are partially offset by the
extensive experience of the company's promoters in the textile
industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 20 CRISIL A4 (Reaffirmed)
Export Packing 480 CRISIL A4 (Reaffirmed)
Credit
Foreign Bill
Discounting 420 CRISIL A4 (Reaffirmed)
Letter of Credit 80 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 230 CRISIL B+/Stable (Reaffirmed)
Standby Line of 120 CRISIL A4 (Reaffirmed)
Credit
Outlook: Stable
CRISIL believes that PKPL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the company scales up its
operations significantly and improves its profitability, resulting
in significant improvement in its financial risk profile.
Conversely, the outlook may be revised to 'Negative' in case of
low cash accruals, or deterioration in working capital management,
or large capital expenditure, weakening the company's credit risk
profile.
Incorporated in 1973 and based in Tirupur (Tamil Nadu), PKPL
operates in the ready-made garments segment, mainly for infant
wear. The company's operations are managed by Mr. A Sakthivel and
Mr. A Sivakumar.
PRESTIGIOUS SCORS: CRISIL Assigns B+ Rating to INR25MM Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Prestigious Scors Private Limited (PSPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 35 CRISIL A4
Secured Overdraft
Facility 25 CRISIL B+/Stable
The ratings reflect PSPL's modest scale of operations, its large
working capital requirements, and stretched liquidity. These
weaknesses are partially offset by the extensive experience of
PSPL's promoters in the construction industry and its above-
average financial risk profile, with low gearing.
Outlook: Stable
CRISIL believes that PSPL will continue to benefit, over the
medium term, from its promoters' extensive industry experience.
The outlook may be revised to 'Positive' if PSPL reports
significantly large cash accruals or substantial capital infusion
along with efficient working capital management. Conversely, the
outlook may be revised to 'Negative' if PSPL reports low cash
accruals, or large working capital requirements or large debt-
funded capital expenditure, constraining its liquidity.
PSPL was incorporated in December 1996. It constructs roads
through road surfacing techniques and takes up other contract
work. PSPL is based in Madhya Pradesh (MP) and works on the
projects in MP only.
R. B. CHAVAN: CRISIL Reaffirms B+ Rating on INR90MM Cash Loan
-------------------------------------------------------------
CRISIL's ratings on the bank facilities of M/s R. B. Chavan (RBC)
continue to reflect RBC's small scale of operations in the
fragmented and tender-based civil construction business and the
firm's stretched liquidity because of large working capital
requirements.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 60 CRISIL A4 (Reaffirmed)
Cash Credit 90 CRISIL B+/Stable (Reaffirmed)
These rating weaknesses are partially offset by the extensive
experience of RBC's proprietor in the civil construction industry
and its moderate order book, leading to healthy revenue
visibility.
Outlook: Stable
CRISIL believes that RBC will continue to benefit over the medium
term from its proprietor's extensive industry experience. The
outlook may be revised to 'Positive' in case of sizeable increase
in the firm's scale of operations and significant improvement in
its working capital management. Conversely, the outlook may be
revised to 'Negative' if RBC's financial risk profile,
particularly liquidity, weakens because of stretch in working
capital requirements or decline in cash accruals, or if the firm
undertakes any large debt-funded capital expenditure programme.
Update
RBC's revenue increased by 99 per cent year-on-year to INR290
million in 2014-15 (refers to financial year, April 1 to
March 31), backed by ramp-up of work in an anti-sea binding
project being undertaken by the firm in 80:20 joint venture with
group concern Arjun Earthmovers in Karnataka. Its operating
profitability declined to 13.1 per cent in 2014-15 from 15.9 per
cent in 2013-14; the firm, however, generated cash accruals of
INR16.9 million in 2014-15, up from INR8.4 million in 2013-14.
RBC's order book of around INR1.65 billion as on 31st March'15
provides it with medium-term revenue visibility.
RBC's gearing declined to 0.97 times as on March 31, 2015, from
1.42 times as on March 31, 2014, with large accretion to reserves
and infusion of fresh capital. The firm's debt protection metrics
are comfortable, with interest coverage and net cash accruals to
total debt ratios of 2.5 times and 0.18 times, respectively, in
2014-15. CRISIL believes that RBC will sustain its financial risk
profile over the medium term, with steady accretion to reserves
and absence of any debt-funded capital expenditure.
The firm has large working capital requirements, marked by gross
current assets of 416 days as on March 31, 2015, despite
moderating from 559 days as on March 31, 2014, driven by large
inventory. The large working capital requirements resulted in
utilisation of cash credit limits at an average of 96 per cent
over the nine months through December 2014. CRISIL believes that
RBC will generate cash accruals of INR26.4 million in 2015-16
against nil debt obligations.
RBC was set up in 1992 as a proprietorship firm by Mr. Rajdeep
Baban Chavan. It undertakes civil construction projects, primarily
in anti-sea binding, for agencies of state governments.
R.K. AGARWAL: Ind-Ra Assigns IND B+ LT Rating on INR100MM Loan
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned R.K. Agarwal
Industries Limited (RKAIL) a Long-Term Issuer Rating of 'IND B+'.
The Outlook is Stable. The agency has also assigned RKAIL's bank
loans these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Fund-based working 100 Long-Term 'IND B+'/Stable
capital limit and Short-Term 'IND A4'
Proposed fund-based 25 Long-Term 'Provisional
working capital limit IND B+'/Stable and Short-Term
'Provisional IND A4'
KEY RATING DRIVERS
The ratings factor in RKAIL's small scale of operations with
revenue of INR599.31 mil. in FY15, according to the provisional
financials (FY14: INR493.87 mil.). In FY15, the company's credit
metrics improved yet remained weak with interest coverage
(operating EBITDA/gross interest expense) of 1.50x (FY14: 1.36x)
and net financial leverage (total adjusted net debt/operating
EBITDAR) of 6.11x (6.95x). Operating EBITDA margins were moderate
at 3.19% in FY15 (FY14: 3.09x).
The ratings are also constrained by the fragmented nature of the
flour milling industry and its susceptibility to government
interventions and seasonal trends. Also, RKAIL's business is
highly commoditized. All these factors could affect the company's
margins.
However, the ratings benefit from over 25 years of experience of
RKAIL's founders in the flour milling industry, and the company's
established customer relationships.
RATING SENSITIVITIES
Positive: A significant rise in the overall revenue along with an
improvement in the overall credit metrics will be positive for the
ratings.
Negative: A dip in the operating profitability, leading to
deterioration in the credit metrics will be negative for the
ratings.
COMPANY PROFILE
Registered in November 1996, RKAIL is a closely held public
limited company. The company is based in Kashipur (Uttarakhand,
India) and manufactures atta, maida/sooji, choker, besan, dal
channa. The company has an installed capacity of 547,500 quintals
per annum.
RADHE COTTON: CRISIL Raises Rating on INR75MM Cash Loan to B+
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Radhe Cotton (RC) to 'CRISIL B+/Stable' from 'CRISIL B/Stable'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 75 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 16.6 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The rating upgrade is driven by an improvement in RC's business
risk profile with stabilisation of its operations. The firm
commenced operations in May 2014 and recorded revenue of around
INR340 million in 2014-15 (refers to financial year, April 1 to
March 31). Its operating profitability margin was 3.8 per cent and
its cash accruals were INR3.4 million for the year. CRISIL
believes that RC's revenue will grow by 18 to 20 per cent per
annum and its operating profitability will remain stable, over the
medium term.
The rating reflects RC's start-up phase of operations in the
highly competitive cotton industry, the firm's large working
capital requirements, and its expected average financial risk
profile, marked by high gearing and average debt protection
metrics. These rating weaknesses are partially offset by the
extensive experience of RC's partners in the cotton industry and
the proximity of the firm's unit to the cotton-growing belt in
Gujarat.
Outlook: Stable
CRISIL believes that RC will continue to benefit over the medium
term from its partner's extensive industry experience. The outlook
may be revised to 'Positive' if the firm generates substantial
cash accruals, driven by a significant increase in its revenue,
leading to improvement in its liquidity. Conversely, the outlook
may be revised to 'Negative' if RC's financial risk profile,
particularly its liquidity, weakens, because of low accruals or a
stretch in its working capital cycle or debt-funded capital
expenditure.
Set up in 2013, RC is a partnership firm located at Visavadar in
Junagadh (Gujarat). RC is engaged in cotton ginning and pressing
and started commercial operations in May 2014.
RAJ KUMARI: CRISIL Ups Rating on INR119MM LT Loan to 'B'
--------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
Raj Kumari and Ram Gobind Memorial Education Society (Rajkumari)
to 'CRISIL B/Stable' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 119 CRISIL B/Stable (Upgraded
Bank Loan Facility from 'CRISIL B-/Stable')
Term Loan 81 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
The rating upgrade reflects CRISIL's belief that Rajkumari will
report healthy revenue growth and sustain its operating margin,
over the medium term, leading to adequate cash accruals and a
stronger financial risk profile. The society's revenue was around
INR51.19 million for 2014-15 (refers to financial year, April 1 to
March 31). It is expected to register a year-on-year revenue
growth of 47 per cent, while its operating margin is expected to
remain at 40 to 43 per cent, in 2015-16. The revenue growth will
be supported by healthy increasing occupancy rate, along with
capacity addition. Rajkumari's liquidity will be supported by the
expected adequate annual cash accruals of INR16 million to INR18
million in 2015-16, against debt obligations of INR14 million,
over the medium term. Its liquidity is expected to be supported by
promoters via unsecured loans, which stood at around INR81.69
million as on March 31, 2015.
The rating reflects Rajkumari's weak financial risk profile, with
small net worth, high gearing and weak debt protection metrics.
The rating also factors in Rajkumari's modest scale of operations
in the competitive education sector due to its operations' startup
nature and geographical concentration in revenue. These weaknesses
are partially offset by the extensive experience of Rajkumari's
promoters in running the educational institute and the healthy
demand prospects of India's education industry.
Outlook: Stable
CRISIL believes that Rajkumari will continue to benefit over the
medium term, from its promoters' extensive experience in the
education sector, and the industry's healthy demand prospects. The
outlook may be revised to 'Positive' if Rajkumari reports
substantial and sustained improvement in its revenue and
profitability margins, resulting in large cash accruals from
operations and improved financial risk profile. Conversely, the
outlook may be revised to 'Negative' if Rajkumari reports low
revenue or decline in its profitability margins from the current
levels, weakening its financial risk profile.
Rajkumari was formed in 2006 by Mr. Ram Karan Hooda. The society
runs a school, Shree Ram Global School, in Rohtak (Haryana), with
pre-school along with primary and secondary school divisions. The
school is affiliated to Central Board of Secondary Education. The
school's pre-school and primary school divisions commenced
operations from April 2012.
ROHIT FERRO: ICRA Lowers Rating on INR901.63cr Term Loan to 'B'
---------------------------------------------------------------
ICRA has revised the long term rating assigned to the INR901.63
crore term loans, INR506.16 crore working capital term loans and
INR751.37 crore fund based limits of Rohit Ferro Tech Limited to
[ICRA]B from [ICRA]B+. ICRA has also reaffirmed the short term
rating of [ICRA]A4 assigned to the INR352.63 crore non-fund based
limits of RFTL. The ratings have also been placed under rating
watch with negative implications.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loans 901.63 Downgraded to [ICRA]B
from [ICRA]B+
Working capital 506.16 Downgraded to [ICRA]B
term loans from [ICRA]B+
Fund based limits 751.37 Downgraded to [ICRA]B
from [ICRA]B+
Non-fund based limits 352.63 [ICRA]A4 reaffirmed
The rating action follows continued deterioration in the financial
metrics of the company in 2014-15, as reflected by an increased
operating loss, higher gearing level and stretched liquidity
position. Additionally, the company has recently suspended
operations at its Haldia plant because of an adverse cost
structure, primarily driven by high electricity costs. The Haldia
plant has a capacity of around 1 lakh MT (37% of RFTL's total
capacity), and thus closure of the same is expected to have a
significant impact on revenue visibility. While ICRA notes that
RFTL remains under the purview of a corporate debt restructuring
(CDR) programme at present, and its payments to banks have been
regular thus far, debt repayments on term loans commence from
December, 2015, which together with the closure of operations at
Haldia, may lead to increased liquidity pressures going forward.
Additionally, ICRA also notes that the company is seeking to sell
its Jajpur plant, and had in fact entered into a business transfer
agreement with Balasore Alloys Ltd. for the same, although the
sale is yet to be finalized. The Jajpur plant has a capacity of
1.03 lakh MT (37% of RFTL's total capacity). The ratings also
continue to factor in RTFL's non-integrated nature of operations,
which exposes its margins and cashflows to variability in the
ferro alloy and raw material prices. The ratings, however, also
continue to take note of the experience of the promoters of the
company in the steel and ferro alloys businesses.
RFTL is promoted by the SKP group based out of Kolkata, West
Bengal. It commenced its Ferro-alloy manufacturing facility at
Bishnupur Industrial complex of WBIDC in 2003, initially with two
number 7.5 MVA furnaces. Over the years, the company has
established additional capacities of three numbers of 9 MVA
furnaces in the same complex. In FY 2008, RFTL expanded its
operations into Odisha by setting up four 16.5 MVA furnaces in
Jajpur. Additionally, it commissioned six 9 MVA furnaces in Haldia
in West Bengal, which is a 100% EOU for exporting Ferro Alloys
from the country. The total manufacturing facility of the company
as on date is of 162 MVA.
Recent results
RFTL recorded a net loss of INR352.82 crore on an operating income
of INR1875.42 in FY2015. During FY2014, the company had registered
a net loss of INR228.6 crore on an operating income of INR2486.68
crore.
S.R. FOILS: Ind-Ra Suspends 'IND D' Long-Term Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated S.R. Foils &
Tissue Limited's (SRFTL) 'IND D' Long-Term Issuer Rating to the
suspended category. The rating will now appear as
'IND D(suspended)' on the agency's website.
The ratings have been migrated to the suspended category due to
the lack of adequate information. Ind-Ra will no longer provide
ratings or analytical coverage for SRFTL.
The ratings will remain in the suspended category for a period of
six months and be withdrawn at the end of that period. However,
in the event the issuer starts furnishing information during this
six-month period, the ratings could be reinstated and will be
communicated through a rating action commentary.
SRFTL's ratings:
-- Long-Term Issuer Rating: migrated to 'IND D(suspended)'
from 'IND D'
-- INR402.7 mil. term loans: migrated to Long Term
'IND D(suspended)' from 'IND D'
-- INR1,920 mil. fund-based limits: migrated to Long Term
'IND D(suspended)' from 'IND D'
-- INR1,430 mil. non-fund-based limits: migrated to Short Term
'IND D(suspended)' from 'IND D'
SARLA HANDICRAFTS: CRISIL Ups Rating on INR30MM Loan to 'B+'
------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
Sarla Handicrafts Pvt Ltd (SHPL) to 'CRISIL B+/Stable' from
'CRISIL B/Stable', and has reaffirmed its rating on the company's
short-term bank facility at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 30 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Packing Credit 55 CRISIL A4 (Reaffirmed)
Term Loan 25 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The rating upgrade reflects CRISIL's belief that SHPL's financial
risk profile will improve over the medium term, marked by adequate
liquidity and funding support from promoters. The company had
fully repaid its term loan as on March 31, 2015, and is expected
to generate cash accruals of around INR140 million against no debt
obligations in 2015-16 (refers to financial year, April 1 to March
31). In addition, the promoters infused INR18.2 million as
equity/unsecured loans in 2014-15. CRISIL believes that SHPL's
promoters will continue to extend funding support to the company
over the medium term. The company's business risk profile is
expected to remain stable over the medium term. It reported an
operating income of INR416 million, with a stable operating margin
of about 5 per cent, for 2014-15. CRISIL believes that SHPL will
register steady improvement in its cash accruals on the back of
steady revenue growth and sustenance of profitability, along with
expected low capital expenditure, resulting in improvement in its
liquidity, and consequently its financial risk profile.
The ratings reflect SHPL's small scale of operations in the
fragmented industry resulting in low profitability, constrained
financial flexibility due to a small net worth, and susceptibility
to volatility in raw material prices. These rating weaknesses are
partially offset by the company's steady revenue growth, backed by
its healthy relationships with customers, who are diversified
across geographies, and its promoters' extensive experience in the
floor coverings industry.
Outlook: Stable
CRISIL believes that SHPL will continue to benefit over the medium
term from its promoters' extensive industry experience and its
established relationships with customers. The outlook may be
revised to 'Positive' if the company achieves higher-than-expected
cash accruals or it receives external support in the form of
equity infusion from its promoters, leading to improvement in its
financial risk profile. Conversely, the outlook may be revised to
'Negative' if SHPL's liquidity deteriorates because of large debt-
funded capital expenditure or a stretch in its working capital
cycle.
SHPL was set up in 1989 as a private limited company; it is
promoted by Mr. Kamal Agarwal and his brother, Mr. Anil Agarwal.
The company manufactures and exports floor coverings, mainly
cotton rugs, bath mats and carpets, at its facilities in Panipat
(Haryana).
SHIVAM COTTON: ICRA Reaffirms B+ Rating on INR9.70cr Cash Credit
----------------------------------------------------------------
ICRA has reaffirmed the [ICRA]B+ rating to the Rs 9.70 crore long-
term fund based cash credit facility of Shivam Cotton Industries.
ICRA has also reaffirmed the short-term rating of [ICRA]A4 to the
INR0.25 crore short term fund based limit of SCI.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund
Based-Cash Credit 9.70 [ICRA]B+ reaffirmed
Short Term Fund
Based Limit 0.25 [ICRA]A4 reaffirmed
The ratings continue to remain constrained by the firm's
relatively modest scale of cotton ginning and seed crushing
operations and the de-growth in operating income witnessed during
FY 2015 owing to the volatility in cotton prices during the year.
The ratings also consider the vulnerability of firm's
profitability to movements in cotton prices which are subject to
seasonality and crop harvest as well as the regulatory risk with
regard to imposition of MSP. The ratings also take into account
the firm's weak financial risk profile characterized by low
profitability margins owing to the limited value addition and
highly competitive & fragmented industry structure due to low
entry barriers, adverse capital structure and high working capital
intensity. The ratings also consider adverse potential impact on
net worth and gearing levels in case of any substantial withdrawal
from capital account given the constitution as a partnership firm.
The rating however continues to favourably factor in the stable
demand outlook for cotton and its derivative products and the
favourable location of the firm's plant with respect to raw
material procurement. ICRA also positively considers the long
standing experience of the promoters in the cotton ginning and
cottonseed crushing industry and the improvement in profitability
during FY 2015.
Shivam Cotton Industries (SCI) was established in the year 1998 as
a partnership firm and is engaged in ginning, pressing of raw
cotton and crushing of oil seed. The firm's manufacturing facility
is located at Karjan, Gujarat and is equipped with 36 ginning and
1 press with a total production capacity of 300 bales per day or
51 MTPD and 10 expellers with capacity of crushing 8571 MTPA of
cottonseeds. SCI is promoted by Mr. Vikram Patel, Mr. Shailesh
Patel and other members of the Patel family who have over fifteen
years of experience in the cotton ginning, pressing and cottonseed
crushing industry.
Recent Results
During FY 2015, the firm reported an operating income of INR70.01
crore and profit before tax of INR0.76 crore as against operating
income of Rs 84.76 crore and profit before tax of Rs 0.62 crore in
FY 2014.
SINGH CONSTRUCTION: CRISIL Reaffirms 'C' Rating on INR40MM Loan
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Singh Construction Pvt
Ltd (SCPL) continue to reflect instances of delays by SCPL in
servicing its debt obligations (not rated by CRISIL); the delays
have been caused by the company's weak liquidity driven by a
stretch in receivables.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 160 CRISIL A4 (Reaffirmed)
Cash Credit 40 CRISIL C (Reaffirmed)
The ratings also reflect the company's modest scale of operations,
with exposure to risks inherent in the tender-based business, and
the customer and geographical concentration in its revenue
profile. These rating weaknesses are partially offset by the
extensive experience of SCPL's promoters in the construction
industry.
Update
The company continues to delay its equipment loan obligations by
over 60 days to HDFC Ltd because of its stretched liquidity.
Modest liquidity, reflected in gross current assets of 351 days as
on March 31, 2015, is driven by its debtors of 55 days and around
INR292 million outstanding as security deposits, earnest money
deposits, and margin money for performance guarantee on account of
tender-based business. The pressure on liquidity is further
accentuated by SCPL's investment of around INR64.3 million as on
March 31, 2015, in its subsidiary. Liquidity pressure has also
impacted the company's business risk profile. There has been a
continuous decrease in the operating income since the past three
years on account of stretched liquidity. Owing to increased funds
stuck with various authorities and customers, the company is
facing paucity of funds to fund growth in scale of operation. The
company recorded an operating income of around INR430 million in
2014-15 (refers to financial year, April 1 to March 31) as against
an operating income of INR407 million in 2013-14. SCPL posted an
operating margin of 7.6 per cent in 2014-15, in line with
historical trends.
For 2014-15, SCPL, on a provisional basis, reported a profit after
tax (PAT) of INR4.7 million on net sales of INR430 million,
against a PAT of INR14.1 million on net sales of INR407 million
for 2013-14.
SCPL, based in Bihar, was originally established as a proprietary
concern by Mr. Shailesh Kumar Singh; the company was reconstituted
as a private limited company in 2011. SCPL undertakes
constructions of roads for government departments in Bihar.
SINGHANIA BUILDCON: ICRA Ups Rating on INR21.72cr Loan to B-
------------------------------------------------------------
ICRA has revised upwards the rating to the INR21.72 crore (reduced
from INR41.80 crore) term loan facilities of Singhania Buildcon
Private Limited to [ICRA]B- from [ICRA]D. ICRA has also assigned
an [ICRA]B- rating to the INR20.08 crore unallocated limit of
SBPL. Earlier, the rating was suspended in the month of March 2015
in the absence of the requisite information from the company,
which currently stands revoked.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits- 21.72 [ICRA]B- upgraded
Term Loans (suspension revoked)
Unallocated Limit 20.08 [ICRA]B- assigned
The upward revision in the rating primarily takes into account the
regularisation in debt servicing by the company and deferment in
the repayment schedule of term loan by the lender in the recent
past. ICRA also takes note of the recent conversion of a portion
of unsecured loan from promoters into equity, which is likely to
have a positive impact on the company's capital structure and
coverage indicators. However, the rating is constrained by the
significant delay in implementation of the partly debt funded
project undertaken by the company for construction of a 3 star
hotel in Raipur. ICRA notes that SBPL's significant debt servicing
obligations are likely to keep its cash flows under pressure, and
any further delay in project implementation would aggravate the
liquidity tightness being faced by the company. SBPL's top-line
stood at a moderate level over the last few years. The company has
embarked upon a number of large projects, for which it has to
significantly scale up its resources and bring in funds to ensure
timely execution. The rating also factors in the company's
exposure to geographical concentration risks as its operations are
primarily concentrated in and around Raipur, and the ongoing
slowdown in the real estate sector which may lead to market risks
for unsold stock. However, the favourable location of a number of
SBPL's projects in proximity to the All India Institute of Medical
Sciences (AIIMS) at Raipur mitigates market risks to an extent.
The rating also takes into consideration the long experience and
established position of the promoters in the real estate business
in Raipur, Chhattisgarh.
Incorporated in 1999, SBPL is the flagship company of the
'Singhania Buildcon' group which is engaged in the real estate
business in Raipur, Chhattisgarh for over a decade. Most of the
projects undertaken by SBPL are located in and around the Raipur
city. SBPL is a partner in an ICRA rated entity Singhania Merlin
Estate (rated at [ICRA]BB+/Stable) which has constructed a modern
residential housing complex 'Singapore City' at Raipur.
Recent Results
SBPL posted a profit before tax of INR2.05 crore (provisional) on
an operating income of INR23.16 crore (provisional) during 2014-
15, as compared to a net profit of INR1.75 crore on an operating
income of INR19.43 crore in 2013-14.
SOMA ISOLUX: CRISIL Reaffirms D Rating on INR36.46BB Term Loan
--------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Soma Isolux NH
One Tollway Private Ltd (SIPL) continues to reflect delays in the
commissioning of SIPL's project-the six-lane Panipat (Haryana)-
Jalandhar (Punjab) 291-kilometer section of National Highway (NH)
1-has been delayed significantly because of delays in completion
of the land acquisition process and shifting of utilities. SIPL
has again sought an extension of the commissioning of the project
after missing the revised COD of March 31, 2015. The company has
applied to the Supreme Court of India for the extension of the COD
to September 4, 2015.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 36,460 CRISIL D (Reaffirmed)
CRISIL had, on June 17, 2015, reaffirmed its ratings on the bank
loan facilities of SIPL at CRISIL D. CRISIL believes that the
delays in project commissioning is likely to have a bearing on
SIPL's ability to service debt obligations in a timely manner
given that debt principal repayments begin from July 2015. Debt
disbursements resumed ever since SIPL restructured its debt
repayment schedule in 2014. However, the Supreme Court's decision
on the revision in COD coupled with consistent timely repayment of
debt obligations remains a key monitorable.
Incorporated in 2008, SIPL is a special-purpose vehicle (SPV)
promoted by the Isolux Corsan group and Soma Enterprises Ltd in
the ratio of 61:39. The SPV has entered into a concession
agreement with National Highways Authority of India (NHAI; rated
CRISIL AAA/Stable) for execution, operation, and maintenance of
the project on a build-operate-transfer (BOT) basis.
SIPL has been awarded the right to widen the four-lane
Panipat'Jalandhar section of NH 1 to six lanes, to be executed on
a BOT-toll basis. SIPL has a concession period of 15 years, which
includes a construction period of 30 months. The original COD was
November 9, 2011, which after subsequent delays and revisions, was
again approved to March 31, 2015. The company has missed the
revised COD of March 31, 2015, and has applied for a revision in
the COD to September 4, 2015.
SRI SRINIVASA: ICRA Reaffirms B+ Rating on INR6.25cr Loan
---------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B+ assigned to
Rs 6.25 crore fund based limits of Sri Srinivasa Rice Mill
(Mahendrawada). ICRA has also reaffirmed the rating of [ICRA]B+
assigned to Rs 3.75 crore unallocated limits of SSRM.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 6.25 [ICRA]B+ re-affirmed
Unallocated limits 3.75 [ICRA]B+ re-affirmed
The reaffirmation of rating continues to be constrained by SSRM's
weak financial profile characterized by low profitability
indicators; small scale of operations in the rice milling industry
and risks arising from partnership nature of the firm. The rating
is further constrained by intensive competitive nature of the rice
milling industry restricting operating margins and agro climatic
risks, which can affect the availability of the paddy in adverse
weather conditions. The rating is however supported by the long
track record of the promoters in the rice mill business and ease
in paddy procurement due to plant location in major paddy
cultivating region of the country. Further, favorable demand
prospects of the industry with India being the second largest
producer and consumer of rice internationally augurs well for the
firm.
Going forward, the firm's ability to improve its profitability and
manage its working capital requirements will be key rating
sensitivities from credit perspective.
Founded in the year 1978 as a partnership firm, Sri Srinivasa Rice
Mill (Mahendrawada) (SSRM) is engaged in the milling of paddy and
produces raw and boiled rice. The firm is promoted by Mr. T. Sathi
Reddy and his family who have more than 25 years of experience in
rice industry. The rice mill is located at Mahendrawada village in
East Godavari district of Andhra Pradesh with an installed
capacity to mill 55800 metric tons of paddy per annum.
Recent Results
SSRM has reported an operating income of INR32.49 crore and net
profit of 0.30 crore respectively in FY2014 as against an
operating income and net profit of INR32.79crore and INR0.32 crore
in FY2015 (provisional and unaudited).
SUPREME VASAI: Ind-Ra Lowers Rating on INR1.54BB Loan to BB+
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Supreme Vasai
Bhiwandi Tollways Private Limited's (SVBTPL) INR1,540 mil.
(outstanding: INR1,510 mil. on March 31, 2015) long-term senior
project loans to 'IND BB+' from 'IND BBB+'. The Outlook is
Stable.
KEY RATING DRIVERS
The three-notch downgrade reflects a steep fall in SVBTPL's toll
revenue to about 23% below Ind-Ra's expectations in FY15, mainly
due to a 27% decline in the traffic from FY14. Since 90% of the
traffic includes commercial vehicles, a slow economic recovery
might be the plausible reason for the decline in traffic. The
actual revenue dipped 12% yoy to average daily revenue of
INR0.73 mil. in FY15.
The rating also factors in the deteriorating credit profile of the
ultimate parent - Supreme Infrastructure India Limited (SIIL;
'IND BB'/Negative) and its consequent, imminent inability to
support the project, should the need arise. The rating is
constrained by the possible diversion of cash from this SPV to
other associate SPVs and/or the sponsors, considering the
financial stress of SIIL and the group's other companies.
The project has a revenue sharing mechanism. According to the
provisions of the concession agreement, 50% of the difference
between revenue numbers submitted at the time of bidding and
actual revenue numbers will be shared with Public Works
Department, the government of Maharashtra. However, according to
the base case projections, the said provision is unlikely to come
into effect over the concession life given the drop in revenue
performance.
The toll rates are based on pre-determined rates (for the entire
concession period) specified in the concession agreement and are
subject to increase every three years. Unlike most concessions by
the National Highway Authority of India ('IND AAA'/Stable), the
toll rates are not linked to inflation which limits the
uncertainty related to macroeconomic inflation rate movements and
thus mitigates revenue (price) risk.
The project is exposed to a variable interest rate (annual
resets). The debt amortization commenced from January 2014 and
will be repaid in 135 structured monthly installments till
March 2025. Similar to most other infrastructure assets, the
amortization is heavily back ended; over 70% of the debt is likely
to be amortized in the last four years of the tenor. Debt service
reserve account of INR22 mil. (two months' debt servicing) has
been created, which is a rating positive.
PROJECT PROFILE
SVBTPL is an SPV acquired by Supreme Infra BOT Private Limited in
Oct. 2013. Supreme Infra BOT is a 100% subsidiary of SIIL and the
holding company of the Supreme Group for its build-operate-
transfer projects. SVBTPL has taken over the concession and toll
collection rights of the 26.425km road in Maharashtra. This was
through the execution of a concession agreement among the Public
Works Department, the government of Maharashtra, lenders'
consortium and the concessionaire, after the erstwhile
concessionaire failed to meet the obligations under the
agreements. The total project cost of INR2,140 mil. is being
financed by debt of INR1,540m debt and the remaining by equity.
RATING SENSITIVITIES
Sustained traffic performance meeting base case projections could
result in a rating upgrade. Conversely, any material traffic
underperformance or higher-than-expected operating expenses and/or
any cash diversion from the SPV could lead to a negative rating
action.
SURYACHAKRA POWER: Ind-Ra Withdraws D Rating on INR120MM Loan
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn the
'IND D (suspended)' rating on Suryachakra Power Corporation
Limited's (SPCL) proposed INR120 mil. term loans.
The rating has been withdrawn due to lack of adequate information.
Ind-Ra will no longer provide ratings or analytical coverage of
SPCL.
Ind-Ra suspended SPCL's ratings on Nov. 26, 2014.
SVASCA INDUSTRIES: CRISIL Reaffirms 'B' Rating on INR130MM Loan
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Svasca Industries India
Ltd (SIL) continue to reflect SIL's working-capital-intensive
operations, weak financial risk profile marked by high gearing and
subdued debt protection metrics, and small scale of operations in
the fragmented transformer industry. These rating weaknesses are
partially offset by the extensive experience of SIL's promoter in
the transformer industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 85 CRISIL A4 (Reaffirmed)
Cash Credit 130 CRISIL B/Stable (Reaffirmed)
Letter of Credit 75 CRISIL A4 (Reaffirmed)
Outlook: Stable
CRISIL believes that SIL will continue to benefit over the medium
term from its promoter's extensive industry experience. The
company's financial risk profile, particularly its liquidity, is,
however, expected to remain weak over the medium term because of
its working-capital-intensive operations. The outlook may be
revised to 'Positive' if the company's working capital management
improves, leading to significant improvement in its liquidity.
Conversely, the outlook may be revised to 'Negative' if SIL's
financial risk profile, particularly its liquidity, deteriorates,
most likely because of low cash accruals or large debt-funded
capital expenditure.
SIL, incorporated in 1996, is promoted by Mr. Shyam Tayal. It
manufactures transformers and transformer components at its
facilities in Rudrapur (Uttarakhand) and Faridabad (Haryana). The
company manufactures both power and distribution transformers
ranging from 6.3 kilovolt amperes to 20 megavolt amperes.
TRISHAN METALS: CRISIL Assigns 'B' Rating to INR81.1MM Loan
-----------------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Trishan Metals Pvt Ltd (TMPL) and has assigned its
'CRISIL B/Stable/CRISIL A4' ratings to TMPL's bank facilities.
CRISIL had suspended the ratings on April 14, 2015, as TMPL had
not provided necessary information required for a rating review.
The company has now shared the requisite information, enabling
CRISIL to assign the ratings to its bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 81.1 CRISIL B/Stable (Assigned;
Suspension revoked)
Letter Of Guarantee 5.0 CRISIL A4 (Assigned;
Suspension revoked)
Working Capital 8.9 CRISIL B/Stable (Assigned;
Term Loan Suspension revoked)
The ratings reflect TMPL's modest scale of operations in the
fragmented and competitive steel industry, susceptibility to
volatility in steel prices, high customer concentration, and
modest debt protection metrics along with stretched liquidity.
These rating weaknesses are partially offset by the extensive
industry experience of TMPL's promoters, healthy growth in
turnover along with improvement in margins, prudent working
capital management, and above-average financial risk profile,
marked by healthy gearing.
Outlook: Stable
CRISIL believes that TMPL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the company improves its
scale of operations and profitability or its capital structure,
leading to a better financial risk profile. Conversely, the
outlook may be revised to 'Negative' if TMPL's financial risk
profile, particularly its liquidity, weakens because of a stretch
in its working capital cycle, low cash accruals, or large debt-
funded capital expenditure.
TMPL, located in Hoogly (West Bengal), manufactures cold-rolled
strips. Till November 2012, Walzen Strips Pvt Ltd and Walzen Steel
India Pvt Ltd (WSIPL) were part of the Kolkata-based Lyca group of
companies promoted by Mr. Tejomoy Roychowdhury. In November 2012,
the ownership and management of WSIPL was transferred to the Bagga
family and the company was renamed as TMPL. The Bagga family also
exports its products to Bangladesh through Trishan Exports Pvt Ltd
(TEPL; holding company of TMPL). It also operates a hotel under
TEPL.
VISHAL PAPER: CRISIL Assigns B+ Rating to INR62.5MM Bank Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' ratings to the bank
facilities of Vishal Paper Mills Pvt Ltd (VPML).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
SME Credit 2.5 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 62.5 CRISIL B+/Stable
Cash Credit 30 CRISIL B+/Stable
Long Term Loan 30 CRISIL B+/Stable
The ratings reflect BPM's modest scale of operations in the highly
fragmented paper industry and its large working capital
requirements, constraining the company's liquidity. These rating
weaknesses are partially offset by its promoters' extensive
experience, and the company's average financial risk profile.
Outlook: Stable
CRISIL believes that VPML will benefit over the medium term from
its promoters' extensive experience in the paper industry. The
outlook may be revised to 'Positive' in case of significant
increase in revenue and operating profitability, coupled with
better working capital management. Conversely, the outlook may be
revised to 'Negative' if the company's revenue and operating
profitability decline significantly or if there is a substantial
debt-funded capital expenditure, resulting in deterioration in its
financial risk profile.
Established in 1985, VPML manufactures duplex paper board with
application across garment boxes, pharmaceutical boxes, sweet
boxes and ice cream boxes. The company is based in Malerkotla
(Punjab).
VPML reported net profit of INR2.8 million on net sales of
INR176.6 million for 2013-14 (refers to financial year, April 1 to
March 31), against net loss of INR2.6 million on net sales of
INR160.8 million for 2012-13. It is estimated to generate net
sales of INR264.7 million in 2014-15.
WEB TECH: CRISIL Assigns 'D' Rating to INR65MM Cash Loan
--------------------------------------------------------
CRISIL has revoked the suspension of its ratings on Web Tech
Engineering Pvt Ltd (WEPL) assigned its 'CRISIL D/CRISIL D'
ratings to these bank facilities. The ratings had been 'Suspended'
by CRISIL on July 26, 2014, as WEPL had not provided the necessary
information for a ratings review.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 15 CRISIL D (Assigned;
Suspension revoked)
Proposed Cash 43 CRISIL D (Assigned;
Credit Limit Suspension revoked)
Cash Term Loan 42 CRISIL D (Assigned;
Suspension revoked)
Cash Credit 65 CRISIL D (Assigned;
Suspension revoked)
The ratings reflect continuous delays by WEPL in payment of
interest and repayment of term loan instalments, and instances of
overdrawn working capital limits due to company's weak liquidity.
WEPL has a below-average financial risk profile, marked by a high
total outside liabilities to tangible net worth ratio and weak
debt protection metrics, and working-capital-intensive of
operations. However, the company benefits from its promoters'
extensive experience and its established customer base in the
capital goods manufacturing industry.
Incorporated in 1998 and promoted by Mr. Sabajeet Singh, WEPL
manufactures security printing and food packaging machines,
automotive component, and solar products. The company has its
manufacturing unit in Faridabad (Haryana).
WEPL reported a net sales of around INR310.7 million, estimated
for 2014-15 (refers to financial year, April 1 to March 31),
against a PAT and net sales of INR3.2 million and INR445.2
million, respectively, for 2013-14.
WELCOME MINERAL: ICRA Reaffirms 'B' Rating on INR6.0cr Term Loan
----------------------------------------------------------------
ICRA has reaffirmed the long term rating to [ICRA]B) for INR1.85
crore fund based cash credit facility and INR6.00 crore term loan
facility of Welcome Mineral Private Limited. ICRA has also
reaffirmed an [ICRA]A4 rating to INR1.10 crore short term non fund
based facilities of WMPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 1.85 [ICRA]B; Reaffirmed
Term Loan 6.00 [ICRA]B; Reaffirmed
Bank Guarantee 1.10 [ICRA]A4; Reaffirmed
The ratings continues to remain constrained by WMPL's limited
operational track record entailing weak financial profile as
reflected by net losses, stretched capital structure and weak debt
protection metrics. While reaffirming the ratings, ICRA considers
the vulnerability of profitability and cash flows to fluctuating
prices of gas and power and cyclicality inherent in the real
estate industry, which is the main consumer sector. The ratings
are further constrained by the restricted pricing flexibility in
the business due to fragmented nature of the industry and intense
competition among the players.
The ratings however, favorably consider the timely commissioning
of the tile manufacturing operations supported by stabilization of
operations with moderate capacity utilization level in FY15 as
well as the experience of the key promoters in the ceramic
industry. The ratings also favorably take into account the
location advantage enjoyed by the company, giving it easy access
to raw material.
Incorporated in September 2013, Welcome Mineral Private Limited
(WMPL) is engaged in the manufacture of slurry (Body clay) and
wall tiles. The manufacturing unit of the company is located in
Morbi, Gujarat, with an installed capacity of 90,000 MTPA for
slurry and 18000 MTPA for wall tiles. The commercial production
has commenced in September 2014. The company is promoted and
managed by Mr. Pradeep Kavar, and Mr. Ramesh Sanavda having
experience in ceramic business.
Recent Results
For the year ended 31st March, 2015, the company reported an
operating income of INR7.26 crore and has incurred net losses of
INR0.51 crore as per unaudited results.
WELMECH ENGINEERING: CRISIL Reaffirms B- Rating on INR64.2MM Loan
-----------------------------------------------------------------
CRISIL's ratings on the bank facilities of Welmech Engineering
Company Pvt Ltd (WECPL) continue to reflect WECPL's small scale of
operations in the fragmented industrial heat treatment furnaces
manufacturing segment, and the susceptibility of its operating
margin to volatility in input prices.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 45 CRISIL A4 (Reaffirmed)
Cash Credit 42.5 CRISIL B-/Stable (Reaffirmed)
Letter of Credit 3 CRISIL A4 (Reaffirmed)
Long Term Loan 5.3 CRISIL B-/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 64.2 CRISIL B-/Stable (Reaffirmed)
The ratings also factor in WECPL's below-average 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 the company's promoters in the
furnace manufacturing industry.
Outlook: Stable
CRISIL believes that WECPL will continue to benefit over the
medium term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the company enhances its
scale of operations and improves its operating margin, leading to
improved cash accruals and liquidity. Conversely, the outlook may
be revised to 'Negative' if WECPL's liquidity weakens due to
substantial working capital requirements and significantly low
cash accruals.
Update
WECPL's operating revenue was about INR143 million in 2014-15
(refers to financial year, April 1 to March 31), a year-on-year
decline by 6 per cent. Its operating margin was at about a
negative 1 per cent in 2014-15 largely because of its inability to
completely pass on increase in input costs. CRISIL believes that
WECPL's revenue will show modest growth over the medium term
supported by an order book of INR90 million executable over the
next six months.
WECPL's financial risk profile is below average, marked by a small
net worth and weak debt protection metrics. The gearing was about
2.74 times as on March 31, 2015, and is expected to remain high
over the medium term. The company's debt protection metrics were
weak because of cash losses. CRISIL believes that WECPL's
financial risk profile will remain below average over the medium
term on account of contraction of debt to fund its working capital
requirements.
WECPL has weak liquidity, with inadequate cash accruals to meet
its term debt obligations and high utilisation of bank lines. The
company is estimated to have incurred an operating loss in 2014-15
and is likely to generate cash losses against debt obligations of
around INR4 million per annum over the medium term. However,
WECPL's liquidity is supported by need-based unsecured loans
extended by its promoters; the balance of such loans was about
INR2.6 million as on March 31, 2015. The company's bank limits of
INR42.5 million were utilised extensively, at an average of 94 per
cent over the 12 months through March 2015, primarily to meet its
working capital requirements. CRISIL believes that WECPL's
liquidity will remain weak over the medium term, because of its
its weak operating profitability.
WECPL commenced operations in 1989 in Ambattur (Tamil Nadu). The
company is equally owned by Mr. Satagopan and Mrs. Karunakaran. It
design, manufacture, erection and commissioning of high-capacity
heat-treatment furnaces and ovens used to develop and implement
heat-treatment facilities and processes in diverse industries like
auto components industry, defence segment and aerospace industry.
=========
J A P A N
=========
TOSHIBA CORP: Foreign Investors Want Tougher Governance in Japan
----------------------------------------------------------------
Denny Thomas and Michelle Price of Reuters report that Japan needs
bolder measures such as harsher criminal sanctions for fraud and
whistleblower protections to improve corporate transparency and
prevent a repeat of the accounting scandal seen at Toshiba Corp,
foreign investors and governance experts said July 23.
Toshiba's chief executive Hisao Tanaka and a string of other
senior officials resigned on July 21 after an independent inquiry
found he had been aware the company had inflated its profits by
JPY150 billion over several years, Reuters recalls.
According to the news agency, the scandal is a major setback for
the government of Prime Minister Shinzo Abe, who has made
improving corporate governance a central theme in his bid to
reinvigorate Japan's economy and entice more foreign capital.
"This is a negative headline in what's been 18 months of positive
momentum in Japan," Reuters quotes Singapore-based David Smith,
head of corporate governance at Aberdeen Asset Management, which
owns Japan stocks, as saying. An Aberdeen affiliate had a very
small equity holding in Toshiba as of end-May, Reuters data shows.
"This is a black mark for corporate Japan in the face of positive
news and strong markets. The government may want to act tough,"
said Mr. Smith, who helps manage about $115 billion in Asia,
Reuters relays.
Reuters notes that Japan's listed companies have long had tense
relations with their foreign shareholders, who have frequently
blamed long-term insiders' dominance of corporate boards for low
returns and weak oversight.
In response to this criticism, the Abe government last month
introduced new rules requiring listed company boards to appoint at
least two outside independent directors, but investors said this
did not go far enough -- Toshiba already had four independent
directors as part of its 16-person board, Reuters says.
"The Toshiba scandal further underlines the need for board
training as well as a robust whistleblower protection system,"
Reuters quotes Seth Fischer, chief investment officer at
Hong Kong-based hedge fund Oasis Management, as saying. Fischer is
a corporate governance activist who successfully pushed for
reforms at Nintendo Co Ltd. "Whistleblowers are ultimately
performing a service to the company, its executives and the
company's overall mission -- which is integrity of financial
statements. They need to be rewarded as such," he said.
Last week's revelations come four years after a similar scandal in
which camera-maker Olympus Corp concealed nearly $1.7 billion in
losses from shareholders, Reuters notes.
Both scandals also raise questions about the quality of Japan
company audits, which rate poorly compared with developed market
peers, Reuters relates citing data compiled by Hong Kong-based GMT
Research.
"One of the problems is that audit fees are very low in Japan.
It's nonsense that auditors, on these fees, are doing any proper
work," Reuters quotes Robert Medd, a partner at GMT, as saying.
As reported in the Troubled Company Reporter-Asia Pacific on
July 22, 2015, Bloomberg News said Toshiba Corp. President Hisao
Tanaka and two other executives quit to take responsibility for a
$1.2 billion accounting scandal that caused the company to restate
earnings for more than six years.
Norio Sasaki, the vice chairman, and Atsutoshi Nishida, a former
president who was serving as adviser, also resigned, the Tokyo-
based company said July 21, more than two months after announcing
it was investigating possible accounting irregularities, according
to Bloomberg. The company said earlier it would correct earnings
by at least JPY152 billion, based on the results of a third-party
investigation of its books, Bloomberg related.
About Toshiba Corp.
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-scale
integrated (LSI) circuits for image information systems and liquid
crystal displays (LCDs), among others. The Social Infrastructure
segment offers various generators, power distribution systems,
water and sewer systems, transportation systems and station
automation systems, among others. The Home Appliance segment
offers refrigerators, drying machines, washing machines, cooking
utensils, cleaners and lighting equipment. The Others segment
leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
June 25, 2014, Moody's Japan K.K. assigned a rating of Ba1 to the
JPY180 billion in subordinated loans issued by Toshiba
Corporation. At the same time, Moody's has affirmed all of
Toshiba's ratings.
Senior Unsecured Baa2
Senior Unsecured Shelf (P)Baa2
Subordinate Ba1
Commercial Paper P-2
The ratings outlook is stable.
TOSHIBA CORP: Muromachi to Lead Recovery Amid Accounting Scandal
----------------------------------------------------------------
Jiji Press reports that Toshiba Corp. plans to have interim chief
Masashi Muromachi relinquish the title of chairman to focus on the
role as president, informed sources said.
Jiji Press relates that Mr. Muromachi will lead an effort to
recover from the accounting scandal that rocked the industrial and
electronics company. Mr. Muromachi, who was chairman when the
scandal came to light, has doubled as interim president since July
22 to replace Hisao Tanaka, who resigned as president to take
responsibility for the scandal, the report says.
Aside from Tanaka, other top executives who resigned include Vice
Chairman Norio Sasaki, Toshiba adviser Atsutoshi Nishida, four
vice presidents and two directors, Jiji Press notes.
Tanaka, Sasaki and Nishida pressured their subordinates to inflate
profits, leading Toshiba to overstate earnings by
JPY152 billion from fiscal 2008 to 2014 in a "systematic manner,"
Jiji Press discloses citing findings by an independent
investigation panel.
About Toshiba Corp.
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-scale
integrated (LSI) circuits for image information systems and liquid
crystal displays (LCDs), among others. The Social Infrastructure
segment offers various generators, power distribution systems,
water and sewer systems, transportation systems and station
automation systems, among others. The Home Appliance segment
offers refrigerators, drying machines, washing machines, cooking
utensils, cleaners and lighting equipment. The Others segment
leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
June 25, 2014, Moody's Japan K.K. assigned a rating of Ba1 to the
JPY180 billion in subordinated loans issued by Toshiba
Corporation. At the same time, Moody's has affirmed all of
Toshiba's ratings.
Senior Unsecured Baa2
Senior Unsecured Shelf (P)Baa2
Subordinate Ba1
Commercial Paper P-2
The ratings outlook is stable.
===============
M A L A Y S I A
===============
1MALAYSIA DEVELOPMENT: PAC Summons Jho Low Over 1MDB Controversy
----------------------------------------------------------------
The Star reports that businessman Low Taek Jho, better known as
Jho Low, has been summoned before the Public Accounts Committee
(PAC) over the 1Malaysia Development Bhd (1MDB) controversy.
The Star relates that the PAC sent a letter to the Ministry of
Finance (MoF) on July 23 calling for him to appear before the bi-
partisan parliamentary committee on Sept 8.
According to the report, PAC chairman Datuk Nur Jazlan Mohamed
said the letter was sent to the MoF because it was "the main
shareholder of 1MDB".
"They should know his whereabouts or be able to trace him," Nur
Jazlan told The Star.
The report relates that Nur Jazlan said aside from Jho Low, the
PAC summoned the directors of Brazen Sky, a company that 1MDB had
invested MYR6 billion in, to appear before it and set September 9
for this meeting.
He said the PAC wanted to question these people due to the
findings of the Auditor-General's interim report on the
government-owned 1MDB, which has amassed MYR42 billion in debts,
the report adds.
As reported in the Troubled Company Reporter-Asia Pacific on
July 23, 2015, Reuters said Singapore Police Force has frozen two
bank accounts to help with an investigation in to Malaysia's
troubled state-owned investment fund 1Malaysia Development Bhd
(1MDB), which is being probed by authorities in Malaysia for
financial mismanagement and graft. Reuters said the freezing of
the Singapore bank accounts follows a similar move in Malaysia
where a task force investigating 1MDB said earlier this month that
it had frozen half a dozen bank accounts following a media report
that nearly $700 million had been transferred to an account of
Malaysia's Prime Minister Najib Razak.
The Wall Street Journal reported on July 3 that investigators
looking into 1MDB had traced close to US$700 million of deposits
moving through Falcon Bank in Singapore into personal bank
accounts in Malaysia belonging to Najib, Reuters related.
Kuala Lumpur-based 1Malaysia Development Bhd (1MDB) operates as a
government agency. The Company offers financial assistance,
analysis, and advice through investors, corporations, and
consultants to startups and growth companies. 1MDB focuses on
investments with strategic value and high multiplier effects on
the economy, particularly in energy, real estate, tourism, and
agribusiness.
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N E W Z E A L A N D
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623 ON THE ROCKS: Goes Into Liquidation
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Jess Pullar at Stuff.co.nz reports that Nelson hospitality company
623 On the Rocks has gone into liquidation, while its inner city
counterpart 623 in the City is in voluntary administration.
Robert Bowe and Michael Graham own both the businesses. Mr. Bowe
did not comment further after confirming on July 23 that the
businesses were in trouble, Stuff.co.nz says.
According to the report, the Rocks Rd restaurant, which is owned
by Bowe's and Graham's company 623 OTR, appointed Geoff Falloon --
geoff@bizrescue.co.nz -- of Biz Rescue as liquidator on July 16.
He said 623 On the Rocks was "insolvent" and was in the process of
being sold to an unrelated party, the report relays.
"[The unrelated party] will refurbish and open again [in the Rocks
Rd premises] in short manner of time," Stuff.co.nz quotes Mr.
Falloon as saying.
The business was being sold as a going concern, meaning 623 On the
Rocks would continue to operate until early August when the sale
was finalized, Stuff.co.nz relates.
Meanwhile, Stuff.co.nz reports that Hardy St's 623 In the City,
also owned by Bowe and Graham under the company 623 ITC, had gone
into voluntary administration. The report relates that Mr.
Falloon said it was in the process of sending information to
creditors with a recommendation as to whether a repayment plan was
appropriate or to liquidate the company.
After this had happened a watershed meeting would take place to
make a decision, the report notes.
"[The meeting] hasn't yet been called. It should be happening in
next two or three weeks," Mr. Falloon, as cited by Stuff.co.nz,
said.
623 ITC Ltd has operated the 623 In the City cafe bar restaurant
since May 2011.
GLOBAL DEVELOPMENTS: Goes Into Liquidation
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Martin Van Beynen at Stuff.co.nz reports that Global Developments
(Waltham) Ltd, another Global Homes company, has gone into
liquidation, just as it was to complete a NZ$4 million sale to
Housing New Zealand (HNZ).
Global Developments has been building a complex of 12 units for
HNZ at 60 Waltham Rd., the report says.
Stuff.co.nz relates that the company was forced into liquidation
on July 22 by Inland Revenue over tax debts. It was to hand over
the complex this week.
It is the second time in about six weeks that Inland Revenue has
moved against a Global Homes company, Stuff.co.nz notes.
It seized funds that HNZ was to pay contractors owed money for
work on another HNZ complex in Worcester St built by Global Homes
entity Derby Grey Ltd, previously called Global Developments (New
Zealand) Ltd., according to Stuff.co.nz.
The company went into liquidation last year owing about
NZ$1.1 million, the report recalls.
Stuff.co.nz says the building group has already cost the
Christchurch City Council about NZ$200,000 in unpaid fees.
According to Stuff.co.nz, the Global Homes group is connected to
Auckland businessman John Edward Clancy, who is understood to be
overseas.
It now has three companies in liquidation and another, Global
Renovations Canterbury Ltd, which was doing repairs on eight HNZ
properties, owes contractors hundreds of thousands of dollars, the
report notes.
Stuff.co.nz relates that the collapse of the group throws into
question warranties and guarantees provided to HNZ, for which
Global has also built units in Madras St and Gloucester St.
According to the report, a HNZ spokesman said it would discuss
issues over the settlement of the Waltham Rd complex with the
liquidators at the appropriate time.
"We are considering our position with respect to the warranties
and guarantees associated with this development," he said, the
report relays.
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S I N G A P O R E
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GLOBAL A&T: Moody's Affirms Caa3 Corporate Family Rating
--------------------------------------------------------
Moody's Investors Service has affirmed Global A&T Electronics Ltd.
(GATE)'s Caa3 corporate family rating and senior secured ratings.
The outlook remains negative.
RATINGS RATIONALE
The rating affirmation follows the filing of an appeal by certain
bondholders ("the plaintiffs") on 21 July in response to the New
York State Supreme Court's ("the Court's") verdict on 17 July to
dismiss all of the claims made by the plaintiffs against the
company for a September 2013 bond exchange transaction.
"The ratings affirmation reflects the continued uncertainty
regarding the final outcome of the legal dispute and lingering
pressure on GATE's profitability given the challenging industry
fundamentals," says Annalisa Di Chiara, a Moody's Vice President
and Senior Analyst.
As background, certain bondholders had filed a lawsuit following
GATE's September 2013 debt exchange in which all second lien loans
due October 2015 totaling $543 million were swapped for $502
million of new first lien notes maturing in February 2019. As a
result all bondholders -- totaling some $1.1 billion -- are now
ranked as first lien creditors. The plaintiffs asserted breaches
of GATE's intercreditor agreement and indenture, and fraud with
respect to certain bondholders' purchases of the Senior Secured
notes in February 2013. GATE filed for a dismissal of all alleged
plaintiff claims in January 2015.
"While we recognize that the court's dismissal ruling is positive
for GATE as it reduces near-term liquidity pressure resulting from
a potential acceleration of notes under a default scenario, the
ultimate outcome of the dispute remains uncertain following the
plaintiffs' immediate lodging of an appeal," added Di Chiara.
Moreover, should a default occur, Moody's believes the prospect of
recovery of full principal and interest will be low for first lien
bondholders.
As of 31 March, GATE's liquidity position, with cash cash-on-hand
and short-term investments of around $191 million, is adequate to
support its interest payments, working capital and maintenance
capex requirements. Its liquidity and cash flow position are aided
by a long-dated maturity profile as its $1.1 billion of senior
secured notes do not mature until February 2019, assuming the
Court's decision is not overturned on appeal.
Of note, the company also has access to an undrawn revolving
credit facility of $125 million. However, there is a as a
condition precedent(minimum debt service coverage ratio of 1.2x)
with outstanding in excess of 13.3% ($16.5 million) of the
facility. There is also a Material Adverse Change (MAC) clause
also exists which could prevent GATE from drawing down on this
facility in time of need.
In addition, GATE's credit profile remains weak reflecting high
leverage, as measured by adjusted debt to EBITDA, of around 5.5x
for the twelve months ended 31 March 2015 and adjusted operating
profit margins of 7.5%. We expect metrics to worsen over the next
12-24 months as industry challenges take hold.
The negative outlook reflects ongoing pressure on GATE's operating
performance and the uncertainty regarding the final outcome of the
dispute with some if its bondholders.
Downward pressure would emerge if the plaintiffs' appeal is
successful resulting in (1) an acceleration of up to $1.1 billion
in debt; or (2) the exchange transaction being unwound, creating
significant near-term default risk.
A rating upgrade is unlikely in the near term, given the negative
outlook. However, the outlook could revert to stable or ratings be
upgraded should the bondholder dispute be resolved favorably with
limited adverse effect on the company's operating performance,
including market share, revenue growth, liquidity and leverage
position.
The principal methodology used in these ratings was Global
Semiconductor Industry Methodology published in December 2012.
Please see the Credit Policy page on www.moodys.com for a copy of
this methodology.
GATE is a leading provider of semiconductor assembly and test
services operating under the name UTAC with manufacturing
facilities in Singapore, South Korea and China. UTAC was
privatized through a leverage buy-out by a private equity group
led by TPG Capital (47.7%) and Affinity Equity Partners (47.7%) in
October 2007.
*********
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
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latest balance sheets publicly available a day prior to
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
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*** End of Transmission ***