/raid1/www/Hosts/bankrupt/TCRAP_Public/170220.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, February 20, 2017, Vol. 20, No. 36
Headlines
A U S T R A L I A
ALLRETAIL PTY: First Creditors' Meeting Slated for Feb. 23
COASTAL ENTERPRISES: First Creditors' Meeting Set for Feb. 23
KIEWA VALLEY: First Creditors' Meeting Set for Feb. 27
LA GAJJAR: First Creditors' Meeting Slated for Feb. 27
LMML HOLDINGS: First Creditors' Meeting Set for Feb. 27
ORIGIN ENERGY: H1 FY2017 Results in Line with Moody's Expectation
C H I N A
CAR INC: S&P Affirms 'BB+' CCR; Outlook Negative
CHINA SHANSHUI: Controversial Shares Issuance Adjourned
EHI CAR: S&P Affirms 'BB' CCR on Improving Profitability
XINYUAN REAL: S&P Assigns 'B-' Rating to Proposed US$ Sr. Notes
XINYUAN REAL: S&P Revises Outlook to Stable & Affirms 'B' CCR
I N D I A
AINAJ INDUSTRIES: CRISIL Raises Rating on INR17MM Cash Loan to B
ASHA ISPAT: CRISIL Reaffirms B+ Rating on INR4.5MM Cash Loan
AVANI DYECHEM: CRISIL Reaffirms B+ Rating on INR3.0MM Cash Loan
CENTECH ENGINEERS: CRISIL Cuts Rating on INR8.5MM Cash Loan to D
DESIGN N: CRISIL Assigns 'D' Rating to INR5.04MM Term Loan
GAYATRI ROLLING: CRISIL Reaffirms 'B' Rating on INR5.50MM Loan
HI TECH: CRISIL Downgrades Rating on INR1.5MM Cash Loan to B-
INDCON PROJECTS: CRISIL Reaffirms B+ Rating on INR6.0MM Loan
ISCON CRAFT: CRISIL Reaffirms B+ Rating on INR6.69MM Term Loan
ISWARYA ENTERPRISES: CRISIL Assigns 'B' Rating to INR9MM Loan
J. N. TRADERS: CRISIL Reaffirms 'B' Rating on INR6.5MM Cash Loan
JAGSUN AGRO: CRISIL Assigns 'B' Rating to INR9MM Bill Disc.
JAYA GURU: CRISIL Assigns 'B' Rating to INR2.25MM LT Loan
KRISHNA CONSTRUCTIONS: CRISIL Assigns B+ Rating to INR22MM Loan
LAGGAR INDUSTRIES: CRISIL Cuts Rating on INR14MM Cash Loan to D
MAHA ELECTRONICS: CRISIL Assigns B- Rating to INR15MM Cash Loan
OM FIRE: CRISIL Upgrades Rating on INR2.1MM Overdraft to 'B'
PARI AGRI: CRISIL Assigns B+ Rating to INR8MM Cash Loan
PIONEER PANEL: CRISIL Assigns B+ Rating to INR4.75MM Term Loan
ROLTA INDIA: S&P Affirms 'D' CCR on Continued Default on Notes
SANJIVANI (T): CRISIL Cuts Rating on INR21.9MM LT Loan to B-
SHALIMAR WORKS: CRISIL Reaffirms 'C' Rating on INR22.55MM Loan
SHIV DURGA: CRISIL Lowers Rating on INR2.5MM Cash Loan to 'B'
SHREE LAKSHMEE: CRISIL Lowers Rating on INR6MM LT Loan to B-
SHREEJI COTTON: CRISIL Assigns B+ Rating to INR5.0MM Cash Loan
SRI SUNFLOWER: CRISIL Reaffirms 'D' Rating on INR12MM LT Loan
SWATHI COTGIN: CRISIL Lowers Rating on INR19.8MM Cash Loan to B
UDDYAM CEMENT: CRISIL Assigns 'B' Rating to INR14MM LT Loan
VAIBHAV FITTING: CRISIL Lowers Rating on INR4.3MM Loan to 'D'
VINDHYABASINI RICE: CRISIL Cuts Rating on INR6MM Cash Loan to D
J A P A N
TOSHIBA CORP: To Buy IHI's 3% Shares in Westinghouse
TOSHIBA CORP: Impairment Loss Credit Negative, Moody's Says
M O N G O L I A
BOGD BANK: Moody's Reviews for Downgrade Caa1 Deposit Rating
S O U T H K O R E A
DOOSAN BOBCAT: 2016 Results Support B1 CFR, Moody's Says
HANJIN SHIPPING: Seoul Court Officially Declares Firm Bankrupt
SAMSUNG GROUP: In Crisis After De facto Head's Arrest
* SOUTH KOREA: Government to Help Struggling Shipping Lines
- - - - -
=================
A U S T R A L I A
=================
ALLRETAIL PTY: First Creditors' Meeting Slated for Feb. 23
----------------------------------------------------------
A first meeting of the creditors in the proceedings of
Allretail Pty Limited will be held at the offices of PPB
Advisory, Level 7, 8-12 Chifley Square, in Sydney, on Feb. 23,
2017, at 3:00 p.m.
Philip Carter, Daniel Walley and Mark Robinson of PPB Advisory
were appointed as administrators of Allretail Pty on Feb. 6,
2017.
COASTAL ENTERPRISES: First Creditors' Meeting Set for Feb. 23
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Coastal
Enterprises (WA) Pty Ltd, trading as T & L Training Consultants,
will be held at Level 17, 37 St Georges Terrace, in Perth, WA, on
Feb. 23, 2017, at 10:30 a.m.
Robert Kirman and Matthew Caddy of McGrathNicol were appointed as
administrators of Coastal Enterprises on Feb. 13, 2017.
KIEWA VALLEY: First Creditors' Meeting Set for Feb. 27
------------------------------------------------------
A first meeting of the creditors in the proceedings of Kiewa
Valley Engineering Pty. Ltd., trading as Cut N Drill and KVE will
be held at Albury Entertainment Centre, Elizabeth Room, 525 Swift
Street, in Albury, New South Wales, on Feb. 27, 2017, at
10:30 a.m.
Leigh William Dudman and Richard Trygve Rohrt of Hamilton Murphy
were appointed as administrators of Kiewa Valley on Feb. 15,
2017.
LA GAJJAR: First Creditors' Meeting Slated for Feb. 27
------------------------------------------------------
A first meeting of the creditors in the proceedings of La Gajjar
Pty Ltd will be held at Level 12, 88 Pitt Street, in Sydney, on
Feb. 27, 2017, at 10:30 a.m.
Steve Naidenov of Veritas Advisory was appointed as administrator
of La Gajjar on Feb. 16, 2017.
LMML HOLDINGS: First Creditors' Meeting Set for Feb. 27
-------------------------------------------------------
A first meeting of the creditors in the proceedings of LMML
Holdings Pty Ltd will be held at One Wharf Lane, Level 20, 161
Sussex Street, in Sydney, on Feb. 27, 2017, at 10:30 a.m.
Alan Walker and Andre Lakomy of Cor Cordis Chartered Accountants
were appointed as administrators of LMML Holdings on Feb. 15,
2017.
ORIGIN ENERGY: H1 FY2017 Results in Line with Moody's Expectation
-----------------------------------------------------------------
Moody's Investors Service says that Origin Energy Limited's
results for the fiscal half year ended Dec. 31, 2016 (H1 FY2017)
were within Moody's expectations, and as such, will not
immediately affect the ratings of Origin entities, including the
Baa3 issuer rating, Baa3 senior unsecured rating and P-3 short-
term issuer rating of Origin Energy Limited, and the Baa3 senior
unsecured rating and Ba2 preference stock rating of Origin Energy
Finance Limited.
The outlook on all the ratings remains negative.
"Origin Energy's EBITDA rose 42% in H1 FY2017 relative to the
previous corresponding period, as a result of higher earnings
from its LNG export and upstream gas segments," says Spencer Ng,
a Moody's Vice President and Senior Analyst.
Earnings growth, coupled with interest savings from Origin
Energy's material debt reduction of around AUD3 billion over the
past 12-18 months, has led to Origin Energy's estimated funds
from operations (FFO)/net debt ratio increasing to around 13.3%
at end-2016 from around 7% at 30 June 2016.
Notwithstanding the strong growth, the result remains below the
minimum tolerance level of 15% set for the Baa3 rating. Moody's
estimate includes the proportionate consolidation of Australian
Pacific LNG's (APLNG, unrated) earnings and debt.
A key driver of Origin Energy's financial metrics strengthening
to the rating tolerance level by the end of FY2017 will be the
contribution from the second APLNG train - which commenced
production in October 2016 - and continued stability in oil
prices.
Moody's notes that APLNG's prices are set based on oil prices
with a lag, which increases the visibility for LNG earnings
during H2 FY2017.
Moody's oil price assumption for Brent is at USD45 per barrel in
2017 and USD50 per barrel in 2018.
"Origin Energy's hedging of its oil price exposure to APLNG to a
price floor of around USD45 per barrel in FY2018 mitigates the
risk of APLNG requiring recapitalisation, given that this floor
is equivalent to the project's reported breakeven oil price in
FY2018," adds Ng.
"A continuation in the higher earnings from the domestic gas
business - driven by high prices and increased production - and
ongoing management commitment to apply operating cash flow to
further lower debt, are also required to keep Origin Energy on
track to reach the metrics required for its Baa3 ratings," adds
Ng.
Earnings from Origin Energy's integrated gas segment rose to
AUD442 million in H1 FY2017 from AUD137 million at end-2016. The
result included an increase in contribution from APLNG of AUD266
million. The company's domestic energy markets segment recorded a
modest increase in earnings of AUD13 million during H1 FY2017, on
the back of higher gross profit from electricity retail.
Moody's notes that Origin Energy announced in December 2016 a
plan to sell its conventional oil and gas assets to a newly
formed entity, NewCo (unrated) , and listing NewCo on the
Australian Securities Exchange by the end of 2017.
Moody's believes that the transaction would be credit positive
for Origin Energy. Moody's assessment is based on the assumption
that the supply arrangement with NewCo will provide Origin Energy
with on-going access to predictable gas supply, and that the
proceeds of the sale will be applied to repay debt.
Origin Energy reported ample liquidity at 31 December 2016, with
cash and undrawn facilities of around AUD5.7 billion compared
with around AUD300 million of remaining capital commitments to
APLNG. However, the liquidity available under the undrawn bank
facilities is of lower quality than unrestricted cash balances,
due to the existence of material adverse event provisions, which
are common in the Australian market.
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in October
2014.
Origin Energy Limited is an integrated Australia-based company,
involved in energy retailing, power generation, and oil & gas
exploration and production. The company is listed on the
Australian Securities Exchange.
Origin Energy Finance Limited is a wholly owned subsidiary of
Origin Energy Limited, and a financing vehicle for the group.
Australian Pacific LNG owns and operates a major liquefied
natural gas (LNG) export project in Gladstone, Queensland, with a
production capacity of up to nine million tonnes of LNG per
annum. Origin Energy Limited and ConocoPhillips (Baa2 negative)
each hold a 37.5% stake in APLNG, with the remaining 25% held by
China Petroleum and Chemical Corporation (Aa3 negative).
=========
C H I N A
=========
CAR INC: S&P Affirms 'BB+' CCR; Outlook Negative
------------------------------------------------
S&P Global Ratings said that it affirmed its 'BB+' long-term
corporate credit rating on China-based car rental company CAR
Inc. The outlook is negative. S&P also affirmed its 'BB+' long-
term issue rating on CAR's outstanding senior unsecured notes.
At the same time, S&P affirmed its 'cnBBB' long-term Greater
China regional scale rating on CAR and the notes.
"We affirmed the ratings to reflect our view that CAR is likely
to maintain its strong market position in China, improve its
profitability while modestly expanding its fleet, and have good
interest servicing capacity over the next 12-24 months," said S&P
Global Ratings credit analyst Stanley Chan. "The company's high
cash flow volatility owing to high revenue concentration and
potentially deeper relationship with its largest shareholder UCAR
Inc. temper these strengths."
In S&P's base case, it expects UCAR will not exert managerial
control or significantly intervene in CAR's operations, despite
the companies' long-term cooperation in car rental, and their
cross-holding structure. As a result, S&P do not assess both
companies' credit profile on a consolidated basis nor do S&P
considers CAR's group status. UCAR's credit profile is likely to
be weaker than that of CAR because of its weak profitability and
short operating history.
S&P expects CAR to gradually reduce its shareholding in UCAR in
the coming 12 months; however, no clear timetable is in place. A
restriction on share disposal of UCAR expired in January 2017.
The cross-holding structure may evolve and further negative
changes could add uncertainties in CAR's operations and
profitability. For instance, CAR's credit profile is likely to
deteriorate in case of an aggressive transfer of benefits from
CAR to UCAR, given UCAR's weaker credit profile. Currently, UCAR
is an important and major customer of CAR, contributing about 30%
of CAR's rental revenue and 40% of total revenue, if S&P includes
used-vehicle disposal.
CAR's growing operating scale and geographical presence, with
higher service quality than local peers', support its strong
market position in China's fragmented car rental market. The
company benefits from some entry barriers to markets in China's
main cities, such as high capital requirement for fleet expansion
and restrictions on vehicle plate purchase. However, CAR has a
smaller scale than global peers' and a short operating track
record, which cause high volatility in profit and constrain the
company's credit profile.
In S&P's view, CAR has good pricing power based on its nationwide
coverage and brand recognition. S&P expects the company's growth
in short-term rental revenue to remain stable while long-term
rental revenue should grow modestly, in tandem with UCAR's
growth. CAR maintains an average daily rental rate (ADRR) for
short-term rental of Chinese renminbi (RMB) 260-RMB270 per
vehicle, which is higher than that of most of its local peers.
CAR also has close relationships with original equipment
manufacturers and usually gets at least 25% discount on the
purchase price of core-model vehicles. Such a benefit reduces
depreciation expenses on used cars.
However, disposal of used cars remains a key risk for CAR's
business. Insufficient disposal or failure to dispose may affect
the company's depreciation expense and fleet utilization rate,
and in turn influence its operational and financial metrics. In
general, car rental companies have greater pricing advantage and
competitive position if they can maintain a young fleet.
S&P expects CAR to maintain its good interest servicing capacity
supported by its moderate capital expenditure plan and improving
utilization. S&P estimates that the company's EBIT interest
coverage would stay at 3.5x-4.0x and EBIT margin would be 25%-30%
over the next 12-24 months.
S&P believes that CAR will prioritize improvement in utilization
ahead of growing the fleet size in the coming 24 months.
Utilization could moderately rise to 65%-70% and average daily
rental revenue per car (RevPAC) could improve to RMB170-RMB175,
leading to strengthened EBIT margin and cash flow from
operations. S&P estimates that CAR's net capital spending for
fleet expansion will decline to RMB2.5 billion-RMB3 billion in
the coming 12 months. In S&P's base case, the company will
refrain from making aggressive debt-funded acquisitions or
investments in the next 24 months.
"The negative outlook on CAR over the next 12 months reflects our
view of the heightened risks from the company's relationship with
UCAR, and uncertainties in CAR's business operation following
changes in substantial shareholders and management," said
Mr. Chan.
CAR's cross-holding structure with UCAR, concentration risk in
rental leasing, and UCAR's unprofitable position may dent CAR's
competitive position, long-term profitability, and debt leverage.
S&P could lower the rating if it assess that CAR's management and
governance has weakened. This could happen if S&P expects CAR's
profitability and debt leverage to significantly deteriorate as
it feeds UCAR's high-growth aspirations.
S&P could also lower the ratings if it believes that UCAR exerts
high control over CAR, or S&P expects both companies to have
closer economic benefits, so that the combined group may have a
weaker credit profile, capping CAR's stand-alone credit profile.
A further increase in connected transactions or contributions
from UCAR to CAR would indicate such a trend.
S&P also could lower the rating if CAR's EBIT coverage ratio
falls below 1.7x or its FFO-to-debt ratio falls below 30% on a
consistent basis. This could happen if the company makes
material debt-funded acquisitions, or the profitability of its
rental business deteriorates significantly.
S&P could revise the outlook on CAR to stable if: (1) S&P
believes UCAR will have limited impact and influence on CAR's
cash flow and strategy, and the collaboration will help both
companies' credit profiles; and (2) CAR executes its growth
strategy in China and demonstrates a record of prudent management
and board effectiveness while maintaining its operating margin
and financial strength.
CHINA SHANSHUI: Controversial Shares Issuance Adjourned
-------------------------------------------------------
Jennifer Li at South China Morning Post reports that China
Shanshui Cement's shareholders voted to adjourn a controversial
stock placement, after the largest stake owner and hostile
purchaser prevailed upon minority investors to postpone their
decisions on the plan to restructure debts at one of China's
largest corporate defaults.
Shareholders with 53.75 per cent of voting power approved an
adjournment at a Feb. 17 extraordinary general meeting on the
issuance of HK$475 million of new shares, SCMP relates citing
Shanshui's filing to the Hong Kong Stock Exchange.
The report says the adjournment creates a kink in the debt
restructuring plan by Shanshui, whose shares had been halted
since April 2015 to give management time to work out
CNY17.63 billion (US$2.57 billion) of liabilities by June 2017.
China's seventh-largest cement maker of 2014, Shanshui had the
dubious honor of being the country's largest bond default, after
failing to make payments on CNY2 billion of onshore obligations
in November 2015, SCMP recounts.
SCMP relates that the Shandong-based company said last October it
would place between 910 and 950 million new shares, or 21.94 per
cent of its enlarged share capital, at HK$0.50 per share, to
increase its public float above the minimum regulatory level of
25 per cent.
The issue price, up to 92.1 per cent of discount to Shanshui's
last traded price of HK$6.29, drew opposition from shareholders,
the report notes. The amount raised from the issuance wouldn't be
sufficient to cover the company's liabilities, they said.
Worse, the plan would dilute the holdings of major shareholders,
says SCMP.
Two of Shanshui's largest shareholders -- Tianrui Group Co. and
China Shanshui Investment Co. -- have asked the cement producer's
chairman Stephen Liu Yiu Keung verbally to adjourn the
extraordinary meeting until further notice, according to the
filing cited by SCMP.
Henan-based Tianrui, parent of Hong Kong-listed China Tianrui
Group Cement, is the largest shareholder of Shanshui, after
launching a hostile takeover in open market, leading to the
trading halt, the report discloses. Tianrui's shares would have
been diluted to 21.98 per cent, from 28.16 per cent by the
issuance of new shares.
SCMP relates that Shanshui's second-largest shareholder is
Shanshui Investment, controlled by former chairman Zhang Caikui
and his son. Their stake in Shanshui would be diluted to 19.59
per cent after the issuance, from 25.09 per cent.
Shanshui's third-largest shareholder Asia Cement also weighed in,
initiating several requests for Shanshui's management to disclose
more accurate financial information and prove the rationality of
its placement offer before voting, according to SCMP. Taiwan-
based Asia Cement's stake would be diluted to 16.36 per cent from
20.96 per cent.
China National Building Material's stake will shrink to 13.01 per
cent from 16.67 per cent, the report says.
The company will hold another extraordinary meeting on March 8 to
vote on Asia Cement's requests, adds SCMP.
About China Shanshui
China Shanshui Cement Group Limited is engaged in manufacturing
and sale of cement and clinker, and limestone mining. The Company
is engaged in the production and sales of various types of
cements, and the production of commodity clinker necessary for
various types of high grade cements in Shandong and Liaoning
Provinces. The commodity clinker produced by the Company is
mainly sold to clients with cement grinding station. The cement
produced by the Company under the brand of Shanshui Dongyue is
widely used in construction works for roads, bridges, housing and
various types of construction projects. The Company operates in
four geographical areas: Shandong Province, Northeastern China,
Xinjiang Region and Shanxi Province.
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 17, 2015, Standard & Poor's Ratings Services said that it
had lowered its long-term corporate credit rating on China
Shanshui Cement Group Ltd. to 'D' from 'CC'. At the same time,
S&P lowered its long-term Greater China regional scale rating on
the company to 'D' from 'cnCC'.
S&P also lowered its issue rating on Shanshui's U.S. dollar-
denominated senior unsecured notes to 'D' from 'CC' and the
Greater China regional scale rating on the notes to 'D' from
'cnCC'.
EHI CAR: S&P Affirms 'BB' CCR on Improving Profitability
--------------------------------------------------------
S&P Global Ratings said it affirmed its 'BB' long-term corporate
credit rating and 'cnBBB-' long-term Greater China regional scale
rating on eHi Car Services Ltd. The outlook is stable. At the
same time, S&P affirmed its foreign currency 'BB-' long-term
issue ratings and 'cnBB+' Greater China regional scale ratings on
eHi's U.S. dollar-denominated senior unsecured bonds.
"We are affirming the ratings because we expect eHi's cash flow
and profit margins to improve even as eHi meaningfully expands
its franchise," said S&P Global Ratings credit analyst Stanley
Chan.
S&P anticipates EBIT margins to be 13%-18% and EBIT interest
coverage to range from 1.3x-2.4x over the next 12-24 months. In
comparison, eHi's EBIT margin was 6.4% in 2015 which S&P
estimates increased to 12%-14% in 2016, while the company's EBIT
coverage was 0.7x in 2015 and likely rose to 1.2x-1.6x in 2016.
In addition, S&P expects a meaningful expansion of eHi's fleet
over the next one to two years. The company owned a fleet of
48,934 vehicles as of Sept. 30, 2016, compared with 19,746 and
38,070 at the end of 2014 and 2015, respectively. In S&P's
estimation, eHi's fleet will increase to 70,000-80,000 vehicles
in 12-24 months.
The business risk profile is constrained by eHi's small scale
relative to global peers', limited track record in executing its
growth plan, geographical concentration in China, and the
company's focus on short-term car rentals, which is highly
fragmented. Mitigating factors include eHi's relatively good
position in China as the number-two player, improving profit
margins, and S&P's favorable outlook for car rentals in China.
A focus on short-term leases exposes eHi to potential renewal
risks, and the car-rental market in China is fragmented and
competitive. Additionally, the weighted average age of the fleet
may continue to go up if there is no meaningful fleet disposal in
the coming 12 months. The company has a limited track record in
fleet disposal, and the local used-car markets are still
developing.
In S&P's view, eHi's successful expansion in the coming two years
hinges on its ability to maintain and increase utilization rates
for its fleet, resilient pricing, and effective vehicle
replacement. The company's revenue per available car (RevPAC)
for rental services was stable at Chinese renminbi (RMB)120-
RMB130 over 2014-2016, supported by its adequate delivery of
utilization and average daily rental rate (ADRR), which were
maintained even as the company pursued a quick-growth strategy.
However, any further pricing competition or delays in vehicle
replacement could expose eHi to a dilution of RevPAC,
overestimation in the residual value of disposed fleets,
underestimation of depreciation expenses, or other operating
metrics. Such occurrences would negatively impact eHi's
profitability and ability to generate cash flow.
The company is likely to continue to rely on external funding to
support its growth in the next two years. S&P therefore expects
eHi to face challenges in effectively improving its cash flow, or
boosting its financial risk profile.
The stable outlook reflects S&P's expectation that eHi will
continue to gradually improve profit margins and cash flow
metrics over the coming 12-24 months. S&P expects its EBIT
margin to be 13%-18% and its EBIT interest coverage to range from
1.3x-2.4x over the period, despite an aggressive growth plan.
S&P may downgrade eHi if there is any material delay of planned
vehicle replacements, a dilution of its utilization rate or
stiffening pricing competition, to the extent that profit margins
and cash flow generation would be negatively impacted. S&P may
also lower the ratings if eHi cannot sustain its EBIT interest
coverage at 1.3x or above.
Ratings upside is unlikely in the coming 12 months due to eHi's
limited track record in executing an aggressive expansion. S&P
may consider raising the rating if eHi can successfully manage
its growth plan while keeping its fleet up to date, and
maintaining its utilization rates and pricing--thus leading to
higher profitability as reflected in EBIT margins consistently
staying at 18% or above. At the same time, eHi would need to
continue to demonstrate a prudent financial management, with EBIT
coverage at 1.7x or above, for S&P to consider an upgrade.
XINYUAN REAL: S&P Assigns 'B-' Rating to Proposed US$ Sr. Notes
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating and
'cnB+' long-term Greater China regional scale rating to a
proposed issue of U.S.-dollar-denominated senior unsecured notes
by Xinyuan Real Estate Co. Ltd. (B/Stable/--; cnBB-/--). The
global scale issue rating is one notch below the long-term
corporate credit rating on Xinyuan to reflect structural
subordination risk.
The issue ratings are subject to our review of the final issuance
documentation. Xinyuan intends to use the proceeds to refinance
its existing debt.
S&P expects Xinyuan's debt-to-EBITDA ratio to be stable at 7.5x-
8.5x in 2017 and 2018, mainly because of improving sales and
profitability. However, the company's capital expenditure for
land and construction will likely remain steep at Chinese
renminbi (RMB) 12 billion-RMB14 billion (US$1.7 billion-US$2.0
billion) in 2017 to fund its expansion plans.
The stable outlook on Xinyuan reflects S&P's expectation that the
company will mildly increase sales and margins over the next 12
months. S&P expects the company's leverage to remain stable but
high over the period owing to its need for land-reserve
replenishment and construction expenditure.
XINYUAN REAL: S&P Revises Outlook to Stable & Affirms 'B' CCR
-------------------------------------------------------------
S&P Global Ratings Services said that it had revised its outlook
on Xinyuan Real Estate Co. Ltd. to stable from negative. S&P
affirmed its 'B' long-term corporate credit rating on the China-
based property developer and the 'B-' long-term issue rating on
the company's senior unsecured notes. As a result of the outlook
revision, S&P has raised its long-term Greater China regional
scale rating on Xinyuan to 'cnBB-' from 'cnB+', and on the notes
to 'cnB+' from 'cnB'.
"We revised the outlook to stable to reflect our expectation that
Xinyuan will maintain its improved leverage, increase sales, and
have slightly better margins over the next 12 months," said S&P
Global Ratings credit analyst Esther Liu.
S&P expects that Xinyuan's leverage, measured by the ratio of
debt to EBITDA, would have fallen to 7.5x-8.5x in 2016 and will
be stable in 2017, compared with 9.9x in 2015, mainly because of
the company's improving sales and profitability.
S&P estimates that Xinyuan's contracted sales will grow to about
Chinese renminbi (RMB) 12 billion-RMB14 billion in 2017, from
RMB11.7 billion (US$1.76 billion) in 2016, supported by the
company's increased saleable resources and changes in the product
mix. Xinyuan will have higher saleable resources in first-tier
cities in 2017, including the Tongzhou project in Beijing. The
company also expects to increase retail sales in its exiting
residential projects.
S&P anticipates that Xinyuan's profitability will gradually
improve in 2017. Its profitability picked up in 2016 after a
substantial fall in 2014-2015. S&P expects the EBITDA margin to
be 17%-18% in 2017, from 16.5%-17.5% in 2016 and 15.4% in 2015.
The improvement in margins is mainly from decreasing selling,
general, and administrative (SG&A) expenses, rather than from
higher gross margins.
S&P expects Xinyuan's EBITDA interest coverage to mildly improve
over the next 12 months, thanks to increasing EBITDA and lower
funding costs following refinancing. S&P estimates that interest
coverage significantly improved to 1.3x-1.5x in 2016, from merely
1x in 2015. Xinyuan issued two domestic bonds totaling
RMB2.2 billion with interest rates of 7.1%-7.5%. It also issued
a RMB1.5 billion non-public domestic bond at 7.5%. Besides, the
company refinanced its US$300 million senior notes with 8.15%
interest rate in late 2016. Xinyuan's average funding cost in
2016 is likely to have been 8.2%, compared with 9.5% in 2015.
"We forecast that Xinyuan's revenue will increase by 20%-30% in
the next 12 months, supported by increased contracted sales in
recent years," said Ms. Liu. "The company's contracted sales
grew by 28% in 2015 and by another 28% in 2016."
Xinyuan's time lag between contracted sales and recognition is
shorter than other Chinese developers because Xinyuan, being
listed in the U.S., adopts percentage of completion recognition
method.
However, S&P believes Xinyuan's capital expenditure (capex) will
remain high at RMB12 billion-RMB14 billion (US$1.7 billion-
US$2.0 billion) in 2017. S&P expects Xinyuan to continue to be
aggressive in land acquisitions for its expansion plan. S&P also
expects construction capex to remain high, given the company's
development needs.
S&P do not expect Xinyuan to reduce its debt level over the next
12 months, given the company's funding needs to grow its small
land bank. S&P estimates that total debt will reach US$2
billion-US$2.2 billion (RMB14 billion-RMB15 billion) in 2016 and
increase to US$2.5 billion-US$2.6 billion (RMB17 billion-RMB18
billion) in 2017, compared with US$1.7 billion in 2015 and US$1.5
billion in 2014. However, S&P believes Xinyuan will continue to
benefit from its stronger liquidity than that of peers that S&P
rates 'B-'.
The stable outlook reflects S&P's expectation that Xinyuan will
mildly increase its sales and margins over the next 12 months.
S&P expects the company's leverage to remain stable but high over
the period owing to its need for land reserve replenishment and
construction expenditure.
S&P could lower the rating if Xinyuan's leverage deteriorates and
its debt servicing ability worsens, as indicated by an EBITDA
interest coverage of less than 1.0x and debt-to-EBITDA ratio
weaker than our expectation of about 8x. This could happen if:
(1) the company's debt-funded expansion from land acquisition
continues to be more aggressive than we estimate; and (2) its
contracted sales are materially below our base case for 2017.
S&P may also downgrade Xinyuan if the company's access to
financing weakens materially, such that its refinancing risk
increases.
The rating upside is limited in the next 12 months, given the
company's high leverage. A ratio of debt to EBITDA below 5x on a
sustainable basis could lead to an upgrade.
=========
I N D I A
=========
AINAJ INDUSTRIES: CRISIL Raises Rating on INR17MM Cash Loan to B
-----------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Ainaj Industries to 'CRISIL B/Stable' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 17 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
The upgrade reflects the improvement in the firm's liquidity
driven by enhanced cash credit limit in the non-peak season too.
Resultantly, the limit is utilised prudently. The rating
continues to reflect Ainaj's below-average financial risk profile
because of high gearing and subdued debt protection metrics, its
working capital-intensive operations in the fragmented cotton
ginning segment, and susceptibility to changes in government
policy regarding the cotton industry. The weaknesses are
partially offset by the extensive experience of Ainaj's
proprietor in the cotton industry and his financial support in
the form of unsecured loans, and favourable location of its plant
giving it access to high-quality raw cotton.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: The firm's financial risk
profile is constrained by high gearing of 1.97 times as on
March 31, 2016, and subdued debt protection metrics reflected in
interest coverage ratio of 1.1 times and net cash accrual to
total debt ratio of 0.02 time in fiscal 2016.
* Working capital-intensive operations: Inventory of 4-5 months
lead to large working capital requirement and high bank line
utilisation.
* Modest scale in a fragmented industry: Ainaj's scale of
operations (operating revenue of INR55.96 crore in fiscal 2016)
will remain modest over the medium term. Operations are also
susceptible to government regulations regarding cotton and
intense competition in a fragmented industry.
Strength
* Proprietor's extensive experience and financial support: The
proprietor's extensive industry experience has led to
longstanding relationships with customers and suppliers. The
proprietor has extended unsecured loans to the firm.
Outlook: Stable
CRISIL believes Ainaj will continue to benefit from its
proprietor's industry experience and established relationships
with customers and suppliers. The outlook may be revised to
'Positive' if steady sales growth and better profitability lead
to higher cash accrual and improved key credit metrics. The
outlook may be revised to 'Negative' if decline in accrual;
large, debt-funded capital expenditure; or increase in working
capital requirement weakens the financial risk profile,
especially liquidity.
Ainaj, established in 1997 and based in Radhanpur, Gujarat, was
set up as a partnership firm by Mr. Dayaram Thakkar, Mr. Vasant
Thakkar, Mr. Dinesh Thakkar, Mr. Suresh Thakkar, and Mr. Rajesh
Thakkar. In 2010, four partners withdrew their capital and Ainaj
was reconstituted as a proprietorship firm of Mr. Suresh Thakkar.
It gins and presses cotton, and extracts oil from seeds. It has
installed capacity of 36,000 tonne per annum for cotton bales and
3000 tonne per annum for cotton oil.
For fiscal 2016, Ainaj's net profit was INR6.00 lakh on net sales
of INR55.83 crore, against a net profit of INR6.00 lakh on net
sales of INR65.10 crore for fiscal 2015.
ASHA ISPAT: CRISIL Reaffirms B+ Rating on INR4.5MM Cash Loan
------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Asha Ispat Private Limited (part of the Asha group) at 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.75 CRISIL A4 (Reaffirmed)
Cash Credit 4.50 CRISIL B+/Stable (Reaffirmed)
Proposed Short Term
Bank Loan Facility 0.48 CRISIL A4 (Reaffirmed)
Standby Line of
Credit 0.20 CRISIL A4 (Reaffirmed)
The ratings continue to reflect the group's low operating
profitability, working capital-intensive operations, high
utilisation of bank lines and exposure to intense competition in
the steel industry. These weaknesses are partially offset by the
extensive experience of promoters and comfortable financial risk
profile because of low gearing, moderate networth and above
average debt protection metrics.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of AIPL and Asha Concast Pvt Ltd (ACPL).
This is because both the companies, together referred to as the
Asha group, have common management and significant operational
linkages. ACPL manufactures and supplies steel ingots to AIPL to
manufacture thermo-mechanically-treated (TMT) bars.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Gross current assets were
104 days as on March 31, 2016, due to significant power subsidy
receivables, sizeable inventory, and open credit offered to
customers. Efficient working capital management will remain a key
rating sensitivity over the medium term.
* Marginal market share in highly fragmented industry: The Asha
group has a small market share in the domestic secondary steel
industry that is intensely competitive with many unorganised
players having small capacities. This limits pricing and
bargaining power against customers and suppliers.
* Low operating margin: Profitability was 1.5% for fiscal 2016
(against 1.9% in the previous fiscal) on account of negligible
bargaining power with customers, significant trading income and
intense competition.
* High bank limit utilisation: Cash credit limits of INR4 crore
in ACPL and INR4.5 crore in AIPL were utilised at an average of
97.4% in the 12 months ended September 2016. Utilisation will
remain high over the medium term. The high bank limit utilisation
limits the group's ability to meet short term exigencies, if any.
Strengths
* Extensive experience of promoters: Presence of more than a
decade in the steel segment has enabled the promoters to develop
strong industry insight and establish healthy relationship with
customers and suppliers. The operations are primarily managed by
Mr. Roshanlal Agarwal and his three sons Mr. Rajesh Agarwal, Mr.
Ravi Agarwal and Mr. Rohit Agarwal.
* Low gearing and moderate networth: Gearing was 0.75 time as on
March 31, 2016, and networth INR11.13 crore. Both these are
likely to remain steady over the medium term, thereby providing
comfort to the financial profile. The debt protection metrics too
are above average with interest coverage of around 2.09 times and
net cash accruals to total debt of 0.15 time in fiscal 2016.
Outlook: Stable
CRISIL believes the Asha group will continue to benefit over the
medium term from its established customer relationship and
extensive experience of promoters. The outlook may be revised to
'Positive' if a substantial and sustained increase in scale of
operations and cash accrual along with better working capital
management improves, the financial risk profile, particularly
liquidity. The outlook may be revised to 'Negative' if financial
risk profile, particularly liquidity, weakens because of lower-
than-expected cash accrual, stretch in working capital cycle, or
significant debt-funded capital expenditure.
AIPL was incorporated in 1996 and ACPL in 2009 and are promoted
by Siliguri-based Agarwal family. Mr. Rajesh Agarwal and Mr.
Roshan Agarwal are directors in AIPL, and Ms. Rajani Agarwal and
Ms. Manisha Agarwal are directors in ACPL. AIPL manufactures
steel ingots and TMT bars whereas ACPL manufactures steel ingots
primarily for AIPL. Both the entities also trade in iron and
steel products.
For fiscal 2016, the Asha group reported a profit after tax (PAT)
of INR0.45 crore on an operating income of INR156.22 crores as
against a PAT of INR0.42 crore on an operating income of
INR128.18 crores in fiscal 2015.
AVANI DYECHEM: CRISIL Reaffirms B+ Rating on INR3.0MM Cash Loan
---------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Avani Dyechem Industries.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .02 CRISIL A4 (Reaffirmed)
Cash Credit 3.00 CRISIL B+/Stable (Reaffirmed)
Foreign Discounting
Bill Purchase 1.00 CRISIL A4 (Reaffirmed)
Inland/Import
Letter of Credit .50 CRISIL A4 (Reaffirmed)
The ratings continues to reflect the firm's exposure to intense
competition in the dyes and chemical industry, large working
capital requirement, and modest financial risk profile because of
high gearing and small networth. These weaknesses are partially
offset by the extensive experience of its proprietor.
Analytical Approach
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Receivables are stretched
at 60-90 days and inventory is sizeable at 20-30 days. However,
credit of 60-90 days from raw material suppliers partially helps
bridge funding gap.
* Weak capital structure: Gearing was high at 4.5 times as on
March 31, 2016, due to a small networth of INR1.12 crore.
Strength
* Extensive experience of proprietor: Presence of over three
decades has enabled the proprietor to establish strong
relationship with clients by continuously improving product
quality.
Outlook: Stable
CRISIL believes ADCI will continue to benefit over the medium
term from its proprietor's extensive experience. The outlook may
be revised to 'Positive' in case of a significant increase in
scale of operations and improvement in profitability and capital
structure. The outlook may be revised to 'Negative' if
considerable decline in revenue and profitability, deterioration
in working capital management, or large, debt-funded capital
expenditure further weakens financial risk profile, particularly
liquidity.
Set up as a proprietorship concern by Mr. Yogesh Dashrathlal
Parikh, ADCI manufactures synthetic organic dyes in powder form
that are used for garments.
Profit before tax (PBT) was INR0.25 crore on operating income of
INR18.95 crore for fiscal 2016, against a PBT of INR0.31 crore on
operating income of INR25.20 crore for fiscal 2015.
CENTECH ENGINEERS: CRISIL Cuts Rating on INR8.5MM Cash Loan to D
-----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Centech Engineers Private Limited to 'CRISIL D/CRISIL D' from
'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.75 CRISIL D (Downgraded from
'CRISIL A4+')
Cash Credit 8.5 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Letter of Credit 2.0 CRISIL D (Downgraded from
'CRISIL A4+')
Proposed Long Term 0.22 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL BB-/Stable')
Standby Line of 1.25 CRISIL D (Downgraded from
Credit 'CRISIL BB-/Stable')
Term Loan 1.28 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
The rating downgrade reflects delays by Centech in meeting the
interest and principal obligations on its term loan along with
instances of overdrawn bank limits; the delays have been caused
by the company's weak liquidity. Centech has weak liquidity on
account of working-capital-intensive operations and instances of
cash flow mismatches.
The ratings continue to reflect Centech's weak financial risk
profile due to large working capital requirements and modest net
worth. This weakness is partially offset by the experience of the
promoters in the heavy ventilating and air conditioning (HVAC)
segment.
Key Rating Drivers & Detailed Description
Weakness
* Delays in servicing debt obligations
Centech has been unable to meet its interest and principal
obligations on its term loan along with instances of overdrawn
bank limits. The delays have been caused by the company's weak
liquidity. Centech has weak liquidity on account of working-
capital-intensive operations and instances of cash flow
mismatches.
* Weak financial risk profile due to large working capital
requirements and modest net worth
With operations commencing from a modest capital base, the net
worth has not grown significantly. Modest net worth levels
constrain the financial flexibility; any expansion or sharp sales
growth in the business will likely alter the capital structure
considerably.
Centech's operations continues to remain working capital
intensive. There are instances of delays in realisation from
customers also.
CRISIL believes Centech's overall financial risk profile will
remain constrained over the medium term by a modest net worth and
large working capital requirements.
Strength
* Experience of the promoters in the HVAC segment
Centech derives significant benefits from the promoters'
technical expertise to handle the design and implementation
aspects of HVAC projects. The management has experience of around
three decades in the HVAC segment.
The company has also executed MEP (mechanical, electrical and
piping) project orders for Bharat Petroleum Corporation Ltd, Tata
Consultancy Services, and Vikram Sarabhai (ISRO).
CRISIL believes Centech will continue to benefit from the
extensive and technical experience and technical expertise of the
promoters.
Centech was incorporated during fiscal 2007 as Contec Airflow
Engineers Pvt Ltd by Mr. C Rama Krishna. Centech designs,
consults, and commissions HVAC and mechanical, electrical, and
plumbing projects. Its operations are currently managed by Mr.
Pawan Kumar.
Centech reported a profit after tax (PAT) of INR0.23 crores on an
operating income of INR32.7 crores for fiscal 2015 against a PAT
of INR0.69 crores on an operating income of INR33.8 crores for
fiscal 2014.
DESIGN N: CRISIL Assigns 'D' Rating to INR5.04MM Term Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Design - N - Glass Inc.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 5.04 CRISIL D
Proposed Long Term
Bank Loan Facility 4.16 CRISIL D
Bank Guarantee 0.30 CRISIL D
Cash Credit 0.50 CRISIL D
The ratings reflect the delays in servicing term loans by DNGI on
account of weak liquidity.
The ratings also factor in a small scale and working capital-
intensive nature of operations. These rating weaknesses are
partially offset by the extensive experience of the proprietor in
the glass industry.
Key Rating Drivers & Detailed Description
Weakness
* Delays in meeting debt obligation: The company has delayed on
the interest payments on its fund based facilities by more than
30 days in the past, on account of weak liquidity and
insufficient funds.
* Small scale of operations: Due to intense industry competition,
revenue was only INR10.95 crore in fiscal 2016.
* Working capital-intensive operations: This was because of high
advances and receivables, as reflected in gross current assets of
151 days as on March 31, 2016. Efficiently managing the working
capital requirement, while scaling up the business will be a
monitorable over the medium term.
Strengths
* Extensive industry experience of the proprietor: The proprietor
has been in the glass industry for 20 years, over which period he
has established a strong relationship with customers and
suppliers. He thus has a sound understanding of the dynamics of
the glass industry.
DNGI was established in 2013 as a proprietorship firm by Mr.
Rajeev Pathak. The firm manufactures a range of glass products,
which include designer, toughened, laminated, and insulated
glass. The manufacturing facilities are in Sampla, Haryana.
Net loss was INR4.63 lakh on net sales of INR10.95 crore in
fiscal 2016, against profit after tax of INR52.77 lakh on net
sales of INR10.7 crore in fiscal 2015.
GAYATRI ROLLING: CRISIL Reaffirms 'B' Rating on INR5.50MM Loan
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable' ratings on the bank
facilities of Gayatri Rolling Mills Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.50 CRISIL B/Stable (Reaffirmed)
Term Loan 3.09 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect the company's below-average
financial risk profile and modest scale of operations. These
weaknesses are partially offset by its promoters' extensive
experience in in the steel industry, and their funding support.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Despite its track record of more
than 10 years, the company's topline remains modest, expected at
INR50-55 crore in fiscal 2017.
* Below-average financial risk profile: Debt protection metrics
will be subdued, with interest coverage and net cash accrual to
total debt ratios expected at 1.6 times and 0.1 time,
respectively, in fiscal 2017. Gearing is likely to be moderate,
at 1.5-2.0 times, and networth small, at INR5-6 crore, as on
March 31, 2017. The financial risk profile is expected to remain
below average over the medium term.
Strengths
* Promoters' extensive experience in the steel industry, and
their funding support: Presence of more than 10 years in the
steel industry has enabled the promoters to establish strong
relationships with clients. The promoters have also infused funds
when needed.
Outlook: Stable
CRISIL believes GRMPL will continue to benefit from its
promoters' extensive industry experience. The outlook may be
revised to 'Positive' if significant growth in revenue and
profitability strengthens cash accrual and improves debt
protection metrics. The outlook may be revised to 'Negative' if
stretched working capital cycle; large, debt-funded capital
expenditure; or decline in profitability weakens debt protection
metrics.
GRMPL was established as a partnership firm and was reconstituted
as a private limited company in 2005. It is promoted by Raipur,
Chhattisgarh-based Mr. Umesh Agarwal and his family. The company
manufactures steel ingots and thermo-mechanically treated (TMT)
bars, and is ISO 9001:2008 certified. Most of the ingot output is
used for captive consumption, and the rest is sold in the open
market.
The company has reported a loss of INR1.53 cr on net sale of
INR53.07 cr in 2015-16, as against a profit after tax of INR0.39
cr on net sale of INR47.8 cr in 2014-15.
HI TECH: CRISIL Downgrades Rating on INR1.5MM Cash Loan to B-
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Hi Tech Transpower Pvt Ltd to 'CRISIL B-/Stable' from 'CRISIL
B/Stable' while reaffirming the short-term rating at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7 CRISIL A4 (Reaffirmed)
Cash Credit 1.5 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Although the promoters have supported the company through equity
infusion of INR45 lakhs and unsecured loans of INR1.18 crore in
FY16, the company is unable to generate sufficient accruals to
meet its repayment of loans which were taken to support its
business requirements. For fiscal 2017 and 2018, the company has
repayment obligations of INR0.69 crores and INR0.57 crores,
respectively, while the accruals over the same period of around
INR0.4 crores each are expected to be insufficient to meet the
repayments. Moreover, the company has provided loans and advances
of INR1.30 crore to one of its affiliates which has resulted in
deterioration in its liquidity and available funds to the
business. The turnover and operating margins are expected to
improve over the medium term, however, the overall financial risk
profile will remain weak with high gearing and low interest
coverage. Further, liquidity will remain impacted with loans and
advances to related entities and upcoming repayment obligations.
The ratings continue to reflect a modest scale of operations,
geographical and customer concentration in revenue, weak
financial risk profile, and insufficient cash accrual to meet
debt obligations. These weaknesses are partially offset by the
extensive experience of promoters in the industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: HTTPL has a modest scale of
operations as reflected in the revenue of INR32.92 crore in 2015-
16 (refers to financial year, April 1 to March 31), on account of
high fragmentation in the electrical contracting industry. Modest
scale of operations restricts the pricing power with customers
and suppliers.
* Geographical and customer concentration in revenue: HTTPL
undertakes civil and electrical projects primarily in Gujarat,
leading to geographical concentration in revenue. Furthermore,
the company derives 55-60% of its revenue from executing projects
for Gujarat Energy Transmission Corporation Ltd (GETCO), which
makes its business risk profile dependent on one customer. The
operations will remain exposed to risks associated with
geographical and customer concentration over the medium term.
* Weak financial risk profile: HTTPL has weak debt-protection
measures marked by interest coverage and net cash accruals to
total debt (NCATD) ratios of 1.11 times and 0.04 times
respectively in 2015-16. The firm has high gearing at around 6.25
times as on March 31, 2016.
* Insufficient accruals against term debt obligation: HTTPL is
expected to generate insufficient cash accruals of INR33.0 lakhs
and INR42.0 lakhs against term debt obligation of INR68.84 lakhs
and INR57 lakhs respectively for FY17 and FY18.
Strengths
* Promoters' extensive experience in the electrical contracting
industry: The promoters have been in the electrical contracting
industry for over a decade. Over the years, HTTPL has developed
established relations with customers and the clients including
Gujarat Energy Transmission Corporation Ltd (GETCO), Suzlon
Energy Ltd, Gujarat State Electricity Corporation Ltd and Wind
World India Pvt Ltd. HTPPL will continue to benefit from the
promoters' extensive experience and leverage on their established
relationship with customers over the medium term.
Outlook: Stable
CRISIL believes HTTPL will continue to benefit over the medium
term from its promoters' extensive experience. The outlook may be
revised to 'Positive' in case of higher-than-expected accrual
driven by improvement in profitability or scale of operations,
while managing working capital prudently, leading to a better
financial risk profile. Conversely, the outlook may be revised to
'Negative' if any major cost or time overrun in projects being
executed, or any debt-funded capital expenditure leads to
deterioration in the financial risk profile.
HTTPL was originally established as a partnership firm in 2005;
the firm was reconstituted as a private limited company with the
current name in July 2010. The company undertakes civil and
electrical projects on a turnkey basis for government departments
and private sector companies. It is promoted by Mr. Ramesh Gami
and his family.
HTTPL reported a net profit of INR0.17 crore on net sales of
INR32.92 crore for fiscal 2016 against a net profit of INR0.11
crore on net sales of INR29.40 crore for fiscal 2015
INDCON PROJECTS: CRISIL Reaffirms B+ Rating on INR6.0MM Loan
------------------------------------------------------------
CRISIL has reaffirmed the ratings on Indcon Projects and
Equipment Ltd's ratings at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 11.5 CRISIL A4 (Reaffirmed)
Cash Credit 6.0 CRISIL B+/Stable (Reaffirmed)
The ratings reflect the weakened liquidity profile marked by
insufficient net cash accrual to meet term debt obligations;
tender-based business operations leading to volatility in sales;
large working capital requirement and average financial risk
profile. These weaknesses are partially offset by the extensive
experience of IPEL's promoters in the engineering equipment
industry, the company's diversified revenue profile, and strong
and long-term relationships with customers and suppliers.
Key Rating Drivers & Detailed Description
Weakness
* Weakened liquidity profile: Liquidity profile is marked by
insufficient net cash accrual to meet term debt obligations of
INR2.37 crores and INR2.5 crores in fiscal 2017 and 2018 and high
bank limit utilisation driven by lower than expected turnover.
Further, the company has large debt contracted from banks and
non-banking financial institutions (NBFCs), resulting in a
weakened liquidity profile.
* Tender-based business operations leading to volatility in
sales: IPEL derives significant portion of its revenue from
tender-based orders. This exposes the company to volatile revenue
profile as inability to bag a tender may lead to revenue losses.
* Large working capital requirement: IPEL's working capital
requirements were high as indicated by gross current assets
(GCAs) estimated at 250 days as on March 31, 2016. This is on
account of higher debtor and inventory days.
* Average financial risk profile: IPEL has average financial risk
profile marked by gearing levels increased to to 1.75 times due
to increase in dependency over working capital funding to meet
the increased working capital requirements and increase in term
loans from the NBFCs.
Strengths
* Extensive experience of IPEL's promoters: IPEL was set up in
1986. The promoters have experience of nearly three decades in
the industrial manufacturing for engineering equipment skid
mounted compressed air, gas and liquid driers, pressure vessels.
* Diversified revenue profile and strong and long-term
relationships with customers and suppliers: The established
industry position of the promoters established strong relations
with suppliers and customers such as Reliance Industries Ltd
(CRISIL AAA/Stable/CRISIL A1+), Indian Oil Corporation Ltd
(CRISIL AAA/Stable/CRISIL A1+), Oil and Natural Gas Corporation
Ltd, Hindustan Petroleum Corporation Ltd (CRISIL
AAA/FAAA/Stable/CRISIL A1+), and helped IPEL in terms of pricing
and assured demand supply. IPEL derives roughly 40% of its
revenue from manufacturing segment and 60% from the EPC segment.
Outlook: Stable
CRISIL believes IPEL will continue to benefit from the extensive
industry experience of its promoters and their established
relationships with customers. The outlook may be revised to
'Positive' if increase in scale of operations and profitability
and efficient working capital management, lead to better cash
accrual and financial risk profile. The outlook may be revised to
'Negative' if reduced cash accrual or large working capital
requirement or debt-funded capital expenditure weakens financial
risk profile.
Incorporated in 1986 by Mr. Prakash Narain Misra, IPEL designs
and manufactures engineering equipment such as skid-mounted
compressed air, gas, and liquid driers; pressure vessels;
columns; and heat exchangers. It is also engaged in engineering,
procurement, and construction of pipeline infrastructure for the
oil and gas sector. The company is based in Delhi, and has
manufacturing facilities in Faridabad (Haryana), Gujarat, and
Delhi.
In fiscal 2016, IPEL earned profits of INR1.19 crores on net
sales of INR56.93 crores, against INR0.87 crores and INR62.77
crores for fiscal 2015.
ISCON CRAFT: CRISIL Reaffirms B+ Rating on INR6.69MM Term Loan
--------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of Iscon
Craft Paper Mill Pvt Ltd at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .5 CRISIL A4 (Reaffirmed)
Cash Credit 5.5 CRISIL B+/Stable (Reaffirmed)
Letter of Credit .5 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.81 CRISIL B+/Stable (Reaffirmed)
Term Loan 6.69 CRISIL B+/Stable (Reaffirmed)
The ratings reflect modest scale of operations in the highly
fragmented paper industry, susceptibility of operating
profitability to volatility in raw material prices, and small
networth constraining its financial flexibility. These weaknesses
are partially offset by promoters' extensive industry experience
and established relationships with customers and suppliers.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: ICPMPL is a small player in the
fragmented paper industry, with total capacity of 100 tonne per
day. Capacity utilisation remained low at 61% as of September
2016. Furthermore, it currently manufactures paper used in
covering of laminates, thereby limiting its diversity, though it
has the option to expand into manufacturing of paper that can be
used to manufacture corrugated boxes.
* Susceptibility to fluctuations in raw material prices: ICPMPL
uses waste paper as the major input for producing board paper.
Profitability is susceptible to volatility in raw material
prices.
* Small networth: ICPM's networth is small at INR5.4 crore as on
March 31, 2016 on account of small paid up capital and low
accretion to services.
Strengths
* Promoters' extensive experience in the paper industry: ICPM's
promoters have over two decades' experience in the industry. The
directors, Mr. Ishwarbhai Patel, Mr. Jayantibhai Patel, and Mr.
Bharatbhai Pokar also operate other established businesses in the
industry, most of which are ICPM's customers.
* Established relationships with customers and suppliers: ICPM
though a new entrant in the highly competitive market has already
established relationships with their customers and suppliers
through the promoters' varied businesses. Established
relationships with customers ensure a steady order flow over the
medium term.
Outlook: Stable
CRISIL believes ICPMPL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if scale of operations and
profitability is higher than expected and the financial risk
profile improves because of better profitability. Conversely, the
outlook may be revised to 'Negative' if the financial risk
profile weakens because of decline in revenue and operating
profitability or if working capital cycle is stretched leading
to deterioration in financial risk profile.
Established in 2011, ICPM manufactures kraft paper and has the
capacity of around 24,000 tonnes per annum at the plant in
Vadodara (Gujarat). The company is managed by Mr. Ishwarbhai
Patel, Mr. Jayantibhai Patel, Mr. Devjibhai K Patel and Mr.
Bharatbhai Pokar.
Profit after tax was INR10.4 lakh on net sales of INR48.4 crore
in fiscal 2016, vis-a-vis net loss of INR1.6 lakh and INR31.5
crore, respectively, in fiscal 2015.
ISWARYA ENTERPRISES: CRISIL Assigns 'B' Rating to INR9MM Loan
-------------------------------------------------------------
CRISIL has assigned rating of 'CRISIL B/Stable' to the bank
facility of Iswarya Enterprises.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 9 CRISIL B/Stable
The rating reflects IE's modest scale of operations in highly
fragmented agro processing industry. The rating also factors in
IE's below-average financial risk profile marked by high gearing
and moderate debt protection metrics. These rating weaknesses are
partially offset by promoter's extensive experience in agro
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: IE has modest scale of operations
as indicated by revenues of INR21 crores in 2015-16. CRISIL
believes that the modest scale of operations will continue to
constrain the business risk profile over the medium term.
* Below-average financial risk profile: IE's below-average
financial risk profile is marked by high gearing and moderate
debt protection metrics. The net worth of the firm remained small
at INR0.7 crore as on March, 2016. Also, the gearing remained
moderate at 1.05 times as on March, 2016. The moderate debt
protection metrics is marked by moderate interest coverage ratio
of 4.4 times for 2015-16.
Strength
* Extensive experience of promoters in foam industry: IE benefits
from the extensive experience of over 10 years of promoters in
agro industry. Over the years, the management has established
longstanding relationship with the customers and suppliers.
Outlook: Stable
CRISIL believes IE will continue to benefit over the medium term
from the promoters' strong relationships with customers and
suppliers. The outlook may be revised to 'Positive' in case of
higher-than-expected sales, coupled with increase in
profitability, leading to improvement in the financial risk
profile. Conversely, the outlook may be revised to 'Negative' if
the revenues and profitability decline or reliance on external
debt increases significantly because of large working capital
requirement or substantial debt-funded capital expenditure leads
to weakening of financial risk profile.
Formed in 2004 as a partnership firm, IE is engaged in processing
of groundnut kernels. The firm is based out of Nallacheruvu,
Andhra Pradesh and is promoted by Mr. Ramanath.
Profit after tax was INR0.09 crore on net sales of INR21 crore in
fiscal 2016, against profit after tax of INR0.06 crore on net
sales of INR11 crore in fiscal 2015.
J. N. TRADERS: CRISIL Reaffirms 'B' Rating on INR6.5MM Cash Loan
----------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of J. N. Traders at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.5 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2.5 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect an average financial risk
profile, exposure to intense competition, and vulnerability of
profitability to volatility in metal prices. These rating
weaknesses are partially offset by the extensive experience of
the partners in scrap trading.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition and susceptibility to volatile
material prices: The scrap trading business is highly
competitive. The prices of materials, which account for about 95%
of sales, are volatile. Hence, profitability will remain
susceptible to any sharp movements these prices.
* Average financial risk profile: The networth was modest at
INR8.2 crore, and the total outside liabilities to tangible
networth high at 2.6 times, as on March 31, 2016. The interest
coverage ratio was moderate at 2.4 times in fiscal 2016.
Strength
* Extensive industry experience of the partners: The partners
have over 30 years of experience in the metal trading industry.
The firm primarily trades in steel and copper scrap. Over the
years, the partners have established a healthy business
relationship with various customers and suppliers.
Outlook: Stable
CRISIL believes JNT will continue to benefit from the extensive
industry experience of its partners. The outlook may be revised
to 'Positive' in case of a significant increase in revenue along
with improvement in profitability, resulting in sizeable net cash
accrual and hence in a better capital structure. The outlook may
be revised to 'Negative' if revenue or profitability declines
steeply, or if the financial risk profile deteriorates, most
likely because of lengthening of the operating cycle.
JNT was established as a partnership firm in 1983 by Mr. Abdul
Kareem Japher, his brother, Mr. Zakir Hussain, and a business
associate, Mr. Niranajan Vakil. The firm trades in ferrous and
non-ferrous metal scrap. Operations are managed by Mr. Japher.
JNT reported net profit of INR1.16 crores on net sales of INR77.6
crores in fiscal 2016, vis-a vis net profit of INR1.1 crore on
net sales of INR105.7 crores in fiscal 2015.
JAGSUN AGRO: CRISIL Assigns 'B' Rating to INR9MM Bill Disc.
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Jagsun Agro Commodities Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Foreign Bill Discounting 9 CRISIL B/Stable
The rating reflects an initial stage of operations, and expected
average financial risk profile and a low profit margin due to the
trading nature of the business. These rating weakness are
partially offset by the extensive experience of the promoter in
the rice industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Initial phase of operations: Operations commenced only in
November 2016. Establishment of a sound track record will be a
rating monitorable.
* Average financial risk profile: The total outside liabilities
to tangible networth ratio is expected to be high at 3.58 times
as on March 31, 2017. Debt protection metrics are likely to be
moderate with interest coverage ratio estimated at around 1.4
times for fiscal 2017.
* Low profit margin due to the trading nature of operations: The
operating margin is expected at 2-3% over the medium term because
of the trading nature of operations and no value addition to
products.
Strength
* Extensive industry experience of the promoter: The promoter,
Mr. Gaurav Gupta, has around 10 years of experience in the rice
industry.
Outlook: Stable
CRISIL believes JACPL will continue to benefit from the extensive
industry experience of its promoter. The outlook may be revised
to 'Positive' in case of a significant increase in scale of
operations and operating profitability, and hence, in a better
financial risk profile. The outlook may be revised to 'Negative'
in case of lower-than-expected profitability or a substantial
increase in working capital requirement, leading to pressure on
the financial risk profile.
JACPL was incorporated on September 1, 2016, promoted by Mr.
Gaurav Gupta. It is based in Karnal, Haryana, and trades in rice.
The company started operations in December 2016
JAYA GURU: CRISIL Assigns 'B' Rating to INR2.25MM LT Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank facilities of Jaya Guru Saw Mill.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 2.25 CRISIL B/Stable
Cash Credit 0.75 CRISIL B/Stable
Letter of Credit 7.00 CRISIL A4
The rating reflects modest scale of operations in highly
fragmented timber industry and working capital intensive nature
of operations. However, the rating draws comfort from extensive
experience of promoter in timber industry and established network
of suppliers. Further, the firm has moderate financial risk
profile marked by moderate gearing and comfortable debt
protection metrics.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
of INR1.57 crores as on March 31, 2016 as neither debt nor equity
as they are expected to remain in the business over the medium
term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in highly fragmented timber
industry: The scale of operations remain modest as reflected in
revenue of INR8.27 crore for fiscal 2016. Furthermore, it
operates in a highly fragmented timber industry with low
bargaining power with customers.
* Working capital-intensive operations: Gross current assets were
around 414 days as on March 31, 2016, due to large inventory.
Strength
* Extensive experience of the proprietor and established network
of suppliers: JGSM is promoted by Mr. R Jayapal, who has been
associated with the timber industry for close to two decades. The
vast experience of the promoter in the timber trading business
has helped the firm establish healthy relationship with its key
suppliers in Africa.
Outlook: Stable
CRISIL believes JGSM will benefit over the medium term from the
extensive experience of its proprietor. The outlook may be
revised to 'Positive' if improvement in scale of operations while
maintaining profitability leads to higher-than-expected accrual.
The outlook may be revised to 'Negative' if financial risk
profile weakens due to increased working capital borrowings,
large, debt-funded capital expenditure, or change in government
policy having a negative impact on operations.
Set up in 1992 as a proprietorship firm by Mr. R. Jayapal, JGSM
processes and trades in timber.
Net profit was INR35.55 lakhs on net sales of INR8.27 crores in
fiscal 2016 against net profit of INR33.03 lakhs on net sales of
INR6.91 crores in fiscal 2015.
KRISHNA CONSTRUCTIONS: CRISIL Assigns B+ Rating to INR22MM Loan
---------------------------------------------------------------
CRISIL has revoked the suspension of its rating on bank
facilities of Krishna Constructions (Chennai) and assigned its
'CRISIL B+/Stable' rating to these bank facilities. CRISIL had
suspended the rating vide its rating rationale dated December 7,
2014, as KC had not provided necessary information required for a
rating review. The firm has now shared the requisite information,
enabling CRISIL to assign its rating to the bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 22 CRISIL B+/Stable (Assigned;
Bank Loan Facility Suspension Revoked)
The rating reflects nascent stage of projects with risks related
to implementation, offtake and timely funding. Furthermore, the
firm is exposed to cyclicality and sluggishness of demand in the
real estate sector. However, the strengths are partially offset
by the extensive experience of partners in the real estate
industry.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility to risks related to execution, completion and
offtake: The firm is currently executing one residential real
estate development project, Krishna Pallavaram, in Pallavaram,
Chennai with a total saleable area of 93,000 square feet. The
firm is also setting up windfarms with total capacity of 3MW. The
firm is yet to finalise power purchase agreements (PPA) for wind
power generation and any delay in securing them or completion of
project may lead to cash flow mismatches. Any delay in the sale
of apartments and receipt of customer advances could affect
project implementation.
* Exposure to cyclicality in the Indian real estate sector: The
real estate sector in India is marked by volatile prices, opaque
transactions, and a highly fragmented market structure. The risk
is compounded by aggressive timelines for completion with
shortage of man power (project engineers and skilled labour).
Strengths
* Extensive experience of promoters: The partners-with nearly
three decades of experience in the industry-have developed 75
residential real estate projects in and around Chennai and have
100% sale record. Benefits from partners extensive experience
should support business risk profile.
Outlook: Stable
CRISIL believes KC will continue to benefit from extensive
industry experience of its partners. The outlook may be revised
to 'Positive' if early completion of projects or substantial
sales realisations from ongoing projects lead to sizeable cash
flows. The outlook may be revised to 'Negative' if delays in
project completion or in receipt of advances from customers, or
sizeable debt-funded projects weaken financial risk profile.
Set up in 1990 as a partnership entity, KC is involved in the
construction and sale of residential apartments in Chennai, Tamil
Nadu. The firm is also entering into generation and sale of power
from wind mills, which is yet to complete and start commercial
production. It is promoted by Mr. Krishna Reddy and family.
KC's profit after tax (PAT) of INR4.5 crore on net sales of
INR24.01 crore for fiscal 2016, vis-a-vis INR2.75 crore and
INR21.54 crore, respectively, for fiscal 2015.
LAGGAR INDUSTRIES: CRISIL Cuts Rating on INR14MM Cash Loan to D
----------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Laggar Industries Ltd to 'CRISIL D' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 14 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects the company's delay in servicing its debt
obligation on account of weak liquidity.
Key Rating Drivers & Detailed Description
Weakness
* Delay in servicing debt: LIL's cash credit limits have been
overdrawn for more than 30 days due to weak liquidity, which is
primarily on account of low sales in last couple of months.
* Weak financial risk profile: LIL had a high total outstanding
liabilities to tangible networth ratio of 3.7 times as on
March 31, 2016, and weak debt protection metrics, with interest
coverage and net cash accrual to adjusted debt ratios of 1.2
times and 0.03 time, respectively, in fiscal 2016. Networth is
small, expected at INR5.5 crore as on March 31, 2017.
* Exposure to regulatory risks: The fabrication and supply of
ballistic protection products are regulated by the Indian
government. Any adverse impact of change in government policies
could hit order flow to the company.
Strengths
* Extensive experience of promoter: LIL's promoter, Mr. Sandeep
Sobti, has experience of over 25 years in armour manufacturing.
Before setting up LIL, he traded in steel through his family
business.
LIL was incorporated by Mr. Sandeep Sobti in 1990. The company
manufactures and trades in bullet-proof steel which is used
primarily in bullet-proof jackets and in armored vehicles. The
company has a rolling mill with installed capacity of 30,000
tonne per annum in Jalandhar, Punjab.
Profit after tax was INR30.90 lakhs over operating income of
INR62.46 crore in fiscal 2016 vis-a-vis net loss of INR9.67 lakhs
over operating income of INR76.38 crore in fiscal 2015.
MAHA ELECTRONICS: CRISIL Assigns B- Rating to INR15MM Cash Loan
---------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of Maha Electronics Private Limited, and has assigned
its 'CRISIL B-/Stable' rating to the facility. CRISIL had, on
November 21, 2016, suspended the ratings as MEPL had not provided
the necessary information for a rating review. The company has
now shared the requisite information, enabling CRISIL to assign a
rating.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 15 CRISIL B-/Stable (Assigned;
Suspension Revoked)
Proposed Long Term 0.5 CRISIL B-/Stable (Assigned;
Bank Loan Facility Suspension Revoked)
The rating continues to reflect MEPL's below average financial
risk profile marked by small net worth high gearing and weak debt
protection metrics, working-capital-intensive nature of
operations, and its exposure to intense competition in the IT
hardware and telecommunication industry. The rating weaknesses
are partially offset by promoters' extensive experience and its
established relationship with its customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Working-capital-intensive nature of operations
MEPL's operations are working capital intensive, as reflected in
its high GCAs 321 days on account of high inventory days of
around 192 days, debtor days of 106 days and creditor days of
around 114 days.
* Exposure to intense competition in the IT hardware and
telecommunication industry
MEPL's operation are exposed to intense competition in the IT
hardware and telecommunication industry which limits bargaining
power.
* Below average financial risk profile-The financial risk profile
is below average financial risk profile marked by small net worth
of INR2.0 Crores high gearing of around 4.3 times and weak debt
protection metrics. Interest coverage ratios were around 0.8
times, for fiscal 2016.
Strength
* Promoters' extensive experience and its established
relationship with its customers
The promoter of MEPL, Mr. Venkateswarulu, has been in the
business for over 17 years has enabled the promoters to establish
strong relationship with customers and suppliers.
Outlook: Stable
CRISIL believes that MEPL will continue to benefit over the
medium term from its promoters' extensive industry experience and
its established relations with HP. The outlook may be revised to
'Positive' if there is a sustained improvement in the company's
working capital cycle, or there is a substantial improvement in
its net-worth on the back of sizeable equity infusion by its
promoters. Conversely, the outlook may be revised to 'Negative'
in case of a steep decline in the company's profitability
margins, or significant deterioration in its capital structure
caused most likely because of a stretch in its working capital
cycle.
MEPL was set up as a partnership firm, Maha Electronics Service,
in 1994 by Mr. S Venkateswarulu and his wife Mrs. S Punyavathy;
the firm was reconstituted as a private limited company and it
got its current name in 2002. MEPL is an authorized service
partner for HP and has also started erection and installation of
towers. The company is based out of Hyderabad, Telangana.
Net loss of INR0.3 crore on net sales of INR26.4 crore for fiscal
2016, vis-a-vis net loss of INR4.5 crore on net sales of INR39
crore, respectively, for fiscal 2015.
OM FIRE: CRISIL Upgrades Rating on INR2.1MM Overdraft to 'B'
------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Om Fire
Safety Company Private Limited to 'CRISIL B/Stable/CRISIL A4'
from 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL A4 (Upgraded from
'CRISIL D')
Overdraft 2.1 CRISIL B/Stable (Upgraded
from 'CRISIL D')
The upgrade reflects timeliness in servicing of term debt and
closure of the term debt account with bank. Financial flexibility
remains constrained by high bank limit utilisation and large
working capital requirement in fiscal 2016.
In the absence of any debt-funded capital expenditure (capex)
plans, its capital structure is expected to remain moderate;
gearing is expected to be at 0.7-1.0 time over the medium term.
Debt protection metrics are also expected to remain comfortable,
with interest coverage ratio remaining at 2.5-3.0 times over the
medium term. OFSC does not have any major debt obligation and
hence can use entire net cash accrual in case of any exigency.
The ratings reflect OFSC's exposure to real estate sector, small
scale, and working capital-intensive operations, constraining
liquidity. These weaknesses are partially offset by the extensive
experience of promoters in the industry, established customer
base, and an above-average financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to real the estate sector: Majority of OFSC's business
comes from residential real estate developers in the Delhi NCR
region. However, it has diversified its customer base by
targeting commercial and educational institutions.
* Small scale of operations: Scale is modest with respect to the
fragmented civil works industry. Turnover remained small at
INR21.92 crore in fiscal 2016.
* Working capital-intensive operations: Working capital
requirement is large as reflected in gross current assets of 322
days as on March 31, 2016, primarily on account of high short-
term loans and advances, moderate inventory, and considerable
receivables.
Strengths
* Extensive experience of promoters: The promoters have been in
the business of civil work for about 17 years. OFSC has executed
works for residential as well as commercial real estate segments
and has undertaken industrial construction and hotel projects.
* Established customer base: Backed by their experience, the
company has developed relationships with prominent real estate
developers and institutions such as India Bulls in (Delhi NCR),
Amausi Medical University (Lucknow), Shalimar (Lucknow), Emaar
MGF (Gurgaon), and Jaypee (Greater Noida). It also gets repeat
business from them. CRISIL believes OFSC to continue to tap
emerging opportunities, establish relationships with prominent
players, and maintain its established position over the medium
term.
* Above-average financial risk profile: Gearing was healthy at
0.77 time as on March 31, 2016, on account of minimal bank
funding for working capital requirements and nil large term debt.
Debt protection metrics have been comfortable, with interest
coverage ratio at 2.9 times and net cash accrual to total debt
ratio at 0.23 time for fiscal 2016.
Outlook: Stable
CRISIL believes OFSC will continue to benefit from the extensive
experience of its promoters over the medium term. The outlook may
be revised to 'Positive' if significant scaling up of operations
and operating profitability levels, along with improvement in its
working capital cycle, diversifies its end-user industry base.
Conversely, the outlook may be revised to 'Negative' in case of
slowdown in revenue or deterioration in profitability, capital
structure or debt protection metrics or deterioration in the
working capital cycle.
OFSC, a private limited company incorporated in 2000, provides
engineering, procurement and construction services and solutions
for firefighting, sanitary, and plumbing works. The company is
promoted by Mr. Bhanu Pal Singh and Mrs. Premsuta Singh.
OFSC had a net profit of INR0.64 crore and net sales of INR21.92
crore in fiscal 2016, against a net profit of INR0.91 crore on
net sales of INR31.04 crore in fiscal 2015.
PARI AGRI: CRISIL Assigns B+ Rating to INR8MM Cash Loan
-------------------------------------------------------
CRISIL has assigned 'CRISIL B+/Stable' rating to the long-term
bank loan facilities of Pari Agri Grain Industries Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 4 CRISIL B+/Stable
The rating reflects improving yet modest scale of operations and
low operating profitability in the competitive agri-grain trading
business, and constrained financial risk profile because of small
networth, expected average capital structure and subdued debt
protection metrics. These weaknesses are partly offset by
moderate industry experience of promoters and their funding
support.
Analytical Approach
For arriving at the rating, CRISIL has treated unsecured loans of
INR2.59 crore that the company has received from the directors
and family members as neither debt nor equity. This is because
the loans bear a nominal interest rate and are expected to remain
in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Improving yet modest scale of operations and low operating
margin amid intense competition
PAGPIL commenced agri-grain trading business from 2015, and
fiscal 2016 is the first full year of operations. Revenue'at
INR25 core in fiscal 2016'is likely to almost double in the
current fiscal. Scale of operations, although improving, is
likely to remain average given the industry competition and large
fund requirement to support growth.
Agri-grain trading business is highly competitive and fragmented
due to the presence of a large number of unorganised players.
This restricts the players' bargaining power and profitability.
Improvement in operating profitability'from 1.06% for fiscal
2016'remains to be seen.
* Average financial risk profile
Networth was small at INR2.13 crore, while unsecured loans from
promoters stood at 2.59 crore as on March 31, 2016. Although a
term loan has not been taken, working capital debt has been
availed to support revenue growth. The capital structure and
debt protection metrics are expected to remain average in the
near-to-medium term.
Strengths
* Experience of promoters:
PAGPIL is promoted by Mr. Arpit Agrawal and Mrs Isha Agrawal, who
possess 8 years of experience in the agri-grain trading business
through family-owned and managed proprietorship firms.
* Funding support from promoters:
Promoters have supported company's operations through infusion of
fresh capital and unsecured loans.
Outlook: Stable
CRISIL believes PAGIPL will benefit over the medium term from the
industry experience of its promoters and their funding support.
The outlook may be revised to 'Positive' if increase in revenue
and profitability results in high cash accrual. The outlook may
be revised to 'Negative' if low accrual or inefficient working
capital management, weakens financial risk profile, particularly
liquidity.
Established as Jai Shree Balaji Warehousing and Real Estate Pvt
Ltd in December 2011, PAGIPL got its current name in 2015. PAGIPL
trades chickpeas, wheat, jowar and soyabean and its registered
office is situated at Dewas, Madhya Pradesh. The company has also
forayed into exports recently.
Revenue was INR25.16 crore and net profit was INR0.14 crore for
fiscal 2016, against INR0.88 crore and INR0.14 crore,
respectively, for fiscal 2015.
PIONEER PANEL: CRISIL Assigns B+ Rating to INR4.75MM Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Pioneer Panel Products.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 4.75 CRISIL B+/Stable
Cash Credit 3.00 CRISIL B+/Stable
Proposed Fund-
Based Bank Limits 1.75 CRISIL B+/Stable
The rating reflects the firm's small scale of operations in a
highly fragmented industry, susceptibility to economic downturns,
and working capital-intensive operations. These weaknesses are
partially offset by the experience of its promoters and above-
average financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations and susceptibility to intense
competition: With expected revenue of INR10.02 crore for fiscal
2017, scale remains modest in the wood panel industry that has a
large unorganised sector, which controls around 50% and 70% of
the decorative laminates and panel products markets,
respectively. Additionally, organized players are subject to the
threat of cheap imports from Thailand and Malaysia, which cater
to 55% of India's requirement for particle boards.
* Susceptibility to economic downturns: The particle board
industry is susceptible to changes in domestic and global
economies. Given the economic slowdown, demand for domestic
construction and real estate is subdued and negatively affects
overall demand for the particle board industry. Against this,
cost of operating and maintaining production facilities is high
even when demand declines.
* Working capital-intensive operations: Gross current assets are
likely to be 132 days as on March 31, 2017, on account of
sizeable inventory (90-120 days on average) and credit of 30-60
days that the firm offers to customers.
Strengths
* Extensive experience of promoters
One of the promoters, Mr. Ashok Kumar Bansal, has experience for
around 15 years, while Mr. Lalit Gupta and Mr. Satish Kumar
Bansal have 10-12 years' experience in related industries.
* Above-average financial risk profile
Gearing is expected to be moderate at 1.20 times (treating
unsecured loans of INR2.56 crore as neither debt nor equity as
they are subordinate to bank limit and non-interest bearing) as
on March 31, 2017, while debt protection metrics are likely to be
comfortable, with interest coverage and net cash accrual to debt
ratios of 3.98 times and 0.23 time, respectively, for fiscal
2017. However, networth is estimated to be small at INR5.55 crore
as on March 31, 2017.
Outlook: Stable
CRISIL believes PPP will benefit over the medium term from the
extensive experience of its promoters and moderate financial risk
profile. The outlook may be revised to 'Positive' if improvement
in scale of operations and operating margin leads to high cash
accrual, and if working capital management strengthens. The
outlook may be revised to 'Negative' if slowdown in growth, low
profitability, or substantial debt-funded expansion weakens
business and financial risk profiles.
Set up in Rohtak, Haryana, in fiscal 2016 as a partnership firm
by Mr. Ashok Kumar Bansal, Mr. Lalit Gupta, and Mr. Satish Kumar
Bansal, PPP manufactures medium density fiberboards, pre-
laminated boards, and High density fiberboards (HDF) boards.
Operations began in October 2016.
ROLTA INDIA: S&P Affirms 'D' CCR on Continued Default on Notes
--------------------------------------------------------------
S&P Global Ratings said that it affirmed its 'D' long-term
corporate credit rating on Rolta India Ltd. At the same time,
S&P also affirmed its 'D' issue-level rating on the 2018 and the
2019 senior unsecured notes issued by Rolta, LLC and Rolta
Americas LLC. These notes are guaranteed by Rolta, an India-
based provider of information technology products and solutions.
S&P's affirmation reflects the continued default on the notes.
Rolta remains engaged with its financial and legal advisors and
investors to remedy the default situation.
Subsequently, S&P withdrew all of its ratings on Rolta at the
issuer's request.
SANJIVANI (T): CRISIL Cuts Rating on INR21.9MM LT Loan to B-
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of The Sanjivani (T) S S K Limited to 'CRISIL B-/Stable' from
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.6 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Proposed Long Term 21.9 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B/Stable')
The downgrade reflects weakening of liquidity, reflected in
expected low cash accrual in fiscal 2017 due to decline in
operating margin. Also, there is limited cushion in bank limit on
account of working capital-intensive operations. Financial risk
profile is expected to remain weak over the medium term because
of debt-funded capital expenditure (capex).
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to adverse regulatory changes and cyclicality in the
sugar industry
Government fixes the price to be paid to sugarcane growers
annually. It amended the Essential Commodities Act, 1955, to
replace sugar mills pay of sugarcane with fair and remunerative
price, a uniform price across the country. Additionally, in
response to domestic market conditions, the government
periodically imposes restrictions on import and export of sugar.
Also, sugarcane and sugar production in India tends to follow a
cyclical trend, wherein production increases for two years and
then declines for the next two years.
* Below-average financial risk profile
Gearing was high at 3.86 times as on March 31, 2016, and will
remain aggressive over the medium term due to debt-funded capex.
However, net worth was healthy at INR61 crore as on March31,
2016.
Strength
* Extensive experience of promoters
The company's promoter has been in the sugar industry for more
than five decades and is also a part of other local government
bodies.
Outlook: Stable
CRISIL believes SSSKL will benefit over the medium term from its
established position and support from promoter. The outlook may
be revised to 'Positive' if long-term fund infusion improves
liquidity. The outlook may be revised to 'Negative' if debt
protection metrics deteriorate due to lower-than-expected growth
in revenue and accrual or large, debt-funded capex.
Established in 1960 in Ahmednagar District, Maharashtra, by Mr.
Shankar Rao Kolhe, SSSKL is a co-operative society that
manufactures sugar.
For fiscal 2016, profit after tax (PAT) was INR13.46 crore on net
sales of INR393.67 crore, against a PAT of INR-13.01 crore on net
sales of INR339.06 crore for fiscal 2015.
SHALIMAR WORKS: CRISIL Reaffirms 'C' Rating on INR22.55MM Loan
--------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of The
Shalimar Works (1980) Limited at 'CRISIL C/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 25.45 CRISIL A4 (Reaffirmed)
Cash Credit/
Overdraft facility 6.00 CRISIL C (Reaffirmed)
Letter of Credit 1.00 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 22.55 CRISIL C (Reaffirmed)
The company has delayed servicing instalment on term debt
contracted from West Bengal Industrial Development Corporation
and unsecured loan availed of from the Government of West Bengal
(both the loans have not been rated by CRISIL) due to weak
liquidity.
The ratings continue to reflect Shalimar Works' weak financial
risk profile because of negative networth and muted debt
protection metrics, low operating efficiency, and customer
concentration in revenue profile. These weaknesses are partially
offset by medium-term revenue visibility due to moderate order
book.
Key Rating Drivers & Detailed Description
Weaknesses
* Insufficient cash accrual against debt obligation: Cash accrual
is likely to be inadequate to service loan availed of from
WBIDCO. As on March 31, 2016, principal overdue on the loan was
INR10.93 crore, while interest accrued and due amount was INR7.38
lakh.
* Weak financial risk profile: Networth was a negative INR277.85
crore as on March 31, 2016 which led to a leveraged capital
structure. Negative operating profit and accrual also resulted in
weak debt protection metrics.
Strength
* Moderate order book: As on date, the company has an order to
build 15 ships for the Indian Navy, of which 8 have been
constructed and delivered. The remaining ships, which have an
approximate order value of INR109 crore, provide revenue
visibility for the medium term.
The Shalimar Works Ltd was established by Turner Morrison Group
of Companies in the late 1890s. In 1980, the company was
liquidated and its assets were acquired by the West Bengal
government through incorporation of Shalimar Works. The company
builds and repairs ships and is also engaged in engineering and
fabrication of heavy structures.
For fiscal 2016, net loss was INR34.30 crore on an operating
income of INR46.26 crore, against loss of INR23.32 crore on an
operating income of INR10.58 crore in the previous fiscal.
SHIV DURGA: CRISIL Lowers Rating on INR2.5MM Cash Loan to 'B'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Shiv Durga Constructions and Engineerings Private Limited to
'CRISIL B/Stable' from 'CRISIL B+/Stable', and has reaffirmed the
'CRISIL A4' rating on the company's short-term facility.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7 CRISIL A4 (Reaffirmed)
Cash Credit 2.5 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Proposed Long Term 2.5 CRISIL B/Stable (Downgraded
Bank Loan Facility from 'CRISIL B+/Stable')
Term Loan .5 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
The downgrade reflects decline in SDC's revenue to INR19.41 crore
in fiscal 2016 from INR27.25 crore in fiscal 2015, resulting in
lower cash accrual. Working capital-intensive operations led to
rise in gross current assets to 162 days as on March 31, 2016,
from 114 days a year earlier, leading to stretched liquidity and
full utilisation of bank limit.
The ratings reflect the company's small scale of operations with
high geographical concentration, and its large working capital
requirement. The weaknesses are partially offset by healthy order
book providing near-term revenue visibility, and promoter's
extensive experience in the civil construction industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations and high geographical concentration
Despite being operational for about a decade, SDC's scale of
operations remains small because of exposure to intense
competition, and high geographical concentration in revenue. Low
entry barriers in the civil construction sector and tender-based
business expose the company to competitive pressure. Also,
operations are confined to Bihar and Jharkhand, and the company
depends on infrastructure investment and new government projects
in the region.
* Large working capital requirement
SDC has substantial receivables, and has to maintain performance
guarantee deposits (Rs 6.4 crore as on March 31, 2016) and fixed
deposits (Rs 5.2 crore) against bank guarantee and cash credit
limits. It receives payments from government authorities in 45-60
days after raising bills. However, inflow of funds at the year-
end keep receivables low then.
Strength
* Promoter's experience in the construction industry
The promoter, Mr. Sanjeev Chowdhary, has been in the construction
business since 2001. He began operations by setting Shiv Durga
Stone Industries in 2001 for undertaking small projects. Over the
years, he has increasingly undertaken large projects. SDC
generally executes World Bank-sponsored contracts for Rural Works
Department (RWD), Bihar.
Outlook: Stable
CRISIL believes SDC will continue to benefit from its promoter's
extensive industry experience. The outlook may be revised to
'Positive' if significant ramp-up of operations and stable
profitability lead to stronger cash accrual and improved
liquidity. The outlook may be revised to 'Negative' if the
liquidity weakens because of low cash accrual, or large working
capital requirement, or significant, debt-funded capital
expenditure.
SDC was incorporated in 2011 to take over the business of Shiv
Durga Stone Industries. The company is promoted by Mr. Sanjeev
Chowdhary. It undertakes road construction contracts in Jharkhand
and Bihar, primarily for Rural Engineering Organisation and RWD
of Bihar, and National Building Constructions Corporation Ltd.
SDC's profit after tax was INR0.85 crore on net sales of INR19.41
crore in fiscal 2016.
SHREE LAKSHMEE: CRISIL Lowers Rating on INR6MM LT Loan to B-
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Shree Lakshmee Homes & Infrastructures to 'CRISIL B-/Stable'
from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 6 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
The downgrade reflects delay in project execution, and cash flow
mismatch due to lower-than-expected customer advance of INR3.3
crore received despite moderate booking. Moreover, cash accrual
is insufficient to meet the large repayment obligation in the
near term. However, the proprietor has committed to bringing in
additional funds to meet the repayment obligation commencing from
February 2017.
The rating reflects exposure to risks related to completion of an
ongoing project, and to risks inherent in the real estate
industry. These weaknesses are partially offset by the extensive
industry experience of the proprietor.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility to risks related to completion and saleability
of an ongoing project: About 40% the project is awaiting
completion. As of January 30, 2017, booking was moderate at
around 53%, while customer advances were only about 38% of the
the value of inventory sold. The external funding requirement has
been entirely tied up; however, any delay in the saleability of
apartments and receipt of customer advances could impact project
implementation. Hence, timely project implementation and
saleability will remain key monitorables.
* Exposure to cyclical demand in the Indian real estate sector:
The business risk profile is susceptible to risks related to
slowdown in the Indian real estate sector. The recent slowdown in
the sector following demonetisation of high-value notes has
adversely affected new bookings. Furthermore, the firm is
susceptible to geographic concentration, as the entire revenue is
derived from real estate development in Udupi.
Strength
* Extensive experience of the proprietor in real estate
development in Udupi, Karnataka: The proprietor, Mr. Amrith
Shenoy, has an experience of more than 15 years in the real
estate development segment in Udupi. He has constructed a variety
of buildings including independent bungalows,
residential/commercial complexes, and individual residences.
Outlook: Stable
CRISIL believes SLHI will continue to benefit from the extensive
industry experience of its proprietor. The outlook may be revised
to 'Positive' if substantial sales realisations from the ongoing
project lead to sizeable cash flow. The outlook may be revised to
'Negative' if delays in project completion or in receipt of
customer advances, or large debt-funded projects, weaken the
financial risk profile. Timely fund support from the proprietor
to meet the repayment obligation in the near term would be the
key rating sensitivity factor.
SLHL was set up in 1999 as a proprietary concern by Mr. Amrith
Shenoy, who manages operations. The firm is an Udupi-based real
estate developer.
Profit after tax (PAT) was INR0.33 crore on net operating income
of INR2.12 crore in fiscal 2016, against PAT of INR0.20 crore on
net operating income of INR1.01 crore in fiscal 2015.
SHREEJI COTTON: CRISIL Assigns B+ Rating to INR5.0MM Cash Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Shreeji Cotton Ginning and Pressing
Industries.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 1.11 CRISIL B+/Stable
Cash Credit 5.00 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 1.89 CRISIL B+/Stable
The rating reflects an average scale of operations in a
fragmented industry, and a below-average financial risk profile
because of a modest networth and high gearing. The rating also
factors in susceptibility to cotton availability its prices and
government policy regarding the cotton industry. These weaknesses
are partially offset by the extensive experience of the promoters
in the cotton ginning industry, and their funding support.
Key Rating Drivers & Detailed Description
Weaknesses
* Average scale of operations in a highly fragmented industry:
Revenue was around Rs46.1 crore in fiscal 2016 and expected to
grow marginally current fiscal. The operations will remain
exposed to intense competition in a fragmented industry.
* Susceptibility to availability and prices of cotton and to
government regulations: Operations will remain susceptible to any
high volatility in cotton prices, its availability or any adverse
impact of government regulations pertaining to the industry.
* Below-average financial risk profile: This is driven by debt
funding of large working capital requirement. The networth was
small at Rs1.38crore and gearing of 4.1 times as on March 31,
2016. The gearing should remain at about 3 times over the medium
term too.
Strength
* Extensive experience of the promoters and their fund support:
With over three decades of experience in the cotton ginning
industry,the promoter family has in-depth understanding of the
dynamics of the industry and the local market. Moreover, they
have supported the firm through unsecured loans to the extent of
Rs1.0 crore in fiscal 2016.
Outlook: Stable
CRISIL believes SCGPI will continue to benefit from the extensive
industry experience of its promoters and their funding support.
The outlook may be revised to 'Positive' in case of significantly
better-than-expected revenue and cash accrual, or substantial
capital infusion. The outlook may be revised to 'Negative' in
case of deterioration in the financial risk profile, particularly
liquidity, owing to lower-than-anticipated cash accrual, larger-
than-expected working capital requirement, or debt-funded capital
expenditure.
SCGPI was established in 2011 by Mr. Dinesh Halai, Mr. Premji
Halai, Mr. Kalyanji Halai, Mr. Harji Rabadiya, and Mr. Vinod
Rabadiya, who have been engaged in cotton ginning for over three
decades. The company gins and presses cotton and sells cotton
seeds. Its manufacturing unit is at Naranpur Bhuj, in the Kutch
district in Gujarat.
Profit after tax was Rs0.05 crore on operating income of Rs46.12
crore in fiscal 2016, against profit after tax of INR0.09 crore
on operating income of Rs40.48 crore in the previous fiscal.
SRI SUNFLOWER: CRISIL Reaffirms 'D' Rating on INR12MM LT Loan
-------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Sri Sunflower Educational Society (SSES) at 'CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 12 CRISIL D (Reaffirmed)
The rating continues to reflect continuous delay in payment of
interest and instalments on the term loan. The delays have been
caused by a sluggish operating performance in fiscal 2016 and
weak liquidity owing to a significant stretch in receivables.
The rating also reflects a below-average financial risk profile
because of small net worth and high gearing. It faces high
geographic concentration in revenue, and is susceptible to
regulatory changes in the education sector. However, it benefits
from promoters' extensive experience in the education sector.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: SSES' financial risk
profile is marked by its small net worth, high gearing, and
average debt protection metrics.
* Susceptibility to unfavorable regulatory changes in education
sector, and geographic concentration in revenue profile
The establishment and running of higher educational institutions
are governed by various governmental and quasi-governmental
agencies such as the University Grants Commission (UGC), AICTE,
and universities, as well as state governments. Each body has
detailed procedures for granting permission for the setting up of
new institutions, and the approvals need to be renewed every
three or five years. Even enhancing the number of seats requires
prior approval.
Strength
* Promoters' extensive experience in running educational
institutes
SSES's promoters have extensive experience in running educational
institutes. Mr. Punnam Raju initially started a school and an
intermediate college in Lankapalli to promote secondary school
education. In 2003, he set up SSES to promote technical education
in the rural areas of Andhra Pradesh. The society offers various
undergraduate and postgraduate courses in engineering and has a
student intake of more than 2200 students. The society has
developed itself as a provider of quality education in the Andhra
Pradesh, supported by its good infrastructural facilities.
SSES was set up in 2003 by Mr. M D V S R Punnam Raju and his
family members. It operates an engineering college in Krishna
(Andhra Pradesh).
SSES reported a profit after tax (PAT) of INR0.59 crore on net
sales of INR9.94 crore for fiscal 2013, vis-a-vis INR0.34 crore
and INR7.42 crore, respectively, for fiscal 2012.
SWATHI COTGIN: CRISIL Lowers Rating on INR19.8MM Cash Loan to B
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Swathi Cotgin (Tmc) Private Limited to 'CRISIL B/Stable' from
'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 19.8 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Long Term Loan 8.2 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Proposed Long Term 5.0 CRISIL B/Stable (Downgraded
Bank Loan Facility from 'CRISIL B+/Stable')
The downgrade reflects less-than-expected revenue in fiscal 2016,
however the adverse effect of drop in revenue was partially
assuaged by increase in operating margins of the company. The
downgrade also factors in stretched liquidity, reflected in the
fully utilised cash credit facility owing to large working
capital requirement, tightly matched expected cash accruals
vis a vis maturing debt obligations.
The rating continues to reflect a modest scale of operations, a
weak financial risk profile because of a small net worth, high
gearing, and below-average debt protection metrics. The rating
also factors in the susceptibility of profitability to volatility
in cotton prices and changes in government regulations. These
rating weaknesses are partially offset by the extensive
experience of the promoters in the cotton industry and an
established customer relationship.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of INR49.11 crore and
operating margin of 8.6% in fiscal 2016, the scale remains modest
in the intensely competitive cotton ginning industry.
* Susceptibility of profitability to volatility in cotton prices:
Raw cotton, the major raw material, accounts for about 90% of the
production cost; hence, operating profitability is highly
susceptible to volatility in raw cotton prices.
* Weak financial risk profile: The networth was modest at INR9.9
crore as on March 31, 2016, against total debt of INR28.63 crore;
hence, gearing was high at 2.88 times. Debt protection metrics
were below average because of a small scale of operations and
hence modest cash accrual. The financial risk profile is expected
to remain below average over the medium term.
Strength
* Extensive industry experience of the promoters has resulted in
a strong relationship with customers and suppliers, which will
continue to benefit the company over the medium term.
Outlook: Stable
CRISIL believes SCPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of a sizeable increase in scale of
operations and improved operating margin, or a better capital
structure most likely because of a significant increase in cash
accrual or infusion of funds. The rating may be revised to
'Negative' in case of a lower-than-expected scale of operations
or operating margin, or large, debt-funded capital expenditure,
resulting in deterioration in the financial risk profile.
SCPL was incorporated in 2013, promoted by Mr. Boggavarapu
Ankamma Rao and Ms Prathipati Teene Venkayamma. The company,
based in Guntur, Andhra Pradesh, gins cotton and processes cotton
seed oil.
Profit after tax (PAT) was INR0.42 crore on net sales of INR49.11
crore in fiscal 2016, against PAT of INR0.57 crore on net sales
of INR59.77 crore in the previous fiscal.
UDDYAM CEMENT: CRISIL Assigns 'B' Rating to INR14MM LT Loan
-----------------------------------------------------------
CRISIL has assigned 'CRISIL B/Stable' rating to the INR14 crore-
proposed long-term bank facilities of Uddyam Cement Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 14 CRISIL B/Stable
The rating factors in risks related to project implementation and
subsequent ramp up in operations and expected below-average
financial risk profile because of debt-funded project capital
expenditure and initial stage of operations. These weakness are
partially offset by the experience of promoters in the cement
trading industry and their fund support.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to project implementation risks and subsequent ramp
up: UCPL is currently setting up a clinker grinding unit to
manufacture Portland Pozolana Cement (PPC) with an installed
capacity of 216000 metric ton per annum at a total cost of
INR13.10 crore. The initial stage of implementation'with less
than 20% of cost incurred so far'exposes the company to project
implementation related risks. Further, timely stabilisation and
commensurate ramp up of operations also remain key monitorables.
* Expected below-average financial risk profile: Financial risk
profile is expected to be below average because of debt funding
for project and subsequent working capital requirement. Due to
the initial stage, networth is expected to remain modest and
hence capital structure should be leveraged.
Strength
* Extensive experience of promoters and their fund support: The
promoters' experience in cement trading business, established
associations with suppliers and customers is likely to support
business operations over the medium term. The promoters will be
infusing INR5.5 crore of their own funds for the implementation
of project. The incremental funds may also be infused once
commercial operations commence.
Outlook: Stable
CRISIL believes UCPL will benefit from the experience of its
promoters in cement trading over the medium term. The outlook may
be revised to 'Positive' if UCPL implements the project on
schedule and reports higher revenue and cash accrual during the
initial phase. The outlook may be revised to 'Negative' if delay
in project implementation or low revenue or margin weakens
financial risk profile, particularly liquidity.
Incorporated in 2013 and promoted by Mr. Manoj Yadav, Mr. Alok
Agrawal and Dr Alok Srivastava, UCPL is setting up a clinker
grinding unit to manufacture PPC cement. Its facility is at
Chunar, Mirzapur in Uttar Pradesh. Commercial operations are
expected to commence from August, 2017.
VAIBHAV FITTING: CRISIL Lowers Rating on INR4.3MM Loan to 'D'
-------------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of
Vaibhav Fitting India Private Limited to 'CRISIL D/CRISIL D' from
'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.1 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Cash Credit 1.1 CRISIL D (Downgraded from
'CRISIL A4')
Proposed Long Term 4.3 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B-/Stable')
Term Loan 4.0 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The downgrade reflects delays in debt servicing owing to weak
liquidity caused by large working capital requirement coupled
with negative cash accrual.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Moderate networth, high gearing
and inadequate debt protection metrics weaken the financial risk
profile.
* Modest scale of operations: Operations are expected to remain
modest due to moderate plant utilisation (50-60%). Consequently,
revenue (Rs 7.4 crore in fiscal 2016) of INR4.8 crore has been
reported till December 2016 in fiscal 2017
* Delay in Debt servicing: The rating downgrade reflects
instances of delay in debt servicing by VFIPL. The delays have
been caused on account of weak liquidity caused by higher working
capital requirement coupled with negative cash accruals.
Strength
* Promoters' experience: The promoters have been in the same line
of business for around eight years through group concern, Max
Forge. Benefits from their experience will continue to support
the business.
Incorporated in 2008 by Mr. Suresh Sanghvi and Mr. Mukesh
Sanghvi, VFIPL manufactures forged fittings in Umbergaon,
Gujarat.
Loss was INR1.14 crore on operating income of INR8 crore in
fiscal 2016 as against INR1.52 crore and INR4.66 crore,
respectively, in the previous year.
VINDHYABASINI RICE: CRISIL Cuts Rating on INR6MM Cash Loan to D
----------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Vindhyabasini Rice Mills Cluster Private Limited to 'CRISIL D'
from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Proposed Long Term 6 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B+/Stable')
Term Loan 4 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects irregularity in paying instalments on term
loan and interest on cash credit facility due to stretched
liquidity.
The rating continues to reflect its working capital-intensive and
modest scale of operations in a highly fragmented and intensely
competitive rice milling and flour milling business. These rating
weaknesses are partially offset by extensive industry experience
of promoters.
Key Rating Drivers & Detailed Description
Weakness
* Delays in servicing instalment on term loan
Low cash accrual and sizeable working capital debt led to weak
liquidity, which in turn resulted in delays in servicing
instalment on term loan and in meeting interest obligation on
cash credit facility.
Strength
* Experience of promoters in the rice industry: Presence of
around three decades in the rice segment through group entities
has enabled the promoter to establish strong relationship with
customers and suppliers. Also, plant in Rohtas is favourably
located near Bihar's paddy-growing region.
Incorporated in January 2010 and promoted by Mr. Sunil Singh,
VRMCPL mills and processes parboiled rice and also started
operating a flour milling unit from May 2015 onwards.
VRMCPL reported profit after tax (PAT) of INR0.14 crore on net
sales of INR25.56 crore in 2014-15.
=========
J A P A N
=========
TOSHIBA CORP: To Buy IHI's 3% Shares in Westinghouse
----------------------------------------------------
Nikkei Asian Review reports that Toshiba Corp. will buy IHI's 3%
stake in Westinghouse Electric at the request of the Japanese
heavy industry group, which seeks to avoid exposure to the U.S.
nuclear company whose corporate value has been severely
diminished due to a massive write-down.
Nikkei says Toshiba revealed on Feb. 17 that the roughly JPY18.9
billion ($167 million) transaction will be executed as of May 17.
It will raise the company's stake in Westinghouse to 90%, the
report discloses. The Japanese multinational conglomerate said
the deal will reduce shareholders' equity and net assets "to some
degree," though the company did not specify how much or when the
impact will be recorded.
According to the report, the terms of IHI's investment in
Westinghouse give the minority shareholder the right to sell its
stake to Toshiba on or after Oct. 1. But the terms also include a
clause that allows the put option to be exercised before that
date under certain conditions.
Nikkei relates that the sale is not expected to affect the
business partnership between Westinghouse and IHI, which supplies
equipment such as containment vessels to the nuclear company.
The remaining 10% of Westinghouse is owned by Kazatomprom, a
state-owned Kazakh nuclear fuel producer, which has a similar put
option that it could exercise. Toshiba said it "cannot answer"
any questions about Kazatomprom's plans, Nikkei relays.
Toshiba earlier expressed an intention to cut its Westinghouse
stake in line with the conglomerate's decision to scale back its
overseas nuclear operations, adds Nikkei.
About Toshiba
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
Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba
Corporation's corporate family rating (CFR) and senior unsecured
rating to Caa1 from B3. Moody's has also downgraded Toshiba's
subordinated debt rating to Ca from Caa3, and affirmed its
commercial paper rating of Not Prime. At the same time, Moody's
has placed Toshiba's Caa1 CFR and long-term senior unsecured bond
rating, as well as its Ca subordinated debt rating under review
for further downgrade.
The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings
said it has lowered its long-term corporate credit rating on
Toshiba Corp. to 'CCC+' and its short-term corporate credit and
commercial paper program ratings on the company to 'C', all by
one notch. All of these ratings remain on CreditWatch with
negative implications. S&P also lowered its senior unsecured
debt rating on Toshiba two notches to 'B-' from 'B+' and kept the
rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the
long- and short-term ratings on Toshiba on CreditWatch with
negative implications at the same time as lowering the long-term
ratings, in response to Toshiba's announcement that it might
recognize several JPY100 billion in impairment losses related to
goodwill arising from its acquisition of a nuclear power business
through U.S.-based Westinghouse Electric Co. LLC, because the
goodwill far exceeded the company's initial estimates.
TOSHIBA CORP: Impairment Loss Credit Negative, Moody's Says
-----------------------------------------------------------
Moody's Japan K.K. says that Toshiba Corporation's (CFR, Caa1,
review for downgrade) delay in releasing its earnings report for
the quarter ended December 2016, and announcement of an
impairment loss of more than JPY700 billion (in excess of $6
billion) - mainly related to its nuclear projects in the US - is
credit negative.
"Toshiba is already in a deleterious financial position," says
Masako Kuwahara, a Moody's Vice President and Senior Analyst.
"The delay in reporting its results and the substantial
impairment charge pose further credit negatives for the company."
Moody's points out that on 14 February 2017, Toshiba postponed
the release of its earnings report for the quarter ended December
2016, but later provided a provisional forecast of a Yen390
billion net loss for the year to March 2017. At the same time, it
announced more than JPY700 billion (over $6 billion) impairment
loss.
Without fresh funds to bolster its equity position, Toshiba
estimated the impairment charge would result in a Yen150 billion
negative shareholders' equity position.
"Moody's believe Toshiba's delay in reporting its financial
results is due to poor internal controls at its US nuclear-power
subsidiary, Westinghouse Electric Corporation," adds Kuwahara.
"The poor internal controls likely indicate manifestly inadequate
processes for the acquisition of nuclear construction and
services provider, CB&I Stone & Webster, in 2015."
Moody's also says that the delay highlights the challenges that
Toshiba faces in effecting a proper corporate governance
framework, adequate to control complex global interests.
Moody's is increasingly concerned over the possibility of
escalating costs for current projects. Even though Toshiba
intends to cease its business of constructing new nuclear plants
overseas, it is committed to completing the four remaining
projects in the US. Toshiba has estimated cost overruns at $6.1
billion, but this figure could rise depending on US regulations
for nuclear generation.
Toshiba's plan to spin off its profitable memory business and
potential disposal of more than 50% will, once successfully
completed, strengthen its capital structure, a credit positive.
While this scenario could assist in underwriting the company's
present very weak balance sheet position, it would nevertheless
materially erode the earnings contribution of its one remaining
profitable business of any scale.
Reflecting these mounting challenges for the company, Moody's
downgraded Toshiba's CFR and senior unsecured debt ratings to
Caa1 on 28 December 2016 over Moody's concerns as to the
sustainability of Toshiba's near-term liquidity, as well as the
substantive and rapid erosion of its equity base. The company's
ratings continue to be under review for downgrade following
Toshiba's announcements.
Moody's review of Toshiba's ratings will include consideration of
the following main aspects:
(1) Toshiba's ability to maintain adequate near-term liquidity;
(2) The relationship between the company and its main banks;
(3) The magnitude of potential impairment losses related to the
acquisition of CB&I Stone & Webster Inc. in the fiscal year
ending March 31, 2017, along with the extent of erosion in its
balance sheet; and
(4) The adequacy of the company's governance, including the
timeliness of financial reporting.
Upward ratings pressure is extremely unlikely over the next 12-18
months, due to the material challenges the company is facing.
Nevertheless, the ratings outlook could change to stable, if
Toshiba can stabilize earnings and cash flow along with its very
weak financial profile.
Evidence that its liquidity is sustainable over the immediate and
longer term and that it can maintain adequate support from its
main banks would also be a prerequisite for changing the ratings
outlook to stable.
On the other hand, Toshiba could face renewed downward ratings
pressure, if a potential impairment loss related to goodwill is
beyond Moody's expectations, and/or its earnings stay weak,
possibly due to a significant deterioration in the memory
business beyond Moody's current expectations.
In addition, further evidence of a challenged liquidity position
or a non-curable breach in its bank debt covenants would also
likely place immediate pressure on Toshiba's ratings.
The principal methodology used in these ratings was Global
Manufacturing Companies (Japanese) published in August 2014.
Toshiba Corporation, headquartered in Tokyo and founded in 1875,
is one of the largest integrated electronics companies in Japan.
===============
M O N G O L I A
===============
BOGD BANK: Moody's Reviews for Downgrade Caa1 Deposit Rating
------------------------------------------------------------
Moody's Investors Service has placed on review for downgrade the
long-term ratings of seven Mongolian banks following Moody's
review for downgrade of Mongolia's sovereign ratings on Feb. 15,
2017.
The seven banks are: Bogd Bank LLC; Capital Bank LLC; Golomt Bank
LLC; Khan Bank LLC; State Bank LLC; Trade and Development Bank of
Mongolia LLC; and XacBank LLC.
RATINGS RATIONALE
The action on the seven banks' ratings reflects the high
correlation between the creditworthiness of the Mongolian banking
system and that of the sovereign, given (1) the strong extent to
which the banks' businesses depend on macroeconomic and financial
conditions in Mongolia, and in view of the low level of cross-
border diversification in their operations; and (2) their
significant direct and indirect exposures to domestic sovereign
debt relative to their capital bases.
The sovereign review is initiated because of uncertainty around
the financing options for Development Bank of Mongolia's (DBM)
$580 million repayment which is maturing on 21 March 2017. DBM
lacks the foreign currency funds to finance the repayment itself,
and the presence of an irrevocable and unconditional government
guarantee on the DBM issuance means that Moody's would consider a
default on the notes to constitute a default by the sovereign.
The DBM notes also contain cross-acceleration clauses on other
government obligations, implying wider implications of a default
for investors.
The purpose of the sovereign review is to assess the implications
of the 21 March 2017 maturity of the government-guaranteed notes
issued by the DBM for the government's fiscal position and
foreign exchange buffers. In Moody's view, the as yet unresolved
issue of how that maturity will be financed poses a near-term
threat to Mongolia's credit profile, notwithstanding ongoing
discussions with the IMF.
Should an agreement with the IMF be reached during the review,
the review will also assess the extent to which the terms of the
resultant program mitigate those near-term risks, as well as
offer the prospect of improvements in Mongolia's credit profile
over the medium term.
In particular, the review for Trade and Development Bank of
Mongolia LLC (TDBM) will focus on the implications -- if any --
for holders of the TDBM government-guaranteed bond of $500
million due on 19 May 2020, in the event that the upcoming
repayment in March for a similarly guaranteed government bond
issued by DBM results in economic losses for bond holders, and
the government guarantee is not honored.
What Could Stabilize the Rating at the Current Level: Bogd Bank
LLC; Capital Bank LLC; Golomt Bank LLC; Khan Bank LLC; State Bank
LLC; and XacBank LLC.
Because these banks' caa1 BCAs are at the same level as
Mongolia's sovereign rating, an upgrade is unlikely in the near
term.
At the end of the review period, Moody's will confirm their Caa1
ratings with stable outlooks if the sovereign rating of Caa1 is
confirmed with a stable outlook; and if the banks' asset quality
and profitability profiles, which are under pressure from the
challenging operating environment, show signs of clear
stabilization.
What Could Change the Rating - Down: Bogd Bank LLC; Capital Bank
LLC; Golomt Bank LLC; Khan Bank LLC; State Bank LLC; and XacBank
LLC
Factors that could result in a downgrade include:
1) A downgrade of Mongolia's sovereign rating; or
2) A downgrade of the banks' BCAs
The banks' BCAs could be downgraded if: (1) asset quality
deteriorates significantly, for example, with problem loans/gross
loans exceeding 9.0% for a sustained period; (2) tangible common
equity falls below 8%; or (3) profitability deteriorates
significantly, leading to annual net losses on a sustained basis.
What Could Stabilize the Rating at the Current Level: Trade and
Development Bank of Mongolia LLC.
Because the bank's caa1 BCA is at the same level as Mongolia's
sovereign rating, an upgrade is unlikely in the near term.
At the end of the review period, Moody's will maintain its Caa1
rating with a stable outlook if the upcoming repayment in March
for a similarly guaranteed government bond issued by DBM does not
increase the risk of economic loss for the government-guaranteed
bond holders of TDBM, and if there is no reduction in the
likelihood that the government guarantee will be exercised if
necessary; and if the banks' asset quality and profitability
profiles, which are under pressure from the challenging operating
environment, show signs of clear stabilization.
What Could Change the Rating - Down: Trade and Development Bank
of Mongolia LLC
1) A high likelihood of losses for holders of TDBM government
guaranteed bonds if the upcoming repayment in March for a
similarly guaranteed government bond issued by DBM increases the
risk of economic losses for bond holders of TDBM and reduces the
likelihood that the government guarantee will be exercised;
2) A downgrade of Mongolia's sovereign rating; or
3) A downgrade of the bank's BCA
The bank's BCA could be downgraded if: (1) asset quality
deteriorates significantly, for example, with problem loans/gross
loans exceeding 9.0% for a sustained period; (2) tangible common
equity falls below 8%; or (3) profitability deteriorates
significantly, leading to annual net losses on a sustained basis.
The resultant ratings and actions are listed below:
Issuer: Bogd Bank LLC
- Baseline Credit Assessment (BCA) of caa1 placed on review for
downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- Local Currency (LC) Deposit Rating of Caa1 placed on review
for downgrade
- Foreign Currency (FC) Deposit Rating of Caa2 placed on review
for downgrade
- LC/FC Short-term Deposit Rating, affirmed at NP
Issuer: Capital Bank LLC
- BCA of caa1 placed on review for downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- LC Deposit Rating of Caa1 placed on review for downgrade
- FC Deposit Rating of Caa2 placed on review for downgrade
- LC/FC Short-term Deposit Rating, affirmed at NP
Issuer: Golomt Bank LLC
- BCA of caa1 placed on review for downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- LC Deposit Rating of Caa1 placed on review for downgrade
- FC Deposit Rating of Caa2 placed on review for downgrade
Issuer: Khan Bank LLC
- BCA of caa1 placed on review for downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- LC Deposit Rating of Caa1 placed on review for downgrade
- FC Deposit Rating of Caa2 placed on review for downgrade
- LC/FC Issuer Rating of Caa1 placed on review for downgrade
- LC/FC Short-term Deposit Rating, affirmed at NP
Issuer: State Bank LLC
- BCA of caa1 placed on review for downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- LC Deposit Rating of Caa1 placed on review for downgrade
- FC Deposit Rating of Caa2 placed on review for downgrade
Issuer: Trade and Development Bank of Mongolia LLC
- BCA of caa1 placed on review for downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- LC Deposit Rating of Caa1 placed on review for downgrade
- FC Deposit Rating of Caa2 placed on review for downgrade
- LC/FC Short-term Deposit Rating, affirmed at NP
- LC/FC Issuer Rating of Caa1 placed on review for downgrade
- LC/FC Short-term Issuer Rating, affirmed at NP
- Backed FC Senior Unsecured of Caa1 placed on review for
downgrade
- FC Senior Unsecured MTN of (P)Caa1 placed on review for
downgrade
Issuer: XacBank LLC
- BCA of caa1 placed on review for downgrade
- Adjusted BCA of caa1 placed on review for downgrade
- Long-term Counterparty Risk Assessment of B3(cr) placed on
review for downgrade
- Short-term Counterparty Risk Assessment affirmed at NP(cr)
- LC Deposit Rating of Caa1 placed on review for downgrade
- FC Deposit Rating of Caa2 placed on review for downgrade
- LC/FC Issuer Rating of Caa1 placed on review for downgrade
- FC senior unsecured MTN of (P)Caa1 placed on review for
downgrade
- LC/FC Short-term Deposit Rating, affirmed at NP
- LC/FC Short-term Issuer Rating, affirmed at NP
- Other Short-term Program, affirmed at (P)NP
The principal methodology used in these ratings was Banks
published in January 2016.
====================
S O U T H K O R E A
====================
DOOSAN BOBCAT: 2016 Results Support B1 CFR, Moody's Says
--------------------------------------------------------
Moody's Investors Service says that Doosan Bobcat Inc.'s
financial results for 2016 were generally in line with
expectations and support the company's B1 corporate family rating
(CFR) and positive outlook.
"DBI's financial profile continued to improve in 2016, and
Moody's expects its financial leverage to remain strong for its
rating category over the next 1-2 years," says Wan Hee Yoo, a
Moody's Vice President and Senior Analyst.
According to the company's announcement on 15 February 2017, its
consolidated operating income grew 4.7% to $357 million in 2016
from $341 million in 2015.
The year-on-year earnings growth was mainly supported by an
improved product mix and cost-cutting measures, despite a 4.7%
year-on-year revenue decline during this period.
At the same time, DBI's reported consolidated debt decreased to
about $1.35 billion at end-2016 from $1.61 billion at end-2015.
This decrease was mainly driven by the early repayment of $220
million of senior secured term loan, which was funded with free
cash flow and cash.
As a result, Moody's estimates DBI's adjusted debt/EBITDA
improved to about 3.6x in 2016 from 4.0x in 2015.
Despite the continued challenges in the company's operating
environment, DBI's earnings will likely increase gradually over
the next 1-2 years on the back of steady demand from its end-
markets, an enhanced product mix and restructuring efforts.
In addition, Moody's expects that DBI's debt level will gradually
decrease over the next 1-2 years, underpinned by healthy
operating cash flow, as well as manageable capital expenditures
and dividend payments. DBI has already paid down its senior
secured term loan totaling about $353 million since the issuance
in 2014.
Consequently, Moody's expects DBI's adjusted debt/EBITDA to fall
to about 3.1x-3.3x over the next 1-2 years from 3.6x in 2016.
This level of financial leverage is strong for its current CFR,
thereby supporting the positive outlook.
That said, Moody's notes that the weaker credit quality of its
parent, Doosan Infracore Co., Ltd (DI, unrated), remains a drag
on DBI's rating, given DI's weak financial leverage and liquidity
profile.
The principal methodology used in this rating was Global
Manufacturing Companies published in July 2014.
Doosan Bobcat Inc. is the leading manufacturer of compact farm
and construction equipment in North America and EMEA. It engages
in the design, manufacture, sale and service of compact farm and
construction equipment under the Bobcat brand and portable power
products. It also distributes heavy construction equipment
produced by its parent Doosan Infracore Co., Ltd.
HANJIN SHIPPING: Seoul Court Officially Declares Firm Bankrupt
--------------------------------------------------------------
Yonhap News Agency reports that Hanjin Shipping Co. was
officially declared bankrupt by a Seoul court on Feb. 17, ending
its 40-year run and heralding a fundamental change in the
country's shipping landscape.
Yonhap says the Seoul Central District Court decided to declare
bankruptcy for Hanjin Shipping after a two-week period for appeal
expired. The court said a bankruptcy trustee will be appointed to
lead the sale of the shipping line's assets to pay off debts to
creditors, Yonhap relates.
All creditors are required to report their right to claim debts
by May 1, the report discloses.
"We will make efforts so that debts will be paid off to Hanjin
Shipping's creditors through fair liquidation proceedings," the
court said.
Earlier this month, the court said that it decided to end the
debt rehabilitation scheme for the shipping line as most of
Hanjin's key assets had been sold, Yonhap recounts.
With the bankruptcy officially announced, Hanjin's remaining
assets will be distributed among creditors.
The shipping line, established in 1977, was the country's No. 1
shipper that has posted a stellar performance in line with the
country's economic growth.
Earlier, an accounting firm estimated the liquidation value of
the shipping line at 1.79 trillion won (US$1.56 billion) saying
that the liquidation of the troubled shipper is "more
economical," rather than continuing its rehabilitation scheme.
Trading of Hanjin Shipping has been suspended on the Seoul bourse
since early this month, with its market capitalization staying at
KRW190 billion, Yonhap discloses. As declared as bankrupt, Hanjin
Shipping will be delisted from the local stock market, adds
Yonhap.
About Hanjin Shipping
Hanjin Shipping Co., Ltd., is mainly engaged in the
transportation business through containerships, transportation
business through bulk carriers and terminal operation business.
The Debtor is a stock-listed corporation with a total of
245,269,947 issued shares (common shares, KRW 5000 per share) and
paid-in capital totaling KRW 1,226,349,735,000. Of these shares
33.23% is owned by Korean Air Lines Co., Ltd., 3.08% by Debtor
and 0.34% by employee shareholders' association.
The Company operates approximately 60 regular lines worldwide,
with 140 container or bulk vessels transporting over 100
million tons of cargo per year. It also operates 13 terminals
specialized for containers, two distribution centers and
six Off Dock Container Yards in major ports and inland areas
around the world. The Company is a member of "CKYHE," a
global shipping conference and also a partner of "The
Alliance," another global shipping conference to be
launched in April 2017.
Hanjin Shipping listed total current liabilities of KRW 6,028,543
million and total current assets of KRW 6,624,326 million as of
June 30, 2016.
As a result of the severe lack of liquidity, Hanjin applied to
the Seoul Central District Court 6th Bench of Bankruptcy Division
for the commencement of rehabilitation under the Debtor
Rehabilitation and Bankruptcy Act on Aug. 31, 2016. On the same
day, it requested and was granted a general injunction and the
preservation of disposition of the Company's assets. The Korean
Court's decision to commence the rehabilitation was made on
Sept. 1, 2016. Tai-Soo Suk was appointed as the Debtor's
custodian.
On Sept. 2, 2016, Hanjin Shipping Co. filed in the U.S. a
voluntary petition under Chapter 15 of the Bankruptcy Code. The
Chapter 15 case is pending in New Jersey (Bankr. D.N.J. Case No.
16-27041) before Judge John K. Sherwood. Cole Schotz P.C. serves
as counsel to Tai-Soo Suk, the Chapter 15 petitioner and the duly
appointed foreign representative of Hanjin Shipping.
SAMSUNG GROUP: In Crisis After De facto Head's Arrest
-----------------------------------------------------
The Korea Herald reports that the court's decision to allow the
arrest of Lee Jae-yong, the heir apparent of Samsung Group, on
Feb. 17 brought the nation's largest conglomerate into the
biggest management crisis in its 79 years of history, suspending
its restructuring plans aimed at a smooth leadership transfer.
Mr. Lee was arrested by a special counsel, on bribery and other
charges related to the political corruption scandal involving
President Park Geun-hye and her confidante Choi Soon-sil, the
report says.
The Korea Herald relates that the de facto leader of Samsung is
accused of paying nearly $40 million in bribes to Choi in pursuit
of President Park's support for his succession in the company.
Since late last year, Mr. Lee has been grilled several times over
his alleged role in the scandal.
The report says the 48-year-old, a key suspect, had avoided being
arrested last month, with the court rejecting a request by the
special counsel, citing insufficient evidence. But the
investigators on Feb. 14 requested again to arrest him with more
evidence collected in recent weeks.
Mr. Lee is the first Samsung chief to ever be arrested, the
report notes. The heir apparent being put behind bars has sent
shock waves throughout the group, whose sales account for one-
fifth of South Korea's gross domestic product.
Mr. Lee's arrest is also expected to deal a severe blow to the
group's global reputation, the Korea Herald says.
The group's crown jewel Samsung Electronics is the world's
largest smartphone and chip maker, the report discloses. In a
survey by Interbrand last October, Samsung Electronics ranked
seventh in terms of its brand value out of 100 global businesses.
"The international community has strict standards on corrupt
companies," the report quotes Kwon Tae-shin, head of Korea
Economic Research Institute, as saying. "In the worst-case
scenario, Samsung could be excluded from biddings placed by
international organizations."
According to the report, the company released a short public
statement that said, "The group will do its best to reveal the
truth at the trial."
Rank-and-file employees at Samsung Electronics and other
subsidiaries, however, could not hide their embarrassment and
frustration, the report adds.
"Executives are remaining extremely silent about the news," the
report quotes an assistant manager at the company as saying.
"Employees at my level are trying to work as usual, but it is
hard to say we are not concerned."
Another manager-level employee at a Samsung unit said major
projects have been stopped for a while, the report relays.
"I am not sure whether it is related to the group issue or not,
but things have been halted at my company for a while," she said.
"Major business projects have been in slow progress or have
stopped due to delayed personnel reshuffles and related
restructuring."
The Korea Herald says the prevailing expectation had been that
the special counsel's request to arrest the Samsung heir apparent
would be turned down by the court again, as the group had sternly
claimed, "It is confident in proving an acquittal."
Due to the unexpected physical detention of its de facto chief,
it seems inevitable for Samsung to postpone major restructuring
planned for this year, including the disbandment of its Future
Strategy Office and the establishment of a holding company
system, according to the report.
About Samsung Group
Headquartered in Seoul, Korea, Samsung Group --
http://www.samsung.co.kr/-- the "chaebol" or industrial group
has surpassed its former archrival, the erstwhile Hyundai Group,
to become the number one business group in South Korea.
Samsung's flagship unit is Samsung Electronics, reportedly the
world's top maker of dynamic random-access memory and other
memory chips, as well as a global heavyweight in all sorts of
electronic gear including LCD panels, DVD players, and cellular
phones.
Other affiliated companies include credit-card unit Samsung
Card, Samsung General Chemicals, Samsung Life Insurance, Samsung
Securities, and trading arm Samsung Corporation.
* SOUTH KOREA: Government to Help Struggling Shipping Lines
-----------------------------------------------------------
Yonhap News Agency reports that the South Korean government is
working to help local shipping firms improve their financial
status.
Korea Shipping Co., established this month with an initial
capital of KRW1 trillion, is tasked with helping local shipping
lines buy new vessels, Yonhap relates.
According to the report, the measures aim to support local
shipping firms, as well as shipbuilders, struggling with falling
new orders and mounting losses.
As part of its support measures, the state-run ship financing
firm is seeking to provide some KRW720 billion to Hyundai
Merchant this month or next month to shore up its capital base,
the report says.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552.
*** End of Transmission ***