/raid1/www/Hosts/bankrupt/TCRAP_Public/170308.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
Wednesday, March 8, 2017, Vol. 20, No. 48
Headlines
A U S T R A L I A
AUSTRALASIAN COLLEGE: Regulators Undecided on Intervention
MESOBLAST LIMITED: Incurs $20 Million Net Loss in Second Quarter
PATERNOTT & SONS: First Creditors' Meeting Set for March 16
VENTIA PTY: Moody's Affirms Ba2 Corporate Family Rating
WATERSUN HOME: Went Into Voluntary Administration
C H I N A
CBAK ENERGY: Incurs $2.19 Million Net Loss in Dec. 31 Quarter
CBAK ENERGY: Working Capital Deficit Raises Going Concern Doubt
CHINA SCE: Moody's Assigns B2 Rating to Sr. Unsec. USD Notes
CHINA SCE: S&P Assigns B- Rating to Proposed US$ Sr. Unsec. Notes
CIFI HOLDINGS: Moody's Revises Outlook to Pos. & Affirms Ba3 CFR
FUTURE LAND: Moody's Revises Outlook to Pos. & Affirms Ba3 CFR
KAISA GROUP: To Release 2014/15 Annual Results by April
H O N G K O N G
NOBLE GROUP: Fitch Affirms BB+ Long-Term Issuer Default Rating
NOBLE GROUP: Moody's Assigns B2 Rating to USD Sr. Unsecured Notes
NOBLE GROUP: S&P Rates Proposed US$-Denom. Fixed-Rate Notes 'B'
I N D I A
AGRO PULPING: CRISIL Reaffirms B+ Rating on INR2.5MM LT Loan
AMISAL: CRISIL Reaffirms B+ Rating on INR6.5MM Loan
ANJANA CONSTRUCTIONS: CRISIL Assigns 'B' Rating to INR4MM Loan
ANNUR A P A: CRISIL Assigns 'B-' Rating to INR8.6MM LT Loan
BRIGHT STAR: CRISIL Assigns B+ Rating to INR4MM Cash Loan
C M ROY: CRISIL Assigns 'B' Rating to INR6MM Cash Loan
EAST INDIA: CRISIL Assigns B+ Rating to INR7.16MM LT Loan
EDIMANNICKAL JEWELLERY: CRISIL Reaffirms B+ Cash Credit Rating
ELCOM INNOVATIONS: CRISIL Assigns B- Rating to INR7.5MM Loan
ELECTRA GLOBAL: CRISIL Reaffirms 'B' Rating on INR5.5MM Loan
FANIDHAR MEGA: CRISIL Assigns 'B' Rating to INR47.5MM LT Loan
FRANSKO AGRO: CRISIL Assigns B+ Rating to INR7.0MM Cash Loan
GURU KIRPA: CRISIL Assigns B+ Rating to INR8.85MM Cash Loan
HINDUSTAN CONSTRUCTION: CRISIL Rates INR6MM Cash Credit at 'B'
ISHANIKA HOTELS: CRISIL Assigns 'B' Rating to INR12MM Term Loan
JEET HOME: CRISIL Assigns 'D' Rating to INR9MM Term Loan
JMK MOTORS: CRISIL Lowers Rating on INR7MM Channel Loan to B+
KAMDHENU REALITIES: CRISIL Ups Rating on INR10.5MM Loan to BB-
KAILASH HILLWAYS: CRISIL Upgrades Rating on INR3MM Loan to B+
KINGFISHER AIRLINES: No Bidders for Two Kingfisher Properties
LORD BALAJI: CRISIL Assigns 'D' Rating to INR10MM Term Loan
MANTHAN SOFTWARE: CRISIL Assigns B+ Rating to INR20MM Cash Loan
MILLENIUM STEEL: CRISIL Assigns 'B' Rating to INR4.25MM Loan
NATIONAL TRADING: CRISIL Assigns B+ Rating to INR5MM Loan
NIKUNJ EXPORTS: CRISIL Assigns B+ Rating to INR6MM Cash Loan
POWER MAX: CRISIL Reaffirms 'C' Rating on INR13MM Cash Loan
POWERTECH ELECTROINFRA: CRISIL Assigns B Rating to INR5.0MM Loan
PRIDE HOTELS: CRISIL Assigns 'D' Issuer Not Cooperating Ratings
RAIN CARBON: S&P Assigns 'B+' Corp. Credit Rating; Outlook Stable
RAJCHANDRA AGENCIES: CRISIL Reaffirms B+ Rating on INR11MM Loan
RAMINENI AGRO: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
REVATHI GOLD: CRISIL Assigns B+ Rating to INR7MM Cash Loan
SANGA AUTOMOBILES: CRISIL Assigns B+ Rating to INR14.12MM Loan
SHIV SHANKER: CRISIL Reaffirms B+ Rating on INR15MM Cash Loan
SHREE AMEYA: CRISIL Raises Rating on INR13.40MM Loan to BB
SHREE GANESH: CRISIL Reaffirms 'B' Rating on INR7MM Cash Loan
SHREE PONNI: CRISIL Assigns 'B' Rating to INR3MM Term Loan
SHRIRAM PROPERTIES: CRISIL Cuts Rating on INR30MM Loan to 'C'
SPAK SURFACTANTS: CRISIL Assigns 'B' Rating to INR8.93MM LT Loan
SWAPNA ENTERPRISE: CRISIL Reaffirms B+ Rating on INR82MM Loan
TATA STEEL: Still in Talks with ThyssenKrupp on Merger Deal
TIRUPATI CORRUGATORS: CRISIL Reaffirms D Rating on INR7.75MM Loan
TOSHBRO MEDICALS: CRISIL Reaffirms 'B' Rating on INR6.5MM Loan
VINAYAK MARINE: CRISIL Lowers Rating on INR8MM LT Loan to B+
I N D O N E S I A
INDIKA ENERGY: Fitch Affirms 'CCC' LT IDR; Outlook Positive
M O N G O L I A
MONGOLIA: Banks Still Under Pressure Despite IMF Deal, Fitch Says
S I N G A P O R E
EZRA HOLDINGS: VT Halter Issues Summon on Suit vs EMAS Chiyoda
EZRA HOLDINGS: May Face "Going Concern" Issue Amid EMS Bankruptcy
S O U T H K O R E A
HYUNDAI MERCHANT: Set to Receive Fresh State Funding
V I E T N A M
VIETCOMBANK: Moody's Maintains b2 BCA on Review for Upgrade
* VIETNAM: Coach Firms Face Bankruptcy as Departure Point Moved
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A U S T R A L I A
=================
AUSTRALASIAN COLLEGE: Regulators Undecided on Intervention
----------------------------------------------------------
Alison Branley at Shanghai Daily reports that federal education
regulators were still deciding whether to take action against a
problem-plagued Sydney hairdressing college when it closed down
and left hundreds of students stranded.
The Australasian College Broadway shut its doors over Christmas,
leaving an estimated 800 students with nowhere to study and with
government training debts, according to Shanghai Daily.
The report notes the organisation has now been the subject of
fiery discussions before a Senate Estimates hearing in Canberra.
The college was the subject of well-publicized allegations of
rotting of the controversial VET-FEE-HELP training loans scheme,
under which it received at least $8.3 million in 2016 alone, the
report notes.
The report says during a hearing of the Education and Employment
Estimates Hearing, Labor senator Doug Cameron pointed out that
the college's owner Maureen Houssein-Mustafa was a National Party
donor.
The committee heard from regulators there had been concerns about
the college's recruitment practices, progress rates and
accusations that it enrolled phantom students, the report notes.
College Already in Liquidation
The report relays Education Department bureaucrats and regulators
told Senator Cameron that they had been investigating the college
before it went into administration in late 2016, but to date in
2017 were yet to make a final regulatory decision.
Australian Skills Quality Authority (ASQA) regulation
commissioner Professor Michael Lavarch said an audit of the
college in 2015 ASQA did identify past problems and the authority
attached extra reporting requirements to the college's
registration, the report says.
It did a further investigation in 2016.
The report says it was after that investigation that the college
was issued with a notice of intention about regulatory action,
which it responded to just before it went into voluntary
administration. It was still operating at that point.
"We're getting close to the making of a regulatory decision,"
Professor Lavarch told the committee, notes the report.
Later in the hearing, regulators said they had learned the
college already went into liquidation on February 8.
"It would appear on the information that's now available to us
that that RTO [registered training organisation is no longer
operating," ASQA commissioner Mark Paterson said, the report
discloses.
Professor Lavarch said they were aware of a NSW Police
investigation into the provider but not specific details, but
said of the issue of phantom students: "Certainly would in
aspects come under our jurisdiction, it could under a particular
circumstance obviously interest the police more broadly."
Senator Cameron repeatedly asked panel members why the Government
continued to fund the college throughout 2016 despite well-
canvassed concerns, the report notes.
The report discloses that Education Minister Simon Birmingham
responded that he had to work within the current training laws at
the time and ultimately closed down the VET-FEE-HELP scheme that
was initiated under Labor.
Federal Education Department deputy secretary Dr. Subho Banerjee
said the department was also aware of the NSW Police
investigation into Australasian college, the report relates.
"There's been a great deal of concern about valid student
enrolments and whether or not some RTO's, in your words, have a
number of phantom student enrolments, and that's been of a matter
of grave concern to the department," he said.
According to the report, the committee heard the college had been
an approved training provider since at least 2009, and that it
was not approved to offer VET-FEE-HELP training loans under the
Government's revamped scheme.
It heard the new scheme had enhanced compliance and audit powers
but also the bar to get into the new scheme had been moved
higher, the report relays.
The committee heard the Australian Council for Private Education
and Training was helping students affected by the college's
closure to find new training, the report adds.
MESOBLAST LIMITED: Incurs $20 Million Net Loss in Second Quarter
----------------------------------------------------------------
The Board of Directors of Mesoblast Limited has resolved to
submit the following report of Mesoblast Limited and its
subsidiaries for the three and six months ended Dec. 31, 2016, in
compliance with the provisions of the Corporations Act 2001.
For the three months ended Dec. 31, 2016, Mesoblast reported a
loss attributable to owners of $20.05 million on $550,000
compared to a loss attributable to owners of $22.32 million on
$4.01 million of revenue for the three months ended Dec. 31,
2015.
For the six months ended Dec. 31, 2016, the Company reported a
loss attributable to owners of $39.84 million on $945,000 of
revenue compared to a loss attributable to owners of $35.48
million on $11.52 million of revenue for the same period a year
ago.
As of Dec. 31, 2016, Mesoblast had $660.88 million in total
assets, $150.36 million in total liabilities and $510.51 million
in total equity.
For the year ended June 30, 2017, the Group has committed to
partner one or more of its four key Tier 1 programs resulting in
non-dilutive funding for operations. This may include MSC-100-IV
for steroid-refractory graft versus host disease and MPC-06-ID
for chronic low back pain, in relation to which the Group has
entered into an agreement with Mallinckrodt Pharmaceuticals in
order to exclusively negotiate a commercial and development
partnership.
The Group is also continuing to work on various cost containment
and deferment strategies, including the reprioritization of
projects and operational streamlining. A fully discretionary
equity facility has been established for up to A$120 million / US
$90 million over 36 months to provide additional funds as
required.
The Group may consider issuing new capital to fund future
operational requirements.
"There is uncertainty related to the Group's ability to partner
programs and raise capital at terms to meet the Group's
requirements. Additionally, there is uncertainty related to the
Group's ability to sustainably implement planned cost reductions
and defer programs on a timely basis while achieving expected
outcomes.
"The continuing viability of the Group and its ability to
continue as a going concern and meet its debts and commitments as
they fall due are dependent upon either entering into an
arrangement with a third party partner on one or more of its four
key Tier 1 programs that would result in non-dilutive funding,
and/or raising further capital, together with various cost
containment and deferment strategies being completed including
the reprioritization of certain projects and operational
streamlining.
"Management and the directors believe that the Group will be
successful in the above matters and, accordingly, have prepared
the financial report on a going concern basis, notwithstanding
that there is a material uncertainty that may cast significant
doubt on the Group's ability to continue as a going concern and
that it may be unable to realize its assets and liabilities in
the normal course of business," according to the report.
A full-text copy of the Form 6-K filing is available for free at:
https://is.gd/GEyXdz
About Mesoblast Ltd.
Melbourne, Australia-based Mesoblast Limited (ASX:MSB;
Nasdaq:MESO) develops cell-based medicines. The Company has
leveraged its proprietary technology platform, which is based on
specialized cells known as mesenchymal lineage adult stem cells,
to establish a broad portfolio of late-stage product candidates.
Mesoblast's allogeneic, 'off-the-shelf' cell product candidates
target advanced stages of diseases with high, unmet medical needs
including cardiovascular diseases, immune-mediated and
inflammatory disorders, orthopedic disorders, and
oncologic/hematologic conditions.
Mesoblast reported a loss before income tax of $90.82 million for
the year ended June 30, 2016, compared to a loss before income
tax of $96.24 million for the year ended June 30, 2015.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2016, citing that the Company has
suffered recurring losses from operations that raise substantial
doubt about its ability to continue as a going concern.
PATERNOTT & SONS: First Creditors' Meeting Set for March 16
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Paternott
& Sons Pty Ltd, trading as Ultra Tune Knox City, will be held at
The Rialto, Level 30, 525 Collins Street, in Melbourne, Victoria,
on March 16, 2017, at 9:30 a.m.
Stephen Robert Dixon and Ahmed Bise of Grant Thornton were
appointed as administrators of Paternott & Sons on March 6, 2017.
VENTIA PTY: Moody's Affirms Ba2 Corporate Family Rating
-------------------------------------------------------
Moody's Investors Service has affirmed Ventia Pty Limited's Ba2
corporate family rating. At the same time, Moody's has affirmed
Ventia's Ba2 senior secured rating. The outlook on the ratings is
stable.
The rating affirmations follow Ventia's announcement that it will
issue an AUD827 million first-lien Term Loan B facility. The
notes will rank equally with all other senior secured debt issued
by Ventia.
The company is repricing the existing Term Loan B facility
equivalent to AUD707 million and upsizing with an add-on
equivalent to AUD120 million.
Proceeds from the add-on will be used to fund a distribution of
AUD114 million to shareholders. The remainder together with cash,
will be used to finance potential acquisition opportunities
amounting to AUD50 million, or if none available, distributed as
dividends.
RATINGS RATIONALE
"We expect that Ventia's credit metrics will remain within the
tolerance levels set for its ratings, despite the increase in
debt and debt-funded dividend payments," says Kirsten Lee, a
Moody's Analyst.
"The company's well established market position in key services
sectors, as well as an existing contract pipeline with good
historical renewal rates and good growth opportunities, provide a
strong base for recurring revenues and support a stable earnings
profile," adds Lee.
Additionally, large contracts in the telecommunications sector
have reached peak productivity and an increase in infrastructure
opportunities will likely drive an increase in revenue, earnings
and cash flow generation over the next two years. As such,
Moody's anticipates that Ventia will deleverage over the next 2-3
years and maintain adequate headroom within its ratings category.
Moody's expects that Ventia's financial profile will remain
moderate for its Ba2 ratings, with pro-forma gross adjusted
debt/EBITDA at around 3.5x, after including the AUD120 million
increase in debt. Pro-forma net debt should increase 20% from the
financial year ended 31 December 2016.
The stable ratings outlook reflects Moody's expectation that
Ventia will continue to generate solid cash flow from: 1)
existing contracts; and 2) continued wins of new contracts at
commercial margins, in a generally supportive market.
Upward ratings pressure could emerge in the medium term if there
is a sustained improvement in Ventia's gross adjusted
debt/EBITDA, such that the ratio falls below 3.5x on a consistent
basis.
On the other hand, the ratings could face downgrade pressure if
gross adjusted debt/EBITDA exceeds 4.5x on a consistent basis.
The principal methodology used in these ratings was Construction
Industry published in November 2014.
Ventia Pty Limited is a leading integrated provider of industrial
and civil services to clients in Australia and New Zealand across
the telecommunications, roads, water, power, utilities and
environmental sectors.
Ventia is a 50:50 investment partnership between CIMIC Group
Limited (Baa3 stable) and AIF VIII Singapore Pte Ltd. (unrated),
comprising the merged businesses of Leighton Contractors Services
and Thiess Services.
WATERSUN HOME: Went Into Voluntary Administration
-------------------------------------------------
Shepparton News reports Property owners in Shepparton and
Mooroopna have been left in the lurch after a major home building
company went into administration.
Melbourne-based company Watersun Home went into voluntary
administration due to the company not having sufficient funds to
continue trading, according to Shepparton News.
The report notes the residential home building company was
involved with 300 properties across the state, including a number
of homes in Mooroopna and Kialla.
Neil Mclean -- nmclean@rodgersreidy.com.au -- and Mathew Gollant
-- mgollant@rodgersreidy.com.au -- of Rodgers Reidy Melbourne
have been appointed as administrators.
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C H I N A
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CBAK ENERGY: Incurs $2.19 Million Net Loss in Dec. 31 Quarter
-------------------------------------------------------------
CBAK Energy Technology, Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of US$2.19 million on US$3.50 million of net revenues
for the three months ended Dec. 31, 2016, compared to a net loss
of US$2.13 million on US$5.50 million of net revenues for the
three months ended Dec. 31, 2015.
As of Dec. 31, 2016, CBAK Energy had US$92.11 million in total
assets, US$79.43 million in total liabilities and US$12.67
million in total shareholders' equity.
"We have financed our liquidity requirements from short-term bank
loans and bills payable under bank credit agreements and issuance
of capital stock.
"We incurred a net loss of $2.2 million for the three months
ended December 31, 2016. As of December 31, 2016, we had cash
and cash equivalents of $0.4 million. Our total current assets
were $31.1 million and our total current liabilities were $49.6
million, resulting in a net working capital deficiency of $18.5
million.
"The Company had a working capital deficiency, accumulated
deficit from recurring net losses and short-term debt obligations
as of September 30, 2016 and December 31, 2016. These factors
raise substantial doubts about the Company's ability to continue
as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/X2QT1y
About CBAK Energy
CBAK Energy Technology, Inc., formerly known as China BAK
Battery, Inc., continued its business and continued to generate
revenues from sale of batteries via subcontracting the production
to BAK Tianjin, a former subsidiary before the completion of
construction and operation of its facility in Dalian. BAK
Tianjin had become a supplier of the Company until September 2016
when BAK Tianjin ceased production, and the Company does not have
any significant benefits or liability from the operating results
of BAK Tianjin except the normal risk with any major supplier.
As of March 1, 2017, Mr. Xiangqian Li is no longer a director of
BAK International and BAK Tianjin. He remained as a director of
Shenzhen BAK and BAK Battery.
China BAK Battery, Inc., filed Articles of Merger with the
Secretary of State of Nevada to effectuate a merger between the
Company and the Company's newly formed, wholly owned subsidiary,
CBAK Merger Sub, Inc. According to the Articles of Merger,
effective Jan. 16, 2017, the Merger Sub merged with and into the
Company with the Company being the surviving entity.
CBAK ENERGY: Working Capital Deficit Raises Going Concern Doubt
---------------------------------------------------------------
CBAK Energy Technology, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q, disclosing
a net loss of $2.19 million on $3.50 million of net revenues for
the three-months ended December 31, 2016, compared to a net loss
of $2.13 million on $5.50 million of net revenues for the same
period in 2015.
The Company's balance sheet at December 31, 2016, showed $92.11
million in total assets, $79.43 million in total liabilities and
total stockholders' equity of $12.68 million.
The Company has financed its liquidity requirements from short-
term bank loans and bills payable under bank credit agreements
and issuance of capital stock.
The Company incurred a net loss of $2.2 million for the three
months ended December 31, 2016. As of December 31, 2016, the
Company had cash and cash equivalents of $0.4 million. The
Company's total current assets were $31.1 million and its total
current liabilities were $49.6 million, resulting in a net
working capital deficiency of $18.5 million. These factors raise
substantial doubts about the Company's ability to continue as a
going concern.
A full-text copy of the Company's Form 10-Q is available at:
https://is.gd/UBXe01
CBAK Energy Technology, Inc., is engaged in the business of
developing, manufacturing and selling new energy high power
lithium batteries. Its products are used in various
applications, including electric vehicles (EV), such as electric
cars, electric buses, hybrid electric cars and buses; light
electric vehicles (LEV), such as electric bicycles, electric
motors and sight-seeing cars, and electric tools, energy storage,
uninterruptible power supply (UPS), and other high power
applications.
CHINA SCE: Moody's Assigns B2 Rating to Sr. Unsec. USD Notes
------------------------------------------------------------
Moody's Investors Service has assigned a B2 senior unsecured
rating to the USD notes proposed by China SCE Property Holdings
Limited (B1 stable).
The rating outlook is stable.
China SCE plans to use the proceeds from the proposed notes for
refinancing certain portions of its existing indebtedness and for
working capital purposes.
RATINGS RATIONALE
The proposed notes will improve China SCE's liquidity profile,
lengthen its debt maturity profile, and reduce its funding costs.
Furthermore, the proposed notes will have a limited impact on the
company's leverage because part of the proceeds will be used to
refinance its existing debt.
Moody's expects that China SCE's interest coverage - as measured
by adjusted EBIT/interest - will rise to around 3.0x over the
next 12-18 months compared to 2.7x for 2016.
Its debt leverage - as measured by adjusted revenue/debt - will
likely rise to around 65%-70% from 63% at end-2016.
These credit metrics support its B1 corporate family rating.
The metrics are also based on Moody's expectation that China SCE
will continue to exercise prudence in its land acquisitions and
debt management. In particular, Moody's assumes that the company
will not invest more than 50% of its total contracted sales in
land acquisitions, and will maintain the growth in debt within
10%-20% year-on-year over the next 12-18 months.
China SCE's B1 corporate family rating reflects its track record
and strong market position in Quanzhou in Fujian Province,
growing operating scale, good liquidity position, and recovering
strong profit margins after its expansion in tier-1 and 2 cities
outside Fujian.
On the other hand, its corporate family rating is constrained by
the company's moderate level of debt leverage and the execution
risk associated with its expansion.
China SCE's bond rating is notched down to B2, reflecting the
risk of structural and legal subordination. Priority debt/total
assets was above 15% at end-2016.
The stable outlook on China SCE's B1 corporate family rating
reflects Moody's expectations that the company will show a
sustained improvement in its credit metrics, supported by strong
revenue growth, improved gross profit margins, as well as prudent
land acquisitions and debt management over the next 12-18 months.
China SCE's ratings could be under upgrade pressure, if the
company: (1) demonstrates stable sales growth and grows its
scale; (2) maintains its prudent approach to land acquisitions;
and (3) maintains EBIT/interest coverage in excess of 3.0x and
adjusted revenue/gross debt in excess of 75%-80% on a sustained
basis.
On the other hand, the company's ratings could come under
downward pressure if China SCE: (1) generates weak contracted
sales; (2) suffers from a material decline in its profit margins;
(3) experiences an impairment of its liquidity position, such
that cash/short-term debt falls below 1.0x; and/or (4) materially
increases its debt leverage.
Credit metrics indicative of a ratings downgrade include
EBIT/interest coverage below 2.0x, and/or adjusted revenue/debt
below 65% on a sustained basis.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Founded in 1996, China SCE Property Holdings Limited is a leading
property developer in Fujian Province. The company listed on the
Hong Kong Stock Exchange in February 2010, and is 57.6% owned by
its chairman, Mr. Wong Chiu Yeung.
The company has also expanded to first- and second-tier Chinese
cities, including Shanghai, Shenzhen, Beijing, Tianjin, Xiamen,
Nanchang, Hangzhou, Nanjing and Suzhou, but still around one
third of its land bank comprise plots in Quanzhou in Fujian
Province at end-2016.
CHINA SCE: S&P Assigns B- Rating to Proposed US$ Sr. Unsec. 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 China SCE Property Holdings Ltd. (CSCE: B/Stable/--; cnBB-/--
). The rating is subject to S&P's review of the final issuance
documentation.
The issue rating is one notch lower than the long-term corporate
credit rating on CSCE to reflect structural subordination risk.
CSCE intends to use the net proceeds to refinance existing debt
and for working capital purposes.
CSCE's leverage increased slightly in 2016, with debt to EBITDA
rising to about 6.5x, from 5.8x in 2015. The company's revenues
grew steadily by 17% in 2016 to Chinese renminbi
(RMB) 12.5 billion. However, the gross margin declined to 25%
(2015: 28.2%), due to a number of low-margin projects in smaller
cities (e.g., Quanzhou and Nanchang) which were sold at discount
before 2015.
At the same time, the company's adjusted debt increased by 12% to
RMB19.9 billion. This is because CSCE accelerated its land
acquisitions in higher-tier cities, offsetting its rising sales
cash inflow during the year. In 2016, CSCE's land acquisition
costs increased to RMB11.6 billion from RMB4.3 billion in 2015.
That said, the company's asset quality has improved over the past
few years, given its increasing exposure in top-tier cities. In
2016, 56% of its land bank was located in first-tier cities.
S&P expects CSCE's leverage to improve in 2017, due to the
anticipated steady sales growth and notable margin recovery. In
2016, CSCE's sales grew by 52% to RMB23.5 billion, partly thanks
to ample liquidity in China. The company's cash collection also
remains high at 93%. Nevertheless, CSCE will continue to pursue
sizable land acquisitions to replenish the company's land banks
in tier 1 and tier 2 cities during its expansion.
CIFI HOLDINGS: Moody's Revises Outlook to Pos. & Affirms Ba3 CFR
-----------------------------------------------------------------
Moody's Investors Service has changed the ratings outlook of CIFI
Holdings (Group) Co. Ltd. to positive from stable.
At the same time, Moody's has affirmed the company's Ba3
corporate family rating and the B1 senior unsecured rating on its
USD400 million bonds due 2020.
RATINGS RATIONALE
"The positive ratings outlook reflects Moody's expectations that
CIFI will improve its credit metrics over the next 12-18 months,
owing to its strong sales execution and prudent land acquisition
strategy," says Stephanie Lau, a Moody's Assistant Vice President
and Analyst.
CIFI demonstrates a strong ability to execute sales. It has a
track record of generating strong contracted sales growth, as
shown during the weak market conditions of 2014 and 2015.
And, in 2016, it achieved a 75% year-on-year growth in contracted
sales to RMB53 billion, including shares in joint ventures. This
growth rate is comparable to that of its similarly Ba3-rated
Chinese property peers with stronger credit profiles.
CIFI's strong contracted sales growth will lead to future revenue
growth. Specifically, Moody's expects that CIFI's revenue will
grow 25%-30% over the next two years.
The company has also shown a track record of prudent land
acquisitions. Its aggregate expenditures on land totaled less
than 55% of its contracted sales during 2013-2015.
It also stepped up land acquisitions in 2015, ahead of the strong
market in 2016 when land prices were higher. Such a strategy
enables the company to maintain some stability in its profit
margins during periods of rising land costs.
Moody's estimates that the company's gross profit margin -
including shares in joint ventures - will improve and stay at
around 25% over the next 12-18 months from 23% in 2015, driven by
the company's delivery of a greater portion of high-margin
products sold in the last 12-18 months.
Moreover, the prudent land strategy will preserve the company's
liquidity. CIFI reported cash of RMB16.57 billion at end-June
2016, which covered 5.0x of its short-term debt. Moody's
estimates that its cash will grow further to around RMB21
billion, based on its strong contracted sales in 2016.
The aforementioned positive developments will result in
improvements to the company's credit metrics over the next 12--18
months. In particular, Moody's expects that CIFI's debt leverage
- as measured by revenue/adjusted debt - will register around
80%-90% and EBIT/interest coverage at 3.5x-4.0x. Such levels
would position the company at the upper end of the Ba3 rating
category.
The Ba3 corporate family rating reflects CIFI's ability to
execute a property development model focused on catering to
housing demand from upgraders. Such a focus helps the company to
achieve rapid turnover. The rating also takes into account the
company's good liquidity, prudent land acquisition strategy, and
diversification across first and second-tier Chinese cities.
On the other hand, the rating is constrained by its moderate
profit margins, and its joint venture businesses add volatility
to its credit metrics.
The B1 rating of CIFI's senior unsecured debt is one notch lower
than its corporate family rating, reflecting structural and legal
subordination risks from a substantial amount of onshore debt to
fund the company's fast expansion.
CIFI's ratings could be upgraded if the company: (1) can sustain
growth in sales and scale, and achieve better geographic
diversification; and (2) improves its credit metrics, with an
adjusted EBIT/interest above 3.5x-4.0x and revenue/adjusted debt
above 85%-90% on a sustained basis.
On the other hand the ratings outlook could return to stable if
CIFI's performance and credit metrics fall below Moody's
expectations; in particular, if its: (1) EBIT interest coverage
falls below 3.0x; and/or (2) revenue/adjusted debt remains below
80%; or (3) liquidity weakens, with its cash holdings slipping
below 1.5x of short-term debt.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
CIFI Holdings (Group) Co. Ltd. was incorporated in the Cayman
Islands in May 2011 and listed on the Hong Kong Stock Exchange in
November 2012.
CIFI develops residential and commercial properties mainly in the
Yangtze River Delta. It has also expanded to the Pan Bohai Rim
and the Central Western Region. At end-June 2016, it maintained a
presence in 14 key cities, with a total and attributable land
bank of 13.5 million and 8.7 million square meters (sqm)
respectively. It also had 52 projects under development.
FUTURE LAND: Moody's Revises Outlook to Pos. & Affirms Ba3 CFR
--------------------------------------------------------------
Moody's Investors Service has revised the ratings outlook on
Future Land Development Holdings Limited to positive from stable.
At the same time, Moody's has affirmed Future Land's Ba3
corporate family rating and B1 senior unsecured debt rating.
RATINGS RATIONALE
"Future Land's positive ratings outlook reflects its strong sales
execution, growing recurring income, and improving credit
metrics," says Stephanie Lau, a Moody's Assistant Vice President
and Analyst. "We note that the company's metrics are stronger
than that for most of its Ba3-rated Chinese property peers."
In 2016, Future Land achieved contracted sales growth of 104%
year-on-year to RMB65 billion - including its share in joint
ventures - surpassing its full-year target of RMB52 billion.
The company has a long and solid track record of property
development in its home market of Changzhou, Jiangsu Province. It
expanded into Nanjing, Suzhou, Shanghai and Hangzhou over the
last few years. Future Land achieved strong sales performance in
these cities in 2016, despite the government's tightening
measures. These cities are major contributors to its sales
growth.
Moody's expects that Future Land will achieve contracted sales
levels that are above average in the geographies in which it
operates, despite the risk of a slowdown in the property market
in China (Aa3 negative) in 2017.
Accordingly, Moody's expects that in 2017, the company will grow
its scale of annual contracted sales to a level above RMB80
billion - including its share in joint ventures - which will
position it better than most Ba3-rated Chinese property peers.
Future Land's ability to recognize revenue on its own is strong.
Moody's expects its revenue in 2017 to reach around RMB40 billion
- excluding its share in joint ventures - representing year-on-
year growth of around 43%. Such revenue growth will be supported
by its strong contracted sales in 2016. The company indicated
that it had around RMB40 billion in contracted sales at end-2016
that will be recognized as revenue over the next 1-2 years.
Future Land is one of only a few Moody's-rated Chinese property
developers who invest in investment properties that consume
capital. In 2016, it had RMB840 million of non-development
recurring revenue, including rental and other revenue. Moody's
expects such revenue to reach around RMB900 million--RMB1.0
billion, as the company increases its operating malls to around
22 by end-2017 from 11.
This stream of non-development revenue will add some stability to
its debt service ability. Specifically, such revenue will cover
around 45%-50% of its projected interest expense in 2017; a
situation which is positive for the company's ratings.
Future Land made sizeable land acquisitions to replenish its land
bank during 2016; a year with strong presales. Moody's expects
that the company will be prudent in its land acquisitions in
2017.
Moody's assumes that the company's aggregate land acquisitions in
2017 will not exceed 50% of its annual contracted sales, and that
it will use proceeds from its joint ventures to pay down debt.
Such a situation would result in strong credit metrics over the
next 12-18 months when compared with most of its Ba3-rated
Chinese property peers.
Specifically, Moody's expects that Future Land's debt leverage -
as measured by adjusted revenue/debt - and adjusted EBIT/interest
coverage will stay at around 100%-110% and 3.2x-3.7x over the
next 12-18 months.
Future Land's Ba3 corporate family rating reflects its long and
solid track record in Jiangsu Province. The rating also considers
its strong sales execution and ability to grow in scale. In
addition, the Ba3 rating is supported by its adequate liquidity
position. Its cash balance of RMB13.8 billion at end-2016 covered
1.35x of its short-term debt.
However, the rating also factors in its exposure to the regional
economy of the Yangtze River Delta, and the execution risks from
its fast expansion, as well as the increasing scale of its joint
venture businesses.
Future Land's senior unsecured bond rating of B1 is one notch
lower than its corporate family rating, reflecting the
subordination risk arising from the priority debt and the listed
status of its 68%-owned subsidiary, Future Land Holdings Company
Limited, in Mainland China.
Future Land's ratings could be upgraded if the company maintains
its strong sales performance, growing scale, and prudent
financial management.
Specifically, upgrade pressure could emerge if the company's: (1)
adjusted revenue/debt - including its share in joint ventures -
exceeds 100%; (2) EBIT interest coverage stays above 3.5x on a
sustained basis; and (3) cash to short-term debt registers more
than 1.5x.
For its ratings to be upgraded, Future Land would also need to
maintain adequate liquidity at the holding company level for
offshore debt servicing.
But, its ratings outlook could return to stable if Future Land's
performance and credit metrics fall below Moody's expectations.
For example, if its credit metrics deteriorate, such that its
EBIT interest coverage - including the company's share in joint
ventures - falls below 3.0x; and/or adjusted revenue/adjusted
debt - including its share in joint ventures - remains below 90%.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Founded in 1996, Future Land Development Holdings Limited engages
primarily in residential development. At end-2016, Future Land
maintained a presence in 33 cities in China, with an attributable
land bank of approximately 19.9 million square meters of gross
floor area.
KAISA GROUP: To Release 2014/15 Annual Results by April
-------------------------------------------------------
Summer Zhen at South China Morning Post reports that Kaisa Group,
whose shares have been suspended from trading in Hong Kong for
almost two years, said it aimed to release its 2014 and 2015
annual results by the end of March, clearing the last hurdle for
trade resumption.
"We target to announce the financial result from 2014 to 2016
first half, by the end of March," Tam Lai Ling, a senior adviser
and former vice chairman of Kaisa, told the South China Morning
Post in a phone interview on March 2. "The company has achieved
other conditions for resumption [of share trading], publishing
the financial results is the last step."
The developer, which in 2015 became the first Chinese developer
to default on its US dollar-denominated bonds, has been
struggling to restructure its CNY65 billion (US$9.44 billion)
debt, prepare delayed financial statements, and improve the
percentage of shares owned by the public, in a bid to resume
trading of its shares, according to SCMP.
On February 23, Hong Kong billionaire Francis Choi Chee-ming
bought a 4.23% stake in Kaisa for CNY5 billion through Da Chang
Investment Company, bringing his combined holding to 5.21%, the
report says.
SCMP says the deal helped Kaisa remain within the listing
requirement that the public control no less than 25 per cent of
shares.
"I have been friends with chairman Kwok for many years," Mr. Choi
(also known as Hong Kong's toy king) told SCMP a telephone
interview.
SCMP relates that the tycoon said he has strong confidence in
Kaisa's prospects given that it owns a number of prime property
assets in China.
According to the report, Mr. Choi paid HK$2.3 per share for 217
million shares, a nearly 50% premium from Kaisa's final closing
price on before the suspension of trade.
Kaisa appointed Liu Xuesheng as independent non-executive
director on February 28 to meet the minimum three independent
non-executive directors requirement under listing rules, the
report discloses.
SCMP says Tam added that the company has completed domestic and
offshore debt restructurings.
Once the financial statements have been submitted, the Hong Kong
Stock Exchange will rule on whether the company can resume
trading, the report notes.
The report notes that trading of the Shenzhen-based developer has
been halted since March 2015 when it delayed the publication of
its 2014 annual results.
The company had said previously that it would seek to have its
shares resume trading by January 2017, SCMP recalls.
About Kaisa Group
Kaisa Group Holdings Ltd. (HKG:1638) --
http://www.kaisagroup.com/english/-- is an investment holding
company, and its subsidiaries are engaged in property
development, property investment and property management.
Shenzhen, China-based Kaisa became the first Chinese developer to
default on dollar-denominated debt when it failed to pay the
coupon on two securities earlier in 2014. In October 2015, the
builder reached an agreement with Bank of China Ltd. that enabled
it to restart sales of some projects.
The company said its offshore debt restructuring plan was
approved by requisite majority of creditors at scheme meetings
held by courts in Hong Kong and the Cayman Islands on May 20,
2016. Kaisa said holders of 96 percent of its offshore
obligations, which are from outside of China, support the
restructuring agreement negotiated in the Hong Kong proceeding.
Kaisa Group filed a Chapter 15 bankruptcy petition (Bankr.
S.D.N.Y. Case No. 16-11303) in the U.S. on May 5, 2016, to seek
recognition of its proceedings in Hong Kong. Dr. Tam Lai Ling,
the foreign representative, signed the petition. Attorneys at
Ropes & Gray LLP serve as counsel in the U.S. cases.
Kaisa listed $14.9 billion in debt and $16.1 billion in assets.
================
H O N G K O N G
================
NOBLE GROUP: Fitch Affirms BB+ Long-Term Issuer Default Rating
--------------------------------------------------------------
Fitch Ratings has affirmed Hong Kong-based commodities trader
Noble Group Limited's Long-Term Issuer Default Rating (IDR) and
senior unsecured rating at 'BB+'. The Outlook on the IDR is
Stable.
The affirmation reflects Noble's improved balance sheet, funding
structure and working capital position following its asset
disposals and business restructuring over the previous few
quarters. However, given the challenging operating environment,
it remains uncertain whether the trader can sustain quarterly
returns, as measured by EBITDA/working capital, above 3%; the
level at which Fitch may consider negative rating action. Noble's
average quarterly return in 2016 was less than 1%, but last year
was a transitional year for the company. It continues to explore
strategic opportunities that may help improve profitability, some
of which are at advanced stages. Fitch may take negative rating
action unless the company's returns improve over the next several
consecutive quarters.
KEY RATING DRIVERS
Significant Balance Sheet Improvements: Noble's ratio of working
capital/total debt, including 50% of its perpetual securities,
improved significantly to a healthy 1.36x at end-2016, from 0.96x
at end-2015. This was consistent with Fitch expectations, as the
company implemented a number of liquidity-strengthening measures,
including the sale of Noble America Energy Solutions (NES) and
completion of a rights issue. This ratio is similar to those of
investment-grade rated peers.
Business Profile Remains Strong: Fitch believes Noble's business
profile remains strong given its global footprint and leading
position in a number of key products in core regions. Returns
have declined, but annual tonnage volume shipped have remained
stable over the last two years at over 220 million tonnes,
supporting its underlying business over the long term.
Return Improvement Uncertain: Noble's quarterly working capital
return has been below Fitch 3% negative rating trigger since
3Q15, and deteriorated further to an average of 0.7% in 2016.
However, the weak EBITDA generation does not reflect Noble's true
2016 return, as it is largely attributed to the sale of NES, a
temporary increase in selling, administrative and operating (SAO)
expenses due to headcount reduction and rationalisation and
capital constraints on business expansion given the company's
focus on improving its balance sheet and liquidity. Adjusting for
more typical SAO expenses and 11 months of NES's performance
prior to disposal, return on working capital is a higher 2%.
Fitch believes Noble may be able to deploy more capital to
generate returns in 2017 due to its improved liquidity at end-
2016. However, it remains uncertain whether the company will be
able to sustain high returns in the difficult operating
environment.
Negative Operating Cash Flow: Noble's cash flow from operation
(CFO) has been negative since 2014, which breaches one of Fitch's
negative rating triggers. The main reason for negative CFO in
2015-2016 was lower accounts payable, which Fitch believes was
due to credit-related events in 2015 and 1Q16 that reduced vendor
and bank credit lines. This effect diminished in 2H16, which was
evident in improved CFO to USD56 million in 4Q16n from negative
USD486 million in 1Q16, helped by a USD226 million accounts
payable increase, compared with falls in previous quarters.
Fitch does not expect to see further decline in Noble's accounts
payable in 2017, but it remains uncertain as to whether the
improved CFO on a quarterly basis in 2016 can be sustained into
2017 and beyond, as it can be affected by the company's decision
to increase working capital to drive profitability.
Limited Secured Debt: Noble's secured debt as a percentage of
total debt is low, at around 13% at end-2016. Noble's management
indicated that the company intends to use more borrowing-based
facilities to finance working capital, in particular, by issuing
letters of credit, rather than using secured debt drawdowns. A
significant increase in secured debt could lower the company's
unencumbered assets relative to unsecured debt, which may result
in its senior unsecured rating being notched down from its IDR.
DERIVATION SUMMARY
Noble's operational scope is in line with large international
traders with global reach, but its scale is smaller than that of
its investment-grade rated peers, such as Cargill Incorporated
(A/Stable), Archer Daniels Midland Company (A/Stable) and Bunge
Limited (BBB/Stable). Its debt structure is heavier on short-term
debt compared with that of investment-grade rated peers given its
asset-light strategy. Noble's balance sheet is strong and in line
with investment-grade rated peers, but it has weaker profit-
generation ability.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Sales volume to remain similar to 2016 levels.
- Capex and business acquisitions of USD100 million a year.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action:
- The company reverting to more longer-term and competitively
priced funding on a sustained basis
Developments that May, Individually or Collectively, Lead to
Negative Rating Action:
- Sustained weakening of EBITDA/working capital below 12% (or
quarterly EBITDA/working capital below 3%).
- Sustained negative cash flow from operation.
- Working capital/total debt sustained below 1.0x.
- Liquidity position, as defined by unrestricted cash and cash
equivalent plus undrawn committed facilities, to total
inventory sustained below 1.0x (2016: 1.3x).
- Weakened business strength evident from lower funding capacity
to support working-capital expansion over the cycle; sustained
decline in tonnage volume that is more severe than industry
performance; and evidence of a weaker risk management process.
- Senior unsecured ratings might be notched down if there is
insufficient coverage of unsecured debt by unencumbered
assets.
LIQUIDITY
Noble's liquidity stands at USD2.0 billion and comprises of
USD1.1 billion of unrestricted cash and equivalents and USD943
million of undrawn committed facilities at end-2016. This
compared with liquidity of only USD868 million at end-June 2016.
Current liquidity is equivalent to close to 1.3x inventory, which
Fitch believes is sufficient to cover requirements arising from
reasonable commodity price increases.
In accordance with Fitch's policies, the issuer appealed and
provided additional information to Fitch that resulted in a
rating action which is different than the original rating
committee outcome.
NOBLE GROUP: Moody's Assigns B2 Rating to USD Sr. Unsecured Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the USD
senior unsecured notes to be issued by Noble Group Limited.
The outlook on Noble's B2 corporate family rating remains
negative.
RATINGS RATIONALE
"The B2 rating reflects Noble Group's large scale and product and
geographic diversity, tempered by weak and volatile cash flow and
pressure on liquidity," says Joe Morrison, a Moody's Vice
President and Senior Credit Officer.
"The issuance of the proposed notes, if successful, would be
credit positive, because the proceeds will be used to refinance
existing short-term debt and secure longer term funding, thereby
partly alleviating pressure on its liquidity," adds Morrison.
At end-2016, Noble Group had cash on hand -- excluding restricted
cash with brokers -- of $1.1 billion and availability under
committed credit facilities of $943 million. These sources,
together with the proposed notes, are sufficient to cover the
$1.3 billion in short-term debt due in 2017. The company has
further debt maturities, however, of about $1.5 billion due in 1H
2018.
Moody's expects Noble's adjusted net debt/EBITDA to trend down in
2017 toward 7.0x from about 7.6x in 2016 on moderately improving
earnings. This level of leverage remains weak for the B2 rating
category.
In addition, the sustainability of profitability and cash flow
remains uncertain, given the unfavorable operating environment
and the loss of profits and cash flow contribution resulting from
the sale of the Noble Americas Energy Solutions business.
The negative outlook reflects uncertainty regarding Noble's
ability to rebuild and reposition its operations to improve
profitability and cash flow amid the prolonged commodity
downcycle and to cope with the still sizeable debt maturities in
2018.
The rating outlook could return to stable, if (1) profitability
improves and the company is able to consistently generate
positive operating cash flow and maintain cash balances at levels
more than sufficient to cover maturing debt over the next 12-18
months; and (2) adjusted net debt to EBITDA trends toward 5.0x-
5.5x.
However, Noble's ratings are likely to be downgraded if cash flow
from operations (CFO) remains consistently weak and liquidity
deteriorates further, or if adjusted net debt/EBITDA remains in
excess of 5.5x-6.0x.
The principal methodology used in these ratings was Trading
Companies published in June 2016.
Noble Group Limited is the largest global physical commodities
supply chain manager in Asia by revenue. Its diversified
activities across the supply chain include the sourcing, storage,
processing, transportation, and distribution of over 20 commodity
products.
Founder and Chairman, Mr. Richard Elman, holds an approximate 18%
stake in the company. China Investment Corporation - the Chinese
sovereign wealth fund - owns about 10%.
NOBLE GROUP: S&P Rates Proposed US$-Denom. Fixed-Rate Notes 'B'
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issue rating and
'cnB+' long-term Greater China regional scale rating to the
proposed U.S. dollar-denominated fixed-rate notes to be issued by
Noble Group Ltd. (Noble: B+/Negative/--; cnBB-/--).
The ratings on the notes are subject to S&P's review of the final
issuance documentation. Noble intends to use the issuance
proceeds to refinance existing debt and for general corporate
purposes.
The notes constitute direct, general, unconditional,
unsubordinated, and unsecured obligations of Noble and will at
all times rank pari passu and without any preference among
themselves. Notable terms include an option to redeem up to 40%
of the principal amount of the notes with proceeds from one or
more equity offerings, which include public offerings and private
placements at any time before 2020. In addition, Noble may
redeem the notes in whole but not in part from 2020. There are
no financial covenants applicable to the notes. There is a
negative pledge that Noble will not pledge its assets for any
present or future indebtedness in the form of bonds, debentures,
notes, or other investment securities.
Noble's 2016 results were supported by gains from the disposal of
Noble America Energy Solutions (NES). Underlying profitability
remained weak and is below S&P's expectation largely due to
liquidity constraints on operations. However, Noble's liquidity
position has stabilized through the rights issue and sale of NES
last year. The company's liquidity is further supported by the
US$1 billion borrowing base facility completed in February 2017
for its wholly owned subsidiary Noble Clean Fuels Ltd.
S&P's current forecast of Noble's credit metrics for 2017-2018
has factored in a significant improvement in the company's
performance during that time. That's due to an improving
commodities market and Noble's improved access to funding,
redeployment of capital into higher return businesses, and the
impact of cost cuts gradually coming through. The company could
face downward rating pressure if the improvement in its
profitability does not materialize.
The proposed notes issuance could improve Noble's liquidity
position if the company replaces its short-term debt with longer-
term debt. The lengthening of the debt maturity profile could
lessen the annual refinancing pressure that the company faced in
the past two years.
The negative outlook on Noble reflects the refinancing risks of
the company's short-term facilities, and potentially weaker
financial performance and cash flow generation due to a reduction
in credit lines and counterparty support.
The rating on the notes is one notch below that on Noble to
reflect the subordination risk associated with the notes. The
company's ratio of priority claims to total assets exceeds S&P's
downward notching threshold of 15%, but is less than 30%.
=========
I N D I A
=========
AGRO PULPING: CRISIL Reaffirms B+ Rating on INR2.5MM LT Loan
------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of Agro
Pulping Machinery Private Limited at 'CRISIL B+/Stable/CRISIL
A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.7 CRISIL A4 (Reaffirmed)
Cash Credit 1.5 CRISIL B+/Stable (Reaffirmed)
Long Term Loan .3 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2.5 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect the company's modest scale of
operations, and vulnerability to fluctuations in raw material
prices and foreign exchange rates. These rating weaknesses are
partially offset by the promoter's extensive experience in
pulping and paper manufacturing equipment industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: APMPL's scale of operations is
modest and has fluctuated in the range of INR3 crore to INR30
crore over the 5 years through fiscal 2016. High dependence on
single product coupled with long order cycles result in spill-
over of orders to the following fiscal year. Scale is expected to
remain modest over the medium term.
* Vulnerability to fluctuations in raw material prices and
foreign exchange rates: High inventory levels of the key raw
material, steel, and absence of price escalation clause exposes
the company's operating margin to volatility in input costs.
Further, high export sales and absence of protection against
forex fluctuations leaves the company vulnerable to forex price
fluctuations.
Strength
* Promoter's extensive industry experience: The promoter's
experience in the industry of over 2 decades has enabled the
company to diversify product portfolio, establish strong
relationship with suppliers, and bag large orders from foreign
companies. The promoter's experience in the industry is expected
to result in improvement of revenues over the medium term.
Outlook: Stable
CRISIL believes APMPL will benefit over the medium term from the
promoters' extensive experience in the pulping and paper
manufacturing equipment industry. The outlook may be revised to
'Positive' if APMPL enhances its business and financial risk
profiles with successful customer diversification, and higher-
than-expected revenue and cash accrual. Conversely, the outlook
may be revised to 'Negative' if low cash accrual, or increase in
working capital requirements weakens the financial risk profile.
Incorporated in 1991, APMPL manufactures pulping and paper
manufacturing equipment. The company also specialises in chemical
recovery from the wastes of paper mills. The company, promoted by
Mr. S Raghavan, has its manufacturing facility in Chennai.
Profit after tax was INR0.52 core on net sales of INR35.28 crore
for fiscal 2016, vis-a-vis INR0.34 crore and INR9.32 crore,
respectively, in fiscal 2015.
AMISAL: CRISIL Reaffirms B+ Rating on INR6.5MM Loan
---------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the long-
term bank facility of Amisal.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Packing
Credit 6.5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's modest scale of
operations in the fragmented leather industry, customer
concentration in revenue profile, large working capital
requirement, and below-average financial risk profile because of
modest networth and high gearing. These weaknesses are partially
offset by the extensive experience of its proprietor.
Analytical Approach
Unsecured loans of INR2.83 crore have been treated as debt as
these are not subordinate to bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in competitive segment and large
working capital requirement: Turnover is likely to decline to
INR18-19 crore in fiscal 2017 from INR24.88 crore in fiscal 2016
due to weak market conditions. Moreover, small scale of
operations limits bargaining power with customers and suppliers.
Also, operations are working capital-intensive, with gross
current assets of 124 days as on March 31, 2016, due to sizeable
inventory of 88 days.
* Customer concentration in revenue profile: Around 80% of sales
are to US clients, Westport Corporation, Kiko Leather, and Randa
Accessories.
* Below-average financial risk profile: Networth was modest at
INR1.94 crore and gearing high at 3.69 times as on March 31,
2016.
Strength
* Extensive experience of proprietor: Presence of more than two
decades in the leather products industry has enabled the
proprietor to establish strong relationship with suppliers and
customers.
Outlook: Stable
CRISIL believes Amisal will benefit over the medium term from the
extensive experience of its proprietor. The outlook may be
revised to 'Positive' if higher-than-expected scale of operations
and margins improve financial risk profile. The outlook may be
revised to 'Negative' if financial risk profile, especially
liquidity, weakens further on account of low cash accrual or
significant stretch in working capital requirement.
Established in 2006 as a proprietorship firm by Mr. K S Saluja,
Amisal manufactures and exports leather fashion accessories
(especially wallets) to the US and Mexico. The business was
earlier carried out under Saluja Carpets, set up in the 1980s.
Profit after tax was INR62 lakh on net sales of INR24.88 crore
for fiscal 2016, vis-a-vis INR38 lakh and INR16.21 crore,
respectively, for fiscal 2015.
Any other information: Revenue is likely to decline in fiscal
2017 on account of weak market conditions. The firm added Kiko
Leather to its customer profile in the current fiscal, which has
started contributing 20-25% of total revenue, while Randa
Accessories' share declined to 10% from 30%. Westport Corporation
continues to contribute 50% to the turnover. The firm has also
added leather bags for ladies and crossbody bags for men to its
portfolio as these provide higher margin. Operating margin is
estimated to be 6-7% in fiscal 2017, in line with past trend.
Operations remain working capital-intensive.
Financial risk profile is below average because of a high gearing
of 3.69 times as on March 31, 2016, following high debt levels
and small networth. Capital structure is expected to remain
leveraged over the medium term. However, moderate operating
margin led to comfortable debt protection metrics, with interest
coverage and net cash accrual to total debt ratios of 2.52 times
and 0.12 time, respectively, for fiscal 2016. Metrics will remain
steady over the medium term.
Bank limit was utilised at an average of 63% in the six months
ended September 2016. Cash accrual is likely to be INR0.50-0.80
crore per annum against minimal term debt repayment over the
medium term.
ANJANA CONSTRUCTIONS: CRISIL Assigns 'B' Rating to INR4MM Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank facilities of Anjana Constructions (AC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL A4
Cash Credit 4 CRISIL B/Stable
The ratings reflect geographical concentration in revenue and
working capital-intensive operations and below average financial
risk profile. These rating weaknesses are partially offset by
partnersextensive experience and sufficient revenue visibility
because of its order book.
Key Rating Drivers & Detailed Description
Weaknesses
* Below Average financial risk profile: The firm's financial risk
profile is expected to continue to remain below average with an
estimated networth ranging between INR1.3-1.7 crore as on
March 31, 2017, and a high gearing ratio of above 3 times. The
debt protection metrics are expected to be moderate with an
interest cover of 1.8-2 times and net cash accruals to total debt
ratio of 0.05-0.1 times.
* Geographical concentration: The entire revenue is derived
through execution of projects for the Public Works Department
(PWD) of Kerala. Revenue growth is therefore dependent on the
regional impetus on infrastructure development.
* Working capital-intensive operations:Gross current assets (344
days as on March 31, 2016) are expected to improve, but remain
high, over the medium term due to large inventory.
Strengths
* Partners' extensive experience:The partners have been in the
civil construction industry for over two decades, resulting in
strong relationship with the PWD of Kerala. Consequently, topline
is expected to increase over the medium term.
* Sufficient revenue visibility: Orders worthRs 10 crore as on
February 1, 2017 are to be executed over the next 12
months;revenue to order book ratio is high at 1.4 times, ensuring
ample revenue visibility over the medium term.
Outlook: Stable
CRISIL believes AC will benefit over the medium term from a
healthy order book and experience of the partners. The outlook
may be revised to 'Positive' if revenue and profitability
increase substantially along with efficient working capital
management and healthy capital structure. Conversely, the outlook
may be revised to 'Negative' if delays in completion of ongoing
projects, or in receipt of payments from customers constrains
liquidity, or if sizeable debt is contracted to fund future
projects.
AC was set up as a partnership firm in 1993 by Mr. Nair and his
wife MrsSudha, who has been managing the business for past two
decades. The firm constructs roads and bridges for the PWD of
Kerala.
Net profit was INR0.14 crore on total income of INR7.17 crore in
fiscal 2016, against INR0.28 crore and INR7.76 crore,
respectively, in fiscal 2015.
ANNUR A P A: CRISIL Assigns 'B-' Rating to INR8.6MM LT Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the long
term bank facilities of Annur A P A Spinners Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 8.6 CRISIL B-/Stable
The rating reflects ASPL's below-average financial risk profile
marked by a highly leveraged capital structure and exposure to
project stabilization risks. These rating weaknesses are
partially offset by the benefits that ASPL derives from the
extensive experience of its promoters in the cotton yarn
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: ASPL's financial risk
profile is below-average marked by modest net worth and high
gearing. The net worth is estimated at INR4 crore and gearing of
about 4.2 time for the fiscal 2017. The capital structure is
expected to be leveraged over the medium term owing to nascent
stages of operations and limited accretion to reserves.
* Susceptibility to risk related to stabilization of its ongoing
project: Having commenced operations from Feb 2017 and with
nascent stages of operations, ASPL's will be exposed to
competition from other established players, which will constrain
the company's business risk profile over the near to medium term.
Strength
* Extensive experience of promoters in the cotton yarn industry:
ASPL is promoted by Mr. A P Annamalai and his wife Mrs. A Kokila.
The promoters have been in the cotton spinning segment over the
last three decades. ASPL is expected to continue to benefit over
the medium term from its promoters' extensive industry experience
in the cotton yarn industry and the need-based funding support
extended by them.
Outlook: Stable
CRISIL believes that ASPL will continue to benefit over the
medium term from the extensive industry experience of its
promoters. The outlook may be revised to 'Positive' if the
company stabilizes its operations, leading to more-than-expected
cash accruals and, consequent improvement in its financial risk
profile. Conversely, the outlook may be revised to 'Negative' if
ASPL witnesses significant delays in ramping up its operations,
resulting in weaker-than-expected cash accruals, or if its
financial risk profile deteriorates on account of larger-than-
expected debt-funded capital expenditure.
Incorporated in 2014, ASPL is currently setting up cotton
spinning unit constituting 9600 spindles in Tamil Nadu. The
company is promoted by Mr. A P Annamalai, and his wife and is
closely held. The project for setting up the spinning mill
commenced in December 2015 and operations have commenced from
February 2017.
BRIGHT STAR: CRISIL Assigns B+ Rating to INR4MM Cash Loan
---------------------------------------------------------
CRISIL has assigned its rating on the long term bank facilities
of Bright Star Syntex Private Limited to 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable
Term Loan 3.5 CRISIL B+/Stable
The rating reflects the modest scale of operations and below
average financial risk profile marked by modest net worth and
high capital structure. However these rating weaknesses are
partially offset by the extensive experience of promoters in
textile industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: BSSPL has reported scale of
operation of about INR18.9 crore during FY 2015-16 and expected
to maintain in FY 2016-17 indicated by revenue of about INR17.88
crore in first ten months ended January 2017. Small scale of
operations amid intense competition leads to low bargaining power
with suppliers and customers. Moreover, the company is a non-
integrated player, and thus has limited ability to pass on cost
escalation.
* Below average financial risk profile: The financial risk
profile is expected to deteriorate in near term on account of
debt funded capex plan.
Strength
* Extensive experience of promoters: The promoters have extensive
experience in the textile business under various group companies.
Over the years, they have developed healthy relationships with
customers, thereby facilitating repeat orders. Benefits from
extensive experience of promoters are expected to support
business risk profile over the medium term.
Outlook: Stable
CRISIL believes that BSSPL will continue to benefit over the
medium term from its promoters' extensive industry experience.
The outlook may be revised to 'Positive' if the company registers
better than expected accruals leading to improvement of the
liquidity profile. Conversely, the outlook may be revised to
'Negative' if the company undertakes any larger-than-expected,
debt funded capex programme or reports deterioration in its
working capital management, leading to Weakening of its financial
risk profile, or if there is any pressure on its profitability
because of Intense industry competition.
BSSPL, was incorporated in 2002, is engaged in spinning, weaving
and finishing of textiles (Jacquard woven fabrics/ curtains) .
The company was promoted by Mr. Bijay Agarwal and Ms Saroj
Agarwal and the manufacturing unit is located at Tarapur (Thane).
It has a total installed capacity of about INR5 lakhs meters per
month.
BSSPL reported a net profit of INR0.31 crore on net sales of
INR18.90 crore for fiscal 2016, against INR18.52 crore and
INR0.36 crore, respectively, for fiscal 2015.
C M ROY: CRISIL Assigns 'B' Rating to INR6MM Cash Loan
------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' rating to the
bank facilities of C M Roy Construction Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL A4
Cash Credit 6 CRISIL B/Stable
The rating reflects the company's small scale of operations,
geographical concentration in its revenue profile and below-
average financial risk profile marked by high gearing. These
weaknesses are partially offset by the extensive experience of
its promoters in the civil construction industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations and geographical concentration in
revenue profile:
CMCPL operations are small scale with operating income of
INR11.68 crores in fiscal 2016. In addition CMCPL derives entire
income from Andaman and Nicobar Islands, which exposes the
company to infrastructure development in that region.
* Financial risk profile: Financial risk profile of the company
is below average marked by leveraged capital structure and
moderate debt protection metrics. While gearing was at 2.5 times
as on March 31, 2016, interest coverage remained at 1.95 times.
Strength
* Extensive experience of promoters:
The promoters have 25 years of experience in the civil
construction industry, which is expected to support business risk
profile.
Outlook: Stable
CRISIL believes CMCPL will benefit over the medium term from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' in case company reports higher-than-expected
revenue and profitability leading to better financial risk
profile. The outlook may be revised to 'Negative' in case of
lower profitability and significant pressure on working capital
management due to delays in project execution and receivables
lead to weak liquidity.
Established in 1990 as a proprietorship concern by Mr. C.M.Roy,
it got reconstituted as a private limited company in 2016. CMCPL
undertakes civil construction work for government bodies in
Andaman and Nicobar Islands.
Net profit was INR0.46 crore on revenue of INR11.68 crore in
fiscal 2016, against net profit of INR0.57 crore on revenue of
INR12.25 crore in fiscal 2015.
EAST INDIA: CRISIL Assigns B+ Rating to INR7.16MM LT Loan
---------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of East India Packaging Private Limited and has
assigned its 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.78 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Long Term Loan 7.16 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Long Term .06 CRISIL B+/Stable (Assigned;
Bank Loan Facility Suspension Revoked)
The ratings were suspended on December 13, 2016, as the company
had not provided the necessary information for a rating review.
It has now shared the requisite information.
The rating reflects modest scale and moderate capacity
utilization levels resulting in low return on capital employed.
These weaknesses are offset by above average financial risk
profile marked by low gearing.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operation in fragmented industry: The firm's
scale of operations stands modest with operating income of
INR17.92 crore in FY2016. EIPPL is operating in the packaging
industry which is highly competitive in nature and is
characterized by large number of organized and unorganized
players.
* Moderate capacity utilization levels impacting ROCE: EIPPL's
ROCE stands low at 4.3% in 2015-16. Company had invested towards
the manufacturing facility, the utilization of which still stands
moderate at around 60% thus impacting ROCE.
Strength
* Above average financial risk profile: EIPPL's financial risk
profile is above average marked by low gearing of 0.91 times as
on March 31, 2016. In absence of any capex, the gearing is
expected to remain low over the medium term.
Outlook: Stable
CRISIL believes that EIPPL will continue to benefit from its
established clientele with proximity to key customers. The
outlook may be revised to 'Positive' in case the company
significantly scales up its operations and profitability with
improved capacity utilization levels. Conversely the outlook may
be revised to 'Negative' if EIPPL's financial risk profile
deteriorates of a larger-than-expected, debt-funded capital
expenditure, or if its liquidity weakens significantly on account
of increase in its working capital requirements.
EIPPL was incorporated in 2010 by the Kolkata-based Jhawar
family. The company commenced operations in June' 2014 and
manufactures corrugated boxes which are used for industrial
packaging. Its manufacturing facility is located at Haldia (West
Bengal) with total installed capacity of 1200 ton/month. EIPPL's
daily operations are managed by its promoter director, Mr. Shashi
Kant Jhawar, and Mr. Suresh Kumar Jhawar.
EIPPL's net profit and net sales were INR0.35 crore and INR17.92
crore, respectively, in fiscal 2016, against net loss and net
sales of INR0.54 crore and INR8.99 crore, respectively, for
fiscal 2015.
EDIMANNICKAL JEWELLERY: CRISIL Reaffirms B+ Cash Credit Rating
--------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Edimannickal Jewellery at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.6 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.3 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect a modest scale of operations in
the intensely competitive gold jewellery retail segment, and a
below-average financial risk profile because of a small networth
and subdued debt protection metrics. These rating weaknesses are
partially offset by the extensive experience of the promoters in
the jewellery business.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Revenue was INR10.6 crore and
profitability low in fiscal 2016. The small scale of operations
is driven by intense competition in the fragmented retail
jewellery industry, comprising several small and big players.
* Below-average financial risk profile: The small scale of
operation has resulted in low accretion to reserves.
Consequently, the networth was modest at around INR3.3 crore as
on March 31, 2016. The interest coverage ratio was also low at
around 1.1 times in fiscal 2016 due to its high dependence on
working capital debt.
Strength
* Extensive experience of the promoters: With over 25 years of
experience, the promoters have a sound insight into consumer-
buying patterns and jewellery designs. The firm has been able to
maintain a steady scale of operations despite intense competition
owing to an improved brand image and established customer
relationship.
Outlook: Stable
CRISIL believes EJ will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' if revenue increases significantly, leading to
sizeable cash accrual and hence to improvement in the financial
risk profile. The outlook may be revised to 'Negative' if the
financial risk profile weakens owing to significantly low revenue
or profitability, and substantial debt-funded capital
expenditure.
EJ, set up as a partnership firm by Mr. E T Jose and his brother
Mr. Thomas Mathew in 1989, retails gold jewellery. It owns a shop
in Ranni, Kerala. Operations are managed by Mr. Thomas Mathew.
In fiscal 2016, net profit was INR0.02 crore on net revenue of
INR10.6 crore, against net profit of INR0.11 crore on net revenue
of INR8.1 crore in fiscal 2015.
ELCOM INNOVATIONS: CRISIL Assigns B- Rating to INR7.5MM Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable/CRISIL A4' ratings to
the bank facilities of Elcom Innovations Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Fund-Based
Bank Limits .5 CRISIL B-/Stable
Cash Credit 7.5 CRISIL B-/Stable
Letter of Credit 4 CRISIL A4
The ratings reflect the company's small scale of operations,
large working capital requirement, and average financial risk
profile because of muted debt protection metrics. These
weaknesses are partially offset by extensive experience and
funding support of its promoters.
Analytical Approach
CRISIL has treated 75% of unsecured loans (Rs 3.54 crore in
fiscal 2016 and INR2 crore in fiscal 2017) from the promoters as
equity as they have been increasing these loans and do not intend
to withdraw them. Also, interest paid on these loans is lower
than bank interest rate. Management has indicated it may convert
these unsecured loans into preference shares.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations
Revenue was INR30 crore in fiscal 2016. Also, order book was
modest at INR15.5 crore, to be executed by May 2017. Scale will
remain subdued in fiscal 2017.
* Average financial risk profile
Interest coverage ratio was weak at 1.53 times in fiscal 2016,
while gearing was moderate at 1.73 times and networth small at
INR9 crore as on March 31, 2016. Financial risk profile is likely
to remain average over the medium term.
* Working capital-intensive operations
Gross current assets were 296 days as on March 31, 2016, due to
receivables and inventory of 145 days and 144 days, respectively.
Strengths
* Extensive experience of promoters
Presence of around 58 years in the telecommunications segment has
enabled the promoters to establish a strong clientele, reflected
in a compound annual growth rate of 40% in revenue in the three
years through 2016.
* Funding from promoters
The promoters extended unsecured loans of INR3.54 crore as on
March 31, 2016, and an additional INR2 crore in the current
fiscal.
Outlook: Stable
CRISIL believes EIPL will continue to benefit over the medium
term from its promoters' extensive experience. The outlook may be
revised to 'Positive' if a significant increase in revenue and
profitability leads to higher cash accrual and hence better
working capital management and liquidity. The outlook may be
revised to 'Negative' if steep decline in cash accrual and
profitability, deterioration in working capital management, or
large, debt-funded capital expenditure further weakens financial
risk profile.
Incorporated in 2002 as SRM Engineering Services India Pvt Ltd,
EIPL got its current name in December 2012. The company,
manufactures and trades in telecommunication systems such as
EPABX and ruggedize field phones for the defence, aerospace,
electronics, and communication segments. Facility is in Mohali,
Punjab, and office in Noida. Parent company, Elcom Systems Pvt
Ltd, holds 70% stake in EIPL is promoted by SUN Group Enterprises
Private Limited, a private equity investor in India and emerging
markets.
Net profit was INR0.22 crore on sales of INR30 crore in fiscal
2016, against INR0.43 crore and INR19 crore, respectively, in
fiscal 2015.
ELECTRA GLOBAL: CRISIL Reaffirms 'B' Rating on INR5.5MM Loan
------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Electra Global Resources Private Limited at 'CRISIL
B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.5 CRISIL B/Stable (Reaffirmed)
Letter of Credit 3.5 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 0.5 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect Electra's small scale of
operations and below-average financial risk profile marked by
subdued debt protection metrics. These rating weaknesses are
partially offset by extensive experience of promoters in the
batteries industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Electra's below-average
financial risk profile is marked by weak debt protection metrics
as indicated by weak interest coverage ratio of 1.1 times in
fiscal 2016.
* Modest scale of operations in highly fragmented battery
industry: The scale of operations remained modest marked by small
revenues of INR15.2 crores in fiscal 2016 in the highly
fragmented battery industry.
Strength
* Extensive experience of promoters: The promoters of Electra,
Mr. Chetan Sanghvi and Mr. Bhaumik Sanghvi have extensive
experience in the field of batteries. The company benefits from
the extensive experience of the promoters, their understanding of
the dynamics of the local market, and established relationships
with customers and suppliers.
Outlook: Stable
CRISIL believes that Electra will maintain its business risk
profile over the medium term backed by the promoter's extensive
industry experience. The outlook may be revised to 'Positive' if
the company reports significantly higher than expected revenues
and profitability, while improving its capital structure.
Conversely, the outlook may be revised to 'Negative' in case of
lower than expected revenues and profitability, or stretch in
working capital cycle, resulting in deterioration in financial
risk profile.
Set up in 2015 in Mumbai by Mr. Chetan Sanghvi, Electra is
engaged in trading of lead batteries and lead.
Electra reported profit after tax of INR0.03 crore on sales of
INR15.23 crore in fiscal 2016.
FANIDHAR MEGA: CRISIL Assigns 'B' Rating to INR47.5MM LT Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank loan facilities of Fanidhar Mega Food Park Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long
Term Bank Loan
Facility 47.5 CRISIL B/Stable
Proposed Short
Term Bank Loan
Facility 1.5 CRISIL A4
The ratings reflect the company's exposure to risks related to
implementation of its project, which is in the initial stage. The
ratings also factor the company's expected subdued financial risk
profile because of partly debt-funded project. These weaknesses
are partially offset by its promoters' extensive business
experience and their funding support.
Analytical Approach
For arriving at the ratings, CRISIL has treated as neither debt
nor equity, the unsecured loan of INR6.01 crore as on March 31,
2016 extended to FMFPPL by its promoters and their family
members. The loans bear nominal interest rate and are likely to
remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to project implementation risks
Timely implementation of the company's mega food park, timely
receipt of government grants, and stabilisation of operations are
key rating sensitivity factors. The project is expected to
commence operations from November 2019.
* Subdued financial risk profile
Financial risk profile may remain weak on account high project
gearing of 1.42 times.
Strengths
* Promoters' extensive experience
The company will benefit from its promoters' experience of over
three decades.
* Promoters' fund support and expected favourable debt repayment
structure
Equity and unsecured loans from the promoters, and the expected
three years of moratorium for repayment of long-term loan will
support the company's liquidity in the initial years of
operations.
* Government support to project by way of funding grant
Funding risk is partly mitigated as 42% of the project cost will
be funded through grant from the central government's Ministry of
Food Processing Industries and the Gujarat government. Timely
realisation of the grant is a key monitorable.
Outlook: Stable
CRISIL believes FMFPPL will continue to benefit from its
promoters' extensive business experience and their funding
support. The outlook may be revised to 'Positive' if timely
project implementation and stabilisation of operations lead to
the expected revenue, profitability, and cash accrual in the
initial phase of operations. The outlook may be revised to
'Negative' if delay in project implementation or in stabilisation
of operations leads to lower revenue and cash accrual, or if a
stretch in working capital cycle weakens the financial risk
profile, especially liquidity.
FMFPPL, incorporated in 2010 and promoted by Mr. Ravjibhai Patel,
Mr. Krunal Patel, Mr. Rushabh Patel and their family members, is
establishing a mega food park at Munderda village, Mehsana
district in Gujarat. The food park will include warehouse
facility; cold storage; multi-fruit processing lines; potato
flakes plant; grading, sorting, and cleaning lines; laboratory
for research and testing; and food processing units. It is
expected to commence commercial operations from November 2019.
This food park will be set up under the Mega Food Park Scheme of
Ministry of Food Processing Industries. Under the scheme, the
government will provide operational and financial support to
private players for setting up facilities to link agricultural
production to the market by bringing together farmers,
processors, wholesalers, and retailers, to maximise value
addition, minimize wastage, increase farmers' income, and create
employment opportunities.
FRANSKO AGRO: CRISIL Assigns B+ Rating to INR7.0MM Cash Loan
------------------------------------------------------------
CRISIL has revoked suspension of its ratings on the bank
facilities of Fransko Agro Foods and assigned its 'CRISIL
B+/Stable/CRISIL A4' ratings to the facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.5 CRISIL A4 (Assigned;
Suspension Revoked)
Cash Credit 7.0 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Long Term Loan 0.15 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Long Term 1.35 CRISIL B+/Stable (Assigned;
Bank Loan Facility Suspension Revoked)
CRISIL had, on December 13, 2016, suspended the ratings as FAF
had not provided necessary information required to maintain a
valid rating. The firm has now shared the requisite information,
enabling CRISIL to assign its ratings.
The ratings reflect the firm's leveraged capital structure owing
to nascent stage of operations and moderate profitability. These
weaknesses are partially offset by the extensive experience of
its promoters and established relationship with suppliers and
customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Leveraged capital structure: Networth is small at INR1.9 crore
as on March 31, 2016, due to start-up phase of operations. Also,
moderate profitability and large working capital requirement on
account of seasonal availability of paddy led to high gearing of
2.56 times as on March 31, 2016.
* Modest scale of operations and exposure to intense competition:
With revenue of INR24.2 crore in fiscal 2016, scale remains small
in the competitive rice milling industry, which limits pricing
and bargaining power against customers.
Strength
* Extensive experience of promoters and established relationship
with suppliers and customers: Presence of around 25 years in the
rice milling business has enabled the promoters to establish
strong relationship with customers and suppliers across India.
Outlook: Stable
CRISIL believes FAF will benefit over the medium term from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' if a substantial increase in revenue and
profitability leads to a better financial risk profile, or if
significant capital infusion improves capital structure. The
outlook may be revised to 'Negative' if aggressive, debt-funded
expansion, sharp decline in revenue and profitability, or
sizeable withdrawal further weakens financial risk profile.
Set up in 2013 in Ernakulam, Kerala, as a partnership firm by Mr.
Felvin Francis and his family members, FAF mills and processes
paddy into boiled rice, rice bran, broken rice, and husk.
Profit after tax (PAT) was INR16.9 lakh on net sales of INR24.20
crore in fiscal 2016, vis-a-vis PAT of INR8.01 lakh on net sales
of INR11.50 crore for fiscal 2015.
GURU KIRPA: CRISIL Assigns B+ Rating to INR8.85MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Guru Kirpa Agro Foods. The ratings reflect
small scale of operations and weak financial risk profile. These
weaknesses are partially offset by the extensive experience of
the partners in the rice industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
SME Credit .25 CRISIL B+/Stable
Proposed Non Fund
based limits .06 CRISIL A4
Cash Credit 8.85 CRISIL B+/Stable
Proposed Fund-
Based Bank Limits 0.84 CRISIL B+/Stable
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations: Despite being in business for over
20 years, GKAF's scale of operations - revenue was INR30.73 crore
in fiscal 2016 - is expected to remain constrained by intense
competition. Competitive pressure will also limit pricing ability
and operating margins.
* Weak financial risk profile: Financial risk profile is weak
with low networth of INR4.53 crore and high gearing of 2.84 times
as on March 32, 2016. The gearing is high because of sizeable
working capital debt. Debt protection indicators are weak, too,
with net cash accrual to total debt (NCATD) and interest coverage
ratios of 0.03 time and 1.48 times, respectively, in fiscal 2016.
The financial metrics may remain weak over the medium term as
well.
Strengths
* Partners' extensive experience in the rice segment: Benefits
from the partners' experience of around 20 years in the rice
processing business, and healthy relationships with suppliers and
customers should continue to support business risk profile.
Strong procurement network, for instance, helps obtain paddy
throughout the year for the PUSA 1121 variety, despite seasonal
availability.
Outlook: Stable
CRISIL believes GKAF will continue to benefit from its promoters'
extensive experience in the rice industry. The outlook may be
revised to 'Positive' if increase in revenue and profitability,
or substantial infusion of capital strengthens financial risk
profile. Conversely, the outlook may be revised to 'Negative' if
low cash accrual, or any large capital expenditure weakens the
financial metrics.
GKAF was set up in 1997 by Mr. Dhalu Ram. Mr. Lokesh Kumar, Mr.
Kailash Chandra, Mr. Rohit Kumar and Mr. Sahil Sardana are the
current partners. The firm processes, trades in, and supplies
basmati and other varieties of rice to both its local and foreign
customer base. Domestic sales and exports contribute 70% and 30%,
respectively, to revenue.
GKAF reported net profit of INR0.03 crore on net sales of
INR30.73 crore in fiscal 2016, against net profit of INR0.14
crore and net sales of INR23.36 crore the previous fiscal.
Status of non-cooperation with previous CRA: ICRA Ltd suspended
its rating on GKAF through its release dated July 25, 2016, on
account of non-provision of information required for monitoring
of ratings.
HINDUSTAN CONSTRUCTION: CRISIL Rates INR6MM Cash Credit at 'B'
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings on
the bank facilities of Hindustan Construction - Raebareli (HC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 0.47 CRISIL B/Stable
Bank Guarantee 1 CRISIL A4
Cash Credit 6 CRISIL B/Stable
The ratings reflect the modest scale and tender-based nature of
operations in a highly fragmented industry and low operating
margin. These rating weaknesses are partially offset by the
extensive experience of the proprietor in the civil construction
business.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
from the proprietoras neither debt nor equity as these loans are
at a lower-than-market interest rate and should remain in the
business.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale and tender-based nature of operations in a highly
fragmented industry
HC's revenues are tender based and dependent on its ability to
bid successfully for tenders. HC reported revenue of Rs18.6 crore
in fiscal 2016 and its scale of operations are expected to remain
modest in the medium term.
* Low operating profitability
The operating profitability margin has been low at 4.3-5.9% in
the three fiscals ended March 31, 2016; the margin was at 4.31%
in fiscal 2016. Profitability is subject to pricing, availability
of labour, machinery mobilisation, and the project size. The
margin is likely to remain low over the medium term owing to the
tender-based nature of operations.
Strengths
* Significant experience of the proprietor
The proprietor has an experience of around 15 years as an
approved government civil contractor in Raebareli, Uttar Pradesh.
Over the years, he has developed a healthy relationship with
various government organisations such as the Public Works
Department and the Irrigation Department, and with raw materials
suppliers.
Outlook: Stable
CRISIL believes HC will continue to benefit from the significant
industry experience of its proprietor. The outlook may be revised
to 'Positive' in case of substantial growth in scale of
operations and profitability while maintaining its working
capital cycle. The outlook may be revised to 'Negative' in case
of unexpected capital outflow through withdrawals, worse-than-
expected working capital management, or reduction in cash accrual
resulting in deterioration in it financial risk profile.
HC was established as a proprietorship firm in 2005 by Mr.
Pushpendra Singh. It is an A class approved government contractor
working for the PWD, AA class approved contractor for the
Irrigation Department, and a contractor for Power Corporation of
India to undertake projects related to construction of roads,
buildings, drainage, and other works. The registered office is at
Raebareli.
In fiscal 2016, net profit was INR 0.21 crore on operating income
of INR 18.61 crore, against net profit of INR 0.16 crore on
operating income of INR 14.36 crore in fiscal 2015.
ISHANIKA HOTELS: CRISIL Assigns 'B' Rating to INR12MM Term Loan
---------------------------------------------------------------
CRISIL has assigned 'CRISIL B/Stable' rating to the long-term
bank facility of Ishanika Hotels Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 12 CRISIL B/Stable
The ratings reflect the start-up nature of the company's project,
and its exposure to risks relating to offtake, and to intense
competition in the hospitality industry. These weaknesses are
partially offset by the low funding and completion risks and the
extensive experience of promoters in the real estate industry.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks relating to offtake, lack of an established
brand name, and to intense competition: Significant offtake risk
is primarily on account of intense competition from other hotels
in Lucknow, lack of popular branding, and the fact that its
resort is new resulting in lack of familiarity among corporates
and tourists.
Strength
* Extensive experience of promoters: The decade-long experience
of the promoters is expected to help the company in scaling up
operations.
* Low funding and completion risks: The total project cost is INR
.17.35 crore, funded through debt to equity ratio of 2.5:1. The
project is 90-92% complete as on February 15, 2017, the promoters
had already brought in their entire contribution in the form of
share capital and unsecured loans. Around INR .0.68 crore of term
loan is to be disbursed by the end of fiscal 2017. Therefore, the
project's funding risk is low as most of the funding has already
been procured.
Outlook: Stable
CRISIL believes IHPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if higher occupancy and tariff lead to substantial
cash accrual. The outlook may be revised to 'Negative' if low
occupancy and tariff, or delays in customer advances constrain
cash accrual and liquidity.
Incorporated in 2015, IHPL is promoted by Mr. Arun Singh and his
wife Ms Rolli Singh. The company is setting up a hotel project in
the area of around 12000 sq. ft. comprising seven floors. The
property comprises 58 rooms and is situated at Gomti Nagar,
Vibhuti Khand Lucknow, Uttar Pradesh. The commercial operations
are expected to start from April 2017.
JEET HOME: CRISIL Assigns 'D' Rating to INR9MM Term Loan
--------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
facilities of Jeet Home Solutions Private Limited. The rating
reflects the recent instances of delay by JHSPL in servicing its
term debt obligations. The delays have been on account of
constrained liquidity arising out of low customer advances.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 9 CRISIL D
The company also has weak financial risk profile, exposure to
high project implementation related risks and cyclicality
inherent in real estate industry. However, the company benefits
from promoters extensive industry experience.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile and delay in servicing debt due to
weak liquidity
JHSPL has a weak financial risk profile driven by moderate debt
availed for the projects vis-a-vis slow pace of bookings and
lower receipt of customer advances. This also impacted liquidity,
resulting in delayed servicing of term debt obligation.
* Exposure to risks and cyclicality inherent in the real estate
industry:
The real estate sector in India is cyclical and has volatile
prices, opaque transactions, and a highly fragmented market
structure. The recent slowdown in the sector has delayed
execution and sales of several projects.
Strength
* Promoters' experience and track record:
The promoters have been in the real estate business since 2004.
Mr. Lallan Prasad Sinha has 13 years of experience in real
estate. He had a partnership concern, Mata Vaishno Properties
(MVP), set up in 2004, which forayed into plotting of land. In
2010, Mr. Lallan Prasad Sinha and Mr. Jitendra Kumar Sinha
incorporated JHSP. Mr. Jitendra Kumar Sinha has 7 years of
experience in real estate. JHSPL currently has one residential
project, Jeet Rivera, under construction in Varanasi, Uttar
Pradesh; out of the four towers in the project, one has completed
construction.
JHSPL, incorporated in 2010, develops real estate in Varanasi,
Uttar Pradesh. The company is promoted by Mr. Jitendra Kumar
Sinha and Mr. Lallan Prasad Sinha. JHSPL currently has one
residential project, Jeet Rivera, under construction.
Profit after tax was INR10 lakh on net sales of INR5.10 crore for
fiscal 2016, against INR36 lakhs and INR17.17 crore,
respectively, for fiscal 2015.
JMK MOTORS: CRISIL Lowers Rating on INR7MM Channel Loan to B+
-------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of JMK
Motors Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Channel Financing 7 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Drop Line Overdraft 1.7 CRISIL B+/Stable (Downgraded
Facility from 'CRISIL BB-/Stable')
Proposed Long Term 2.95 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
The downgrade reflects tightly matched cash accrual against debt
obligation due to weak liquidity. Fluctuating revenue may led to
weak cash accrual. Also, financial risk profile is weak because
of small net worth, moderate total outside liabilities to
tangible net worth (TOLTNW) ratio, and average debt protection
metrics. Liquidity will remain weak over the medium term on
account of modest cash accrual, and funding from promoters will
remain a rating sensitivity factor.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
of INR . 4.36 crore (as on March 31, 2016) extended to JMK Motors
Pvt Ltd by its promoters as neither debt nor equity as the loans
are expected to be retained in the business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and exposure to intense competition
With revenue of INR35 crore for fiscal 2016, scale remains small
in the competitive automotive dealership industry that has many
small and large players. This limits the company's bargaining
power with suppliers and customers and also restricts ability to
exploit economies of scale. Despite expected improvement, scale
will remain subdued over the medium term.
* Weak financial risk profile
The financial risk profile of the company is weak with small net
worth, total outstanding liabilities to tangible net worth
(TOL/TNW) of 2.27 times as on March 31, 2016 and moderate debt
protection metrics.
Strengths
* Extensive experience of promoters and established market
position
Presence of more than a decade has enabled the promoters to
establish healthy relationship with principal, Tata Motors Ltd
(TML) and also acquire dealership of Toyota Kirloskar Motor Pvt
Ltd and Hero Motocorp Ltd.
Outlook: Stable
CRISIL believes JMPL will benefit over the medium term from the
extensive entrepreneurial experience of its promoters. The
outlook may be revised to 'Positive' if significant ramp-up in
operations and improvement operating profitability lead to large
cash accrual, and if liquidity improves with effective working
capital management. The outlook may be revised to 'Negative' if
substantial decline in scale affects cash accrual, or if
liquidity deteriorates on account of larger-than-expected working
capital requirement or debt-funded capital expenditure.
Set up in 2000 by Mr. Rakesh Singh Baghel and his wife, Ms.
Pratiba Singh, JMPL is an authorised dealer and service provider
for TML's passenger vehicles in Jhansi district, Uttar Pradesh.
For fiscal 2016, profit after tax (PAT) was INR0.17 crore on net
sales of INR35 crore, against a PAT of INR0.07 crore on net sales
of INR36.93 crore for fiscal 2015.
KAMDHENU REALITIES: CRISIL Ups Rating on INR10.5MM Loan to BB-
--------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
of Kamdhenu Realities to 'CRISIL BB-/Stable' from 'CRISIL
B+/Stable'. The upgrade factors in better-than-expected bookings
and receipt of customer advances for its three real estate
projects. Moreover, two out of the three projects are entirely
completed and one is running ahead of its schedule. The upgrade
also factors in improved credit risk profile due to higher cash
inflows from its projects.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 9.5 CRISIL BB-/Stable (Upgraded
Bank Loan Facility from 'CRISIL B+/Stable')
Term Loan 10.5 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
The rating continues to reflect the extensive experience of
promoters in the real estate industry and the advantageous
location of its projects, resulting in healthy saleability. These
strengths are partially offset by an average financial risk
profile and susceptibility to risks inherent in the Indian real
estate sector.
Key Rating Drivers & Detailed Description
Strengths
* Advance stages of project execution and healthy saleability: KR
has completed construction of two of its three projects: Business
Bay and Kamdhenu Aura. The remaining project, Oakland, is nearing
construction and is ahead of its scheduled completion date.
Almost all the units in Business Bay and Kamdhenu Aura are sold
and the firm has received healthy advances against the bookings.
Also, Oakland is almost 60% booked, better than expected. This
has resulted in higher cash inflows from the projects.
* Extensive experience of promoters: KR is a part of the Kamdhenu
Group (KG) incorporated in 1955 by the late Mr. Anantram Sabhlok.
It commenced its operations by developing infrastructure projects
such as roads, bridges, and dams. After successfully completing
these projects, the group undertook development of other
residential projects in and around Navi Mumbai. The business risk
profile should continue to benefit over the medium term from the
promoters' experience, established track record, and advantageous
locations of its projects.
Weaknesses
* Average financial risk profile: Financial risk profile is
average, with high total outside liabilities to tangible networth
ratio, and modest networth. CRISIL believes that the financial
risk profile of KR will remain average over the medium term.
* Susceptibility to risks and cyclicality inherent in the Indian
real estate industry: The real estate sector in India is cyclical
and marked by volatile prices, opaque transactions, and a highly
fragmented market structure because of the presence of several
regional players. Moreover, multiplicity of property laws and
non-standardised government regulations are likely to affect the
tenure of project execution. The risk is compounded by aggressive
completion timelines and shortage of manpower (project engineers
and skilled labour) in this sector. Absence of regulatory
certifications on land titles exposes real estate developers to
legal risks. Also, high transaction costs discourage the
development of a robust secondary market, leading to liquidity
risks.
Outlook: Stable
CRISIL believes KR will maintain its business risk profile over
the medium term on the back of its promoters' longstanding
experience in the residential real estate industry. The outlook
may be revised to 'Positive' in case of higher-than-expected
bookings and cash inflows and improvement in capital structure.
The outlook may be revised to 'Negative' in case of lower-than-
expected bookings for Oakland project, launch of any large debt-
funded project, or sizable capital withdrawals.
KR, set up in 1985 as a partnership between Mr. Surinder Sabhlok
and his family, undertakes real estate development in Navi
Mumbai. The firm has completed projects, Business Bay and
Kamdhenu Aura. Currently, it is developing a residential project,
Oakland.
Profit after tax stood at INR7.27 crore on net sales of INR39.70
crore for fiscal 2016, vis-a-vis INR2.17 crore and INR15.69
crore, respectively, in fiscal 2015.
KAILASH HILLWAYS: CRISIL Upgrades Rating on INR3MM Loan to B+
-------------------------------------------------------------
CRISIL has upgraded its long term rating on the bank facilities
of Kailash Hillways Engineering associates to 'CRISIL B+/Stable'
from 'CRISIL B/Stable' while reaffirming the short term rating at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3.5 CRISIL A4 (Reaffirmed)
Cash Credit 3.0 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 0.7 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The rating upgrade reflects CRISIL's belief that KHEA's business
risk profile will continue to improve over the medium term due to
order book in hand. In fiscal 2016, operating income stood at
around INR16 crore and is expected to reach over INR19 crore in
fiscal 2017 on account of in-hand orders worth INR17 crore. The
operating margin has remained in the range of 10-12% over the
three fiscals through fiscal 2016 and is expected to remain in a
similar range over the medium term.
The rating reflect KHEA's modest scale of operations due to
geographical/customer concentration, working capital intensive
operation and high bank limit utilization. These rating
weaknesses are mitigated by the partners' experience and
established industry presence and comfortable leverage.
Key Rating Drivers & Detailed Description
Weakness
* Geographical/customer concentration: Since firm only operates
in Uttaranchal region and executes tender for Public Works
Department (PWD), revenue profile is exposed to
geographical/customer concentration.
* Modest networth: As on March 31, 2016, networth was modest at
INR2.2 crore (Rs. 1.7 crore in previous year) and is expected to
remain modest over the medium term in the absence of equity
infusion.
Strengths
* Partners' experience and established industry presence:
Partners have over decade of experience in the construction
industry.
* Moderate working capital operation: Gross current asset ranged
from 93-211 days over the 3 years through March 2016 due to low
debtor days and moderate inventory requirement and is expected to
remain moderate over the medium term.
* Comfortable leverage: Total outside liabilities to tangible
networth ratio (TOL/TNW) has been at 2.9-4.3 times over the three
years ended March 31, 2016 and is expected to be below 2.3 times
over the medium term.
Outlook: Stable
CRISIL believes KHEA will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if KHEA achieves higher-
than-expected revenue growth while maintaining profitability or
equity infusion thereby leading to improvement in financial risk
profile; especially liquidity. Conversely, the outlook may be
revised to 'Negative' if the financial risk profile weakens due
to stretch in working capital or lower than expected
profitability or debt funded capex.
KHEA was established as a partnership firm by Mr. Kailash
Pokhriyal, Mr. Bachan Pokhriyal and Mr. Chandervir Singh
Pokhriyal in 2001. The firm undertakes the construction and
maintenance of roads and bridges for government projects in
Garhwal (Uttarakhand).
KHEA reported a profit after tax (PAT) of INR0.7 crore on net
sales of INR16 crore respectively in fiscal 2016 against PAT of
INR0.8 crore on net sales of INR17 crore in previous year.
KINGFISHER AIRLINES: No Bidders for Two Kingfisher Properties
-------------------------------------------------------------
The Hindu BusinessLine reports that recovering monies owed to
them by Vijay Mallya's defunct Kingfisher Airlines by auctioning
"Kingfisher House" and "Kingfisher Villa" is proving to be a
Herculean task for banks. There were no bidders at the auction of
these properties on March 6, the report says.
Despite the reserve price on the two properties being marked down
by about 10 per cent from the previous auction, there was no
buyer interest in them, said a source well versed with
developments in this regard, Hindu BusinessLine relates.
"There were no takers, despite the auction being held at market-
related price. Multiple attempts at auctioning the properties
have come a cropper. Banks will once again meet to take a call on
whether to bring down the price further. Also, we may look at the
possibility of a bilateral deal," Hindu BusinessLine's sources
said. Borrower Kingfisher Airlines, which was grounded in 2012,
owed about INR6,203 crore to a 17-bank consortium as on May 31,
2013, with further interest thereon at the rate of 11.50% per
annum with yearly rests with costs and charges, the report
discloses.
Hindu BusinessLine relates that bankers said this amount has now
bloated about INR9,000 crore. The airline's promoter Mallya has
been declared a wilful defaulter by banks.
The report says the reserve price of Kingfisher House was reduced
from INR135 crore at the last auction to INR103.50 crore for the
latest auction. Similarly, the reserve price of the palatial
Kingfisher Villa was cut from INR85.30 crore to INR73 crore.
The guarantors to both the properties are United Breweries
(Holdings) Ltd and liquor baron Vijay Mallya, who is now in
London, Hindu BusinessLine notes.
About Kingfisher Airlines
Headquartered in Mumbai, India, Kingfisher Airlines --
http://www.flykingfisher.com/-- formerly known as Deccan
Aviation Ltd., served about 35 domestic destinations with a fleet
of more than 40 aircraft, including Airbus jets and ATR 72
turboprops.
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 15, 2014, Bloomberg News said Kingfisher Airlines has
grounded planes since October 2012. The airline lost its
operating license in January 2013 after failing to convince
authorities it has enough funds to restart flights.
As reported in the TCR-AP on Nov. 25, 2016, the Times of India
said the Karnataka high court has ordered the winding up of the
now-defunct Kingfisher Airlines (KFA). Justice Vineet Kothari
gave this direction on Nov. 18, while allowing a petition filed
in 2012 by Aerotron, a UK-based company, for recovery of a little
over $6 million due to it for supply of rotable aircraft
components to KFA.
LORD BALAJI: CRISIL Assigns 'D' Rating to INR10MM Term Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL D' ratings to the bank facilities
of Lord Balaji Ware Housing Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 10 CRISIL D
The ratings reflect frequent instances of delay in servicing of
the term loan, caused by weak liquidity and a stretch in the
working capital cycle.
The rating is further constrained by the modest scale of
operations and weak financial risk profile. These rating
weaknesses are partially offset by the extensive entrepreneurial
experience of the promoter.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and exposure to intense competition:
Operating revenue, at INR1.90 crore in fiscal 2016, is likely to
be INR2.3 crore in fiscal 2017, but will remain constrained by
the modest scale and intense competition.
* Weak financial risk profile: - Financial risk profile is
constrained by the high total outside liabilities to tangible
networth ratio at 2.14 times as on March 31, 2016, and interest
coverage ratio of 2.05 times in fiscal 2016.
Strength
* Extensive experience of the partners: Extensive industry
experience of promoters for more than 1 decade.
Lord was set up in 2011, albeit operation commenced in April
2015. It constructs warehouse spaces and leases them to various
customers in Delhi. The company has storage capacity of 2.70
lakhs sq. ft. Big Bazar and Mother Dairy are the main tenants,
and nearly the entire space available has been leased out.
Profit after tax (PAT) of INR0.23 crore was reported on operating
income of INR1.90 crore in fiscal 2016.
MANTHAN SOFTWARE: CRISIL Assigns B+ Rating to INR20MM Cash Loan
---------------------------------------------------------------
CRISIL has revoked the suspension of its rating on bank
facilities of Manthan Software Services Private Limited and
assigned 'CRISIL B+/Stable' rating to these bank facilities.
CRISIL had suspended the rating vide its rating rationale dated
October 3, 2016, as Manthan had not provided necessary
information required for a rating review. The company has now
shared the requisite information, enabling CRISIL to assign its
rating to the bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit/ 20 CRISIL B+/Stable (Assigned;
Overdraft facility Suspension Revoked)
The rating reflects Manthan's weak operating efficiencies
resulting from operating losses and large working capital
requirements. However, these weaknesses are partially mitigated
by promoter's extensive experience and fund support from its
venture capital (VC) investors to drive new product developments
and expand into new geographies.
Analytical Approach
For arriving at the rating, CRISIL has considered Manthan's
preferential share capital as equity. This is because the
preferential share capital is compulsorily convertible to equity
shares, not beyond the nineteenth year from the date of issue.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak operating efficiency: The company reported operating
losses over the past two years, through fiscal 2016, largely due
to high manpower costs and sales expenditure.
* Large working capital requirement: Manthan has large working
capital requirement as reflected in high gross current assets,
primarily on account of high debtors.
Strengths
* Extensive experience of promoter: The promoter, Mr. Atul Jalan,
has experience of over 25 years in managing different information
technology (IT)-related products. Mr. Jalan initially started
with security solution software and subsequently floated other
entities before starting Manthan. The company specialises in data
analytics for retail space and has developed multiple products to
cater to complex needs of its customers.
* Steady infusion of equity by VC investors: Since its inception,
there has been regular support from several investors in the form
of compulsorily convertible cumulative preference shares, which
was mainly utilized to drive new product development and expand
into new geographies.
Outlook: Stable
CRISIL believes Manthan will continue to benefit over the medium
term from its established market position in the business of data
analytics, with niche product capabilities in retail and consumer
product group (CPG) industry. The outlook may be revised to
'Positive' in case of a substantial and sustained increase in
revenue and profitability margins resulting in increased cash
accrual. Conversely, the outlook may be revised to 'Negative' if
weaker-than-expected profitability or deterioration in working
capital cycle, or any large, debt-funded capital expenditure
weakens the financial risk profile.
Established in 2003, Manthan, promoted by Mr. Atul Jalan and
based in Bengaluru, is engaged in software product development
and services. The company provides data analytics software
products and services primarily for retail and CPG industry.
Manthan's net loss of INR22.6 crore on revenue from operations of
INR141.37 crore for fiscal 2016, vis-a-vis net loss of INR79.48
crore and revenue from operations of INR145.14 crore, for fiscal
2015.
MILLENIUM STEEL: CRISIL Assigns 'B' Rating to INR4.25MM Loan
------------------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Millenium Steel India Private Limited and assigned
its 'CRISIL B/Stable/CRISIL A4' ratings to the facilities. CRISIL
had, on November 30, 2016, suspended the ratings as the company
had not provided the information necessary for a rating review.
It has now shared the requisite information, enabling CRISIL to
assign ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.25 CRISIL B/Stable (Assigned;
Suspension Revoked)
Letter of Credit 16.00 CRISIL A4 (Assigned;
Suspension Revoked)
Proposed Long Term 0.75 CRISIL B/Stable (Assigned;
Bank Loan Facility Suspension Revoked)
The ratings reflect large working capital requirement, exposure
to intense competition, and a below-average financial risk
profile. These weaknesses are mitigated by the extensive
experience of the promoter in trading in steel products and coal.
Key Rating Drivers & Detailed Description
Weaknesses
* Moderate scale of operations in a competitive industry
Revenue remained moderate indicated by the estimated revenues of
around INR160 crore for fiscal 2017. Furthermore, the steel and
coal trading industry is highly fragmented, with intense
competition from numerous small and medium-sized players owing to
low entry barriers and minimal capital requirement. Moderate
scale coupled with intense competition limits pricing power,
reflected in modest operating margin of around 0.7% to 1.0% over
the four years ended March 2016.
* Working capital-intensive operations
Gross current assets are expected at 255 days, driven by high
receivables of over 200 days and inventory of one month, as on
March 31, 2017.
* Below-average financial risk profile
The capital structure is highly leveraged as reflected in the
estimated total outstanding liabilities to tangible networth
(TOLTNW) ratio of 16.81 times as on March 31, 2017. Also, the
debt protection metrics are weak: the interest coverage and net
cash accrual to total debt ratios are estimated at 1.48 times and
0.04 time, respectively, for fiscal 2017.
Strength
* Extensive industry experience of the promoter
The promoter, Mr. Hariprasad Reddy Duvvuru, has an experience of
over 10 years in trading in iron and steel and was associated
with various iron and steel trading companies prior to setting up
MSIPL.
Outlook: Stable
CRISIL believes MSIPL will continue to benefit over the medium
term from its established industry track record. The outlook may
be revised to 'Positive' in case of a considerable increase in
cash accrual or improvement in working capital management,
resulting in a better TOLTNW ratio. The outlook may be revised to
'Negative' if revenue or operating profitability declines, or
working capital management deteriorates, resulting in weakening
of liquidity.
MSIPL, set up in 2005, is managed by Mr. Duvurru. The company
trades in various steel products and coal.
For fiscal 2016, MSIPL made a profit after tax (PAT) of INR47.98
lakh on total income of INR223.76 crore, against a PAT of INR1.64
crore on total income of INR260.17 crore for the previous fiscal.
NATIONAL TRADING: CRISIL Assigns B+ Rating to INR5MM Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of National Trading Company.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Working
Capital Facility 5 CRISIL B+/Stable
The rating reflects NTC's leveraged capital structure marked by
high total outside liabilities to total networth (TOLTNW) ratio
and modest networth, its working capital intensive operation and
modest scale of operation susceptible to intense competition.
These weaknesses are partially offset by the partners extensive
experience in the trading of electrical goods and established
relationship with reputed principals.
Key Rating Drivers & Detailed Description
Weaknesses
* Leveraged capital structure marked by high TOLTNW ratio and
modest networth: Networth is modest at INR4.33 crore as on March
31, 2016, due to modest scale of operations and low margins. This
along with and large working capital requirement led to high
TOLTNW of 4.99 times as on March 31, 2016.
* Working capital-intensive operations: Operations remained
working capital intensive, reflected in gross current assets of
over 180 days as on March 31, 2016, due to substantial debtors
and moderate inventory requirement.
* Modest scale of operations amid intense competition: Scale of
operations remains modest with revenue of INR46.47 crore in
fiscal 2016. Modest scale constrains the bargaining power in the
intensely competitive electrical goods distribution industry.
Revenue is expected to remain modest due to intense competition.
Strength
* Extensive experience of partners and established relationship
with suppliers: Presence of over two decades in the industry
enabled the partners to establish healthy relationship with
reputed principals such as Philips India (PI) and Larsen & Turbo
Limited (L&T).
Outlook: Stable
CRISIL believes NTC will continue to benefit from the extensive
experience of partners and established relationship with
principals. The outlook may be revised to 'Positive' if
significant improvement in scale of operations and profitability
leads to sizeable cash accrual and thereby strengthens financial
risk profile. Conversely, the outlook may be revised to
'Negative' if low cash accrual, sizeable working capital
requirement or capital withdrawal weakens financial risk profile,
particularly liquidity.
Incorporated as a partnership firm in 1993, NTC trades,
distributes and retails in lighting products of PI and electrical
products of L&T. This Ernakulam, Kerala-based firm is promoted by
Mr. Sree Prasad and his wife, Ms K Sona.
Profit after tax was INR0.84 crore on net sales of INR46.47 crore
in fiscal 2016, vis-a-vis INR0.66 crore and INR43.11 crore,
respectively, in fiscal 2015.
NIKUNJ EXPORTS: CRISIL Assigns B+ Rating to INR6MM Cash Loan
------------------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Nikunj Exports and assigned its 'CRISIL B+/Stable'
rating to the firm's facilities. CRISIL had, on December 14,
2016, suspended the ratings as Nikunj had not provided the
necessary information required for a rating review. The firm has
now shared the requisite information, enabling CRISIL to assign
its ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Long Term Loan 4.6 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Fund-Based 1.9 CRISIL B+/Stable (Assigned;
Bank Limits Suspension Revoked)
The rating reflects Nikunj's moderate financial risk profile,
marked by a weak capital structure, though supported by sound
debt protection metrics, modest scale of operations in a highly
competitive granite export business, and susceptibility of the
firm's revenue to adverse government regulations and volatility
in foreign exchange rates. These rating weaknesses are partially
offset by the extensive experience of the firm's promoters in the
granite industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest financial risk profile, marked by weak capital structure
Weak capital structure: The firm's gearing was around 4.2 times
as on March 31, 2016. High gearing was due to modest net worth of
around INR2.8 crores and high debt levels of around INR12 crores
in 2015-16
* Sound debt protection metrics: Nikunj's debt protection metrics
are expected to be sound over the medium term, with expected
interest coverage and net cash accruals to total debt ratios at
around 2 times and 11 per cent, respectively, for 2015-16.
* Small scale of operations in the highly competitive granite
export business
The firm was set up in 2015 in Ongole (Andhra Pradesh). Hence, it
has a limited track record in the granite processing and export
business. The firm is expected to record revenue of around
INR12.9 crores during 2016-17 (refers to financial year, April 1
to March 31)
* Susceptibility of revenue to adverse government regulations and
volatility in foreign exchange (forex) rates-
The firm derives majority of its revenue from supply of high
quality premium black galaxy. However, it does not hedge against
forex exposure, thereby exposing its profitability to any adverse
movement in forex rates.
Strength
* Extensive experience of promoter's in the granite industry
The firm's business risk profile benefits from the extensive
industry experience of its proprietor. Mr. Vasudev Poddar has
been associated with the granite quarrying and processing
industry for over 25 years. He also has an established
relationship with various stakeholders such as mine owners and
export customers.
Outlook: Stable
CRISIL believes that Nikunj will continue to benefit from the
extensive experience of its promoters in the granite industry
over the medium term. The outlook may be revised to 'Positive' if
the firm increases its scale of operations and operating
profitability on a sustained basis, thereby leading to
improvement in its financial risk profile. Conversely, the
outlook may be revised to 'Negative' if there is deterioration in
Nikunj's working capital management or if its revenue and
operating profitability deteriorate or in case of large debt-
funded capital expenditure, leading to weakening of its financial
risk profile.
Set up in 2015, Nikunj is a 100 per cent export-oriented unit
involved in the processing and export of granite slabs. The firm
commenced commercial operations in March 2015. It is promoted by
Mr. Vasudev Poddar, who has been associated with the granite
industry for more than 25 years.
Net profit is expected to be INR1.36 crore on sales of INR12.90
crore in fiscal 2017, against a net profit of INR0.22 crore on
sales of INR7.1 crore in fiscal 2016.
POWER MAX: CRISIL Reaffirms 'C' Rating on INR13MM Cash Loan
-----------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Power Max
India Private Limited continues to reflect the company's below-
average financial risk profile, and sizeable working capital
requirement and modest scale of operations in the intensely
competitive engineering-procurement-construction (EPC) industry.
These weaknesses are partially offset by the promoters' extensive
experience, and established relationships with clients.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 13 CRISIL C (Reaffirmed)
Working Capital
Demand Loan 7 CRISIL C (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Modest cash accrual and
large working capital requirement will, likely, keep the
financial metrics weak. Networth was modest at INR5.8 crore and
gearing high at 5.31 times as on March 31, 2016, following net
losses in the past two years. Large working capital borrowings
may keep the gearing high. Low cash accrual continues to
constrain debt protection metrics.
* Large working capital requirements: Working capital requirement
remains sizeable, with gross current assets (GCAs) of 813 days as
on March 31, 2016. With the bulk of billing happening around
year-end, debtors were high at 258 days. Delays in realisation
from clients, and accumulated retention money even on completed
projects add to pressure on working capital. Liquidity may remain
under pressure over the medium term, despite mobilisation
advances collected from customers, and ability to stretch
payables.
* Modest scale of operations in intensely competitive EPC
industry: Power Max's operations are restricted to the EPC
industry. The EPC industry in India is highly fragmented and
competitive, marked by the presence of several players executing
small projects. Although there are large business opportunities
in the sector, low entry barriers because of low capital
investment requirement, attracts new players, thereby
continuously constraining the margins of all players. The tender-
based nature of the industry intensifies competition, which
restricts any significant increase in Power Max's profit margin.
Power Max continues to remain a small player in the EPC industry
with net revenue in the range of INR25-50 crore in the last three
years through 2015-16.
Strength
* Promoters' extensive experience and established relationships
with clients: Benefits from the promoters' experience of around
four decades in the engineering, procurement and construction
(EPC) industry, and healthy relationships with suppliers and
lenders, and with customers such as Bharat Heavy Electricals Ltd,
NTPC Ltd, and Hindustan Unilever Ltd, should continue to support
Power Max's business risk profile.
Power Max undertakes erection, commissioning, testing, and
maintenance of structural works and electrical equipment, and
civil and mechanical construction.
Power Max reported profit after tax (PAT) of INR0.65 crore on net
sales of INR27.54 crore in 2015-16 against net loss of INR3.49
crore on net revenue of INR37.06 crore in 2014-15.
POWERTECH ELECTROINFRA: CRISIL Assigns B Rating to INR5.0MM Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
the bank facilities of Powertech Electroinfra Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 1.6 CRISIL B/Stable
Bank Guarantee 3.4 CRISIL A4
Cash Credit 5.0 CRISIL B/Stable
The ratings reflect below average financial risk profile because
of low operating profitability and working capital-intensive
operations with geographical concentration in revenue. These
rating weaknesses are partially offset by the extensive
experience of the promoters in the multiple trading industry,
their funding support, and their established relationship with
customers.
Analytical Approach
Unsecured loans of INR3.90 crore are treated as quasi equity as
these are expected to convert in to capital and INR0.3 crore
treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Below average financial risk profile: The networth was small at
around INR0.34 crore and the total outside liabilities to
tangible networth ratio high at 70.72 times as on March 31, 2016.
The interest coverage ratio was around 1.2 times and net cash
accrual to total debt ratio 0.05 time in fiscal 2016 due to low
operating profitability on account of the trading nature of
operations
* Working capital-intensive operations and geographical
concentration in revenue: The gross current assets ratio was high
at 167 days, driven by receivables of 71 days and inventory of 85
days, as on March 31, 2016. Furthermore, as the company only
works in Uttar Pradesh, its revenue is constrained by
geographical concentration. It is also exposed to risks related
to the tender-based nature of operations.
Strength
* Extensive experience of the promoters and their established
relationship with customers: One of the promoters, Mr. Sudhir
Agarwal, has been in the trading business with government
departments for more than three decades. Over the years, company
has established a track record of executing multiple orders.
Outlook: Stable
CRISIL believes PEPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of an improvement in the financial risk
profile and operating profitability, driven by higher-than-
expected cash accrual and better working capital management. The
outlook may be revised to 'Negative' if liquidity deteriorates
because of large working capital requirement, lower-than-expected
cash accrual, or large, debt funded capital expenditure.
PEPL was established in 2009, promoted by Mr. Raghav Agarwal and
Mr. Sudhir Agarwal. The company trades in raw material required
for setting up of power sub-stations. These include transformers,
cables, poles, wires, lamps, and lighting equipment. The company
also trades in kitchen utensils under the mid-day meal scheme in
Uttar Pradesh. It mainly undertakes tender-based orders from
various government departments in Uttar Pradesh.
Net profit was INR0.17 crore on sales of INR44.93 crore in fiscal
2016, as against net profit of INR0.11 crore on sales of INR40.0
crore in fiscal 2015.
PRIDE HOTELS: CRISIL Assigns 'D' Issuer Not Cooperating Ratings
---------------------------------------------------------------
CRISIL has been consistently following up with Pride Hotels Ltd
for obtaining information through letters and emails dated
January 27, 2017, January 31, 2017, and February 15, 2017, among
others, apart from telephonic communication. However, the issuer
has continued to be non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.4 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Cash Credit 16 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Corporate Loan 26.26 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Drop Line Overdraft 1.30 CRISIL D (Issuer Not
Facility Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Overdraft 3.30 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Proposed Long Term 4.55 CRISIL D (Issuer Not
Bank Loan Facility Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Term Loan 146.19 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Detailed Rationale
CRISIL has downgraded its ratings on the bank facilities of PHL
to 'CRISIL D/CRISIL D' from 'CRISIL BB+/Stable/CRISIL A4+'.
The downgrade reflects delays in servicing instalments on term
loan on account of cash flow mismatch, as discussed with the
banker.
Key Rating Drivers & Detailed Description
Weakness
* Weak liquidity: Delays in commissioning its Delhi project led
to stretched liquidity and mis-match of cash flows and hence
delays in servicing debt.
* Susceptibility to competition in the hospitality industry: The
hotel industry is intensely competitive because of the growing
presence of foreign players and expansion by domestic players.
Major international brands such as Starwood, Hilton, Marriott,
Hyatt, and Accor are expanding presence in India. Demand for
rooms is expected to increase by 10% in the next three years
(Source: CRISIL Research). However, large room additions are
likely to intensify competition, thereby restricting a player's
ability to increase average room rent.
Strengths
* Established market position and brand recall: The company has
established six hotels in India with total capacity of 740 rooms
and offers management contracts to various hotels across India.
Set up in 1988 by managing director, Mr. S P Jain, and his son,
Mr. Satyen Jain (CEO), PHL operates six hotels under the The
Pride Hotel brand in Pune, Nagpur, Bengaluru, Chennai, Ahmedabad,
and Kolkata. The company is about to commission its seventh hotel
in New Delhi and has also entered into service agreements for
management and operation of hotels on contract basis.
Profit after tax (PAT) was INR11.8 crore on revenue of INR102.1
crore in fiscal 2015, against a PAT of INR4.1 crore on revenue of
INR101.1 crore in the previous fiscal.
RAIN CARBON: S&P Assigns 'B+' Corp. Credit Rating; Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings said that it had assigned its 'B+' long-term
corporate credit rating to Rain Carbon Inc. (RCI). The outlook
is stable. S&P also raised its corporate credit rating on Rain
CII Carbon LLC (RCCL) to 'B+' from 'B'. At the same time S&P
raised its issue rating on RCCL's existing notes to 'B+'. RCCL
is a 100%-owned subsidiary set up to hold RCI's U.S. and European
assets.
At the same time, S&P assigned its 'B+' rating to the U.S.
dollar-denominated senior unsecured notes, maturing 2025, that
RCI plans to issue. The recovery rating on the proposed notes is
'4', reflecting S&P's expectation for average (30%-50%) recovery
in the event of a payment default. RCI's U.S. subsidiaries will
guarantee the proposed notes.
RCI is a fully owned subsidiary of Rain Industries Ltd.
(unrated), which is listed on the Indian stock exchange. RCI is
primarily engaged in merchant calcining of carbon products and
tar distillation with facilities across North America, India, and
Europe.
S&P's rating on RCI reflects the company's exposure to cyclical
end markets, its limited product differentiation, exposure to raw
material and end-product price volatility, and aggressive
financial policies. These risks are partially offset by RCI's
leading position in the calcined petroleum coke (CPC) and coal
tar pitch (CTP), broad geographic footprint, and track record of
good relations with suppliers. Moreover, an ongoing cyclical
recovery in the company's profitability supports improved
financial metrics.
RCI's key products CPC and CTP are primarily used in aluminum
production, and are exposed to end-market demand and price
volatility. A third of the demand for RCI's products comes from
the aluminum industry, and the rest from various industrial
applications. In S&P's view, both these segments are tied to
industrial cyclicality, which feeds through to end-product
prices. Both CPC and CTP prices have been volatile over the past
two to three years, and in S&P's view, they will remain volatile.
Inputs are subject to the same conditions. Volatility in the
prices for raw materials--green petroleum coke (GPC) and coal tar
(byproducts of crude oil refining and steel making)--has exposed
RCI to variable margins per ton.
RCI's products have limited differentiation and the company lacks
bargaining power with suppliers and end customers. S&P expects
the supply of a high-quality raw material used in making CPC to
drop. The material, low-sulfur GPC, is expected to see less
production because refineries are increasingly focusing on
processing high-sulfur crude. Still, RCI's long-term
relationship with GPC suppliers, and RCI's physical location near
refineries, makes the company better placed than peers to source
GPC. Coal tar and other chemical businesses do not face such
constraints. However product differentiation remains constrained
in these segments due to the nature of RCI's business as a
convertor.
RCI benefits from having facilities in the U.S., Europe, and
Asia, which allows the company to cater to demand from a variety
of locations. Integration between RCI's U.S. and Indian CPC
businesses to provide for incremental demand from Asia is
expected to bring in additional cash flows. Although RCI has
limited product differentiation, it collaborates well with end
customers, for instance by providing modified products; this
strength will help RCI offset the impact of business constraints,
such as GPC supply limitations. RCI's recent measures to improve
operating efficiencies through cost control have also supported
margins.
Volatile cash flows and high leverage underpin RCI's financial
risk profile. The company relies on debt for acquisitions, and
over the years, RCI has grown through leveraged acquisitions. As
such, S&P assess RCI's financial policies as aggressive. In
2012, RCI acquired Europe-based Rutgers NV (unrated). While in
S&P's view the businesses have integrated fairly well, RCI's
operating performance has been weaker than S&P expected, due to
weakening market conditions. As a result, RCI's balance sheet
remains leveraged, though financial ratios have recently been
improving.
S&P believes RCI's financial ratios will continue a recovery that
started in the second quarter of the fiscal year ended Dec. 31,
2016. The ratios, however, are recovering from weak levels, with
funds from operations (FFO)-to-debt reaching 10% in 2016 and
heading toward 12% in 2017. The improvement is driven by a
number of factors: a generally better market for commodities;
stronger aluminum price-production levels supporting
profitability at calciners; the exit from the market of some of
RCI's competitors in the CTP business; and cost reduction
measures by RCI. S&P would need to see continued improvement in
operating performance and margins over the next few quarters to
warrant a reassessment of S&P's view on RCI's financial profile.
S&P assess the group credit profile (GCP) of the Rain Industries
group at 'b+'. The Rain Industries group fully owns RCI, which
in turn owns RCCL. RCI and RCCL form the substantial majority of
the assets and cash flows of the Rain Industries group. They are
integral to Rain Industries' strategy and share the name and
management with the group. S&P assess RCI and RCCL as core
subsidiaries of the Rain Industries group. Hence S&P equalizes
its rating on RCI with GCP of 'b+' and, in line with the GCP, S&P
raised its rating on RCCL to 'B+' from 'B'.
The stable outlook on RCI indicates S&P's expectation that RCI's
profitability will continue to recover gradually with support
from new projects, improving demand, declining completion, and
cost optimization. S&P expects RCI's FFO to debt will remain
above 12% during this period. RCI's endeavors to refinance its
long-term maturities well in advance, and its sufficient cash
flows to service debt thereafter, lends support to the rating.
S&P may lower its ratings if RCI's profitability and cash flows
do not recover in line with S&P's expectations, such that its
EBITDA interest coverage remains below 2.5x sustainably. This
could happen if S&P sees constrained profitability at both the
CPC and CTP businesses, or if weak demand holds down utilization
rates. S&P could downgrade RCI if S&P sees no progress on the
company's refinancing of next year's maturities.
S&P may raise the rating if the cash flows of RCI's businesses
recover sustainably, such that S&P expects its ratio of FFO to
debt to sustainably approach 20%. This could happen if S&P sees
capacity utilizations improve beyond 80% and if profitability of
the CPC and CTP businesses is 25%-30% better than in fiscal 2016.
Any upgrade depends on the expectation that debt due in 2018 is
refinanced to extend the company's maturity profile.
RAJCHANDRA AGENCIES: CRISIL Reaffirms B+ Rating on INR11MM Loan
---------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Rajchandra Agencies at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's average financial risk
profile because of leverage capital structure, and high
geographical concentration in revenue profile. These weaknesses
are partially offset by the extensive experience of its promoters
in the fast-moving consumer goods (FMCG) industry, diverse
product portfolio, and longstanding relationship with customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Average financial risk profile: Total outside liabilities to
tangible net worth ratio was high at 2 times as on March,
2016while debt protection metrics were weak, with an interest
coverage ratio of 2 times for fiscal 2016.
* Geographical concentration in revenue profile: RA has a limited
geographical reach for its distributorship business. The firm is
a distributor for Airtel's prepaid and DTH products, ITC's
cigarette and FMCG products and Vivo mobile's handsets for the
regions of Dahisar and Borivali in Mumbai (Maharashtra).
Consequently, the firm generates its entire revenue from 2-3
suburbs of Mumbai, which causes high geographic concentration for
the firm in terms of revenue.
Strengths
* Extensive experience of promoters: Presence of nearly two
decades in the FMCG segment has enabled the promoters to
establish strong relationship with major suppliers and customers.
* Diverse product portfolio: The firm sells Bharti Airtel Ltd.'s
prepaid and direct-to-home (DTH) products, ITC's FMCGs, and
Vivo's handsets.
Outlook: Stable
CRISIL believes RA will continue to benefit over the medium term
from its established relationship with customers and suppliers
and extensive experience of promoters. The outlook may be revised
to 'Positive' if large cash accrual, efficient working capital
management, and funding from promoters improve financial risk
profile, especially liquidity. The outlook may be revised to
'Negative' if financial risk profile, particularly liquidity,
weakens further due to low cash accrual, or large working capital
requirement or debt-funded capital expenditure.
Set up in 2004 as a partnership concern by Mr. Mukesh Gupta and
Mr. Hari Gupta, RA is an authorised distributor for Bharti Airtel
Ltd's prepaid and DTH products; ITC's cigarettes, foods, and
personal care products; and Vivo's mobile handsets for Dahisar
and Borivali.
RA had a profit after tax of INR0.5 crore on sales of INR119.1
crore in fiscal 2016, vis-a-vis INR0.1 crore and INR104.9 crore,
respectively, in fiscal 2015.
RAMINENI AGRO: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Ramineni Agro Industries Pvt Ltd (RAIPL;
part of the Ramineni group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 2.5 CRISIL B+/Stable (Reaffirmed)
The rating reflects the group's below-average financial risk
profile because of high gearing, small networth, and weak debt
protection metrics, and large working capital requirement. These
weaknesses are partially offset by the extensive experience of
its promoters in the cotton industry and established relationship
with key customers and suppliers.
Analytical Approach
For arriving at its rating, CRISIL has combined the business and
financial risk profiles of RAIPL and Sri Adishankaracharya Cotton
and Oil Mills Pvt Ltd (SAC). This is because the two companies,
together referred to as the Ramineni group, are in the same
business, and have common management and significant operational
linkages.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive operations
Gross current assets were 218 days as on March 31, 2016, due to
sizeable inventory of 204 days.
* Below-average financial risk profile
Networth was small at INR6.4 crore and gearing high at 4.9 times
as on March 31, 2016. Debt protection metrics were also weak,
with interest coverage and net cash accrual to total debt ratios
of 1.37 times and 8%, respectively, for fiscal 2016.
Strengths
* Extensive experience of promoters
Presence of over three decades in the cotton industry has enabled
the promoters to establish strong relationship with customers and
suppliers.
Outlook: Stable
CRISIL believes the Ramineni group will continue to benefit over
the medium term from the extensive experience of its promoters.
The outlook may be revised to 'Positive' in case of a substantial
and sustained increase in revenue and profitability margins, or
if networth increases with sizeable equity infusion. The outlook
may be revised to 'Negative' if profitability margins decline
steeply, or capital structure weakens further due to large, debt-
funded capital expenditure or stretched working capital cycle.
Set up in 2012 by Mr. R Srinivasa Rao and his family members, SAC
gins and presses raw cotton. Established in 2009 in Guntur,
Andhra Pradesh, RAIPL is engaged in a similar business but also
sells cotton lint and cotton seeds.
Profit after tax (PAT) for the group stood at INR0.74 crore on
net sales of INR62.81 crore for fiscal 2016, vis-a-vis net loss
INR0.84 crore on net sales of INR58.18 crore, respectively, for
fiscal 2015.
REVATHI GOLD: CRISIL Assigns B+ Rating to INR7MM Cash Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facilities of Revathi Gold Agro Products.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable
Cash Term Loan 1.5 CRISIL B+/Stable
The rating reflects the firm's modest scale of, and working
capital-intensive, operations and below-average financial risk
profile. These weaknesses are partially offset by the extensive
experience of proprietor and longstanding relationship with
customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of about INR26 crore
in fiscal 2016, scale remains small, leading to weak
profitability.
* Large working capital requirement: Gross current assets were
114 days as on March 31, 2016, because of large inventory
requirement.
Strength
* Extensive experience of partners: The partners have been in the
rice milling industry for over two decades, resulting in
established relationship with a wide clientele.
Outlook: Stable
CRISIL believes RGAP will benefit over the medium term from the
extensive experience of partners. The outlook may be revised to
'Positive' if significant improvement in capital structure,
revenue, and operating margin strengthens financial risk profile.
Conversely, the outlook may be revised to 'Negative' if
profitability weakens due to increased competition, or if working
capital management deteriorates.
Established in 2010 as a partnership firm by Mr. R P
Chandirasekaran based RGAP processes paddy to produce rice,
broken rice and husk.
Net profit was INR0.25 crore on net sales of INR26.8 crore in
fiscal 2016, vis-a-vis INR0.24 crore and INR21.84 crore,
respectively, for fiscal 2015.
SANGA AUTOMOBILES: CRISIL Assigns B+ Rating to INR14.12MM Loan
--------------------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Sanga Automobiles Pvt Ltd and has assigned its
'CRISIL B+/Stable/CRISIL A4 ' ratings to the facilities. The
ratings were suspended by CRISIL through its rating rationale
dated December 2, 2016, since SAPL had not provided information
required for a rating review. SAPL has now shared the requisite
information, enabling CRISIL to assign its ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4
Cash Credit 13 CRISIL B+/Stable
Inventory Funding
Facility 4.8 CRISIL B+/Stable
Overdraft 1.08 CRISIL B+/Stable
Proposed Term Loan 14.12 CRISIL B+/Stable
The ratings reflect the company's below-average financial risk
profile, modest scale of operations, and exposure to intense
competition in the automobile dealership industry. These rating
strengths are partially offset by the promoters' extensive
experience and funding support.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
(INR11.69 crore outstanding as on March 31, 2016) extended to
SAPL by its promoters as neither debt nor equity in calculating
the financial ratios. This is because the interest rate on these
is lower than the bank rate debt and are expected to remain in
the business over the medium term.
Key Rating Drivers & Detailed Description
Strengths
Modest scale of operations: With revenue of INR122.99 crore in
fiscal 2017, SAPL's scale of operations remains modest, compared
to other players in the automotive dealership business.
Exposure to intense competition in the automobile dealership
industry: Business risk profile will remain constrained by
intense competition from dealers of established automobile
manufacturers such as Tata Motors Ltd (TML; rated 'CRISIL
AA/Positive/CRISIL A1+'), Hyundai Motor India Ltd (Hyundai; rated
'CRISIL A1+'), and Ford India Pvt Ltd. Furthermore, stability of
the business will depend on the business profile of Maruti Suzuki
India Ltd (MSIL; rated CRISIL AAA/Stable/CRISIL A1+).
Below-average financial risk profile: Debt protection metrics
were weak, as indicated by interest coverage ratio of 1.23 times
in fiscal 2016. Networth was modest at INR4.98 crore, and total
outside liabilities to tangible networth ratio was moderate at
1.51 times as of March 2016. Low profitability may continue to
constrain financial risk profile.
Weakness
Promoters' extensive industry experience and their funding
support: The promoter's experience of around a decade in the
automobile business has helped post steady growth in operating
income. Promoters' funding support in the form of unsecured loans
stood at INR11.69 crore as on March 31, 2016.
Outlook: Stable
CRISIL believes SAPL will continue to benefit over the medium
term from the extensive experience of the promoter and the
company's established position in the automobile dealership
market in Jaipur. The outlook may be revised to 'Positive' if
revenue and profitability improve substantially or in case of any
significant equity infusion by the promoters strengthens capital
structure and debt protection metrics. Conversely, the outlook
may be revised to 'Negative' if decline in revenue and
profitability, deterioration in working capital management, or
any large capital expenditure weakens financial risk profile,
particularly liquidity.
SAPL, incorporated in 2004 by Mr. Aminuddin Kagzi, is an
authorised dealer of Maruti Suzuki India Ltd (MSIL; rated CRISIL
AAA/Stable/CRISIL A1+) vehicles in Jaipur (Rajasthan). The
company has two showrooms and three workshops in Jaipur
(Rajasthan).
SAPL, on a standalone basis, had a profit after tax (PAT) of
INR0.49 crore on net sales of INR122.99 crore in fiscal 2016,
vis-a vis INR0.19 crore and INR119.58 crore, respectively, in
fiscal 2015.
SHIV SHANKER: CRISIL Reaffirms B+ Rating on INR15MM Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Shiv Shanker Rice Mills (Ferozepur) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 15 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.17 CRISIL B+/Stable (Reaffirmed)
Term Loan 1.33 CRISIL B+/Stable (Reaffirmed)
Operating revenue, which grew by a compound annual rate of 30%
over the three years through March 2016, is expected to grow
moderately in the medium term, backed by established
relationships with reputed clients. Operating margin, on the
other hand, may remain modest around 3.9%, as the small scale
limits the overall bargaining power. Absence of any major term
debt repayment should keep net cash accrual adequate, to fund
majority of incremental working capital requirement.
Key Rating Drivers & Detailed Description
Weaknesses
* Moderate scale of operations in the intensely competitive rice
industry
The firm faces intense competition from various small, medium,
and large players. Revenue of around INR59.18 crore in fiscal
2016 and a modest capacity of around 5 tonnes per hour, reflects
the moderate scale of operations, which limits the bargaining
power with suppliers and customers, and the ability to pass on
any increase in raw material cost. Resultantly, the operating
margin was modest at 3.8-4.4% over the three years through March
2016.
* Weak financial risk profile
The total outside liabilities to adjusted networth ratio was high
at 3.3 times as on March 31, 2016, because of low networth of
INR6.6 crore and high dependence on external working capital
debt. Debt protection metrics were weak, with interest coverage
and net cash accrual to adjusted debt ratios at 1.6 times and
0.05 time, respectively, in fiscal 2016. However, in absence of
any major term debt, net cash accrual should be adequate to meet
the incremental working capital requirement. Hence, dependence on
external debt will be lower and the interest coverage ratio will
improve in the medium term.
* Working capital intensive operations:
Operations are moderately working capital intensive, as reflected
in gross current assets, inventory and receivables of 148, 120
and 25 days, respectively, as on March 31, 2016 and hence high
dependency on external working debt and trade credit from
suppliers. Firm avails trade credit of around 30 days from
suppliers. As on March 31, 2016, payables stood at 24 days.
Strength
* Extensive industry experience of the partners
The three decade-long experience of the promoters in the rice
industry and established presence in the domestic market, through
the Pir Baba brand (which accounts for 10-20% of production),
have helped operating income grow by 30% in compounded terms over
the three years through March 2016, to INR59.18 crore in fiscal
2016; it is likely to rise at a moderate pace of 5-7% in the
medium term. Over 80% of the total produce is sold via deemed
exporters.
Outlook: Stable
CRISIL believes SSRM will continue to benefit over the medium
term from its partners' extensive industry experience. The
outlook may be revised to 'Positive' if the capital structure
improves significantly with higher cash accrual, backed by
increase in scale of operations or prudent working capital
management. Conversely, the outlook may be revised to 'Negative'
if the liquidity weakens due to a large debt-funded capex, or
increase in working capital requirements.
SSRM, a partnership firm, was formed by Mr. Raj Kumar, Mr. Mohit
Kumar, and Mr. Pankaj Kumar. SSRM mills, processes, and sells
parimal, paddy, and basmati rice in domestic markets. The plant
is in Ferozepur and the key promoters are Mr. Raj Kumar, Mr.
Mohit Kumar, and Mr. Pankaj Kumar who also manages the
operations.
Profit after tax (PAT) of INR0.33 crore was reported on operating
income of INR59.18 crore for fiscal 2016, against INR0.27 crore
and INR44.36 crore, respectively, for fiscal 2015.
SHREE AMEYA: CRISIL Raises Rating on INR13.40MM Loan to BB
----------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
Shree Ameya Public Charitable Trust to 'CRISIL BB/Stable' from
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.85 CRISIL BB/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term 1.50 CRISIL BB/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
Term Loan 13.40 CRISIL BB/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects significant improvement in SAPCT's liquidity
on the back of robust fee collection and increased occupancy. The
revenue is expected to improve to INR17 crore backed by increased
fee collection, occupancy, and income from rentals from banquet
hall and convention centre. With improving revenue and stable
profitability, cash accrual is expected to improve significantly
in fiscal 2017 from INR5.57 crore in fiscal 2016. Against this,
the trust does not have any significant expansion plans or major
debt repayment which should boost liquidity. Liquidity is
expected to be maintained in the form of fixed deposits which
will be used to meet its operational expenses.
Key Rating Drivers & Detailed Description
Strengths
* Benefits expected from healthy demand prospects for the
education sector: SAPCT is likely to benefit from the steady
demand in the higher education sector in India. The demand for
higher education is likely to grow steadily over the medium term
because of rising disposable income levels, favourable age
demographics, and growth in employment opportunities.
* Healthy financial risk profile: The financial risk profile is
healthy, with a low total outside liabilities to adjusted
networth ratio at 0.67 time and debt service coverage ratio
expected at above 2 times for fiscal 2017.
Weakness
* Modest scale of operations and track record of operations:
While revenue is expected to increase to INR17 crore in fiscal
2017, scale of operations remains modest. Furthermore, the trust
has started offering new courses which has a limited track record
of operations.
Outlook: Stable
CRISIL believes SAPCT will continue to benefit over the medium
term from its improved liquidity. The outlook may be revised to
'Positive' if a substantial improvement in cash accrual on the
back of a significant increase in fee collection strengthens the
financial risk profile, particularly liquidity. Conversely, the
outlook may be revised to 'Negative' if the financial risk
profile, particularly liquidity, weakens, most likely because of
low fee collection or debt-funded capital expenditure.
SAPCT was registered in Mumbai under the Public Trust Act in
September 2001, to set up educational institutions offering
autonomous and university-affiliated courses in management. The
trustees are Mr. Harishchandra Mishra (founder), his son Mr.
Ashish Mishra, and other family members.
The trust initially set up Aditya Institute of Management Studies
and Research, at Borivali in Mumbai, spread over a campus of 0.89
acre, which currently offers the PGDM and master in management
studies (MMS) courses. The trust then set up Aditya College of
Architecture, which offers architecture courses, and Aditya
College of Interior Design, which offers interior designing
courses. It also has a banquet hall (Aditya Banquet Hall) which
has a capacity of up to 1500 people, and recently set up the
Aditya Convention Centre, with a similar capacity.
SAPCT received approval from the All India Council for Technical
Development in July 2011 to offer the PGDM course. The trust
subsequently got itself registered with Mumbai University for
offering the MMS course. It has also received an approval from
the Council of Architecture, New Delhi, for offering a degree
course in architecture. SAPCT is currently offering an autonomous
course for interior designing, but has recently got affiliated to
Yashwantrao Chavan Open University and has also applied for
affiliation with the Maharashtra Board of Technical Education.
The trust reported a net surplus of INR3.14 crore on an operating
income of INR12.1 crore for fiscal 2016, against a net surplus of
INR0.77 crore on an operating income of INR6.88 crore for fiscal
2015.
SHREE GANESH: CRISIL Reaffirms 'B' Rating on INR7MM Cash Loan
-------------------------------------------------------------
CRISIL's has reaffirmed its rating on the long-term bank
facilities of Shree Ganesh Industries at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B/Stable (Reaffirmed)
Proposed Cash
Credit Limit 3 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect the firm's below-average
financial risk profile, marked by moderate gearing, modest net
worth, and weak debt protection metrics. The rating also factors
in the firm's small scale of operations in the intensely
competitive cotton ginning industry, and susceptibility to
adverse government regulations and volatility in raw material
prices. These rating weaknesses are partially offset by the
extensive entrepreneurial experience of SGI's promoter.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations in the intensely competitive cotton
ginning industry, and susceptibility to adverse government
regulations and fluctuating raw material prices: Revenue of INR37
crore in fiscal 2016 reflects small scale of operations amid
intense competition. Susceptibility to unfavourable regulations
and fluctuating raw material prices is likely to continue over
the medium term.
* Below-average financial risk profile: Moderately high gearing
(2.2 times as on March 31, 2016), modest networth (Rs 3.4 crore)
and weak debt protection metrics (interest coverage and net cash
accrual to total debt ratios were 1.7 times and 4%, respectively,
in fiscal 2016) reflect below-average financial risk profile.
Strengths
* Extensive entrepreneurial experience of promoter: Presence of
over two decades in the cotton ginning business enabled the
promoter establish strong relationships with customers and
suppliers.
Outlook: Stable
CRISIL believes SGI will continue to benefit over the medium term
from the promoter's extensive experience. The outlook may be
revised to 'Positive' if substantial and sustained improvement in
revenue, profitability margin, or working capital management or
sizeable equity infusion by promoter enhances capital structure
and networth. Conversely, the outlook may be revised to
'Negative' if steep decline in profitability margin, stretch in
working capital cycle or any large capital expenditure weakens
capital structure.
Established in 2000 and promoted by Mr. Sanjay Bachuwar, SGI
executes cotton ginning business in Nizamabad, Telangana
Profit after tax was INR0.15 crore on net sales of INR36.92 crore
in fiscal 2016, vis-a-vis INR0.12 crore and INR38.17 crore,
respectively, in fiscal 2015.
SHREE PONNI: CRISIL Assigns 'B' Rating to INR3MM Term Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank loan facilities of Shree Ponni Lead Alloy Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL B/Stable
Cash Term Loan 3 CRISIL B/Stable
The rating reflects the company's nascent stage of operations,
and expected modest scale amid intense competition in the lead
industry. These weaknesses are partially offset by its promoters'
extensive industry experience, and their likely financial support
in the initial phase of operations.
Key Rating Drivers & Detailed Description
Weaknesses
* Nascent stage of operations: The company commenced operations
in January 2017 and is likely to stabilise operations in the next
year.
* Exposure to intense competition: The lead industry has many
small players, and hence, is intensely competitive, resulting in
limited bargaining power with customers.
Strength
* Promoters' extensive industry experience: SPLPL's promoters
have been in the lead industry for 15 years and have established
strong relationships with customers and suppliers.
Outlook: Stable
CRISIL believes SPLPL will continue to benefit from its
promoters' extensive experience in the lead industry. The outlook
may be revised to 'Positive' if the company successfully scales
up operations, thereby improving its financial risk profile. The
outlook may be revised to 'Negative' if lower-than-expected
accrual, or larger-than-expected working capital requirement
weakens the financial risk profile.
SPLPL, based in Bengaluru and promoted by Mr. R Thirumalaisamy
and his family members, is a part of the Ponni group. Sri Ponni
Industries, the group's flagship entity, also manufactures
lead.The company commenced commercial operations only in January
2017.
SHRIRAM PROPERTIES: CRISIL Cuts Rating on INR30MM Loan to 'C'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Shriram Properties and Infrastructure Private Limited to
'CRISIL C' from 'CRISIL BB+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 30 CRISIL C (Downgraded from
'CRISIL BB+/Stable')
The downgrade reflects instances of delays by SPIPL in meeting
interest payment on its unrated debt'its compulsorily convertible
debentures (CCD). The CCDs were subscribed to by Deutsche
PfandBriefBank AG (DPB), and were to be compulsorily converted
into equity by September 30, 2015. However the CCDs are yet to be
converted to equity as the CCD holder has invoked the put option,
and directed existing shareholders to purchase the CCD. The
shareholders and SPIPL have contested the exercise of put option
by the CCD holder, and the matter is currently sub-judice, with
the High Court of Madras.
The rating reflects weak liquidity, with instances of delay in
meeting interest on CCD and SPIPL's exposure to single-site
concentration risk. These weaknesses are partially offset by
stable cash flows from leasing out the completed portion of the
information technology (IT) park.
Key Rating Drivers & Detailed Description
Weakness
* Single site concentration
SPIPL is a moderate player in the real estate leasing business,
with a total leasable area of 1.6 million square feet (sq ft), at
a single site in Chennai, and is therefore, exposed to risks
relating to geographical and single-site concentration.
Strength
* Stable cash flows from leasing out of completed portion of IT
park
SPIPL benefits from the stable cash flows from leasing out the
completed portion of the project. The project is advantageously
located on a 56-acre site along the National Highway 45 (NH-45),
Chennai. Of the total area of 6.1 million sq ft, the company has
completed development of up to 1.6 million sq ft of special
economic zone area, which is fully leased.
SPIPL, incorporated in 2006, is a special purpose vehicle that
was formed as a joint venture between SPPL and SUN-Apollo. SPIPL
has developed an IT park at the special economic zone at
Perungalathur in Chennai (Tamil Nadu). The company has developed
total area of 1.6 million square feet in the business park, which
has been fully occupied.
For fiscal 2016, SPIPL made net loss of INR43.46 crore on total
income of INR117.03 crore, against a net loss of INR48.11 crore
on total income of INR89.34 crore for the previous fiscal.
SPAK SURFACTANTS: CRISIL Assigns 'B' Rating to INR8.93MM LT Loan
----------------------------------------------------------------
CRISIL has assigned its ratings 'CRISIL B/Stable/CRISIL A4' to
the bank facilities of Spak Surfactants Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility .07 CRISIL B/Stable
Long Term Loan 8.93 CRISIL B/Stable
Foreign Letter of
Credit 2.00 CRISIL A4
Bill Discounting 2.00 CRISIL B/Stable
Cash Credit 1.00 CRISIL B/Stable
The ratings reflect the exposure to risks associated with
stabilisation of operations and weak financial risk profile.
These weaknesses are partially offset by benefits from the
extensive industry experience and funding support of promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Risks pertaining to stabilisation of the operations:
The company's operations are nascent as commercial operations for
manufacturing of specialty chemicals commenced only in October
2016, the firm remains exposed to risks pertaining to
stabilization of its operations.
* Weak Financial risk profile:
Company has weak financial risk profile marked by modest networth
of INR1.5 Crores as on March 31, 2016.
Strength
* Extensive experience of promoters along with fund support:
Promoters Mr. Arun Joglekar and Mr. Ameya Joglekar have extensive
experience in this industry of around 3 decades. Company's
liquidity is supported by unsecured loans from promoters and
funding support from the group company.
Outlook: Stable
CRISIL believes that company will benefit over the medium term
from its promoter's extensive industry experience. The outlook
may be revised to 'Positive' in case of stabilization of
operations leading to sustained growth in net cash accruals and
improvement in its capital structure. The outlook may be revised
to 'Negative' in case of lower-than-expected revenues or
significant debt-funded capital expenditure, resulting in
weakening of its debt protection metrics.
SSPL was incorporated in 2011, promoted by Mr. Arun Joglekar and
his son, Mr. Ameya Joglekar, started its operations in October
2016. SSPL is engaged in manufacturing of esters, surfactants and
polysorbates. The manufacturing facility is in Ratnagiri,
Maharashtra.
SWAPNA ENTERPRISE: CRISIL Reaffirms B+ Rating on INR82MM Loan
-------------------------------------------------------------
CRISIL has reaffirmed the rating at 'CRISIL B+/Stable' for the
bank facility of Swapna Enterprise.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 82 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the susceptibility of SE's
revenue and earnings to the cyclicality in the real estate
industry and the geographic concentration in its revenue profile.
The rating also factors in SE's exposure to high project risk
marked by high demand risk. These weaknesses are partially offset
by the extensive experience of partners, prudent project funding
and successful completion of Phase-I.
Key Rating Drivers & Detailed Description
Strength
* Extensive experience of partners: The partners have over two
decades of experience in the real estate industry. The firm has
successfully completed Green City Phase I project and other
commercial and residential projects in Surat, Gujarat.
Weaknesses
* Exposure to high project risk: SE is currently undertaking
construction of Phase II of Green City residential project. Of
the overall project cost for Phase II, 50% has already been
incurred till January 2017, while 10% of the area has already
been sold, with advance collections standing at 19% of the sold
value. The project progress and collection efficiency will remain
rating sensitivity factors over the medium term.
* Susceptibility of revenue to the cyclicality in the real estate
industry and geographical concentration risk: India's real estate
industry is marked by cyclicality, volatile prices, and intense
fragmentation because of the presence of a large number of
regional players. Furthermore, SE is exposed to geographical
concentration risk as the projects are executed majorly in Surat.
Geographical concentration in revenue results in topline growth
being dependent on regional impetus on infrastructure
development.
Outlook: Stable
CRISIL believes SE will sustain its business risk profile over
the medium term backed by the extensive industry experience of
its partners. The outlook may be revised to 'Positive' if robust
response to projects leads to high cash flow. The outlook may be
revised to 'Negative' if low cash inflows, because of subdued
response to projects, and consequently, small flow of advances,
weakens liquidity.
SE, a partnership firm established in 2008 by Mr. Alpesh G
Kotadia and Mr. V K Ravani, is setting up Green City in Adajan
(Surat). The firm is a part of the Green group that has over two
decades' of experience in residential and commercial development.
The group generally forms a new special purpose vehicle or
partnership firm for each of its projects.
TATA STEEL: Still in Talks with ThyssenKrupp on Merger Deal
------------------------------------------------------------
Reuters reports that Tata Steel Ltd is still in talks with
Germany's ThyssenKrupp AG about a potential merger of their
European steel assets, the Indian company said on March 6.
According to the report, the statement was in response to reports
in the British media on March 5 that India's largest steel
company might be in the process of calling off a potential deal
with the Germans.
Reuters relates that the company is in "constructive discussions"
with ThyssenKrupp, said Tata Steel. "However, until a definitive
agreement is reached, there can be no assurances that these
discussions will result in a transaction."
Tata Steel began talks with ThyssenKrupp last July after it
called off the sale of its Port Talbot works in Wales because of
uncertainty caused by the Brexit vote and its burgeoning pension
liabilities, according to the report.
A deal would cut costs and reduce overcapacity but Thyssenkrupp
Chief Executive Heinrich Hiesinger warned in January that it
would take time and may yet fail, Reuters says.
Thyssenkrupp has looked at the option of splitting its European
steel business into a separate company that could be floated if a
merger does fall through, Reuters reports citing German weekly
WirtschftsWoche.
Reuters reported in February that the deal faces extensive delays
as the German major would not go ahead with the tie-up unless the
pension liabilities of Tata Steel's UK assets are carved out into
a separate entity.
However, the separation is a cumbersome exercise and involves
significant issues.
Reuters says Tata is currently involved in seeking regulatory
approval to spin off the 15 billion pound scheme. But the
regulator is still not convinced about "imminent insolvency" of
Tata Steel UK - a precondition for separation, adds Reuters.
Tata Steel is the UK's biggest steel company.
About Tata Steel
Headquartered in Mumbai, India, Tata Steel Limited --
http://www.tatasteel.com/-- is a diversified steel producer. It
has operations in 24 countries and commercial presence in over 50
countries. Its operations predominantly relate to manufacture of
steel and ferro alloys and minerals business. Other business
segments comprises of tubes and bearings. On April 2, 2007, Tata
Steel UK Limited (TSUK), a subsidiary of Tulip UK Holding No.1,
which in turn is a subsidiary of Tata Steel completed the
acquisition of Corus Group plc. Tata Metaliks Limited, which is
engaged in the business of manufacturing and selling pig iron,
became a subsidiary of the Company with effect from February 1,
2008. In September 2008, the Company acquired a 7.3% interest in
Riversdale Mining Ltd.
TIRUPATI CORRUGATORS: CRISIL Reaffirms D Rating on INR7.75MM Loan
-----------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Tirupati Corrugators at 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.4 CRISIL D (Reaffirmed)
Cash Credit 7.75 CRISIL D (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5.74 CRISIL D (Reaffirmed)
Term Loan .18 CRISIL D (Reaffirmed)
The ratings reflect the continuously overdrawn bank limit; this
was caused by liquidity pressure due to a stretched working
capital cycle.
The rating also reflects a modest scale, and working capital-
intensive nature, of operations and a weak financial risk profile
because of a small networth and high gearing. These rating
weaknesses are partially offset by the extensive experience of
the proprietor in the corrugated boxes industry and a diversified
customer base.
Key Rating Drivers & Detailed Description
Weakness
* Overdrawn cash credit limit: This was caused by liquidity
pressure resulting from a build-up in inventory and receivables.
Average bank limit utilisation was high at around 100% over the
12 months through December 2016, and a temporary overdraft was
regularly availed.
Strengths
* Extensive industry experience of the proprietor and a
diversified customer base: The proprietor has an experience of
three decades in the packing industry. This helps the firm in
anticipating price trends and calibrating purchasing and stocking
decisions.
TC was set up as a proprietorship concern in 2009 by Mrs Mangla
Bangur, and commenced commercial operations from October 2010.
The firm manufactures corrugated boxes using kraft paper.
Operations are looked after by Mr. Anand Bangur.
Profit after tax was INR0.18 crore on operating income of
INR32.28 crore in fiscal 2016, as against PAT of INR1.54 crore on
operating income of INR46.34 crore in the previous fiscal.
TOSHBRO MEDICALS: CRISIL Reaffirms 'B' Rating on INR6.5MM Loan
--------------------------------------------------------------
CRISIL rating continues to reflect Toshbro Medicals Pvt Ltd
modest scale of operations in intensely competitive industry,
below average financial risk profile marked by low net worth,
modest debt protection indicators and large working capital
requirements. These rating weaknesses are partially offset by
TMPL's promoters' extensive experience and established presence
in the trading of medical equipment's.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL A4 (Reaffirmed)
Cash Credit 6.5 CRISIL B/Stable (Reaffirmed)
Analytical Approach
Unsecured loans from promoters have been treated as neither debt
nor equity (NDNE)
Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of the promoters and established presence:
The promoters are into this business since 2001 and over the
years have established healthy presence in the trading of medical
equipments which is expected to benefit the business risk profile
over the medium term.
Weakness
* Below average financial risk profile: The financial risk
profile is weak marked by low networth due to loss in fiscal 2016
and weak capital structure marked by high dependence on the bank
facilities of the company.
* Working capital intensive operations: The GCA days of the
company is high at 247 days as on March 31, 2016 due to high
debtors and inventory days. The operations of the company is
expected to remain working capital intensive due to delay in
payment by debtors and high reliance on working capital debt
Outlook: Stable
CRISIL believes that TMPL will continue to benefit over the
medium term from its promoters' extensive experience in the
industry. The outlook may be revised to 'Positive' if TMPL
reports significant and sustainable growth in its revenues and
profitability margins, while improving its debt protection
indicators and working capital cycle. Conversely, the outlook may
be revised to 'Negative' in case of significantly lower-than
expected revenues and operating margin, or if its working capital
cycle lengthens significantly, impacting its financial risk
profile.
TMPL was incorporated in 2001, by Mr. Arun Toshniwal and his son
Mr. Anurag Toshniwal. TMPL is engaged in the trading of medical
equipment's primarily related to Ophthalmology, Neurosurgery,
Dentistry and ENT. The company is based out of Mumbai
(Maharashtra).
TMPL reported a loss of INR3.27 Crores on net sales of INR30.44
Crores for fiscal 2016, vis-a-vis profit after tax (PAT) of
INR0.15 Crores and INR31.10 Crores, respectively in fiscal 2015.
VINAYAK MARINE: CRISIL Lowers Rating on INR8MM LT Loan to B+
------------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of
Vinayak Marine Services Private Limited to 'CRISIL B+/Stable'
from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Bank 8 CRISIL B+/Stable (Downgraded
Facility from 'CRISIL BB-/Stable')
The rating downgrade reflects weakening of liquidity, reflected
in expected low cash accrual in fiscal 2017, tightly matching the
fixed debt repayment obligation. Also, financial risk profile is
expected to remain weak over the medium term because of debt-
funded capital expenditure (capex). Promoters fund in the form of
unsecured loan would be a rating sensitivity factor.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
of INR58.84 lakhs (as on March 31, 2016) extended to Vinayak
Marine Services Private Limited by its promoters as neither debt
nor equity as the loans are expected to be retained in the
business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations:
VMS's scale of operation is modest with revenues estimated at
around INR10.42 cr. in 2016-17. The company currently has a fleet
of four vessels. With the recent purchase of VMS-6 (crew boat)
the revenue is expected to improve over the medium term.
Furthermore, VMS normally enters into annual contracts with its
clients resulting in limited revenue visibility.CRISIL believes,
that VMS's limited revenue visibility along with a modest scale
may continue to constrain its business risk profile over the
medium term.
* Weak financial risk profile:
VMS's financial risk profile is weak marked by modest net worth
of INR4.9 cr. as on March 31, 2016.The gearing of the company is
high at 1.85 times and has moderate debt protection metrics as on
March 31, 2016.
Strengths
* Established market position in offshore services of ship
management: VMS is promoted by Mr. Ravi Kapoor since 2006. Mr.
Kapoor is a qualified marine engineer who has over a decade of
experience in offshore services of ship management. Prior
starting the venture of VMS, Mr. Kapoor was working with ONGC in
its logistics department.
Outlook: Stable
CRISIL believes that VMS will benefit from the extensive
experience of the promoters in the offshore services of ship
management industry. The outlook may be revised to 'Positive' if
VMS's revenue and profitability improve on a sustainable basis,
thereby improving its cash accruals, leading to improvement in
capital structure. Conversely, the outlook may be revised to
'Negative' if the financial risk profile and liquidity weaken
owing to significant decline in rental rates, or any unexpected
termination in the existing charter agreement, or significant
delays in receipt of receivables.
VMS, incorporated in 2006, started operations in 2007, as
offshore ship management services provider to oil exploration
companies such as Oil and Natural Gas Corporation (ONGC) Larsen
And Toubro Limited (L & T ltd, rated 'CRISIL
AAA/FAAA/Stable/CRISIL A1+') etc. VMS has four crew boats of its
own.
For fiscal 2016, the VMS reported a profit after tax of INR65
lakhs on net sales of INR8.32 crore, as against a profit after
tax of INR59 lakhs on net sales of INR7.96 crore for fiscal 2015.
=================
I N D O N E S I A
=================
INDIKA ENERGY: Fitch Affirms 'CCC' LT IDR; Outlook Positive
-----------------------------------------------------------
Fitch Ratings has affirmed Indonesia-based PT Indika Energy Tbk's
Long-Term Foreign- and Local-Currency Issuer Default Ratings
(IDR) at 'CCC' and assigned a Positive Outlook. Indika's senior
notes due 2018 and 2023 have also been affirmed at 'CCC' with a
Recovery Rating of 'RR4'.
The Positive Outlook reflects Fitch's expectation of improvement
in Indika's cash flows due to higher thermal coal prices. Fitch
revised its mid-cycle price assumptions for thermal coal on 2
March 2017. Fitch believes the higher cash generation has
substantially improved the company's ability to refinance its
2018 notes, and the need for any debt restructuring has receded
significantly. Fitch is likely to upgrade Indika's ratings to
'B-' should the company successfully refinance its 2018 notes.
This is provided such refinancing does not significantly raise
its annual debt refinancing needs and can be managed comfortably
within forecast cash generation at the Indika level (holding
company on a standalone basis), and maintains a sufficiently
large cash balance at Indika-level to support overall liquidity.
KEY RATING DRIVERS
Updated Coal Price Assumptions: Fitch has increased the 2017
price for thermal coal - Newcastle 6,000 kcal - to USD70/metric
tonne (mt) (from USD57), and assume USD65/mt thereafter (from
USD60) (see Updating Fitch's Commodity Price Assumptions
published on 2 March 2017:
https://www.fitchratings.com/site/re/895103). Prices have come
off the peak reached in late 2016, but Fitch increased mid-cycle
price assumptions reflect China's policies aimed at managing coal
production and prices. Fitch expects some production uptick in
Australia, China and Indonesia in response to higher prices,
which should lead to some further moderation in prices as
reflected in the updated price assumptions.
Higher Kideco Dividends: The improvement in coal prices will
drive higher cash generation at PT Kideco Jaya Angung, Indika's
key coal mining asset (Kideco - 46% held by Indika), and
consequently lead to higher dividend flows to Indika. Indika
relies heavily on dividends from Kideco. Fitch now assume
dividend receipts from Kideco to be around USD40m in 2017
(including a dividend of USD17m received during 4Q16), and to
rise further in 2018 to over USD70m in the next year (against
previous assumptions of below USD40m) based on Fitch revised coal
price assumptions.
Kideco's relatively high production flexibility and capacity
(requiring little capex), generally low cash operating costs and
absence of any debt support its profitability and pre-dividend
free cash generation. Kideco trimmed costs and maintained a low
strip ratio during 2016, while Fitch expects the rising oil
prices to drive up costs during 2017. Notwithstanding this,
Kideco retains its ability to generate stronger cash flows under
higher coal prices.
Weak, but Improving Liquidity: Fitch expects higher dividends
from Kideco to arrest deterioration in Indika's liquidity
profile. Fitch estimates Indika's (entity level) cash flows to be
neutral in 2017 and to cover its operating expenses and interest
costs without the need to dip in to its cash reserves (estimated
at around USD150m as of end-December 2016). This is also likely
to reduce its reliance on short-term debt in the near term. Fitch
expects the situation to improve further in 2018, based on Fitch
revised coal assumptions for 2018-2019.
Better Refinancing Ability: Fitch expects the sustained
improvement in Indika's cash flows to enhance its refinancing
ability, particularly the 2018 notes (USD171m remaining). Fitch
believes that a successful refinancing - at a cost not
significantly higher than its existing notes and a manageable
debt maturity profile which can be accommodated within its
forecast cash generation - will provide the company adequate time
to address its capital structure, with the next large debt
maturity the USD500m notes due in January 2023.
Subsidiaries' Cash Generation to Remain Muted: Fitch expects no
dividends in 2017 from Indika's key subsidiaries - 70%-owned PT
Petrosea Tbk (Petrosea, a mining contractor) and 51%-owned PT
Mitrabahtera Segara Sejati Tbk (MBSS, coal barging and handling)
- given their losses during 2016. Fitch anticipates the higher
commodity prices to result in some (but only a modest)
improvement in the trading performance and cash generation of
these subsidiaries during 2017, with a more sustained recovery
from 2018. Fitch believes the investment needs of these
subsidiaries can be self-funded, requiring no financial support
from Indika.
The revenues of fully owned Tripatra - an engineering,
procurement and construction company - declined during 2016,
while Fitch expects its order-book to benefit from an increase in
infrastructure investments in Indonesia, including oil & gas.
DERIVATION SUMMARY
Indika's 'CCC' rating reflects its weak liquidity and high
refinancing risk for its debt maturing in 2018. The Positive
Outlook, however, reflects the likely improvement in Indika's
cash flows supported by higher coal prices, which consequently
enhances its ability to refinance the 2018 debt maturity. Fitch
now expects Indika's (entity level) FCF to be neutral in 2017.
Indika's ratings are comparable with those of MIE Holdings
Corporation (MIE, CCC), which also faces significant challenges
in relation to refinancing its outstanding notes due in February
2018 and April 2019. MIE's challenges are more complicated than
those of Indika, from its depleted asset base relative to
indebtedness which is still high. Yanzhou Coal Mining Company
Limited's (Yancoal, B/ Negative) reflects its high financial
leverage and weak liquidity; the 'B' IDR, however, incorporates
ongoing adequate access to banking and domestic capital markets
as a provincial state-owned enterprise.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the company
include:
- Coal prices in line with Fitch's mid-cycle commodity price
assumptions, adjusted for difference in calorific value
(average Newcastle 6000 kcal free-on-board (FOB): USD70/mt in
2017 and USD65/mt thereafter)
- Kideco coal volumes of around 32 million tonnes in 2017 and
around 36mt in 2018. Capex remaining low around USD3m in 2017
and around USD5m in 2018 and 2019
- Dividend payout ratio for Kideco remaining high around 95%-98%
- No dividend from MBSS and Petrosea in 2017, with dividends of
around USD5m from Petrosea in 2018. Dividends from associate
PT
Cirebon Electric Power of about USD7m per year through to 2018
- Low capex at Tripatra and MBSS, and marginally higher capex at
Petrosea to support new mining contracts resulting in capex of
around USD70m in 2017 and declining to around USD50m a year
thereafter.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- A successful refinancing of its 2018 notes is important for
any positive rating action, provided any new debt raised for
refinancing does not significantly increase its annual total
debt-servicing requirement, such that Indika can manage its
liquidity needs within operating cash generation at the Indika
level, and maintains a cash balance of at least USD100m at the
Indika level.
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Failure to refinance the 2018 notes; not meeting the above
upgrade guidance
- Any further weakening of liquidity, which may arise from
weaker-than-expected coal prices and dividend receipts, and
reduced access to credit facilities.
LIQUIDITY
Indika's liquidity position is weak, but likely to improve with
higher coal prices.
===============
M O N G O L I A
===============
MONGOLIA: Banks Still Under Pressure Despite IMF Deal, Fitch Says
-----------------------------------------------------------------
Mongolian banks will remain under pressure from asset-quality
weakness and stricter enforcement of regulations, Fitch Ratings
says, even though the sovereign's recent IMF staff-level
agreement is likely to reduce financing risks and help stabilise
the economy.
The proposed IMF programme has helped provide Fitch with
sufficient confidence that Mongolia (B-/Stable, affirmed on 20
February) can meet its immediate external debt obligations, and
is also likely to reduce some of the short-term macroeconomic
risks faced by Mongolian banks, such as a further collapse in the
Mongolian tugrik. The three Fitch-rated banks (all 'B-'/Stable)
have ratings that are driven by their standalone intrinsic
strength, and have become less reliant on funding from the
government in recent years. However, they have large exposure to
government-related entities, equivalent to as much as 2.4x of
equity in the case of State Bank.
External financing support to the sovereign should help banks to
maintain access to funding from international financial
institutions. This is particularly important for Khan Bank and
XacBank, which have a large proportion of wholesale funding.
Fitch expects banks to continue to use foreign-currency swap
facilities provided by the Bank of Mongolia (BOM), due to limited
swap counterparts, but they are likely to pivot toward market-
based arrangements.
Fitch maintains a negative sector outlook for Mongolian banks, as
the weak operating environment continues to put pressure on their
financial profiles. Asset quality is likely to deteriorate
further at banks with higher exposure to the most vulnerable
borrowers - those in the mining, wholesale/retail and
manufacturing sectors, for which banks' impaired loan ratios were
17.9% at end-2016, compared with 8.5% for total loans.
Fitch does not expect BOM's asset-quality review - which is
linked to the IMF programme and is likely to conclude in 2017 -
to reveal significant capital shortfalls at Fitch-rated banks.
However, it is likely to emphasise forward-looking provisioning,
early loss recognition and accurate collateral valuation, which
could create additional credit costs and weigh on banks' profits.
Profit will also be constrained by weak loan growth, which Fitch
only expect to recover in the medium term, if the economy
stabilises. The phasing-out of low-margin government-subsidised
lending is unlikely to fully offset these drags on profit.
Tighter enforcing of laws and regulations, in particular around
connected exposures, could also create some strains in the
banking sector. Two local banks, controlled by the same
shareholder, that are not rated by Fitch - Trade and Development
Bank of Mongolia and Ulaanbaatar City Bank - have allegedly
exceeded a limit of 20% of total capital that can be loaned to a
single borrower. Fitch believes potential spill-over risks to be
manageable for Fitch-rated banks, as they are not significantly
exposed to those banks or to the identified large borrower.
=================
S I N G A P O R E
=================
EZRA HOLDINGS: VT Halter Issues Summon on Suit vs EMAS Chiyoda
--------------------------------------------------------------
Splash 24/7 reports that US shipbuilder VT Halter Marine, part of
Singapore's ST Engineering, has issued Ezra Holdings with a
summons related to action it is taking against EMAS Chiyoda
Subsea (ECS) over the breach of a loan agreement.
VT Halder Marine filed a civil action lawsuit against ECS on
February 27 in the United States District Court with claims
against ECS amounting to $3,298,153.22 and guaranteed by Ezra
Holdings, the report says.
Singapore-based Ezra Holdings Limited, an investment holding
company, provides integrated offshore solutions for the oil and
gas industry. The company operates in three divisions: Subsea
Services, Offshore Support and Production Services, and Marine
Services.
EZRA HOLDINGS: May Face "Going Concern" Issue Amid EMS Bankruptcy
-----------------------------------------------------------------
The Strait Times reports that Ezra Holdings said on March 2 that
it may still face a "going concern" issue despite the Chapter 11
filing bankruptcy filing in the US of associate Emas Chiyoda
Subsea (ECS Group).
According to the report, Ezra said this is because the ECS filing
does not deal with its charter hire liabilities relating to
vessels chartered by the ECS Group.
Ezra said it has guaranteed a substantial proportion of these
liabilities, which amount to approximately US$400 million
(SGD564.9 million), ST relates.
In addition, Ezra said it has guaranteed approximately US$500
million of loans owed by the ECS Group to financial institutions,
the report relays.
ST adds that Ezra said it has also has substantial contingent
liabilities in relation to performance and/or bank guarantees it
granted and/or procured for projects undertaken by the ECS Group.
Ezra said the amounts are not quantifiable as at the date of this
announcement. Ezra said it understands that the ECS Group intends
to continue with those projects so the potential liability in
relation to these guarantees is unclear.
"However, the ECS Chapter 11 filing, together with the Norwegian
liquidation, may constitute events of default under the charter
parties, loan agreements and projects of the ECS Group and the
moratorium afforded under the ECS Chapter 11 filing does not stay
claims against the company (Ezra) in relation to these
guarantees," Ezra, as cited by ST, said.
The report relates that Ezra said that "In the event claims are
made against the company in relation to any or all of these
guarantees, the company will face an immediate going concern
issue."
According to the report, the Norway liquidation refers to ECS
Group putting its wholly owned subsidiary, EMAS-AMC AS, under
voluntary liquidation in Norway. EMAS-AMC AS was hit with a a
termination of agreement by Gulen Base over the development,
construction and lease agreement for Halsvik spoolbase due to its
"material payment default". Ezra is a guarantor for the
performance by EMAS-AMC AS of its obligations under that
agreement.
Ezra said it is currently seeking advice on the ECS Chapter 11
filing and the Norwegian liquidation, as well as assessing the
impact of such filings on the group, the report adds.
Singapore-based Ezra Holdings Limited, an investment holding
company, provides integrated offshore solutions for the oil and
gas industry. The company operates in three divisions: Subsea
Services, Offshore Support and Production Services, and Marine
Services.
====================
S O U T H K O R E A
====================
HYUNDAI MERCHANT: Set to Receive Fresh State Funding
----------------------------------------------------
Yonhap News Agency reports that Hyundai Merchant Marine Co. said
March 6 that it signed a memorandum of understanding with a
state-run shipbuilding financing firm to sell part of its fleet
to receive fresh funding.
Under the deal, Hyundai Merchant will sell 10 container ships at
market value of KRW150 billion (US$131 million) to Korea Shipping
Co., versus their book value of KRW850 billion, Yonhap says. The
shortfall will be financed with sales of bonds and stocks to the
financing firm.
Hyundai Merchant said the measure will help the shipping firm
jack up its financial status, Yonhap relays.
Korea Shipping will buy some KRW100 billion worth of stocks to be
sold by Hyundai Merchant and KRW600 billion worth of bonds
convertible into the shipper's stocks, Hyundai Merchant, as cited
by Yonhap, said.
The container ships may be leased by Hyundai Merchant, it added.
Credit Rating Upgraded from D to BB
On Feb. 9, Hyundai Merchant said Korea Investor Service (a
Moody's Affiliate) upgraded HMM's credit rating from D (Default)
to BB (Stable).
Korea Investor Service said:
* HMM has successfully overcome all the challenges through debt
for equity swap and changing conditions (adjustment of
charter fee/debt adjustment with bondholders etc)
*Favorable conditions for HMM including reduced HMM's financial
burden, benefits from Korean government supports, a
possibility of support from its largest shareholder, and
merits as Korea's main national flag carrier led to raise
HMM's credit rating from D to BB.
* Expected to have a high likelihood of upgrading its credit
rating based on continuous improvement on earnings.
* Meanwhile, HMM's debt ratio slightly increased from 186%
(2016.09) to 235%, as HMM issued convertible bonds, and
acquired overseas shipping terminals etc.
Hyundai Merchant Marine Co., Ltd. -- http://www.hmm21.com/-- is
a Korea-based company specializing in the provision of shipping
services. The Company provides its services under two main
segments: container and bulk.
Hyundai Merchant Marine is currently under a creditor-led
restructuring scheme.
=============
V I E T N A M
=============
VIETCOMBANK: Moody's Maintains b2 BCA on Review for Upgrade
-----------------------------------------------------------
Moody's Investors Service maintains its review for upgrade on
JSC Bank for Foreign Trade of Vietnam's (Vietcombank, B2 stable)
baseline credit assessment (BCA) and adjusted BCA of b2, and
long-term counterparty risk assessment of B1(cr).
The BCA of Vietnam-based Vietcombank has been on review since 5
September 2016. The review incorporates Moody's expectation that
the bank's capital raising plans, if executed successfully, could
lead to upward pressure on its b2 BCA. This is also facilitated
by Moody's change of Vietnam's Macro Profile to "Weak" from
"Weak-" in September 2016, which captures the improved operating
and economic conditions for Vietnamese banks.
The review on Vietcombank will continue until the State Bank of
Vietnam (SBV) makes a decision on the bank's capital raising
plans. In August 2016, Government Investment Corporation of
Singapore (GIC, unrated), signed a memorandum of understanding
with the bank to purchase its shares at an undisclosed price. As
of, the SBV has not approved this transaction.
Moody's expects to conclude the review in the second quarter of
2017 following a review of Vietcombank's capital raising plans
and the publication and analysis of its audited financial report
for 2016.
The long-term credit ratings of the bank are not subject to this
review, and have a stable outlook.
RATINGS RATIONALE
The review of BCA will consider the size and resulting impact of
GIC's capital injection on Vietcombank's solvency position while
supporting continued balance sheet growth. Similar to other rated
banks in Vietnam, Vietcombank's capital ratios have been
declining due to asset growth. Vietcombank's tangible common
equity as a percentage of risk-weighted assets, adjusted for
government securities, declined to 7.9% at end-September 2016,
down from 8.7% at end-December 2015 and from 10.1% at end-
December 2014. As a state-owned bank, continued dividend pay-outs
also exerts negative pressure on its capital buffer.
The review will take place in the context of the improved
operating and economic environment in Vietnam -- as captured in
Moody's increase in Vietnam's Macro Profile to "Weak" from "Weak-
" -- that supports Vietcombank and other Vietnamese banks' asset
quality and profitability metrics, and contributes to relative
stability in their funding and liquidity profiles.
WHAT COULD CHANGE THE RATINGS UP/DOWN
A ratings upgrade could occur if Moody's assesses that the
capital injection could materially improve Vietcombank's solvency
profile, while supporting continued balance sheet growth.
Concurrently, Moody's will also assess if the improved operating
conditions will impact Vietcombank's standalone credit profile on
a sustainable basis.
The BCA and adjusted BCA could be confirmed if the capital
raising plan is abandoned or if the capital increase is not
sufficient to support the bank's projected balance sheet growth.
The long term ratings of Vietcombank are already at the same
level as the ratings/ceiling of the government of Vietnam. Hence,
these ratings have no potential upside unless the sovereign
rating is upgraded.
Taking into account announcement, the ratings are:
JSC Bank for Foreign Trade of Vietnam (Vietcombank)
- The local currency long-term deposit rating of B1; outlook
stable
- The foreign currency long-term deposit rating of B2; outlook
stable
- The local currency and foreign currency long-term issuer
ratings of B1; outlook stable
- The BCA and Adjusted BCA of b2; on review for upgrade
- The long-term counterparty risk assessment of B1(cr); on
review for upgrade
- The local currency and foreign currency short-term deposit
ratings of NP
- The local currency and foreign currency short-term issuer
ratings of NP
- The short-term counterparty risk assessment of NP(cr)
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings/analysis was
Banks published in January 2016.
Headquartered in Hanoi, the bank reported total assets of VND
788,169 billion (USD 34.5 billion) at end-December 2016.
* VIETNAM: Coach Firms Face Bankruptcy as Departure Point Moved
---------------------------------------------------------------
VietNamNet Bridge reports that Coach operators are facing
bankruptcy after Ha Noi's Transport Department moved their
departure point from My Dinh Bus Station to Nuoc Ngam Bus Station
on January 1.
VietNamNet says the transport department ordered coaches linking
Ha Noi with the provinces of Thai Binh, Nam Dinh, Ha Tinh, Thanh
Hoa and Nghe An to move their departure point from My Dinh to
Nuoc Ngam Bus Station, nearly 15 kilometres away. The decision
aimed to reduce traffic jams on Belt Road No 3, the report
relates.
Speaking at a dialogue with representatives from the Ministry of
Transport last month, the Ha Noi administration and the city
Transport Department, Nguyen Xuan La, a representative from a
coach operator of Thai Binh Province said, "It's very hard for us
now; we have had very few passengers the last two months."
La's firm borrowed money to operate and had to pay interest every
month, he said.
"If the situation continues, we might go bankrupt," the report
quotes La as saying.
VietNamNet relates that La said the city should prepare a road
map before moving coach operators from My Dinh Bus Station to
Nuoc Ngam Bus Station.
In the meantime, Nguyen Van Thach, head of Nam Dinh Province's
Transport Association said the decision was unsuitable, the
report relays.
According to the report, Thach gave an example about a local bus
operator who reportedly suffered losses of VND600 million
(US$26,300) due to a shortage of passengers in the last two
months.
"Bankruptcy is very near," he said, VietNamNet relays.
*********
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
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Information contained herein is obtained from sources believed
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
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thereof are US$25 each. For subscription information, contact
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*** End of Transmission ***