/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170309.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 Thursday, March 9, 2017, Vol. 20, No. 49 Headlines A U S T R A L I A A1 STEELFAB: First Creditors' Meeting Slated for March 17 AUSTRALIAN CAREERS: Closes All Training Campuses and Courses DARWIN STEEL: First Creditors' Meeting Scheduled for March 16 MANDURAH HERITAGE: First Creditors' Meeting Set for March 14 MARVILLA KNIGHT: First Creditors' Meeting Set for March 15 NISRIX PTY: First Creditors' Meeting Set for March 15 RAPID PERSONAL: Enters Liquidation on Cashflow Problems C H I N A GUORUI PROPERTIES: Fitch Publishes 'B' IDR; Outlook Stable GUORUI PROPERTIES: S&P Assigns 'B' CCR; Outlook Stable KWG PROPERTY: S&P Puts 'BB-' CCR on Watch Neg. on Land Purchase YANLORD LAND: S&P Affirms 'BB-' CCR & Revises Outlook to Positive YULONG ECO-MATERIALS: Receives NASDAQ Delinquency Letter I N D I A ADROIT CORPORATE: CRISIL Lowers Rating on INR18.53MM Loan to D AJIT AGRO: CARE Assigns 'B+' Rating to INR7.0cr LT Loan ANTONY COMMERCIAL: CRISIL Raises Rating on INR16MM LT Loan to BB- AVANI TEXTILES: Ind-Ra Lowers Long-Term Issuer Rating to 'BB-' B. D. AGRO: CRISIL Upgrades Rating on INR3MM Cash Loan to B- BLACKBERRY TILES: CRISIL Raises Rating on INR6.5MM Loan to B+ COTS KNITS: CRISIL Upgrades Rating on INR7.24MM Loan to B+ DHARESHWAR GINNING: CARE Assigns B+ Rating to INR6.63cr LT Loan EXPAT ENGINEERING: CARE Reaffirms B+ Rating on INR11cr Loan GALAXY MICA: CRISIL Upgrades Rating on INR5.95MM LT Loan to B+ GATIMAN AUTO: CRISIL Upgrades Rating on INR4.6MM Loan to 'B' GOPAL CHAKRABORTY: Ind-Ra Raises Rating on Bank Loans to 'BB- GOVARDANAGIRI AGRO: Ind-Ra Assigns 'B+' Long-Term Issuer Rating GURU KIRPA: CRISIL Upgrades Rating on INR6MM Cash Loan to B+ H.V. EQUIPMENTS: CRISIL Reaffirms B+ Rating on INR4MM Overdraft INDIAN SUCROSE: CRISIL Raises Rating on INR150MM Cash Loan to BB- JUMBO BAG: CRISIL Reaffirms B+ Rating on INR34.5MM Cash Loan KIRTI SOLAR: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating KSC ENGINEERS: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating LALWANI INDUSTRIES: Ind-Ra Cuts Long-Term Issuer Rating to 'BB-' MILAN INFRASTRUCTURES: CRISIL Cuts Rating on INR8MM Loan to 'D' NANCY KRAFTS: CRISIL Lowers Rating on INR7.84MM Loan to 'B' NANDI GRAIN: CARE Assigns 'D' Issuer Not Cooperating Ratings NEUROGEN BRAIN: CRISIL Raises Rating on INR22MM Loan to BB- PEKON ELECTRONICS: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating PGH INTERNATIONAL: CARE Assigns 'B' Rating to INR88.74cr LT Loan PODDAR CAR: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating RAGHAV INDUSTRIES: CRISIL Reaffirms B+ Rating on INR8MM Loan RAGHUVANSHI COTTON: CARE Puts 'D' Issuer Not Cooperating Rating RAJARSHI CARS: CRISIL Reaffirms B+ Rating on INR10.55MM Loan RAJKAMAL TEXTILES: CRISIL Reaffirms B+ Rating on INR5.0MM Loan RIO GLASS: CARE Assigns 'B+' Rating to INR5.34cr LT Loan RSI SOFTECH: CRISIL Reaffirms B+ Rating on INR4.5MM Cash Loan SAKET ENGINEERS: CRISIL Reaffirms 'B' Rating on INR40.5MM LT Loan SARDAR INDUSTRIES: CRISIL Reaffirms B+ Rating on INR8MM Loan SAVALIA COTTON: CARE Assigns 'D' Issuer Not Cooperating Ratings SHIV-OM SULZ: CARE Upgrades Rating on INR6.73cr Loan to BB- SHREE RK: CARE Assigns 'B' Rating to INR4.90cr LT Loan SHRI SAI: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan SINGAN PROJECTS: CARE Assigns 'D' Issuer Not Cooperating Ratings SOOD STEEL: CRISIL Upgrades Rating on INR7.5MM Cash Loan to B+ STATUS SERAMIK: CARE Reaffirms B+ Rating on INR4.21cr LT Loan STERLING IMPEX: CRISIL Assigns 'B' Rating to INR10MM Overdraft SUPER PLATECK: CRISIL Reaffirms B- Rating on INR3.75MM Loan TOOLFAB ENGINEERING: CARE Ups Rating on INR19.92cr Loan to BB- UNITY FABTEXT: CRISIL Lowers Rating on INR1.9MM LT Loan to B+ I N D O N E S I A PERISAI PETROLEUM: Offers to Pay Bond Holders in Cash and Stocks J A P A N TOSHIBA CORP: Speeds Up Nuclear Unit's Chapter 11 Filing TOSHIBA CORP: To Hold Extraordinary Shareholders Meeting March 30 TOSHIBA CORP: BlackRock Lends 46 Million Shares S R I L A N K A SRI LANKA: S&P Affirms 'B+' LT Sovereign Credit Rating - - - - - ================= A U S T R A L I A ================= A1 STEELFAB: First Creditors' Meeting Slated for March 17 --------------------------------------------------------- A first meeting of the creditors in the proceedings of A1 Steelfab Pty Limited will be held at the offices of McLeod & Partners, Hermes Building, Level 1, 215 Elizabeth Street, in Brisbane, Queensland, on March 17, 2017, at 10:00 a.m. Jonathan Paul Mcleod of McLeod & Partners was appointed as administrator of A1 Steelfab on March 7, 2017. AUSTRALIAN CAREERS: Closes All Training Campuses and Courses ------------------------------------------------------------ Administrators to the Australian Careers Institute, George Georges and John Lindholm of Ferrier Hodgson, on March 8 announced the closure of all training campuses and courses. The Australian Careers Institute Group has approximately 1,600 students and 200 employees across campuses in three states. Administrator George Georges said, "Unfortunately, there was no proposal forthcoming for a Deed of Company Arrangement to continue the operations of the business". "As a result, classes have been cancelled in Queensland and New South Wales and suspended in Victoria for one week. "Discussions are ongoing with an interested party for the continuation of the Victorian classes. "The Administrators will be working with the Australian Skills Quality Authority (ASQA) and the Australian Council for Private Education and Training (ACPET) to determine the current position of the students and the assistance that will be made available going forward. "Wherever possible we will look to minimise disruption to students. Students should make contact with the ACPET Activations team on 1800 875 474 to discuss this process," Mr. Georges said. Mr. Georges said this is a disappointing outcome for the employees who are extremely committed to furthering the education and training of their students. "Employees were notified late yesterday and they will be provided with appropriate support. All employee entitlements will rank as priority unsecured claims," Mr. Georges said. Ferrier Hodgson partners, George Georges and John Lindholm on Feb. 8, 2017, were appointed as joint and several Voluntary Administrators of Australian Careers Institute Pty Ltd and a number of associated entities (the Group) pursuant to a resolution of the Board of Directors. The associated entities are: - Nexus Institute Pty Ltd, trading as WYN Institute - ACN 162 266 668 Pty Ltd (Sage Institute of Education) - 24 Hours Fitness Pty Ltd - Cyberlife Pty Ltd - Cyberfit Pty Ltd - Cyberscene Pty Ltd DARWIN STEEL: First Creditors' Meeting Scheduled for March 16 ------------------------------------------------------------- A first meeting of the creditors in the proceedings of Darwin Steel & Pipe Supplies Pty Ltd will be held at Paspalis Business Centre, Level 1, 48-50 Smith Street, in Darwin, Northern Territory, on March 16, 2017, at 2:30 p.m. Christopher Powell and Nicholas Gyss of DuncanPowell were appointed as administrators of Darwin Steel on March 7, 2017. MANDURAH HERITAGE: First Creditors' Meeting Set for March 14 ------------------------------------------------------------ A first meeting of the creditors in the proceedings of Mandurah Heritage Gastropub Pty Ltd, trading as The Heritage Gastropub and The Heritage Restaurant, will be held at the offices of SM Solvency Accountants, level 8/490 Upper Edward Street, in Spring Hill, Queensland, on March 14, 2017, at 10:00AM (AWST)/12:00PM (AEST). Brendan Nixon and Leon Lee of SM Solvency Accountants were appointed as administrators of Mandurah Heritage on March 3, 2017. MARVILLA KNIGHT: First Creditors' Meeting Set for March 15 ---------------------------------------------------------- A first meeting of the creditors in the proceedings of Marvilla Knight Pty Ltd will be held at United Service Club, 183 Wickham Terrace, in Spring Hill, Queensland, on March 15, 2017, at 2:00 p.m. Leon Lee & Brendan Joseph Nixon of SM Solvency Accountants were appointed as administrators of Marvilla Knight on March 6, 2017. NISRIX PTY: First Creditors' Meeting Set for March 15 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Nisrix Pty will be held at the offices of Grant Thornton, Level 1, 10 Kings Park Road, in West Perth, on March 15, 2017, at 11:00 a.m. David Hodgson, Ahmed Bise & Stephen Dixon of Grant Thornton were appointed as administrators of Nisrix Pty on March 3, 2017. RAPID PERSONAL: Enters Liquidation on Cashflow Problems ------------------------------------------------------- Dominic Powell at Smart Company reports a small business owner has opened up about the difficulties of managing cashflow in a growing business, after his personal training company Rapid Personal Training entered liquidation. Insolvency firm Hogan and Sprowles has been appointed to manage the liquidation of Rapid PT, which employs three full-time staff and 17 contractors, and has seven locations spread across Sydney and Perth, according to Smart Company. The business has ceased trading. Rapid PT was established in 2012 by founder Kris Cochrane, who told SmartCompany about the difficulties the business faced when it came to managing growth plans. "We had big plans and big growth. We expanded into Western Australia and invested into strategies that were, honestly, a gamble," the report quoted Mr. Cochrane as saying. "Things like extra staff, online infrastructure, things that cost money. "It was a matter of making decisions as a business owner without a great deal of experience, and without a realistic understanding of what would happen if things don't go the way you want them to." While Cochrane says the business was profitable, he blamed the business' cash position as its weakest link, saying sales performance couldn't match payments being made. The experience has been difficult for Cochrane, who says it all "happened so fast", says the report. "It all happened so fast I didn't see it coming. I was looking at the sales numbers, and for the first time ever I raised the white flag and said I wouldn't be able to pull this off," the report quoted Cochrane as saying. "As an entrepreneur, I've probably failed." While Cochrane is helping out the liquidators where he can, he says he's "virtually unemployed" at the moment and hasn't thought too much about the future. "Once I feel everything's been handled appropriately, I'll think about what I'll do. I'll probably stay in the industry, stick with what I'm good at," he added, notes the report. Rapid PT has closed its operations at seven locations, but trainers will keep their jobs after re-contracted to other gyms, Cochrane says. Rapid PT's Facebook page has been shut down and the business's website now displays only the Rapid PT logo, the report relays. ========= C H I N A ========= GUORUI PROPERTIES: Fitch Publishes 'B' IDR; Outlook Stable ---------------------------------------------------------- Fitch Ratings has published China-based residential property developer Guorui Properties Limited's Long-Term Issuer Default Rating (IDR) of 'B'. The Outlook on the IDR is Stable. The agency has also assigned Guorui a senior unsecured rating of 'B' and its proposed US dollar senior unsecured notes an expected rating of 'B(EXP)'. The Recovery Rating is 'RR4'. Guorui's rating is supported by a healthy EBITDA margin, stable investment-property rental income and a quality landbank that is large enough to support sustained improvement in its contracted sales. However, the rating is constrained by high leverage, as measured by net debt/adjusted inventory, of 55.1% at end-1H16. Fitch estimates leverage will hover around 60% in the next 18 months. The proposed notes are rated at the same level as Guorui's senior unsecured rating because they will constitute direct and senior unsecured obligations of the company. The final rating is subject to the receipt of final documentation conforming to information already received. Guorui intends to use the net proceeds from the note issue for general corporate purposes. KEY RATING DRIVERS Small to Mid-Sized Developer: Fitch expects Guorui to be able to expand to contracted sales of more than CNY15bn in the next 18 months. The company had CNY11.1bn in contracted sales in 2016 from projects in eight cities, compared with CNY6.2bn in 2014, after new projects helped to diversify its sources of sales. It has a landbank of 7.7 million square metres (sq m), of which just 1.6 million sq m was under construction at end-June 2016. However, the company is still concentrated geographically, with four cities - Langfang, Shenyang, Beijing and Haikou - accounting for about 60% of Guorui's total sellable resources. This constrains the rating on the company. Landbanking Drives High Leverage: Guorui started to acquire new sites aggressively in 2015. The land premium paid amounted to 79% and 69% of total contracted sales in 2015 and 2016, respectively. The debt-funded expansion drove a jump in total debt to CNY16.5bn at end- June 2016, from CNY10.8bn at end-2014, pushing its leverage up to 55.1%, from 44.2%, over the same period. Fitch expects Guorui's aggressive landbanking strategy to keep its operating cash flow negative and drive leverage higher to around 60%. However, the company does have the capacity to deleverage as it has accumulated a sufficiently large landbank and has a modest growth target. Healthy Margin: Fitch expects Guorui to be able to maintain a gross profit margin close to 30% over next 24 months. Its EBITDA margin of above 30% historically is higher than that of most of its peers in the same rating category. Guorui's margins are likely to be sustainable because of its low land cost - the average unit cost of its landbank was CNY2,600/sq m at end-June 2016. Guorui has been able to keep land cost low at between 20%- 30% of its average selling prices (ASP) because it establishes solid relationships with local governments and acquires land at lower cost through participation in primary land development. In addition, it had 7.7 million sq m of land reserves in Beijing, Shantou and Chaozhou for primary development and urban redevelopment projects as at end-June 2016. Stronger Rental Income: Guorui holds seven investment properties with total gross floor area (GFA) of about 800,000 sq m, which generated CNY280m in rental income in 2015. The company's two properties in Beijing accounted for more than 90% of its investment-property rental income. Fitch expects Beijing Glory City's rental income to remain stable in 2017, given its prime location within the Second Ring Road in the capital. The new Hademen Center, located one kilometre from the landmark Tiananmen Square in Beijing, started to generate rental income from 2H16 and the company expects it will contribute CNY400m of rental income a year. Guorui also expects the newly developed South Levee Bay in Foshan in southern China to contribute CNY100m in rental income in 2017. Fitch expects the company's recurring EBITDA/gross interest coverage to reach 0.2x in 2016 and gradually improve to around 0.3x in the next 24 months due to the expansion of its investment-property portfolio and lower funding costs. Improving Capital Structure: Guorui has been optimising its capital structure since 2014 by diversifying funding channels and reducing effective borrowing costs. Fitch estimates the company's funding cost fell to 6.5% in 2016, from 7.2% in 2015. The company repaid the majority of its trust loans that had higher interest costs and issued longer-tenor onshore bonds at lower rates. The proposed US dollar bonds will mark the company's debut in the offshore bond market and help to further diversify its funding channels. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for Guorui include: - Contracted sales of CNY14bn-18bn during 2017-2019. - Land premium/contracted sales still high at 60% in 2017, but to gradually reduce to 30% in 2019. - Land replenishment ratio (land acquisition GFA/contracted sales GFA) at 1.0x in 2017 and gradually falling to 0.5x in 2019 (2016: 1.1x). - Cash collection ratio remaining healthy at 83%-90% during 2017-2019 (2016: 80%). - Funding cost for new borrowing of around 6%. RATING SENSITIVITIES Positive: Developments that may, individually or collectively, lead to positive rating action include: - Contracted sales sustained above CNY10bn - Net debt/adjusted inventory sustained below 50% (1H16: 55%) - EBITDA margin sustained above 30% (1H16: 36%) - Contracted sales/gross debt sustained above 0.6x (1H16: 0.6x) Negative: Developments that may, individually or collectively, lead to negative rating action include: - Net debt/adjusted inventory sustained above 60% - EBITDA margin sustained below 25% GUORUI PROPERTIES: S&P Assigns 'B' CCR; Outlook Stable ------------------------------------------------------ S&P Global Ratings assigned its 'B' long-term corporate credit rating to Guorui Properties Ltd. The outlook is stable. S&P also assigned its 'cnBB-' long-term Greater China regional scale rating to the China-based property developer. At the same time, S&P assigned its 'B-' long-term issue rating and 'cnB+' long-term Greater China regional scale rating to Guorui's proposed issue of U.S.-dollar-denominated senior unsecured notes. The rating on the notes is subject to S&P's review of the final issuance documentation. "The rating on Guorui reflects the company's high project concentration, moderate operating scale, and limited brand recognition outside Beijing," said S&P Global Ratings credit analyst Matthew Chow. "The rating also reflects Guorui's high leverage and strong growth appetite. The company's good debt- servicing ability and above-average profitability due to its low- cost land bank temper the above weaknesses." S&P believes Guorui faces project concentration risks, with only a few projects contributing a major part of its contracted sales and revenue. In the first half of 2016, the company's Yongqing Glory City project alone contributed more than half of its contracted sales. The top three projects in 2015 accounted more than 50% of full year sales. "Although Guorui is exploring opportunities in its existing regions and may expand to more cities when it grows its scale, we expect the project concentration to persist for the next few years," Mr. Chow said. In S&P's view, Guorui's operating scale will remain smaller than that of peers with a similar rating, such as China SCE Property Holdings Ltd. and China Aoyuan Property Group Ltd. This is mainly because of the company's large land bank in lower-tier cities, which constrains its growth. Guorui's market position is also fairly weak in the cities it operates in. As at end of June 2016, the company has 18 projects under development or held for future development in 11 cities, and it has only a single project in many of these cities. S&P believes it is tougher for Guorui to create synergies from its growing operating scale than it is for larger developers or those with a regional focus. S&P expects Guorui's financial leverage to remain high over the next two years despite a 69% increase in contracted sales year- on-year in 2016. This is because S&P believes the company will continue to spend considerable capital on land acquisitions and construction to support its expansion plan and drive growth. "The issue rating is one notch lower than the long-term corporate credit rating on Guorui to reflect structural subordination risk. Guorui intends to use the net proceeds for refinancing and general corporate working capital," Mr. Chow noted. The stable outlook on Guorui reflects S&P's expectation that the company's leverage will remain high to support its expansion plan. However, the leverage is likely to be commensurate with the current rating over the next 12 months. S&P also expects Guorui to maintain steady growth in property sales and above-peer- average profit margins over the period. S&P could lower the rating if Guorui's debt-funded expansion is more aggressive than S&P expects, such that its leverage does not show any signs of improvement. In a less likely scenario, S&P could downgrade Guorui if the company's liquidity position tightens or it faces difficultly in refinancing or securing new financing. S&P could raise the rating if Guorui improves its leverage while maintaining its profitability, such that its debt-to-EBITDA ratio is sustainably less than 5x. KWG PROPERTY: S&P Puts 'BB-' CCR on Watch Neg. on Land Purchase --------------------------------------------------------------- S&P Global Ratings said that it has placed its 'BB-' long-term corporate credit rating and 'cnBB+' long-term Greater China regional scale rating on Chinese property developer KWG Property Holding Ltd. on CreditWatch with negative implications. S&P also placed its 'B+' long-term issue rating and 'cnBB' long-term Greater China regional scale rating on the company's outstanding senior unsecured notes on CreditWatch with negative implications. S&P placed the ratings on CreditWatch because S&P expects KWG's financial position to weaken more than we had earlier expected under S&P's base-case scenario for the rating. The likely deterioration follows the company's recent significant land acquisition in Hong Kong and its active land purchases in mainland China in 2016. KWG acquired land for about Chinese renminbi (RMB) 18 billion in 2016, which included its attributable portion for jointly controlled entities (JCEs), exceeding S&P's expectation of RMB10 billion. In addition, the company, together with Logan Property Holdings Co. Ltd., won the bid for a residential site with a record high price of Hong Kong dollars (HK$) 16.86 billion (about RMB14.9 billion) in February 2017. "In our view, these aggressive acquisitions may push KWG's leverage beyond our base-case expectations for the current ratings," said S&P Global Ratings credit analyst Matthew Kong. S&P estimates the company's total debt might have increased significantly at end-2016 from RMB35 billion as of June 30, 2016, as reflected in sizable bond issuances. Its debt-to-EBITDA ratio (adjusted for the attributable portion for JCEs) is therefore likely to deteriorate further, compared with 5.0x-5.5x for the 12 months to June 30, 2016. S&P aims to resolve the CreditWatch status within the next three months, after reviewing KWG's 2016 annual results and seeking more clarity from management about the company's growth appetite and the financial policies relating to such growth. S&P will assess the likely impact of these on the company's cash flow and leverage. "We may lower the rating by one notch if we expect KWG will continue to expand aggressively, such that its leverage on a proportionate consolidation basis remains elevated with no sign of recovery over the next 12 months," Mr. Kong said. S&P may also affirm the rating and revise its outlook to negative if S&P believes KWG can show discipline in land banking, actively reduce its debt materially, and control its leverage, he added. YANLORD LAND: S&P Affirms 'BB-' CCR & Revises Outlook to Positive ----------------------------------------------------------------- S&P Global Ratings said that it had revised its outlook on Yanlord Land Group Ltd. to positive from stable. At the same time, S&P affirmed its 'BB-' long-term corporate credit rating on the China-based property developer and S&P's 'BB-' long-term issue rating on the company's outstanding senior unsecured notes. S&P also affirmed its 'cnBB+' long-term Greater China regional scale rating on Yanlord and the notes. "We revised the outlook to positive as we expect Yanlord to sustain its improved leverage over the next 12 months and continue to demonstrate satisfactory sales execution and disciplined land acquisitions," said S&P Global Ratings credit analyst Dennis Lee. "In our base case, we forecast that Yanlord's debt-to-EBITDA ratio will stabilize at 3.5x-4.0x in the next two years." Yanlord's operating performance and financial leverage improvement in 2016 were stronger than S&P had anticipated. The company's total contracted sales of Chinese renminbi (RMB) 33 billion were significantly higher than S&P's base-case projection of RMB25 billion. Driven by a strong revenue increase and substantial margin recovery, Yanlord's debt-to-EBITDA ratio improved to below 3.0x in 2016, from 4.3x in 2015. S&P believes the earnings and margin visibility of Yanlord in 2017 is high, given the company's large unrecognized contracted sales amount of RMB26.5 billion as of end-2016 and S&P's expectation that the company will complete and deliver at least 70% of the sales in 2017. The amount does not include the sales of completed projects, which can be recognized in the same year. S&P anticipates that Yanlord will maintain its contracted sales at RMB30 billion-RMB35 billion in 2017 and 2018, despite the recent government tightening policies. The stable sales performance is supported by the company's increased saleable resources and S&P's assumption that property prices in the key cities in which Yanlord operates, such as Shanghai, Nanjing, and Suzhou, will remain stable due to low inventory levels. However, S&P believes Yanlord's high-end product positioning could make it more sensitive to tightening policies and overall market sentiment than peers that target mass-market buyers. Stable property prices in tier-1 and key tier-2 cities will continue to support Yanlord's above-average margins, in S&P's view. S&P forecasts that the gross margin will reach 36%-38% in 2017 and around 35% in 2018, from 31.2% in 2016. S&P believes the company can protect its contracted sales margin in 2017, given that its Shanghai projects are highly profitable with over 40% margin. However, such high margins are unlikely to be sustained over the next three to five years, given rising land costs in higher-tier cities, the government's cooling measures on property prices, and lower contributions from its Shanghai projects starting 2018. Yanlord's good brand recognition, project execution, and diverse land banking strategy provide some buffer against the industry's margin decline, in S&P's view. S&P anticipates that Yanlord will continue to increase its land bank in a controlled manner. The company accelerated its land purchases in 2016 with total spending of about RMB15 billion in Tianjin, Nanjing, Suzhou, and Shenzhen. In S&P's base case, it projects the company will spend about RMB16 billion on land acquisition in 2017, around 50% of its contracted sales this year. In S&P's view, Yanlord's land reserves are adequate but not abundant. Including a new purchase in Nanjing in December 2016, the company currently has land reserves of about 6 million square meters (sqm), more than the about 4 million sqm as of end-2015. S&P estimates that the existing reserves are sufficient for development for the next four to five years. The positive outlook reflects S&P's view that Yanlord will continue to demonstrate satisfactory sales execution despite the government's recent tightening measures. S&P also expects the company to replenish its land bank in a disciplined manner, and maintain a stable growth aspiration, such that its financial leverage improvement in 2016 sustains. "We could raise the rating if we consider that Yanlord is able to control its financial leverage while continuing to expand, such that its debt-to-EBITDA ratio stays below 4x for a prolonged period," said Mr. Lee. S&P could revise the outlook back to stable if it determines that Yanlord's debt-to-EBITDA ratio cannot remain below 4.0x. This could happen if the company's sales are materially weaker than S&P's projection of about RMB32 billion in 2017, or its debt- funded land acquisitions are more aggressive that S&P expects. It could also happen if Yanlord experiences significant project delays, which then hurt its booking revenue and EBITDA. YULONG ECO-MATERIALS: Receives NASDAQ Delinquency Letter -------------------------------------------------------- Yulong Eco-Materials Limited, a vertically integrated manufacturer of eco-friendly building products located in the city of Pingdingshan in Henan Province, China, on March 3 disclosed that it has received a letter from the NASDAQ Stock Market ("NASDAQ") notifying the Company that it is not in compliance with NASDAQ Listing Rule 5250(c)(1) because it has not filed its Quarterly Report on Form 10-Q for the period ended December 31, 2016 in a timely manner with the Securities and Exchange Commission (the "SEC"). NASDAQ Listing Rule 5250(c)(1) requires listed companies to timely file all required periodic financial reports with the SEC. This delinquency serves as an additional basis for delisting the Company's securities from the Nasdaq Stock Market. Previously, NASDAQ Staff had granted the Company an exception until April 12, 2017 to file its delinquent Form 10-K for the period ended June 30, 2016 (the "Initial Delinquent Filing") and delinquent Form 10-Q for the period ended September 30, 2016. About Yulong Eco-Materials Limited Yulong Eco-Materials Limited (NASDAQ: YECO) -- http://www.yulongecomaterials.com/-- is a holding company. The Company is a manufacturer of building products. The Company's segments include Yulong Bricks; Yulong Concrete and Yulong Transport, and Yulong Renewable. The Yulong Bricks segment is engaged in the production and sale of fly-ash bricks. The Yulong Concrete and Yulong Transport segment is engaged in the production and sale of ready-mixed concrete. The Yulong Renewable segment is engaged in the hauling and processing of construction waste, and production and sale of recycled aggregates and recycled bricks. The Company produces fly ash bricks and ready-mixed concrete. The Company's construction waste management (CWM) business includes hauling and processing construction waste, and producing crushed construction waste or recycled aggregates, and bricks made from recycled aggregates, or recycled bricks. The Company operates principally from the city of Pingdingshan, Henan Province, in the People's Republic of China. ========= I N D I A ========= ADROIT CORPORATE: CRISIL Lowers Rating on INR18.53MM Loan to D -------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Adroit Corporate Services Private Limited to 'CRISIL D' from 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6 CRISIL D (Downgraded from 'CRISIL B+/Stable') Term Loan 18.53 CRISIL D (Downgraded from 'CRISIL B+/Stable') The downgrade reflects ACSPL's delays in servicing its term debt. There have been delays in repayment of debt obligations, furthermore, cash credit limit also remains overdrawn frequently. The delayed receivables constrains liquidity. The company also has a weak financial risk profile because of high gearing and subdued debt protection metrics, and modest scale of operations in a fragmented industry. However, it benefits from promoter's extensive experience in the business process outsourcing (BPO) services industry. Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile and liquidity: The financial risk profile has deteriorated on account of large bank borrowing partly to fund its large working capital requirement and expand its operations across the country. It had gearing of 2.3 times as on March 31, 2016, and subdued interest coverage ratio of 1.76 times for fiscal 2016. * Its receivables were at 200-250 days which entails large working capital requirement and constrains liquidity. Consequently, it has been delaying the servicing of its term debt. * Modest scale of operations in a fragmented industry: ACSPL, established in 1994, provides BPO services primarily to clients in the banking sector. Although the operating income has grown over the three years through March 2016, it remains modest at INR22.65 crore in fiscal 2016. Moreover, revenue growth has been flattish in recent times. Strength * Extensive experience of promoter in the BPO services industry: ACSPL was founded by Mr Sadashiva Shetty in 1994 to operate as a registrar and share transfer (R&T) agent. Subsequently, it also entered into the banking space in fiscal 2007 and started providing outsourcing services to financial their non-critical functions. It has developed association with some of financial institutions and scaled up its operations. Incorporated in 1994, ACSPL provides business process outsourcing services, primarily to the banking sector. The company is also a R&T agent. Operations are managed by Mr Sadashiva Shetty. ACSPL reported a profit after tax of INR23 lakh on net sales of INR22.66 crore for fiscal 2016, vis-a-vis INR56 lakh and INR23.59 crore, respectively, for fiscal 2015. AJIT AGRO: CARE Assigns 'B+' Rating to INR7.0cr LT Loan ------------------------------------------------------- The rating assigned to the bank facilities of Ajit Agro Industries is primarily constrained on account of its fluctuating Total Operating Income (TOI) in the highly competitive and fragmented cotton ginning industry and its financial risk profile marked by low profitability, moderately leveraged capital structure, weak debt coverage indicators and moderate liquidity profile. The rating, is further, constrained on account of the susceptibility of the firm's profitability to cotton price fluctuation, seasonality associated with the cotton industry and change in the government policies along with its constitution as a partnership firm. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7.00 CARE B+; Stable Assigned The rating, however, derives strength from the long standing experience of the promoters along with its established track record of around two decades in the industry and strategically located in the cotton growing region. The ability of the firm to increase its scale of operations while improving profitability in light of volatile raw material prices and efficient management of working capital shall be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weakness Financial risk profile marked by fluctuating TOI and profitability TOI of AAI shown a fluctuating trend over the past three financial years ended FY16 owing to volatility exhibited in the prices of raw cotton coupled with Government of India's intervention by way of extensive procurement of cotton directly from farmers in the regions to support the minimum support prices. Furthermore, the profitability of the firm has also remained volatile and low during the last three financial years (FY14-16) owing to volatile in raw material prices where the prices of raw cotton is market driven with limited value addition and its presence in the lowest segment of the textile value chain. Moderately leveraged capital structure with weak debt coverage indicators The capital structure of the firm stood moderately leveraged although improved marginally from March 31, 2015 attributed to higher net worth base due to accretion of profit to reserve along with infusion of capital by the partners to support its business operation. Furthermore, debt service coverage indicators of the firm stood weak with total debt to GCA of 26.08 times as on March 31, 2016 along with interest coverage at 1.53 times during FY16. Moderate liquidity position The liquidity profile of the firm stood moderate marked by moderate liquidity ratios and elongated operating cycle. Working capital limit are generally utilized during the season i.e. from October to March and reduces during off-season. Presence in a highly fragmented cotton ginning industry and constitution as a partnership concern AAI is primarily engaged in the business of cotton ginning and pressing industry as well as extraction of cotton oil. The industry is highly fragmented with presence of numerous independent small scale enterprises. Its constitution as a partnership concern with moderate net worth base restricts its overall financial flexibility in terms of limited access to external fund for any future expansion plans. Furthermore, there is an inherent risk of possibility of withdrawal of capital and dissolution of the concern in case of death/insolvency of partner. Operating margins are susceptible to cotton price fluctuation, seasonality associated with the cotton industry and government regulation The prices of raw cotton are highly volatile in nature and depend upon factors like, area under production, yield for the year, international demand-supply scenario, export quota decided by the government and inventory carried forward of the last year. Furthermore, the cotton prices in India are highly regulated by government; hence, any adverse change in the government policy may negatively impact the prices resulting in lower realizations and profit. Key Rating Strengths Experienced promoters with long track record of operations The partners of the firm are experienced with long track record of operations in the cotton ginning industry. Furthermore, it is benefited from established good relations with the customers and suppliers. Strategic location of manufacturing units with close proximity to raw material sources The manufacturing facility of the firm is located in cotton producing belt of Khandwa (Madhya Pradesh) which is one of the largest producer of raw cotton in India. The presence of AAI in cotton producing region results in benefit derived from lower logistics expenditure (both on transportation and storage), easy availability and procurement of raw materials at effective price. Khandwa-based (Madhya Pradesh) AAI, was formed in 1997 as a partnership concern by its key promoter, Mr. Ajit Singh Ubeja along with his family members, to primarily undertake the business of cotton ginning and pressing activity along with extraction of cotton oil. AAI operates from its sole manufacturing unit located at Khandwa having production capacity of 150 quintal lint per day as on March 31, 2016, along with extracting capacity of around 125 quintal per day of cotton oil with total of six extraction machines. The finished products of the firm comprises of cotton bales, cotton seeds, cotton seed oil as well as cotton seed cake which is a by-product derived from the processing of oil from seeds Moreover, the firm also trades in soyabean as well as undertakes job work activity for other units pertaining to ginning and pressing located in and around Khandwa district. The firm caters to the domestic market and sells its products directly all over India. It procures raw cotton, key raw material, from the local market and nearby areas while procure cotton seeds mainly from Southern states of India. ANTONY COMMERCIAL: CRISIL Raises Rating on INR16MM LT Loan to BB- ----------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Antony Commercial Vehicles Private Limited to 'CRISIL BB- /Stable' from 'CRISIL B+/Stable' while short term rating assigned at 'CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2 CRISIL A4+ (Assigned) Cash Credit 4 CRISIL BB-/Stable (Upgraded from 'CRISIL B+/Stable') Proposed Long Term 16 CRISIL BB-/Stable (Upgraded Bank Loan Facility from 'CRISIL B+/Stable') Inventory Funding 10 CRISIL BB-/Stable (Upgraded Facility from 'CRISIL B+/Stable') Electronic Dealer 23 CRISIL BB-/Stable (Upgraded Financing Scheme from 'CRISIL B+/Stable') (e-DFS) The upgrade reflects the sustained improvement in the business risk profile, also reflected in revenue growth of 20% (in compounded terms) recorded over the three years through March 2016. Demand for the Euro-4 chasis should aid healthy growth in revenue and sustenance of profitability in the medium term, thus, leading to a sharp increase in cash accrual. Efficient working capital management will also lower reliance on short-term debt, thus, resulting in controlled interest outgo going forward. Sustenance of the operating margin and working capital cycle will remain key rating sensitivity factors over the medium term. The rating reflects the extensive experience of the promoter in the automobile industry, the moderate scale of operations, strong relationship with the principal Ashok Leyland (ALL) and its established presence in the western region. These strengths are partially offset by the average financial risk profile, marked by a small networth and high gearing, and exposure to intense competition. Key Rating Drivers & Detailed Description Strengths * Extensive experience of the promoters and their established relationships with the principal and the customers: Four decades of experience in building bodies for heavy commercial vehicles (CVs) and servicing them, via group companies, have helped promoters build strong relationships with customers and identify regions with untapped potential. This is also reflected in revenue growth of 30% (INR283 crore in fiscal 2016), vis-a-vis the previous year. * Low receivables and inventory risk: Exposure to receivables risk is low as vehicles are delivered and registered in the customer's name, only on receipt of full payment and delivery order from the financial institutions, backing the purchase; receivables are realised within 15 days. Although inventory, averaging 30 days, is subject to negligible loss on account of a drop in value, ALL compensates such losses through various schemes. With inventory levels likely to remain moderate, exposure to pricing risk remains low. * Modest scale of operations: Revenue of INR283 crore in fiscal 2016, reflects the moderate scale of operations, and was backed by higher offtake from the existing customers. Weaknesses * Average financial risk profile: Financial risk profile is constrained by small networth and high total outside liabilities to tangible networth ratio of around INR3.38 crore and 29 times, respectively, as on March 31, 2016. Interest coverage and net cash accrual to total debt ratios were adequate, at 1.55 times and 0.04 time, respectively, in fiscal 2016. * Exposure to intense competition: Presence only in Mumbai, Navi Mumbai, and Thane (all in Maharashtra), limits scalability. Moreover, revenue and profitability remain highly dependent on the principal, ALL, given the inherent nature of the business model. Revenue diversity is fairly limited, with dealership of only MHCVs, unlike other peers, dealing in light CVs, passenger cars, or other products. Outlook: Stable CRISIL believes ACVPL will continue to benefit from the extensive experience of its promoters and the established position of its principal, ALL, in the CV industry. The outlook may be revised to 'Positive' if a significant increase in cash accrual, fresh equity infusion, and efficient working capital management, strengthen the financial risk profile. The outlook may be revised to 'Negative' if low cash accrual, large working capital requirement, or substantial, debt-funded capex weakens the financial risk profile, particularly liquidity. Incorporated in 2011, ACVPL is an authorised dealer for medium and heavy CVs of ALL for Mumbai, Thane, and Raigad. The company received the dealership in 2011, and started commercial operations in April 2012. It operates two showrooms, one in Taloja (Raigad) and the other in Bhiwandi (Thane). For fiscal year 2016 the company has reported profit after tax of INR0.70 crore on an operating income of INR283 crore vis-a-vis profit after tax of INR0.69 crore on an operating income of INR204 crore for the previous year. AVANI TEXTILES: Ind-Ra Lowers Long-Term Issuer Rating to 'BB-' -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Avani Textiles Limited's (ATL) Long-Term Issuer Rating to 'IND BB-' from 'IND BB+'. The Outlook is Negative. Instrument-wise rating actions are: -- INR730 mil. Fund-based bank facilities lowered to IND BB-/Negative rating; -- INR730 mil. Fund-based bank facilities affirmed with IND A4+ Rating; -- INR176.8 mil. (reduced from INR372.65) term lowered to IND BB-/Negative rating The downgrade and Negative Outlook reflects ATL's weak financial risk profile and deterioration of operational performance, resulting in a significant dip in earnings. Revenue plunged to INR2,348 million in FY16 (FY15: INR2,818 million, FY14: INR2,957 million) on account of low yarn volumes and realizations. EBITDA margins declined to 6.6% in FY16 (FY15: 7.8%, FY14: 11.0%) owing to low average yarn contribution margins of INR29/kg (INR34/kg, INR42/kg) and low capacity utilization. The downgrade also reflects ATL's tight liquidity and high debt refinancing risk with inadequate debt service coverage ratio over FY17-FY20. The company has been supporting bank debt repayments in FY17 using unsecured loans arranged by the promoters. Following the refinancing, unsecured loans increased to INR483 million at end-September 2016 (FYE16: INR393 million, FYE15: INR375 million). Consequently, gross interest coverage deteriorated to 1.1x in FY16 (FY15: 1.5x) and net financial leverage to 8.5x (5.6x). The ratings continue to factor in the risks associated with the commodity trading business and exposure to foreign exchange fluctuations. The ratings are further constrained by ATL's weak liquidity position with an average use of fund-based working capital limits of 98% during the 12 months ended January 2017. However, the ratings draw support from ATL's moderate scale of operations, promoters' three decades of experience in the yarn business and their financial support in making timely bank debt repayments in the past. RATING SENSITIVITIES Negative: Further weakening of the financial risk profile due to a further drop in the margins or inability to refinance the debt obligations could result in a negative rating action. Positive: An improvement in the financial risk profile with diminished refinancing risks resulting from an increase in earnings could result in the Outlook being revised back to Stable. COMPANY PROFILE ATL is a public limited company incorporated on Aug. 22, 2006, with registered office in Bhindran, Patiala road, Sangrur. The company manufactures cotton yarn and has four operational units for ginning and spinning. ATL was set up under a mega project unit under the industrial policy of the government of Punjab. B. D. AGRO: CRISIL Upgrades Rating on INR3MM Cash Loan to B- ------------------------------------------------------------ CRISIL has upgraded its rating on the long-term bank facilities of B. D. Agro Products Private Limited to 'CRISIL B-/Stable' from 'CRISIL C'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3 CRISIL B-/Stable (Upgraded from 'CRISIL C') Long Term Loan 0.82 CRISIL B-/Stable (Upgraded from 'CRISIL C') Proposed Fund- 2.18 CRISIL B-/Stable (Upgraded Based Bank Limits from 'CRISIL C') The upgrade reflects CRISIL's belief that liquidity will remain adequate over the medium term, supported by sufficient cash accrual against debt obligation due to improved profitability. Liquidity is further supported by nil debt-funded capital expenditure plans for the medium term. Furthermore, the business risk profile is likely to improve over this period, backed by higher operating income and profitability, and better working capital management. Operating efficiency will likely be supported by higher capacity utilisation and efficient working capital management. The rating continues to reflect BD Agro's below-average financial risk profile, with a small networth and weak debt protection metrics and modest scale of operations. The rating also factors in susceptibility to adverse regulatory changes and volatility in raw material prices. These weaknesses are partially offset by the extensive experience promoters in the rice business and assured sales to the Food Corporation of India, thereby ensuring stable revenue. Key Rating Drivers & Detailed Description Weaknesses * Modest scale in the intensely competitive rice industry: Limited capacity and intense competition in the rice industry have led to a small scale, as reflected in revenue of INR25.90 crore in fiscal 2016. Modest scale also restricts benefits of economies of scale and pricing flexibility, thereby constraining profitability. * Below-average financial risk profile: Financial risk profile is below average due to weak debt protection metrics, with interest coverage ratio of 2.00 times in fiscal 2016. The ratio is expected to remain modest over the medium term due to continued low operating margin and high dependence on working capital debt. Strength * Extensive experience of promoters: The promoters, given their experience of over two decades, have established healthy relationships with customers resulting in repeat orders reflected from assured sales to the Food Corporation of India, thereby ensuring stable revenue and healthy relation with suppliers ensuring ease in procurement. Outlook: Stable CRISIL believes BD Agro will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' in case of higher-than-expected cash accrual, backed by a substantial increase in revenue and improvement in the operating margin, while maintaining the working capital cycle. The outlook may be revised to 'Negative' in case of deterioration in the financial risk profile, particularly liquidity, most likely because of a decline in profitability, a stretched working capital cycle, or larger-than-expected, debt- funded capital expenditure. Based in Kolkata (West Bengal [WB]) and incorporated in June 2009, BD Agro is promoted by Mr Mahendra Agarwal and his brother, Mr Rajendra Agarwal. The company began commercial operations in November 2009. Until March 2011, BD Agro traded in paddy and wheat. However, in fiscal 2010, it set up a rice mill, with a processing capacity of 104 tonne per day in Howrah (WB). The plant started commercial operations at the end of March 2011. In fiscal 2016, net profit was INR0.29 crore on an operating income of INR25.90 crore, as against a net profit of INR0.51 crore on an operating income of INR22.33 crore in fiscal 2015. BLACKBERRY TILES: CRISIL Raises Rating on INR6.5MM Loan to B+ ------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Blackberry Tiles Private Limited to 'CRISIL B+/Stable' from 'CRISIL B/Stable', and reaffirmed the short-term rating at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.4 CRISIL A4 (Reaffirmed) Cash Credit 2 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Cash Term Loan 6.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Proposed Long Term 0.1 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') The upgrade reflects ramp-up in, and stabilisation of, operations. During fiscal 2017, sales are likely to be INR25 crore showing healthy ramp up since beginning production in February 2015. Annual topline growth is likely to be steady at 10-15% with increasing capacity utilisation and geographical reach. Consequently, yearly cash accrual of INR2-2.5 crore will be sufficient to meet debt obligation. However, financial risk profile remains constrained by modest networth and large working capital requirement. The ratings reflect BTPL's modest, though improving, scale of operations in the highly competitive ceramics tiles industry, small networth, and working capital-intensive operations. These weaknesses are partially offset by the extensive experience of its promoters, favourable location of plant, and adequate debt protection metrics. Analytical Approach Unsecured loans from promoters have been treated as neither debt nor equity as these are expected to remain in business and are subordinated to bank loans. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: With expected sales of INR25 crore in fiscal 2017, scale remains small in the competitive ceramics industry. * Small networth: Modest equity and low accretion to reserves led to a subdued networth of INR4 crore as on March 31, 2016. Networth will remain modest over the medium term. * Large working capital requirement: Gross current assets were high at 195 days as on March 31, 2016. Strengths * Extensive experience of promoters: The promoters have been in the ceramics segment for more than a decade. * Favourable location of plant: Unit in Morbi, which is India's ceramic tiles hub, ensures easy availability of raw material and labour. * Comfortable debt protection metrics: Interest coverage and net cash accrual to total debt ratios are expected to be 2.5 times and 0.35 time, respectively, for fiscal 2017. Outlook: Stable CRISIL believes BTPL will continue to benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' if a significant increase in scale of operations and profitability leads to higher-than-expected cash accrual, and if capital structure improves because of substantial equity infusion. The outlook may be revised to 'Negative' if liquidity weakens because of decline in profitability, further stretch in working capital cycle, or any large, debt-funded capital expenditure. Incorporated in Morbi in 2013 and promoted by Mr. Sureshkumar Kaswala, Mr. Vashudev Barsara, Mr. Mansukh Detroja, Mr. Bharat Detroja, Mr. Amod Katiyar, and Mr. Dipesh Jariwala, BTPL manufactures digitally printed ceramic tiles. Commercial operations began in February 2015. Profit after tax was INR0.05 crore on an operating income of INR17.3 crore in fiscal 2016, against a loss of INR0.5 crore on an operating income of INR0.2 crore in the previous year. COTS KNITS: CRISIL Upgrades Rating on INR7.24MM Loan to B+ ---------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of The Cots Knits to 'CRISIL B+/Stable' from 'CRISIL B/Stable,' while reaffirming the short-term rating at 'CRISIL A4.' Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 0.35 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Packing Credit 3.00 CRISIL A4 (Reaffirmed) Proposed Long Term 7.24 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') The upgrade reflects CRISIL's belief that TCK will benefit over the medium term from its improved liquidity and stable business risk profile. The improvement in liquidity is driven by the expected increase in cash accrual and profitability coupled with steady demand and better realisations during the year. The operating income is expected to increase to INR26 crore in fiscal 2017 from INR22.6 crore in fiscal 2016. The profitability margin is likely to go up to 10-12% from 6.6%; operating margin was 12.2% for the nine months ended December 2016. Cash accrual of INR1.35-1.40 crore per annum is expected to be generated over the medium term against which there are no significant debt obligations. Bank limit utilisation stood at 72% for the 12 months ended December 2016. The rating also factors in the small scale of operations, exposure to intense competition in the readymade garment (RMG) industry and working capital intensive operations. However, these weaknesses are mitigated by the extensive experience of the promoters and established customer relationships, and the moderate financial risk profile, marked by a modest capital structure and average debt protection metrics. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations and exposure to intense competition: TCK is expected to record revenues of INR26.1 Crores during fiscal 2017, indicating its modest scale of operations in a highly fragmented RMG industry. RMG manufacturing is a highly fragmented industry on account of low entry barriers and low capital requirements. TCK's business risk profile will remain constrained on account of the firm's modest scale of operations in the highly fragmented and intensely competitive RMG industry * Working capital intensive operations Operations are working capital intensive, as reflected in high gross current assets of around 250 days, expected as on March 31, 2017. This is primarily on account of the inventory of 90-120 days, owing to the seasonal availability of raw material and the long working capital cycle. Strengths * Extensive experience of the promoters in the garment industry and established customer relationships: Benefits from the two decade-long experience of the promoter, Mr T Sharan Chinnu, and the established relationships with key customers and suppliers, will continue. Average financial risk profile * Moderate gearing and comfortable debt protection metrics: Financial risk profile is moderate, marked by low networth and gearing, expected to be INR6.3 crore and 0.88 time, respectively, as on March 31, 2017. Debt protection metrics are comfortable, with net cash accrual to total debt and interest coverage ratios, seen around 25% and 2.58 times, respectively, in fiscal 2017. Outlook: Stable CRISIL believes TCK will continue to benefit from the extensive experience of its promoters. The outlook may be revised to 'Positive' if the firm reports a significant growth in revenue and demonstrates better working capital management, while maintaining its improved profitability and capital structure. The outlook may be revised to 'Negative' if the firm reports significant decline in revenue and profitability, or in case of any aggressive debt-funded capital expenditure or a stretch in the working capital cycle, weakening the financial risk profile. TCK, established in 2008 by promoter, Mr T Sharan Chinnu, at Tirupur (Tamil Nadu), knits and manufactures readymade garments. Profit before tax (PBT) of INR64.36 lakh was reported on total income of INR22.59 crore, against INR57.34 lakh and INR22.30 crore, respectively, for the previous fiscal. DHARESHWAR GINNING: CARE Assigns B+ Rating to INR6.63cr LT Loan --------------------------------------------------------------- The rating assigned to the bank facilities of Dhareshwar Ginning Industries are primarily constrained on account of its modest scale of operations coupled with low profit margins, moderately leveraged capital structure, weak debt coverage indicators and moderate liquidity position. The ratings are further constrained by seasonality associated with cotton availability and susceptibility of margins to cotton price fluctuations and prices and supply for cotton are highly regulated by the government. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 6.63 CARE B+; Stable Assigned The ratings, however, derive comfort from experienced partners coupled with proximity to the cotton-growing area of Gujarat. Going forward, DGI's ability to increase its scale of operations with improvement in profitability, capital structure, and debt coverage indicators along with better working capital management will be the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operations coupled with low profit margins During FY16 the firm has registered a TOI of INR29.43 crore which has declined from INR34.34 crore during FY15. Further during FY16, the profit margins stood low marked by PBILDT margin stood at 3.49% which was in line as compared to previous year, however PAT margin stood below unity on account of higher interest and finance charges during FY16. Moderately leveraged capital structure and weak debt coverage indicators The capital structure of DGI remained moderately leveraged marked by an overall gearing ratio of 1.87 times and debt equity ratio of 0.35 times as on March 31, 2016. Consequently, the debt coverage indicators of DGI stood weak marked by total debt to GCA stood at 20.22x as on March 31, 2016. Furthermore, interest coverage ratio stood at 1.48x during FY16. Moderate liquidity position The liquidity position remained moderate marked by current ratio stood at 1.27x as on March 31, 2016, however the quick ratio remained below unity at 0.16x as on March 31, 2016. Furthermore, its working capital cycle has elongated to 103 days during FY16, mainly on account of high inventory period of 88 days during FY16. Key Rating Strengths Experienced promoter Mr. Nathabhai Bhimani holds experience of more than five years in the same line of business and looking after the finance department of the firm. Mr. Dayalal Mendapara holds total experience of more than three years and looking after the administrative department of the firm. Mr. Amrishbhai Mendapara, Mr. Keshavjibhai Vansjaliya Mr. Chagan Mendapara collectively hold an average experience of more than a decade in the same line of business and collectively looking after the Purchase department of the firm. Mr. Chirag Mendapara holds experience of more than three years and looks after the selling department of the firm and Mr. Ashishbhai Mendapara also holds three years of experience and looking after the administrative work of the firm. Proximity to cotton growing area of Gujarat The manufacturing facilities of DGI are located at Rajkot in Gujarat. Gujarat produces around 30% of total national production of cotton; hence, DGI's presence in the cotton producing region results in benefit derived from a lower logistic expenditure (both on transportation and storage), easy availability and procurement of raw materials at effective prices and consistent demand for finished goods resulting in a sustainable and clear revenue visibility. Analytical Approach: Standalone DGI Rajkot-Gujarat based partnership firm was established in 2013 the firm is engaged in cotton ginning and pressing. The manufacturing unit of the company is located in Rajkot, Gujarat which has an installed capacity of 11736 Metric tones per annum as on March 31, 2016. DIG sells the manufactured product to local traders and it has started its commercial production from April, 2014. EXPAT ENGINEERING: CARE Reaffirms B+ Rating on INR11cr Loan ----------------------------------------------------------- The ratings of bank facilities of Expat Engineering India Limited continue to be constrained by its moderate financial risk profile marked by high gearing and TDGCA ratio, stretched working capital cycle, thin PBILDT margin witnessing decline in FY16 (refers to the period April 1 to March 31) owing to increase in material and labor costs, concentration of order book on few projects. However, the rating favorably factors in increasing order book from external clients. The rating also takes strength from satisfactory order book position and experience of the promoters in the construction industry. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 11 CARE B+; Stable Re-affirmed Short-term Bank Facilities 7 CARE A4 Reaffirmed The company's ability to execute the projects as per scheduled timelines and within budgeted cost, considering the delays in execution observed in past projects, will be the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weakness Moderate financial risk profile: EEIL sales during FY16 improved to INR72.7 crore in FY16 as against INR65.8 crore in FY15 but the PBDIT margins deteriorated significantly from 6.48% in FY15 to 2.69% in FY16. Decline in margins was largely attributed towards increase in material and labour costs. Company's working capital cycle is stretched with operating cycle of 386 days. However, with repayment of loans and accretion of profits, the company's overall gearing and TDGCA improved to 1.54x and 9.77x as on Mar'16 from 2.02x and 12.53x as on Mar'15 respectively. Concentration of order book: Company's order book is concentrated on few projects. It comprises of INR130.6 crore from internal group projects and balance from external clients. Among external projects, company had more than 90% of orders from top 3 clients. Key Rating Strengths Strong order book with increasing share from external clients: The company had order book of INR329.6 crore as on Jan'17. EEIL which has historically been largely dependant on internal group projects, has been able to receive orders from external clients recently. However, the timely execution and receipt of payments from these projects would be crucial. Expat Engineering India Limited (EEIL) was originally a division of Expat Properties India Limited, established in 1999 and part of the Expat Group. Later in 2007, this division demerged into a separate entity, EEIL. This restructuring was done in order to expand the operations for construction of residential buildings other than the group projects. EEIL, promoted by Mr. Santosh Balakrishna Shetty and several others, is engaged in executing contracts for land & infrastructure development and construction of residential & commercial buildings for projects belonging to the Expat group as well as others. EEIL registered a total operating income of INR72.7 crore and PAT of INR2.6 crore in FY16 (refers to the period April 1 to March 31) as against operating income of INR65.8 crore and PAT of INR2.2 crore in FY15. GALAXY MICA: CRISIL Upgrades Rating on INR5.95MM LT Loan to B+ -------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Galaxy Mica Private Limited to 'CRISIL B+/Stable' from 'CRISIL B/Stable', and reaffirmed the short-term rating at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Foreign Exchange Forward 0.05 CRISIL A4 (Reaffirmed) Long Term Loan 5.95 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects ramp-up in, and stabilisation of, operations which, along with addition of new customers, is likely to result in a 50% year-on-year growth in turnover in fiscal 2017 from INR14.7 crore. Furthermore, ongoing capacity expansion will lead to a healthy 20% revenue growth over the medium term, with cash accrual increasing to INR1.5-2 crore annually. However, financial risk profile remains constrained by modest networth and large working capital requirement. The ratings reflect GMPL's working capital-intensive operations, aggressive capital structure, and modest scale of operations in the intensely competitive laminates industry. These weaknesses are partially offset by the experience of its promoters and their funding support. Analytical Approach Unsecured loans from promoters have been treated as neither debt nor equity as these are expected to remain in business and are subordinated to bank loans. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations: With turnover of INR14.7 crore in fiscal 2016, scale remains small in the competitive laminates segment. Despite healthy revenue growth in fiscal 2017, scale will remain subdued. * Working capital-intensive operations: Gross current assets were in excess of 300 days as on March 31, 2016. * Aggressive capital structure: Networth was small at INR2.4 crore and gearing high at 3.0 times as on March 31, 2016. Strengths * Extensive experience of promoters: The promoters have industry experience of more than a decade. * Funding from promoters: Unsecured loans from promoters increased to INR3.5 crore in fiscal 2017 from INR1.5 crore as on March 31, 2015. Outlook: Stable CRISIL believes GMPL will continue to benefit over the medium term from the extensive experience and funding support of its promoters. The outlook may be revised to 'Positive' in case of higher-than-expected cash accrual and a better working capital cycle. The outlook may be revised to 'Negative' if substantially low sales or profitability, stretch in working capital cycle, or large, debt-funded capital expenditure further weakens financial risk profile. Incorporated in 2012 and promoted by Ahmedabad-based Mr. Ashwin Patel, Mr. Gautam Patel, and Mr. Suresh Patel, GMPL manufactures laminates used for furnishing. Operations began from September 2014. Profit after tax was INR0.11 crore on an operating income of INR14.7 crore in fiscal 2016, against a loss of INR0.69 crore on an operating income of INR4.8 crore in the previous year. GATIMAN AUTO: CRISIL Upgrades Rating on INR4.6MM Loan to 'B' ------------------------------------------------------------ CRISIL has upgraded its rating on the long-term bank facilities of Gatiman Auto Private Limited to 'CRISIL B/Stable' from 'CRISIL B-/Negative', and reaffirmed the short-term facilities at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.2 CRISIL A4 (Reaffirmed) Cash Credit 4.6 CRISIL B/Stable (Upgraded from 'CRISIL B-/Negative') Letter of Credit 1.45 CRISIL A4 (Reaffirmed) The rating upgrade reflects belief that GAPL will sustain improvement in its business risk profile over the medium term, supported by diversified customer profile and product portfolio. Revenue grew 18% over the previous fiscal to INR76.5 crore in fiscal 2016, and is expected at INR86-88 crore in fiscal 2017. Increasing revenue should enhance absorption of fixed costs. Operating margin improved to 9.7% in fiscal 2016 from 2.8% in fiscal 2014. Cash accrual improved to INR4.63 crore in fiscal 2016 from INR2.25 crore in fiscal 2015, and comfortably covered maturing debt of INR2 crore. Consequently, financial risk profile was moderate, with gearing of 1.6 time as on March 31, 2016, and comfortable interest coverage ratio of 2.6 times in fiscal 2016. The financial metrics, particularly liquidity, should remain comfortable over the medium term because of steady cash accrual, in the absence of large capital expenditure. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations, and susceptibility to volatility in raw material prices: Scale of operations remains modest'with topline of about INR76.5 crs. in fiscal 2016'and susceptibility to volatile raw material prices persists, despite track record of more than 25 years. Strength * Promoters' extensive experience and established customer relationships: Benefits from the promoters' extensive experience of more than 40 years, and strong relationships with large customers should continue to support business risk profile. Outlook: Stable CRISIL believes GAPL will continue to benefit over the medium term from the promoters' experience. The outlook may be revised to 'Positive' if significant improvement in revenue and steady profitability lead to sizeable cash accrual, while working capital cycle remains stable. The outlook may be revised to 'Negative' if low cash accrual, increase in working capital requirement, or large, debt-funded capital expenditure weakens the financial risk profile, especially liquidity. Incorporated in 1988, GAPL manufactures sheet metal components (press parts), mainly fuel tanks, silencer assemblies, and tippers for automobile and industrial original equipment manufacturers. The company is based in Pithampur (Madhya Pradesh) and is promoted by Mr Ashvin Shah, Mr Subhash Chuttar, Mr Shyam Jain, and Mr Prafull Kothadiya. GAPL has reported a profit after tax (PAT) of INR3.08 crore on net sales of INR76.48 crore for fiscal 2016, against a PAT of INR0.37 crore on net sales of INR68.76 crore for fiscal 2015. GOPAL CHAKRABORTY: Ind-Ra Raises Rating on Bank Loans to 'BB- ------------------------------------------------------------- India Ratings and Research (Ind-Ra) has upgraded Gopal Chakraborty Charitable Trust's bank loans to 'IND BB-' from 'IND B+' with a Stable Outlook as: -- INR275.60 mil. (increased from INR264.28) Bank loans raised to IND BB-/Stable rating; and -- INR52.30 mil. Proposed bank loans* assigned with provisional IND BB-/Stable rating * The rating is provisional and shall be confirmed upon the sanction and execution of loan documents for the above facilities by GCCT to the satisfaction of Ind-Ra. KEY RATING DRIVERS The upgrade reflects GCCT's growing student headcount annually and developing brand equity of its school - Indus Valley World School. GCCT reported above 10% yoy growth in headcount during FY16-FY17 (end February 2017). It has created additional infrastructure and doubled its student intake capacity in the academic year 2016-2017. Ind-Ra expects the headcount to grow further during FY18-FY19, on the back of availability of infrastructure. The upgrade also reflects the trust's continuously increasing scale of operations (FY16 total income: INR189.32 million; 17.67%yoy) and net operating surplus (FY16: INR6.63 million; FY15: negative INR0.82 million). The trust's operating margins increased moderately by 1.29 percentage points to 17.87% in FY16 as operating income increased 18.04% yoy as against 16.21% yoy increase in operating expenditures. However, it remained lower than other educational institutions rated by Ind-Ra at 'IND BB'. The trust's total corpus funds turned positive first time ever in FY16 since inception due to the annual addition of development funds and annual operating surplus. GCCT reported INR23.38 million corpus funds in FY16 (FY15: negative INR6.57 million). Moreover, GCCT's debt service coverage ratio (DSCR) also increased to 1.56x in FY16 from 1.26x in FY15. This was on the back of a 23.96%yoy increase in current balance before interest and depreciation (CBBID) to INR37.52 million while debt to service remained at about INR24 million during FY15-FY16. DSCR will come under stress during FY18-FY19; however, it can be adequately covered through promoters support. Promoters had injected funds INR9.22 million and INR16.95 million in the form of unsecured loans and capital, respectively, in FY16. Ind-Ra expects promoters support to continue in case of any stress on liquidity. However, the ratings are constrained by the trust's increasing debt burden and tight liquidity. Its total debt increased to INR324.72 million in FY16 from INR224.83 million in FY15. The addition of debt was mainly to fund the capex. Debt/income was 171.52x in FY16 (FY15:139.73x) and debt/CBBID was 8.65x (7.43x). Also, its balance sheet resources were limited to cover the debt (FY16: INR324.72 million) and operating expenditures (FY16: INR151.80 million). Available funds (cash and unrestricted funds) cover to debt was 4.95% and its cover to operating expenditure was 10.58% in FY16. RATING SENSITIVITIES Positive: A further improvement in operational effectiveness of the trust's institute resulting in an improvement in its operating margins, liquidity profile and debt metrics could positively affect the ratings. Negative: A significant fall in student enrolments, leading to further deterioration in the operating margins, liquidity profile and a significant fall in DSCR may trigger a negative rating action. COMPANY PROFILE GCCT runs a school - Indus Valley World School. The trust was established in 2008 in Kolkata. It is registered under the Indian Trust act, 1882. The school offers K-12 education and is affiliated to the Central Board of Secondary Education. The school is spread over 165,000sqf. GOVARDANAGIRI AGRO: Ind-Ra Assigns 'B+' Long-Term Issuer Rating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Govardanagiri Agro Industries Private Limited a Long-Term Issuer Rating of 'IND B+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR140 mil. Proposed term loans* assigned with Provisional IND B+/Stable rating; -- INR100 mil. Proposed fund-based facilities* assigned with Provisional IND B+/Stable/Provisional IND A4 rating * The rating is provisional and shall be confirmed upon the sanction and execution of the loan documents for the proposed facilities by GAIPL to the satisfaction of Ind-Ra. KEY RATING DRIVERS The ratings reflect the under-construction stage of GAIPL's cotton oil extraction project. The company was established in February 2015 to set-up a cotton oil extraction unit in Telangana. The project is nearly complete (90%), and the trial production is likely to begin by end-July 2017. The project is likely to commence commercial production by October 2017. The management expects the facility to process 300 tonnes of cotton oil per day. The ratings are supported by the project's locational advantage in terms of availability of raw materials (which are sourced from ginning and pressing mills in the area) and promoters' two decades of experience in cottonseed delinting and expelling processes. RATING SENSITIVITIES Negative: Failure to scale up operations leading to a stressed liquidity position could lead to a negative rating action. Positive: Successful commencement of operations leading to substantial revenue and profitability will lead to positive rating action. COMPANY PROFILE GAIPL was established in February 2015 to set-up a cotton oil extraction unit in Telangana. The site will engage in cottonseed delinting, dehulling and oil extraction processes to provide oiled cake, hulls, oil and lint. The promoters of the company are Mr. D Raghavaiah and Mr. Ronda Suresh. GURU KIRPA: CRISIL Upgrades Rating on INR6MM Cash Loan to B+ ------------------------------------------------------------ CRISIL has upgraded its rating on the long term bank facilities of Guru Kirpa Agro Industries - Firozpur (GKAI) to CRISIL B+/Stable from CRISIL B/Stable. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Term Loan 4 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Warehouse Financing 2 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects improvement in financial risk profile marked by equity infusion of INR1.03 crore in fiscal 2016, which improved total outside liabilities to tangible networth ratio (TOLTNW) to 6.87 times as on March 31, 2016, from 14.29 times as on March 31, 2015. The TOLTNW ratio is expected to improve further over the medium term due to increase in networth owing to steady accretion to reserves and the lower dependence on outside liabilities which in turn should expand cash accrual and strengthening debt protection metrics. Consequently, the interest coverage ratio and net cash accrual to adjusted debt is expected to improve to 1.7'1.9 times and 5'6 %, respectively, over the medium term against 1.45 times and 4% in fiscal 2016. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: Scale of operations is modest reflected by operating income of INR36.35 crore in fiscal 2016. Growth is expected to be moderate due to low milling capacity of INR2 tonne per hour and intense competition owing to high fragmentation in the industry on account of low entry barriers. * Working capital intensive operations: Operations are expected to remain working capital intensive-gross current assets of 213 days as on March 31, 2016, resulting from large inventory of 210 days. Strength *Extensive experience of partners: The partners have extensive experience in commodity trading business through commission agents in Fazilka and nearby man dis. They have also been associated with agriculture business and have sound knowledge of rice industry and market dynamics in the region. Outlook: Stable CRISIL believes GKAI will continue to benefit from the experience of its partners. The outlook may be revised to 'Positive' if growth in revenue leading to high cash accrual along with efficient working capital management improves financial risk profile. The outlook maybe revised to 'Negative' if low cash accrual, increase in working capital requirement, or sizeable debt-funded capital expenditure, constrain liquidity. Established as a partnership firm in 2013 by Mr Rajinder Kumar and seven others, GKAI primarily processes basmati and non- basmati rice at its facilities in Fazilka, Punjab. The operations are managed by Mr Kumar, supported by other partners. Profit after tax was INR16 lakhs over operating income of INR36.76 crore in fiscal 2016 vis-a-vis profit after tax of INR11 lakhs over operating income of INR15.44 crore in fiscal 2015. H.V. EQUIPMENTS: CRISIL Reaffirms B+ Rating on INR4MM Overdraft --------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of H.V. Equipments Private Limited at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 12 CRISIL A4 (Reaffirmed) Bank Guarantee 1 CRISIL B+/Stable (Reaffirmed) Overdraft 4 CRISIL B+/Stable (Reaffirmed) Proposed Bank Guarantee 4 CRISIL A4 (Reaffirmed) Business risk profile is expected to grow by around 10% over the medium term on the back of order book of INR39 crore as on January 31, 2017, to be executed in the next 12-18 months. Operating margin is expected to remain healthy at 11.5-12% due to limited competition in installing ash handling systems. However, margin will remain susceptible to the nature and quantum of orders received. Key Rating Drivers & Detailed Description Strengths * Extensive experience of promoter and established customer relationship: Presence of more than 30 years in the fly ash handling and mill reject systems has enabled the promoter to establish strong client relationship. * Average financial risk profile: Capital structure is healthy and debt protection metrics moderate, but net worth is small on account of modest scale of operations. However, with healthy profitability and no debt-funded capital expenditure, financial risk profile is expected to remain average over the medium term. Weaknesses * Small scale of operations and susceptibility to cyclicality in end-user industry: Scale is modest due to tender-based business and also because the company only undertakes ash handling systems, which form a small portion of the thermal power industry. Despite expected improvement, scale of operations will remain subdued over the medium term. * Working capital-intensive operations: Gross current assets were 292 days as on March 31, 2016, and have remained consistently high in the past five years because of stretched receivables. With rise in orders, working capital requirement is expected to increase significantly over the medium term and hence its management will remain a key rating sensitivity factor. Outlook: Stable CRISIL believes HVEPL will continue to benefit over the medium term from the extensive experience of its promoter. The outlook may be revised to 'Positive' if more-than-expected growth in scale of operations and profitability or significant improvement in working capital cycle leads to a better liquidity. The outlook may be revised to 'Negative' if considerably low operating income or profitability or any delay in receivables weakens liquidity. Set up in 1984 by Mr. S S Verma, HVEPL installs ash handling and mill reject systems for public sector enterprises. It mainly provides dense phase pneumatic conveying systems to thermal power and cement plants, and paper mills. The company has a fabrication and design unit in Noida. Profit after tax (PAT) was INR54.63 lakh on net sales of INR18.73 crore for fiscal 2016, vis-a-vis INR50.59 lakh and INR17.28 crore, respectively, in fiscal 2015. INDIAN SUCROSE: CRISIL Raises Rating on INR150MM Cash Loan to BB- ----------------------------------------------------------------- CRISIL has upgraded its rating on the bank loan facilities of Indian Sucrose Limited to 'CRISIL BB-/Stable' from CRISIL B+/Stable. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 150 CRISIL BB-/Stable (Upgraded from 'CRISIL B+/Stable') The upgrade reflects improvement in liquidity reflected in higher cushion between cash accrual and repayment obligations. ISL has already earned cash accrual of INR43 crore in the first nine months of current fiscal against maturing debt obligations of INR24.48 crore in fiscal 2017 as against previous expectation of barely sufficient cash accruals. CRISIL believes cushion between cash accrual and repayment obligations will remain sufficient with expected sustained high sugar realization and reducing debt obligations. Further, due to higher cash accrual, networth will increase significantly and hence total outside liabilities to tangible networth (TOLTNW) should be 2.8'3.0 times as on March 31, 2017 (5.6 times as on March 31, 2016) resulting in higher financial flexibility. The TOLTNW is expected to improve further over the medium term in the absence of any debt-funded capital expenditure plan and lower dependence on working capital debt. The rating reflects ISL's established position in Punjab sugar industry and average financial risk profile. These strengths are partially offset by volatile operating margin, intensive working capital operations and exposure to risk related to government regulations. Key Rating Drivers & Detailed Description Strengths * Established position in Punjab sugar industry: With over two decades of presence, ISL is an established player. The operating revenue is expected to touch INR360 crore in fiscal 2017. ISL sells sugar under the brand 'Sweeto' in Punjab, Himachal Pradesh, Rajasthan and Jammu & Kashmir markets through its network of dealers and distributors. It has a manufacturing unit in Mukerian (Punjab) with sugarcane crushing capacity of 6500 tonne per day. * Average financial risk profile: TOLTNW is expected to be at 2.8'3.0 times over the medium term. The interest coverage ratio and net cash accrual are also expected to be at 2.8'3.0 times and 11-12% over the medium term. Weaknesses * Volatile operating margin: The operating margin'at 6.7'12.3% over the last three years'is expected to be significantly high at 20% in fiscal 2017 owing to volatile sugar prices depending upon seasonal variation in sugarcane production. * Exposure to risk related to regulatory approval: The sugar industry is highly regulated, with government controls on pricing, supply of sugarcane, and sugar release. The statutory minimum price of sugarcane and prevailing sugar prices are key factors that determine a sugar mill's profitability. * Working capital intensity, driven partly by seasonality in operations: The flow of orders generally peaks in the second half of the year due to which working capital requirement is higher towards March-end. Therefore, gross current asset days of 321 as on March 31, 2016, majorily driven by inventory days of 246 days. Outlook: Stable CRISIL believes ISL will continue to benefit from its established position in the sugar market in Punjab. The outlook may be revised to 'Positive' if high cash accrual strengthens capital structure and improves working capital cycle. The outlook may be revised to 'Negative' if company reports lower than expected cash accruals weakening its capital structure, or stretch in working capital cycle constrains liquidity. The Yadu group acquired ISL from the Oswal group in 2002. Its manufacturing unit at Mukerian has a sugarcane crushing capacity of 6500 tonne per day. For the nine months ended December 31, 2016, ISL's profit after tax (PAT) was INR28.01 crore on net sales of INR274.43 crore, against a net loss of INR18.9 crore on net sales of INR127.07 crore for the corresponding period of the previous fiscal. In fiscal 2016, the PAT was INR5.97 crore on net sales of INR283.09 crore, against net loss of INR8.76 crore on net sales of INR211.99 crore in fiscal 2015. JUMBO BAG: CRISIL Reaffirms B+ Rating on INR34.5MM Cash Loan ------------------------------------------------------------ CRISIL's ratings on the bank facilities of Jumbo Bag Limited continue to reflect JBL's below-average financial risk profile marked by leveraged capital structure and weak debt protection metrics. These rating weaknesses are partially offset by the company's established regional market position in the Flexible Intermediate Bulk Containers (FIBC) segment. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 7.7 CRISIL A4 (Reaffirmed) Cash Credit 34.5 CRISIL B+/Stable (Reaffirmed) Foreign Bill Discounting 6.25 CRISIL B+/Stable (Reaffirmed) Letter of Credit 8 CRISIL A4 (Reaffirmed) Standby Line of Credit 1 CRISIL B+/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weakness * Financial risk profile: The group's financial risk profile is marked by gearing of 3.9 times respectively for fiscal 2016. The group's debt protection metrics is modest with interest coverage and net cash accruals to total debt ratios of 1.1 times and 0.02 times respectively for fiscal 2016. * Working capital intensive operations: The group's operations are working capital intensive due to large inventory which led to high Gross Current Asset (GCA) days of 310 as on March 31, 2016. Strengths * Long standing presence of the promoters: The vast experience of promoters has helped the group in establishing relationship with key suppliers and customers. Outlook: Stable CRISIL believes that JBL will maintain its established position in the FIBC market over the medium term, supported by its established relationships with customers and suppliers. The outlook may be revised to 'Positive' in case of significant improvement in the company's scale of operations and profitability coupled with prudent working capital cycle leading to a better financial risk profile. Conversely, the outlook may be revised to 'Negative' if JBL's accruals decline, or if it undertakes a large debt-funded capital expenditure programme, or if its working capital management deteriorates, resulting in weakening of its financial risk profile JBL, established in 1990 in Chennai, manufactures FIBCs, also known as jumbo bags. The company is a part of Bliss group and is promoted by Mr. G P N Gupta. For the three quarters ended December 2016, the company had provisionally reported revenues of INR72.58 crore with a profit after tax (PAT) of INR0.61 crore. Company had reported net losses of INR0.98 crore on total revenue of INR85.29 crore in fiscal 2016, against net losses of INR1.48 crore and total revenues of INR96.35 crore, respectively, in fiscal 2015. Status of non-cooperation with previous CRA JBL has not cooperated with ICRA India which has suspended its rating vide release dated October 03, 2016. The reason provided by ICRA Limited is non-furnishing of information for monitoring of ratings. KIRTI SOLAR: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating --------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Kirti Solar Limited's (KSLT) Long-Term Issuer Rating at 'IND BB-'. The Outlook is Stable. The instrument-wise rating actions are: -- INR60 mil. Fund-based limits affirmed with IND BB-/Stable rating; -- INR40 mil. Non-fund-based limits affirmed with IND A4+ rating KEY RATING DRIVERS The affirmation reflects KSLT's continued small scale of operations and moderate credit profile. During FY16, its revenue was INR227 million (FY15: INR267 million), EBITDA margins were 2.2% (2.9%), interest coverage was 1.4x (1.3x) and net leverage was 4.4x (3.1x). The revenue fell due to slower execution of orders and the operating margins declined on account of an increase in the raw material expenses. The ratings factor in the company's strong liquidity as reflected in its maximum working capital utilization of 66.1% on an average for the 12 months ended January 2017. The ratings are supported by KSLT's strong association with its parent entity Pekon Electricals Limited (PELT; 'IND BB-'/Stable), in terms of strong operational linkages and common promoters. Consolidated FY16 financials of PELT and KSLT indicate revenue of INR584 million (FY15: INR1274 million), interest coverage of 1.5x (1.2x) and net leverage of 8.1x (5x). The consolidated revenue declined in FY16 on account of a decline in the export incentive sales which was a major revenue contributor for PELT. The ratings are also supported by its promoters' experience of almost a decade in the manufacture of solar products and trading of plastic granules. RATING SENSITIVITIES Positive: An improvement in the profit margins and overall credit profile could be positive for the ratings. Negative: Deterioration in the overall credit profile could be negative for the ratings. COMPANY PROFILE Incorporated in 2001, KSLT is an unlisted public limited entity that manufactures solar products. It has a registered office in Kolkata. It is managed by Dhiraj Bhagchandka, Rachit Jalan and Aditya Bhagchandka. KSC ENGINEERS: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned KSC Engineers Private Limited (KSC) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR80.40 mil. Fund-based limits assigned with IND BB+/Stable/IND A4+ rating; KEY RATING DRIVERS The ratings are constrained by KSC's small scale of operations. Revenue was INR329.55 million in FY16 (FY15: INR289.64 million). The ratings, however, are supported by an improved EBITDA margin and strong credit metrics. EBITDA margin was 10.06% in FY16 (FY15: 8.11%) on account of a decline in raw material prices. In FY16, gross interest coverage (operating EBITDA/gross interest expense) and net financial leverage (adjusted net debt/operating EBITDA) improved to 8.72x (FY15: 7.21x) and 1.96x (3.20x), respectively, on account of a rise in EBITDA margin. The ratings are further supported by KSC's established operational track record of over 30 years, three decades of its directors' experience in the auto component manufacturing business and comfortable liquidity position, indicated by an average utilization of working capital limits of 66% during the 12 months ended January 2017. RATING SENSITIVITIES Negative: A substantial dip in EBITDA margin on a sustained basis leading to weak credit metrics will be negative for the ratings. Positive: A significant improvement in revenue on a sustained basis while maintaining credit metrics at the current level will be positive for the ratings. COMPANY PROFILE Incorporated as a private limited company in 1985, KSC manufactures auto components such as fasteners, sheet metal components, brake and clutch parts, auto electric parts at its factory in Noida, Uttar Pradesh. KSC supplies to the overseas markets of Africa, Latin America, the Far East, the Middle East and others. LALWANI INDUSTRIES: Ind-Ra Cuts Long-Term Issuer Rating to 'BB-' ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Lalwani Industries Limited's (LIL) Long-Term Issuer Rating to 'IND BB-' from 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR14 mil. Fund-based limits lowered to IND BB-/Stable rating; and -- INR91 mil. Non-fund-based limits affirmed with IND A4+ rating KEY RATING DRIVERS The downgrade reflects LIL's weakened credit profile due to lower revenue, despite some recovery in 10MFY17. LIL's revenue improved to INR195.8 million in 10MFY17 (FY16: INR150.9 million), but remained substantially lower than the FY15 level of INR436.9 million. The sharp fall in revenue in FY16 was a combined effect of lower demand and prices. Although the demand was better in 10MFY17, realizations remained low. As a result, while the EBITDA interest improved to 1.4x in 10MFY17 (FY16: 0.4x) and the net leverage improved to 0.3x (9.3x), they remained below the FY15 levels of 1.7x and negative 4x, respectively. LIL's liquidity position is moderate. The company's working capital utilization has been low, with an average maximum utilization of around 75% and overall average of 55% in the 12 months ended January 2017. While cash flow from operations turned negative in FY16 due to an increase in working capital requirements as a result of stretching of receivables as well as building up of inventory due to the low demand, Ind-Ra expects it to turn positive in FY17 due to an improved EBITDA generation and easing of the working capital cycle (FY16: 111 days). While the gross interest coverage was less than 1x in FY16, the company had interest income of INR2.7 million, which was higher than the interest expense of INR2.3 million, resulting in a negative net interest coverage. Ind-Ra expects LIL's gross interest coverage to be above 1x in FY17. The ratings continue to be supported by the management's experience of over 25 years in the ferro alloys industry. RATING SENSITIVITIES Positive: Growth in the revenue along with an improvement in the credit metrics could lead to a positive rating action. Negative: A lower-than-expected improvement in the credit metrics could lead to a negative rating action. COMPANY PROFILE Incorporated in 1995, LIL manufactures ferro alloys including ferro silico magnesium, nickel magnesium, ferro molybdenum, ferro chrome andferro aluminium with a total installed capacity of 1,590mtpa. It is also involved in the trading of ferro alloy products. LIL is an associate entity of Lalwani Ferro Alloys Limited ('IND BBB'/Negative). MILAN INFRASTRUCTURES: CRISIL Cuts Rating on INR8MM Loan to 'D' --------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Milan Infrastructures and Developers Private Limited to 'CRISIL D' from 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 8 CRISIL D (Downgraded from 'CRISIL B+/Stable') The rating reflects the recent instances of delay by MIDPL in servicing its term debt obligations. The delays have been on account of constrained liquidity arising out of low customer advances. Key Rating Drivers & Detailed Description Weaknesses * Weak Financial Risk Profile: The financial risk profile is weak marked by weak capital structure/TOLTNW of 4.9 times in fiscal 2016. Further the networth stands modest at INR4.20 cr in fiscal 2016. Further debt protection metrics are also weak marked by interest coverage ratio of 1.2 times and NCAAD of 1.5 % in fiscal 2016. * Deteriorating liquidity risk profile marked by delay in debt servicing: MIPL failed to honor its debt repayment obligation of INR1 cr which was due on Jan-2017 and was only able to pay INR0.50 cr till Feb-2017. Strength * Promoters' extensive experience in real estate industry: MIDPL's promoters have extensive experience of more than a decade in the real estate sector. The promoter group enjoys an established position in the real estate sector and have implemented several residential and commercial real estate projects in and around Ghaziabad. MIDPL, set up in 2006, is engaged in development of various residential and commercial projects, mainly in Ghaziabad (Uttar Pradesh). The company is promoted by Mr. Navin Tyagi and Mr. Amit Mahajan. At present, it is undertaking a residential-cum- commercial project at Rajnagar extension, Ghaziabad. MIDPL reported a profit after tax (PAT) of INR0.08 Crores on net sales of INR6.53 Crores for fiscal 2016, vis-a-vis INR0.01 Crores and INR0.81 Crores, respectively in fiscal 2015, on a standalone basis. NANCY KRAFTS: CRISIL Lowers Rating on INR7.84MM Loan to 'B' ----------------------------------------------------------- CRISIL has downgraded its rating of Nancy Krafts Private Limited (NKPL; part of the Nancy Group) to 'CRISIL B/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Export Packing 16.66 CRISIL A4 (Downgraded Credit from 'CRISIL A4+') Letter of credit & 4.50 CRISIL A4 (Downgraded Bank Guarantee from 'CRISIL A4+') Proposed Long Term 7.84 CRISIL B/Stable (Downgraded Bank Loan Facility from 'CRISIL BB-/Stable') Standby Line of 1 CRISIL A4 (Downgraded from Credit 'CRISIL A4+') The downgrade reflects deterioration in the Nancy group's liquidity, marked by deterioration in its working capital cycle along with high bank limit utilization which was almost fully utilized for the past twelve month ended 31st January 2017. With working capital-intensive nature of operations the gross current assets are expected to be above 450 days over the medium term (457 days as on March 31st, 2016), the debtor days were already stretched at 357 days for March 31st, 2015 and the further stretch during fiscal 2016 was on the account of delay of payments from the group's customers. Consequently, creditor days are also expected to be stretched above 270 days over the medium term in line with March 31st, 2016. The creditor days was 159 days in fiscal March 31st, 2015. Furthermore, liquidity is further stretched marked by bank limits which are almost fully utilised, constraining financial flexibility. There were also instances of intermittent devolvement of Letter of Credit, which was regularized within 2-3 days. Crisil believes that Nancy Group's liquidity would remain weak over the medium term. Analytical Approach For arriving at the ratings, CRISIL has combined the business and financial risk profiles of NKPL, Nancy Krafts (NK), and Kitty Overseas. This is because the three entities, collectively referred to as the Nancy group, are in the same line of business, with a common customer base, and common promoters and management. Key Rating Drivers & Detailed Description Weaknesses * Working capital-intensive operations: Operations are working capital intensive, with gross current assets at 457 days as on March 31st, 2016, mainly driven by stretch in the group's debtor days to 346 days in March 31st, 2016 from 222 days as of March 31st, 2015. The increase in debtor days is attributed to slow realisation from overseas markets. * Stretched liquidity: The group's liquidity is stretched, with almost fully utilised bank limits for the 12 months through January 2017, constraining its financial flexibility. Further there has been a withdrawal of unsecured loans from the promoters which stand at INR0.92 crore in March 31st, 2016 from INR1.43 crore in March 31st, 2015. Strength * Promoters' extensive experience in garment business, and well- established relationships with customers: The Nancy group manufactures ready-made garments, entirely for export. The promoters, with over 30 years of business experience, along with their family members, are personally involved in all aspects of the business. They are also technically qualified and have a sound understanding of the garment export industry. Outlook: Stable CRISIL believes the Nancy group will continue to benefit over the medium term from its established relationships with customers. The outlook may be revised to 'Positive' if improvement in working capital management or in operating revenue and profitability margins strengthens liquidity. Conversely, the outlook may be revised to 'Negative' if more-than-expected deterioration in working capital due to large working capital requirement because of further stretch in its debtor days or debt-funded capital expenditure, or a decline in profitability margins puts pressure on its already weak liquidity. NK was set up in 1980 as partnership firm. NKPL was established in 1981 as a partnership firm and later reconstituted as a private limited company. Kitty Overseas was established as a partnership firm in 1993. All three entities manufacture ready-made garments, especially for women and children, at their plants in New Delhi. The entities cater to the export market and supply their products to retailers and wholesalers in Latin America, Mexico, Spain, the US, and Europe. The Nancy group reported a profit after tax of INR1.39 crore on net sales of INR113.67 crores for March 31st, 2016, vis-a-vis INR1.02 crore and INR114.07 crore, respectively, for March 31st, 2015, on a consolidated basis. NANDI GRAIN: CARE Assigns 'D' Issuer Not Cooperating Ratings ------------------------------------------------------------ CARE has been seeking information from Nandi Grain Derivatives Private Limited to monitor the ratings vide email communications/ letters dated October 25, 2016, November 25, 2016, February 17, 2017 and numerous phone calls. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 69.30 CARE D; ISSUER NOT COOPERATING; Based on best available information Short-term Bank Facilities 0.50 CARE D; ISSUER NOT COOPERATING; Based on best available information However, despite our repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which; however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on Nandi Grain Derivatives Private Limited's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. The ratings take into account delays in debt servicing obligation. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating in March 2016, the following were the rating strengths and weaknesses: Key rating strengths: Experienced promoter group: The company is a part of Nandyal based Nandi group of companies which has diversified business interest and long presence in the industry Key rating weakness: Stretched liquidity position: The company has been facing liquidity stretch with delays in debt servicing obligation. Nandi Grain Derivatives Private Limited, established in June 2010 is part of Nandi Group of Industries based out of Nandyal in Andhra Pradesh. The group since 1978 has built a diversified presence of businesses such as cement, dairy, PVC pipes, construction, TMT bars, etc. NGDPL is engaged in manufacturing of liquid starch using maize (wet milling process) as raw material with an installed milling capacity of 400 tons per day. Gluten, germs, corn steep soluble and fiber are the other by-products produced in the wet milling process which constitutes about 35% of the throughput. NEUROGEN BRAIN: CRISIL Raises Rating on INR22MM Loan to BB- ----------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facility of NeuroGen Brain And Spine Institute to 'CRISIL BB-/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Rupee Term Loan 22 CRISIL BB-/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects improvement in the business risk profile, with stabilisation of NBSI's operations, resulting in better- than-expected revenue growth thereby enhancing cash accrual and liquidity. With an increasing scale of operations and premium pricing, supported by specialised services in neurological disorders and spinal injuries through specialisation in stem cell therapy and related fields, cash accrual is expected to be at INR7.30 crore for fiscal 2017, and could exceed INR8.7 crore over the medium term. Improving cash accrual has enhanced the liquidity, and supported planned capital investments in the near term through internal sources of funds, allaying any pressure on the capital structure. The rating reflects the extensive experience of proprietor in the healthcare industry and healthy profitability in the neurology sector. These strengths are partially offset by an average financial risk profile, with a modest networth, high gearing, though supported by moderate debt protection metrics. The rating also factors in a modest scale of operations, driven by its single-site operations. Analytical Approach For arriving at its rating, CRISIL has combined the financials of NBSI and Neurogen Brain and Spine Institute Pvt Ltd (NBSIPL) owing to common proprietor, and significant business and financial linkages between them. Also, CRISIL has treated unsecured loans of INR5.41 crore extended to NBSI by the proprietor and affiliates as neither debt nor equity because proprietor have undertaken to retain these loans in the business over the medium term. Key Rating Drivers & Detailed Description Strength * Established presence in the neurology segment and proprietor's extensive experience: NBSI specialises in neurological disorders and spinal injuries treatment and attracts patients from all over the world. The proprietor, Dr Alok Kundanlal Sharma, with over two decades of experience in the healthcare sector, has been associated with renowned hospitals in Mumbai like Sion Hospital and KEM Hospital, and thus, has goodwill in the medical fraternity and among patients. Weaknesses * Small scale of operations, driven by single-site operations: Scale is modest, with revenue expected to be at INR34.25 crore for fiscal 2017, because of single-site operations. It runs a hospital only in Navi Mumbai, Maharashtra, exposing operations to risks related to risks related to force majeure. * Average financial risk profile and moderate debt protection metrics: Networth was modest at INR5.89 crore, and gearing and total outside liabilities to tangible networth ratio were high at 5.12 times and 3.99 times, respectively, as on March 31, 2016. Debt protection metrics were also average, with interest coverage and net cash accrual to total debt ratios at 2.26 times and 0.15 time, respectively, for fiscal 2016. Outlook: Stable CRISIL believes NBSI will benefit over the medium term from its proprietor's extensive experience. The outlook may be revised to 'Positive' if cash accrual is significantly better than expected, supported by a substantial increase in scale of operations while sustaining healthy operating margin. Conversely, the outlook may be revised to 'Negative' in case of lower-than-expected revenue or profitability, leading to deterioration in the financial risk profile. Registered in 2008, NBSI, a sole proprietorship firm by Dr Alok Sharma, provides medical services relating to neurological disorders and spinal injuries through specialisation in stem cell therapy and other rehabilitation services. For fiscal 2016, NBSI reported a profit after tax (PAT) of INR0.26 crore on an operating income of INR22.48 crore as against a PAT of INR0.03 crore on an operating income of INR11.35 crore the previous fiscal. For fiscal 2016, NBSIPL reported a PAT of INR1.97 crore on an operating income of INR6.0 crore as against losses of INR4.7 lakh on an operating income of INR4.41 crore the previous fiscal. PEKON ELECTRONICS: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Pekon Electronics Limited's (PELT) Long-Term Issuer Rating at 'IND BB-'. The Outlook is Stable. The instrument-wise rating actions are: -- INR40 mil. Fund-based limits affirmed with IND BB-/Stable rating; -- INR24.34 mil. Term loan assigned with IND BB-/Stable rating; and -- INR110 mil. Non-fund-based limits affirmed with IND A4+ rating KEY RATING DRIVERS The affirmation reflects PELT's small scale of operations and moderate credit profile. During FY16, its revenue declined to INR357 million (FY15: INR1,008 million) due to a decline in export incentive sales which was a major revenue contributor. This led to the net leverage deteriorating to 10.7x in FY16 (FY15: 6.1x). However, its interest coverage improved to 1.6x in FY16 (FY15: 1.2x) due to an improvement in the operating EBITDA margin to 1.9% from 1.1% because of an increase in other operating income (rental income). The ratings are supported by the company's strong liquidity position with its average working capital utilization being 75% during the 12 months ended January 2017. Also, its founders have more than three decades of experience in the trading of processed plastic granules. RATING SENSITIVITIES Positive: An improvement in the scale of operations and overall credit profile could be positive for the ratings. Negative: Deterioration in the overall credit profile could be negative for the ratings. COMPANY PROFILE Incorporated in 1985, PELT is engaged in the trading of processed plastic granules and duty entitlement pass book licenses. Its registered office is located in Kolkata. The company's day-to-day operations are managed by Dhiraj Bhagchandka, Suresh Kumar Jalan and Purushottam Kumar Bhagchandka. PGH INTERNATIONAL: CARE Assigns 'B' Rating to INR88.74cr LT Loan ---------------------------------------------------------------- CARE has been seeking information from PGH International Private Limited to monitor the rating(s) vide e-mail communications dated October 21, 2016, December 30, 2016 ad February 16, 2016 and numerous phone calls. However, despite our repeated requests, the company has not provided the requiste information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 88.74 CARE B; ISSUER NOT COOPERATING; Based on Best Available Information The rating on PGH International Private Ltd.'s bank facilities will now be denoted as CARE B; ISSUER NOT COOPERATING. The rating is constrained on account of prolonged delay of its Mall project and modest bookings thereof leading to increasing saleability risk. The rating is further constrained due to high project implementation and marketability risk of its recently launched residential project owing to nascent stage of its implementation and inherent cyclical nature of the real estate industry. The rating, however, draws strength from the experienced and resourceful promoters' group with long track record in execution of real estate project. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers Key Rating Weakness Prolonged delay of its Mall project and modest bookings thereof leading to increasing saleability risk Since the project execution delayed by 24 months and level of booking is modest thus the pace of new booking and realization of funds from sales would be very crucial. As PGH has received LOIs for only a small part of total leasable area, leasing of the balance space at envisaged rate in a time bound manner would be crucial. High project implementation and marketability risk of its recently launched residential project owing to nascent stage of its implementation The real estate project is at nascent stage of development and the company has higher dependence on customer advances for funding the project cost. Thus, considering the stage of development and subdued real estate scenario, completion of project within envisaged time and cost and timely receipt of customer advances would be very crucial considering its reliance on customer advances to fund the project cost. Key Rating Strengths Experienced and resourceful promoters' group with long track record in execution of real estate project. Mr. Suresh N Vijaywargia, an engineer by profession promoted PGH and he is having vast experience across a range of business activities. He has more than three decades of experience in the fields of engineering, construction, film financing, retailing and education in India and abroad. The promoter group is also financially resourceful and have demonstrated significant commitment as indicated by the tangible net worth of INR211.50 crore as on March 31, 2015. Originally incorporated in 2003 as NM International Pvt Ltd, PGH was initially engaged in film production activities which were subsequently discontinued. At present, PGH is developing a shopping and entertainment project by the name 'People's World' at Bhopal, on a land area of about 14.38 acres (owned by the promoter, Mr. Suresh N Vijaywargia) located at Bhanpur, Bhopal (Madhya Pradesh). The company is developing a shopping mall-cum- entertainment zone with a total construction area of 86,915 square meters. The company entered into development agreement with the promoter and the revenue surplus would be shared as 40:60 between Mr. Suresh Vijaywargia and PGH. Furthermore, adjacent to the present project site, on the land area of about 85 acres (owned by PGH), the company has developed banquet for events, adventure sports arena, film city, tourist attractions, water park, hotel, resort, etc. The company is also developing a High-Rise (Multistoried Residential Complex) named 'People High-Rise' on 65,930 Sq. mts of land. The proposed project is of 1,720 residential units, to be constructed on total 65923 Sq. mts and is scheduled to be completed in two phases. PODDAR CAR: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating -------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned Poddar Car World Private Limited (PCWPL) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR48.6 mil. Long-term loan assigned with IND BB+/Stable rating; -- INR13 mil. Long-term loan assigned with IND BB+/Stable Rating; -- INR385.9 mil. Fund-based working capital limits assigned with IND BB+/Stable/IND A4+ rating; and -- INR2.5 mil. Non-fund-based working capital limits assigned with IND A4+ rating KEY RATING DRIVERS The ratings reflect PCWPL's moderate credit profile during FY14- FY16 with EBITDAR interest coverage of 1.7x-2x and net adjusted leverage of 3.4x-5x. The net adjusted leverage increased to 4.8x in FY16 (FY15: 3.5x) due to an increase in working capital borrowings coupled with a marginal decline in the EBITDA margin to 2.6% (2.8%). EBITDAR interest coverage also declined to 1.8x in FY16 (FY15: 2x) as a result of an increase in interest payable along with the decline in EBITDA margin. Ind-Ra expects the credit metrics to witness some moderation in FY17 due to an increase in debt. The company's revenue increased substantially to INR2.9 billion 9MFY17 (FY16: INR2.8 billion), driven by its growth in the existing locations as well as its entry in West Bengal in 4QFY16. EBITDA margin remained range bound between 2.5%-2.8% during FY13- FY16 (FY16: 2.6%), reflective of the low-margin trading nature of business. The ratings are supported by PCWPL's position as an established dealer of Maruti Suzuki India Limited with an operational track record of over a decade. PCWPL opened the premium classNexa showroom in Assam and entered West Bengal in FY16. This will aid its revenue growth in the near term. The company plans to add another showroom in Assam in 2018 at a cost of around INR60 million. PCWPL's liquidity position is moderate as reflected in its average 75%-80% utilization of the working capital limits during the 12 months and negative cash flow from operations in two of the last four financial years (including FY16). RATING SENSITIVITIES Positive: An increase in the scale of operations along with a sustained improvement in the credit metrics could lead to positive rating action. Negative: EBITDAR interest coverage falling below 1.5x on a sustained basis could lead to a negative rating action. COMPANY PROFILE PCWPL began operations in 2006 as an authorised dealer of Maruti Suzuki India. It has 3S showrooms (sales, service and spares) of Maruti Suzuki cars and also deals in pre-owned car sales, accessories and spares. The company has nine showrooms: six in Assam and three in West Bengal. RAGHAV INDUSTRIES: CRISIL Reaffirms B+ Rating on INR8MM Loan ------------------------------------------------------------ CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' rating on the bank facilities of Raghav Industries. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8 CRISIL B+/Stable (Reaffirmed) Packing Credit 2 CRISIL A4 (Reaffirmed) Proposed Cash Credit Limit 2 CRISIL B+/Stable (Reaffirmed) Operating income grew 19% to INR54.3 crore in fiscal 2016 from INR45.14 crore the previous fiscal, driven by healthy demand and prices for rice. Operating margin improved marginally to 3.5% from 3.3%, and should remain at these levels. Working capital requirement has reduced, with gross current assets, inventory and debtors declining to 77, 62 and 11 days, respectively, as on March 31, 2016, from 152, 113, and 32 days, respectively a year earlier. Capital structure is highly leveraged, with gearing and total outside liabilities to tangible networth (TOLTNW) ratio of around 3.34 and 3.5 times, respectively, as on March 31, 2016. Debt protection metrics are weak, with interest coverage and net cash accrual to total debt ratios at 1.6 times and 7%, respectively, but adequate to service negligible maturing term debt. The firm does not have any debt-funded capex plans over the medium term. The ratings continue to reflect below-average financial risk profile and modest scale of operations. These rating weaknesses are partially offset by the extensive experience of the partners. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in the intensely competitive rice milling industry: Intense competition in the rice milling business restricts scale of operations and profitability (revenue and operating margin were INR54.3 crore and 3.5% in fiscal 2016). * Below-average financial risk profile: Modest profitability and scale of operations, and sizeable working capital debt continue to constrain financial risk profile. Gearing was high at 3.34 times as on March 31, 2016, and debt protection metrics were weak with interest coverage of around 1.6 times. * Strength Partners' extensive experience: Benefits from the partners' experience of more than a decade, and their established relationships with customers and local suppliers, and keen grasp of market dynamics should continue to support business risk profile. Outlook: Stable CRISIL believes RI will continue to benefit over the medium term from the partners' extensive experience. The outlook may be revised to 'Positive' significant improvement in cash accrual or fresh capital infusion by partners improving the financial risk profile. Conversely, the outlook may be revised to 'Negative' if the financial risk profile deteriorates on account of pressure on profitability, stretch in working capital cycle, or any large, debt-funded capital expenditure. RI, set up in 2005, processes basmati rice. The firm is promoted by Mr Rakesh Garg and his brother, Mr Mukesh Garg. The milling and sorting unit in Karnal (Haryana) has milling and sorting capacities of 3 and 10 tonne per hour, respectively. RI reported profit of INR0.31 crore on sales of INR54.3 crore in fiscal 2016, against INR0.26 crore and INR45.14 crore, respectively, in fiscal 2015. RAGHUVANSHI COTTON: CARE Puts 'D' Issuer Not Cooperating Rating --------------------------------------------------------------- CARE has been seeking information from Raghuvanshi Cotton Ginning and Pressing Private Limited to monitor the rating vide e-mail communications dated February 11, 2017, February 20, 2017 and numerous phone calls. However, despite our repeated requests, the company has not provided the requisite information for monitoring the rating. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 69.44 CARE D; ISSUER NOT COOPERATING; Revised from CARE BB on the basis of best available information The rating on RCGPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. CARE has revised the rating assigned to the bank facilities of RCGPL to 'CARE D' on account of the delays in debt servicing due to stretched liquidity position. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers Key Rating Weaknesses Ongoing delays in debt servicing Debt servicing of RCGPL is irregular as reflected by delays in servicing of its term loan principal and interest along with over utilisation in its fund-based working capital facilities. Incorporated in 2006 by Mr. Dinesh Selani, Rajkot-based RCGPL is a 55% subsidiary of BTCL, which is currently managed by Mr. Bhadresh Mehta. RCGPL has a composite cotton ginning and pressing unit at Rajkot with an installed production capacity of 34,732 cotton bales (1 bale=170 kgs) per annum and 18 oil expellers having an installed capacity of 2,721 metric tonne per annum (MTPA) at its manufacturing facility located at Rajkot, Gujarat. RAJARSHI CARS: CRISIL Reaffirms B+ Rating on INR10.55MM Loan ------------------------------------------------------------ CRISIL has reaffirmed its rating of 'CRISIL B+/Stable' on the long-term bank facilities of Rajarshi Cars Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Drop Line Overdraft Facility 10.55 CRISIL B+/Stable (Reaffirmed) Electronic Dealer Financing Scheme (e-DFS) 8.00 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect modest scale of operations and dependence on the performance of Nissan Motor India Pvt Ltd and the success of its car models. Also, RCPL faces intense competition in the automotive dealership business. These weaknesses are partially offset by the promoter's healthy relationship with NMIPL, and the exclusive dealership of its passenger cars in Ahmedabad (Gujarat). Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in an intensely competitive industry Scale of operations remains modest, with revenue reducing to Rs38.2 crore in fiscal 2016, from Rs52.8 crore the previous fiscal, owing to intense competition and weak performance of NMIPL's cars. Intense competition and dependence on NMIPL product launch will continue to constrain scalability in operations over the medium term. * Average financial risk profile With modest networth of INR1.27 crore and high total outside liabilities to tangible networth ratio of around 7 times as on March 31, 2016, financial risk profile remains average. Debt protection metrics are average too, due to large debt. Fund infusions by the promoters are expected to partly support financial risk profile. Strength * The promoter's healthy relationship with principal: The promoter Mr Virendrasinh Vaghela, has been in the automobile dealership business for more than 5 years, andhas maintained healthy relationships with principal, NMIPL. He has also helped RCPL acquire a strong brand image in the region. Outlook: Stable CRISIL believes RCPL will continue to benefit over the medium term from its established relations with the principal. The outlook may be revised to'Positive' if cash accrual is larger than expected, leading to improvement in capitalstructure. Conversely, the outlook may be revised to 'Negative' in case of low accrual or deterioration in financial risk profile because of any large capital expenditure. RCPL, incorporated in 2011 and promoted by Ahmedabad-based Mr. Virendrasinh N Vagehla, is an authorised dealer of NMIPL's passenger cars in Ahmedabad. Profit after tax (PAT) was Rs0.10 crore on operating income of INR38.2 crore in fiscal 2016, against PAT of INR0.01 crore on operating income of INR52.8 crore in the previous fiscal. RAJKAMAL TEXTILES: CRISIL Reaffirms B+ Rating on INR5.0MM Loan -------------------------------------------------------------- CRISIL has reaffirmed its rating on the long term bank facilities of Rajkamal Textiles at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee .09 CRISIL A4 (Reaffirmed) Cash Credit 5.00 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect Rajkamal's modest scale of operations and, vulnerability of operating margin to raw material price fluctuations and, moderate financial risk profile marked by moderate gearing and below average debt protection metrics. These rating weaknesses are partially offset by the benefits the company derives from the extensive experience of its promoter in the grey melange yarn industry and established relationship with customers. Key Rating Drivers & Detailed Description Weaknesses * Susceptibility to volatility in raw material prices: Cost of cotton constitutes about 75 per cent of the firm's total cost of production. Any drastic volatility in raw material prices will effect company's performance over the medium term. * Moderate scale of operations in highly fragmented grey melange yarn industry: The scale of operation remain moderate with expected revenue of around INR37.6 crore in fiscal 2017. The operations remain exposed to intense competition in the fragmented grey melange yarn industry. * Modest Financial Risk profile: Rajkamal has below-average financial risk profile marked by small networth and moderate gearing of INR5.8 crore and 1.76 times, respectively, as on March 31, 2016. Its debt protection metrics are also average with interest coverage of 1.63 times for fiscal 2016. Financial risk profile will continue to remain below-average over the medium term with moderately high reliance on working capital debt and modest operating profitability. Strengths * Established track record: Promoter's presence of over two decades in grey melange yarn business. This enabled a healthy growth in revenue. An established relationship with major suppliers and customers further strengthens the market position. Outlook: Stable CRISIL believes that Rajkamal will continue to benefit over the medium term from the extensive industry experience of its promoter. The outlook may be revised to 'Positive' if the firm scales up its operations and generates more-than-expected cash accruals on a sustained basis, resulting in an improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if Rajkamal's capacities are under-utilized, resulting in low cash flows, if the operating margin declines, or if it undertakes a large debt-funded capital expenditure programme, leading to deterioration in its financial risk profile. Set up in 2002 by Mr. C Rajendran and Mrs. C Nanjammal, Rajkamal manufactures grey melange yarn with counts ranging from 20s to 40s. It is based in Coimbatore in Tamil Nadu. For 2015-16, Rajkamal has registered a profit after tax (PAT) of INR10 lakh on net sale of INR37.59 crore, as against a PAT of INR9.7 Lakh on net sale of INR35.40 crore for 2014-15. RIO GLASS: CARE Assigns 'B+' Rating to INR5.34cr LT Loan -------------------------------------------------------- The ratings assigned to the bank facilities of Rio Glass Private Limited are primarily constrained on account of its modest scale of operations, leveraged capital structure and moderate debt coverage indicators and weak liquidity position during FY16 (refers to the period April 1 to March 31). Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 5.34 CARE B+; Stable Assigned Short-term Bank Facilities 0.60 CARE A4 Assigned The ratings are further constrained on account of susceptibility of profit margins to volatility in raw material price and foreign exchange fluctuations. The ratings however, continue to derive strength from experience of the promoters and healthy operating margin during FY16 (refers to the period April 1 to March 31). RGPL's ability to increase its scale of operations with improvement in capital structure and liquidity indicators would be the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operations: The total operating income (TOI) of RGPL remained modest at INR8.63 crore during FY16 (Audited) which increased by 24.53% as compared with FY15. Leveraged capital structure and moderate debt coverage indicators: The capital structure of the company stood leveraged marked by overall gearing of 2.12 times as on March 31, 2016 (Audited) as against 2.09 times as on March 31, 2015. Net worth of the company stood modest at INR2.37 crore as on March 31, 2016. Debt coverage indicators of the company also stood moderate as marked by total debt to GCA (TDGCA) of 7.42 years [FY15:8.46 years] and interest coverage of 2.09 times [FY15: 2.10 times] in FY16. Weak liquidity position: The current ratio of the company stood below unity at 0.92 times as on March 31, 2016 as against 0.87 times as on March 31, 2015 owing to creditors and working capital borrowings as on balance sheet date. Susceptibility of profit margins to volatility in raw material price and foreign exchange fluctuations: Main raw material for RGPL is silica and Price of silica is changing with supply and demand. Because of being main raw material, changes in price of silica can have a direct effect on profitability of RGPL. Key Rating Strengths Healthy operating margin: The PBILDT margin of the company increased by 84 bps y-o-y, and stood comfortable at 15.90% during FY16 as against 15.06% during FY15. The increase in PBILDT margin is primarily on account of small decrease in material cost. However, the PAT margin of the company increased by 64 bps y-o-y, but stood modest at 0.58% during FY16 as compared to negative 0.06% during FY15. Rajkot-based (Gujarat), RGPL was established by Mr. Hardik Patel, Managing Director and other directors in 2013. The company is engaged in manufacturing of glass. The product portfolio of the company includes toughened/tempered safety glass, insulated glass units, heat strengthened glass, laminated glass etc. The company sells its products across India as well as export to Nepal, Bhutan, Nigeria and Africa. The company has its manufacturing unit at Rajkot. The company sells its products under the brand name of 'RIO'. As per the audited results for FY16, RGPL reported net profit of INR0.05 crore on a total operating income of INR8.63 crore as against net loss of INR0.01 crore on a total operating income of INR6.93 crore in FY15. RSI SOFTECH: CRISIL Reaffirms B+ Rating on INR4.5MM Cash Loan ------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings to the bank facilities of RSI Softech India Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2 CRISIL A4 (Reaffirmed) Cash Credit 4.5 CRISIL B+/Stable (Reaffirmed) Long Term Loan 0.22 CRISIL B+/Stable (Reaffirmed) Proposed Fund-Based Bank Limits 1.78 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect RSI's modest scale of, and working capital-intensive, operations. These weaknesses are partially offset by the extensive industry experience of the promoter and the company's healthy debt protection metrics. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: RSI's modest scale of operations is indicated by its operating income of INR10.01 crores in 2015-16 (refers to financial year, April 1 to March 31), and networth of INR6.5 crores as on March 31, 2016. * Large working capital requirement: RSI's large working capital requirement is reflected in gross current assets of 438-835 days over the three years ended March 31, 2016, driven by stretched receivables of 272'313 days. Strength * Promoter's extensive experience and moderate order book: RSI was set up by Mr. T Sesha Rao, a former scientist with the National Remote Sensing Centre (Department of Space, Government of India). He has experience of 28 years. The company has orders of INR15 crores and the promoter's extensive experience has helped it bag new orders and ramp up operations fast. Outlook: Stable CRISIL believes RSI will continue to benefit over the medium term from the promoter's extensive industry experience. The outlook may be revised to 'Positive' in case of significant ramp up in the scale of operations and profitability, resulting in higher- than-expected cash accrual, along with efficient working capital management. Conversely, the outlook may be revised to 'Negative' if RSI undertakes any higher-than-expected, debt-funded capital expenditure or fails to execute its projects on time, or bids aggressively for projects, leading to pressure on operating margin. Incorporated in 1988 and based in Hyderabad, RSI operates in the fields of remote sensing, geographic information system, cadastral surveys, topographical surveys, and urban utilities. The company is promoted by Mr. T Sesha Rao. RSI reported a net profit of INR0.50 crore on net sales of INR10.06 crore for fiscal 2016, as against a PAT of INR1 lakh on net sales of INR2.12 crore for fiscal 2015. SAKET ENGINEERS: CRISIL Reaffirms 'B' Rating on INR40.5MM LT Loan ----------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Saket Engineers Private Limited at 'CRISIL B/Stable' and reaffirmed its rating on the company's short-term bank facility at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 10 CRISIL A4 (Reaffirmed) Cash Credit 6.5 CRISIL B/Stable (Reaffirmed) Long Term Loan 40.5 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 25.0 CRISIL B/Stable (Reaffirmed) The ratings reflect SEPL's exposure to risks related to implementation of, and offtake from, its ongoing projects, and to risks and cyclicality inherent in the real estate industry. These rating weaknesses are partially offset by SEPL's established track record in the real estate segment in Hyderabad, supported by its promoter's extensive experience in the construction business. Key Rating Drivers & Detailed Description Strength * Established track record in regional real estate segment SEPL has completed two residential projects and around 10 industrial projects over the past 18 years in Hyderabad and has developed around 750 custom designed homes. The company has a healthy brand visibility in Hyderabad, and specialises in construction of gated communities and townships. SEPL's promoters, Mr. Radhakrishnan and Mr. G Ravikumar, have more than 20 years of experience in the construction industry. The promoters' experience has helped the company develop in-house expertise for all construction activities, thereby contracting civil construction Weaknesses * Exposure to project implementation risks SEPL is currently undertaking two residential projects: Bhu: sattva II, and Pranaam II. The construction for Sriyam and Pranaam, Callipolis is complete. Saket Bhu: sattva will be constructed in three phases. Phase-1 is expected to be completed, while phase-2 will be launched in the second-half of June 2017. Phase-3 of the project will be launched when construction in phase-2 is nearing completion. SEPL's high reliance on project- specific customer advances exposes the company to price realization and project implementation risks. * Exposure to risks and cyclicality inherent in real estate industry SEPL's business risk profile is susceptible to risks related to cyclicality in Indian real estate industry. The real estate sector in India is cyclical and is marked by volatile prices, opaque transactions, and a highly fragmented market structure. The execution of the real estate projects in India is affected by multiple property laws and non-standardized government regulations across the states. The risk is compounded by aggressive timelines for completion with shortage of man power (project engineers and skilled labor) in this sector. The recent slowdown in the real estate sector has adversely delayed the execution and sale of several ongoing and future projects. Outlook: Stable CRISIL believes that SEPL will continue to benefit over the medium term from its established presence in the real estate development business in Hyderabad and its promoter's extensive industry experience. The outlook may be revised to 'Positive' if the company registers substantial realisations from its ongoing projects, leading to considerable improvement in its liquidity. Conversely, the outlook may be revised to 'Negative' in case of time or cost overruns in the company's ongoing projects, or if the company undertakes large debt-funded projects, weakening its capital structure. Set up by Mr. T Radhakrishnan in 1993, SEPL undertakes residential real estate development; the company also undertakes civil work on contract basis. It is developing three projects'Saket Sriyam, Saket Pranaam, and Saket Bhu: Sattva'in Hyderabad, all of which are near completion. SEPL is also developing a project'Saket Callipolis'in Bengaluru (Karnataka). The Company has recorded PAT of INR0.74 Crore on operating income of INR61.81 Crore for fiscal 2016 vis-a-vis PAT of INR1.37 Crore on operating income of INR98.78 Crore for fiscal 2016. SARDAR INDUSTRIES: CRISIL Reaffirms B+ Rating on INR8MM Loan ------------------------------------------------------------ CRISIL has reaffirmed its rating on the long-term bank facility of Sardar Industries at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 0.25 CRISIL B+/Stable (Reaffirmed) Term Loan 1.75 CRISIL B+/Stable (Reaffirmed) The rating reflects the firm's modest scale of operations in the highly competitive cotton ginning industry and vulnerability to changes in cotton prices. These rating weaknesses are partially offset by the partners' substantial experience in the cotton ginning industry. Analytical Approach For arriving at the rating, CRISIL has treated unsecured loans of INR2.35 crore as on March 31, 2016 from the partners as neither debt nor equity. That's because these loans are at a lower-than- market interest rate and should remain in the business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in the highly fragmented cotton industry: Revenue was low in fiscal 2016 due to intense competition. Entry barriers are limited on account of low capital and technology intensity and little differentiation in end products. Fragmentation also limits the pricing and bargaining power, leading to lower profitability; the operating margin was around 2.3% in fiscal 2016. * Vulnerability to changes in cotton prices: As cotton is an agricultural commodity, its availability is highly dependent on the monsoon. Furthermore, government interventions and fluctuations in global cotton output have resulted in sharp fluctuations in cotton prices. Finished cotton prices declined and have remained volatile. Such fluctuations impact the margins of cotton ginners. Ability to manage volatility in cotton prices will remain a key sensitivity factor. Strengths * Extensive industry experience of the partners: The partners have an experience of around a decade in the cotton ginning industry. They have thus developed an understanding of the dynamics of the local market, and have established a relationship with customers and suppliers. This is likely to result in sustained revenue growth over the medium term. * Proximity to cotton-growing belts: The production facility is based at Kadi in Mehasana, which is a part of the cotton-growing belt of Gujarat. Gujarat accounts for nearly 33% of India's total cotton production. This enables procurement of raw cotton directly from local farmers, thus making operations more cost effective. Outlook: Stable CRISIL believes SI will continue to benefit from the extensive industry experienceof its partners. The outlook may be revised to 'Positive' in case of higher-than-expected revenue and profitability, leading to improvement in debt protection metrics. The outlook may be revised to 'Negative' if the financial risk profile deteriorates further due to large, debt-funded capital expenditure, and/or an increase in working capital requirement. SI was established as a partnership firm in 2010 by the Patel family, who manage operations. The firm gins cotton at its facility in Rangpurda, Kadi. In fiscal2016, net profit was INR0.20 crore on operating income of Rs48.27 crore, against net loss of Rs0.19 crore on operating income of Rs67.89 crore in fiscal 2015. SAVALIA COTTON: CARE Assigns 'D' Issuer Not Cooperating Ratings --------------------------------------------------------------- CARE has been seeking information from Savalia Cotton Ginning and Pressing Private Limited to monitor the rating vide e-mail communications dated February 11, 2017, February 20, 2017 and numerous phone calls. However, despite our repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at fair ratings. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 44.22 CARE D; ISSUER NOT COOPERATING; Issuer not cooperating; Revised from CARE BB) on the basis of best available information Short-term Bank 3.50 CARE D; ISSUER NOT Facilities COOPERATING; Revised from CARE A4 on the basis of best available information The ratings on SCGPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. CARE has revised the ratings assigned to the bank facilities of SCGPL to 'CARE D' on account of the delays in debt servicing due to stretched liquidity position. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers Key Rating Weaknesses Ongoing delays in debt servicing Debt servicing of SCGPL is irregular as reflected by delays in servicing of its term loan principal and interest along with over utilisation in its fund-based working capital facilities. Incorporated in November 1999, Rajkot-based, SCGPL is promoted by Mr. Utpal Savalia and Mr. Jitendra Bhalara and is engaged in cotton ginning & pressing and trading of cotton & cotton seeds. As on March 31, 2015, SCGPL had an installed capacity of 13,000 Metric Tonne Per Annum (MTPA) of cotton ginning at its processing unit located at Shapar Industrial Area near Rajkot in Gujarat. SHIV-OM SULZ: CARE Upgrades Rating on INR6.73cr Loan to BB- ----------------------------------------------------------- The revision in the long-term rating of Shiv-Om Sulz Fab Private Limited takes into account steady growth in its scale of operations marked by increasing Total Operating Income (TOI) along with improvement in its capital structure during FY16 (refers to the period April 1 to March 31). Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 6.73 CARE BB-; Stable Revised from CARE B+ Short-term Bank Facilities 0.50 CARE A4Assigned The ratings, however, continue to remain constrained on account of SFPL's presence in the highly competitive and fragmented textile industry along with its fluctuating profitability margins and working capital intensive nature of operations. The rating, further, continues to remain constrained on account of the susceptibility of the company's profitability to fluctuations in the raw material prices. The rating, however, continues to draw strength from the long standing experience of the promoters with its established track record of operations of more than a decade in the industry and location advantage by way of proximity to the raw material as well as customers due to its presence in the textile cluster, Bhilwara (Rajasthan). SFPL's ability to increase its scale of operations while improving profitability in light of the volatile raw material prices and improvement in the solvency position as well as efficient management of working capital shall be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Steady growth in TOI The scale of operations of SFPL as indicated by TOI grew at a Compounded Annual Growth Rate (CAGR) 10% in the last three financial years. During FY16, TOI witnessed significant growth by around 19% y-o-y on the back of increase in sales volume of fabrics along with higher revenue generated from trading activity as well as job-work receipt. Improvement in solvency position Its capital structure continued to remain moderately leveraged although improved; attributed to accretion of profit to reserve along with lower total debt level pertaining to schedule repayment of its term loans. The debt coverage indicators of the company also improved marginally albeit stood weak with total debt to GCA of 11.27 times as on March 31, 2016, along with interest coverage at 1.61 times in FY16. Key Rating Weakness Fluctuating albeit moderate profitability Profitability margins of the company have witnessed a fluctuating trend during past three financial years ended FY16 mainly on account of volatility associated with its primarily raw material coupled with its presence in the highly fragmented and competitive textile industry leading to pressure on profitability. During FY16, PBILDT margin of the company declined attributed to higher trading activity carried out was offset to an extent by higher revenue generated from job-work receipts which fetches better margin. In line with PBILDT margin, PAT margin of the company also declined, although lower in quantum than PBILDT margin, on the back of proportionately lower interest and depreciation expenses. Moderate liquidity position The business of the company remained to be working capital intensive in nature. The liquidity ratios of the company stood moderate with elongated operating cycle in FY16. Bhilwara (Rajasthan) based SFPL was initially incorporated in the name of BSM Suitings Private Limited in 1999 by Mr. Sheo Ratan Sadan along with his sons, Mr. Vinit Kumar Bubna and Mr. Amit Bubna. However, in 2002, the name of the company changed to its current form. SFPL is primarily engaged in the business of manufacturing of cotton grey fabrics and outsources the processing work required for the manufacturing of cotton finished fabrics on job-work basis to the nearby process house located at Bhilwara. Further, the company does trading of cotton grey and finished fabrics as well as undertakes job work activity for other textile players. The manufacturing facility of SFPL is located at Bhilwara with total of 75 looms having an installed capacity of 60 Lakh Meters Per Annum (LMPA) as on March 31, 2016. The company caters to domestic market and sells its products through the network of its agents located all over India under the brand name "Silver Ox". It procures yarn, key raw material, from the local Bhilwara market and nearby areas. SHREE RK: CARE Assigns 'B' Rating to INR4.90cr LT Loan ------------------------------------------------------ The ratings assigned to the bank facilities of Shree RK Industries are primarily constrained on account of its Nacent stage of operations , constitution as partnership concern and Seasonality associated with agro commodities and presence in highly fragmented and government regulated industry. The ratings are, further, constrained on account of its weak solvency and stressed liquidity position. The ratings, however, favourably take into account experienced management along with established relationship with customers as well as suppliers. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term bank facilities 4.90 CARE B; Stable Assigned Short-term bank facilities 2.50 CARE B; Stable/CARE A4 Assigned Increase in the scale of operations with improvement in profitability and efficient management of working capital would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weakness Nacent stage of operations and constitution as partnership concern The firm has started operation in March, 2015 and FY16 is the first full year of operations. The scale of operations of the firm is relatively modest and the low net worth base makes its operations highly susceptible to any business shock thereby limiting its ability to absorb losses or financial exigencies. Further, constitution as a partnership concern led to risk of withdrawal of capital. Being present in the highly fragmented and competitive industry, the profitability margin of the firm stood low marked by low PBILDT and PAT margin. Further, the profitability of the firm is susceptible to the fluctuation in agriculture commodities prices which depends on various factors like vagaries of weather, yield production and seasonality. Weak solvency position and stressed liquidity position The capital structure of the firm stood weak marked by an low overall gearing mainly on account of higher utilization of working capital bank borrowings. Further, the debt service coverage indicators and interest coverage ratio also stood weak mainly due to higher debt level and interest cost. The liquidity position of the firm stood stressed due to fully utilization of working capital borrowings during last twelve months ended January 2017. The current ratio and quick ratio stood at below unity level as on March 31, 2016. Seasonality associated with agro commodities and presence in highly fragmented and government regulated industry As the firm is engaged in the business of processing of wheat, the prices of agriculture commodities remained fluctuating and depend on production yield, demand of the commodities and vagaries of weather. Hence, profitability of the firm is exposed to vulnerability in prices of agriculture commodities. The agro commodity industry is characterized by highly fragmented and competitive in nature as evident by the presence of numerous unorganized and few organized players. Further, the industry is characterized by high degree of government control both in procurement and sales for agro-commodities. Government of India (GoI) decides the Minimum Support Price (MSP) payable to farmers. Key Rating Strength Experienced management and established long relationship with customers and suppliers The management of the company has vast experience in the industry. Further, with long standing presence of partners in the agro market, partners have established relationship with customers and partners. Jaipur (Rajasthan) based Shree R.K. Industries (SRK) was formed in May 2014 as a Partnership concern by Mr. Ram Kishan Khandelwal, Mr. Harsh Khandelwal and Mrs. Suman Khandelwal and shares profit and loss in the ratio of 5:25:70 respectively. Shree RK Industries is mainly engaged in the business of processing of wheat and sale its finished products mainly ataa, suji, maida, etc. in Rajasthan, Gujarat and Maharastra under the brand name of "Shahanai" and "100- Tunch". The firm procures raw material i.e. wheat from Haryana, Rajasthan and Madhya Pradesh. The processing plant of SRK operates in three shifts and is located at Jaitpura, Jaipur with an installed capacity of 12960 MTPA per shift. The promoters of the firm has also promoted, Harsh Enterprises (HE, Proprietor- Mrs Suman khandelwal) formed in 1993 and is engaged in the business of trading of agro commodities. SHRI SAI: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan -------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Shri Sai Hasti Agro at 'CRISIL B+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility .37 CRISIL B+/Stable (Reaffirmed) Term Loan .93 CRISIL B+/Stable (Reaffirmed) The rating reflects the working capital-intensive nature, and small scale, of operations in the highly competitive rice milling industry. These rating weaknesses are partially offset by the extensive industry experience of the proprietor. Analytical Approach For arriving at the rating, CRISIL has treated unsecured loans from the proprietor as neither debt nor equity as the loans are at an interest rate that is lower than the market rate, and will remain in the business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations Turnover was Rs31.64 crore in fiscal 2016. In the 10 months through January 2017, total sales were Rs28-30 crore, with 70-75% utilisation the total installed capacity of about 14,600 tonne per annum. While large players have better efficiencies and pricing power because of their scale of operations, small players are exposed to intense competition and low pricing flexibility, thus constraining profitability. * Working capital-intensive operations Gross current assets were 120-150 days in the two fiscals ended March 31, 2016 (148 days as on March 31, 2016) owing to debtors of 8-10 days and inventory of around four months. This is mitigated by creditors of 45-55 days. Working capital requirement is being funded through a bank limit of Rs7 crore, which has been almost fully utilised. Operations will remain working capital intensive over the medium term. Strength * Experience of the proprietor and established relationship with customers and suppliers The proprietor has an experience of more than a decade in the rice industry. Over this period, he has established a strong relationship with suppliers and customers. Benefit from this experience will continue over the medium term. Outlook: Stable CRISIL believes SSHA will continue to benefit from the extensive industry experience of itsproprietor and established relationship with suppliers and customers. The outlook may be revised to 'Positive' if revenue and profitability increase, leading to higher cash accrual and hence to a better financial risk profile. The outlook may be revised to 'Negative' in case of any large, debt-funded expansion, a substantial decline in revenue and profitability, or a stretched working capital cycle, leading to deterioration in the financial risk profile. SSHA, set up as a proprietorship firm in 2007 by Mr Pragnesh Kumar R Naik, initially traded in paddy. From December 2012, it started manufacturing rice flakes. Operations are managed by Mr Naik. Its manufacturing facility is in Navsari, Gujarat. In fiscal 2016, net profit was INR0.18 crore on operating income of Rs31.64 crore, against INR0.16 crore and Rs30.73 crore, respectively, in fiscal 2015. SINGAN PROJECTS: CARE Assigns 'D' Issuer Not Cooperating Ratings ---------------------------------------------------------------- CARE has been seeking information from Singan Projects Limited to monitor the ratings vide e-mail communications/ letters dated October 25, 2016, November 25, 2016, February 17, 2017, and numerous phone calls. However, despite our repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on SPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. The ratings have been revised on account of delays in debt servicing. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 33.00 CARE D; ISSUER NOT COOPERATING; Revised from CARE B+ Short-term Bank Facilities 21.50 CARE D; ISSUER NOT COOPERATING; Revised from CARE A4 Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers The revision in the ratings assigned to bank facilities of Singan Projects Limited takes into account stretched liquidityposition resulting in delays in debt servicing obligation. Singan Projects Limited, incorporated in 2002, is promoted by Mr. S. Narayana of Hyderabad, Andhra Pradesh (A.P). SPL is engaged in the business of water drainage, water supply scheme, development & improvement of reservoir, sanitation, drinking water projects etc. majorly through direct contracts, awarded by the State and Central Government departments. The promoter; Mr. S. Narayana Reddy (CMD) has been present in the construction industry for more than four decades and has significant experience in working for various projects under the Government department of AP. SOOD STEEL: CRISIL Upgrades Rating on INR7.5MM Cash Loan to B+ -------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facility of Sood Steel Industries to 'CRISIL B+/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects improvement in the business risk profile on account of a higher operating margin following better market realisation and increased revenue contribution from the more profitable sales to private construction contractors in Punjab and Himachal Pradesh. The operating margin was 4.7% in fiscal 2016 as against 2.2% in fiscal 2015. The margin is expected to be sustained over the medium term. The higher margin led to an increase in cash accrual and hence to better liquidity. The upgrade also factors an improvement in the financial risk profile because of lower gearing and higher debt protection metrics. The gearing was 0.95 time as on March 31, 2016, against 1.61 times a year earlier. Debt protection metrics were moderate, with interest coverage ratio of 4.63 times and net cash accrual to total debt (NCATD) ratio of 0.35 time in fiscal 2016. The rating reflects a modest scale of operations, customer and geographical concentration in revenue, and susceptibility to fluctuations in raw material prices. These rating weaknesses are partially offset by a comfortable financial risk profile because of low gearing, and the extensive experience of the partners in the steel industry. Analytical Approach CRISIL has treated unsecured loans of INR2.09 crore as neither debt nor equity. That's because these are extended by the promoters, subordinated to bank debt, and expected to remain in the business over the medium term. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations along with customer and geographical concentration in revenue: Revenue was low at INR71.4 crore in fiscal 2016. The steel industry is inherently vulnerable to economic cycles. The demand for steel products depends on growth of the primary end-user segments, such as infrastructure and real estate; any slowdown in these segments adversely affects demand. Also, customer and geographical concentration in revenue will continue to expose the firm to the risk of a slowdown in customer demand and in the economy of these regions, leading to lower sales over the medium term. * Susceptibility of the operating margin to fluctuations in raw material prices: Costs of production and profit margins in the steel long products industry depend on raw material prices, as raw material cost accounts for 85-90% of net sales. Also, the firm is unable to pass on raw material price increases on account of the commodity nature of its product. This has led to fluctuations in the operating margin. Strengths * Extensive industry experience of the partners: Before establishing the thermo-mechanically treated (TMT) steel manufacturing facility under SSI, the partners managed steel manufacturing facilities under Sood Steel Industries Pvt Ltd, which was among the few such units in Himachal Pradesh. The firm will continue to benefit from the extensive industry experience of its promoters and established relationship with customers. * Adequate financial risk profile: The gearing was 0.95 times as on March 31, 2016, while the interest coverage and NCATD ratios were 4.63 times and 0.35 time, respectively, in fiscal 2016. Outlook: Stable CRISIL believes SSI will continue to benefit from the extensive industry experience of its partners. The outlook may be revised to 'Positive' in case of improvement in the capital structure either by equity infusion or substantially higher in cash accrual, backed by a significant increase in the scale of operations or operating margin. The outlook may be revised to 'Negative' if the financial risk profile weakens, most likely because of large, debt-funded capital expenditure, or a decline in the operating margin. SSI was set up in 2010 by the Kangra, Himachal Pradesh-based Sood family as a partnership firm by Mrs Meenakshi Sood, her son Mr Sidharth Sood, and daughter Mrs Naina Sood. The firm manufactures TMT bars from mild steel billets and ingots. Profit after tax (PAT) was INR1.69 crore on net sales of INR71.4 crore in fiscal 2016, vis-a -vis INR41 lakh and INR80.4 crore, respectively, in fiscal 2015. STATUS SERAMIK: CARE Reaffirms B+ Rating on INR4.21cr LT Loan ------------------------------------------------------------- The ratings assigned to the bank facilities of Status Seramik India Private Limited continue to remain constrained on account of its small scale of operations along with its weak financial risk profile marked by the ongoing losses, leveraged capital structure, weak debt coverage indicators and stressed liquidity position during FY16 (refers to the period April 01 to March 31). The ratings are further constrained by SSIPL's presence in the highly fragmented quartz stone industry along with fortunes dependent upon real estate market, susceptibility of its profit margins to fluctuation in prices of raw material and power and fuel and its working capital intensive nature of operations. The ratings, however, continue to derive comfort from the experienced promoters of SSIPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 4.21 CARE B+; Stable Reaffirmed Short-term Bank Facilities 0.90 CARE A4 Reaffirmed Ability of SSIPL to increase its scale of operations, improvement in profit margins, capital structure and debt protection metrics coupled with effective management of working capital would remain the key rating sensitivities. Furthermore, improvement in liquidity position would also remain crucial. Detailed description of the key rating drivers Small scale of operations, ongoing losses, leveraged capital structure, weak debt coverage indicators and stressed liquidity position SSIPL's total Operating Income (TOI) grew by 16.89% y-o- y during FY16 on the back of increase in quantity sold during the year. However, scale of operations continues to remain small and due to high material cost incurred during the year PBILDT declined by 395 bps while on the back of high depreciation and interest costs SSIPL has reported net losses during FY16. On the back of high bank borrowing and low net worth base as on March 31, 2016, solvency position marked by overall gearing stood leveraged at 2.97x. Furthermore, owing to low cash accruals during FY16 and high debt level as on March 31, 2016, total debt to GCA stood high and weak at 17.08 times as on March 31, 2016. Operating cycle stood high and elongated at 207 days owing to high inventory level to meet demand of the product and maintaining minimum inventory of 70 designs of the product, having five different sizes of each design. Consequently, its fund-based limits remained fully utilized during the past 12 months period ended December 2016 hence overall operations stood working capital intensive in nature. Margins are susceptible to volatility of prices in raw material and power and fuel The price of the key raw material i.e. resins is market driven which due to higher demand is expected to remain firm and put pressure on the margins of tile manufacturers. Key Rating Strengths Experienced promoters Mr Sanjay Patel and Mr. Suresh Patel, who manage overall operation of SSIPL, possesses more than two decades of experience in the ceramic industry. SSIPL has over 100 dealers and distributors across India for the marketing and sale of its products. Sabarkantha-based (Gujarat) SSIPL an ISO 9001:2008 certified private limited company is engaged in the business of manufacturing of Quartz Stone, N- dura stone, Lappato and Rock Stone. SSIPL was incorporated in January, 2011 by Mr. Sanjay Patel and Mr. Suresh Patel while the operation was commenced from December 2011. SSIPL is operating from its sole manufacturing plant located in Sonsan (Sabarkantha District, Gujarat) with installed capacity of 1,50,000 Square Meters of Ceramic Products as on March 31, 2016. During FY16 (A), SSIPL reported net loss of INR0.33 crore on a TOI of INR16.70 crore as against net loss of INR0.08 crore on a TOI of INR14.28 crore during FY15. During 9MFY17 (Provisional), SSIPL has achieved TOI of INR14.09 crore. STERLING IMPEX: CRISIL Assigns 'B' Rating to INR10MM Overdraft -------------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the bank facilities of Sterling Impex - Delhi. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Letter of credit & Bank Guarantee 10 CRISIL A4 Overdraft 10 CRISIL B/Stable The ratings reflect a modest scale of operations in the fragmented chemicals trading industry, a weak financial risk profile, and large working capital requirement. These rating weakness are partially offset by the extensive industry experience of the promoters and an established relationship with suppliers and customers. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations in a fragmented industry: SI's scale of operations is modest as reflected in revenue of INR43.76 crore in fiscal 2016, and is estimated at around INR60.0 crore for fiscal 2017. The modest scale of operations limits bargaining power with suppliers as well as customers. * High working capital requirement: Gross current assets were 316 days as on March 31, 2016, because of receivables of 93 days. Against this, credit of 38 days is received from suppliers. * Weak financial risk profile: The gearing was high at 11.28 times as on March 31, 2016, and debt protection metrics low: interest coverage ratio was 0.56 time and net cash accrual to total debt ratio was a negative 0.06 time, in fiscal 2016. Strength * Extensive industry experience of the promoters: A presence of nearly three decades in the chemical business through a group company has enabled the promoters to understand market dynamics and establish a strong relationship with clients and suppliers. Outlook: Stable CRISIL believes SI will continue to benefit from its established market position and healthy relationship with customers and suppliers. The outlook may be revised to Positive in case of significant improvement in revenue and profitability leading to higher cash accrual, and hence to a better financial risk profile. The outlook may be revised to 'Negative' in case of considerable deterioration in the financial risk profile, particularly liquidity, most likely because of less-than- anticipated cash accrual, higher-than-expected working capital requirement, large, debt-funded capital expenditure, or substantial capital withdrawal. SI was established in 2003 by Mr Anil Mahajan. The firm imports and trades in polyvinyl chloride (PVC) and leather fabric; plasticizers such as DOP, DIP etc and resin, calcium carbonate, PVC, and other chemicals. The business activities are carries out at Delhi and Kashipur, Uttrakhand. SI, reported a profit after tax (PAT) of INR0.62 crore on net sales of INR43.76 crore for 2015-16 (refers to financial year, April 1 to March 31), against a PAT of INR1.01 crore on net sales of INR59.97 crore for 2014-15. SUPER PLATECK: CRISIL Reaffirms B- Rating on INR3.75MM Loan ----------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B-/Stable/CRISIL A4' ratings on the bank facilities of Super Plateck Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3.75 CRISIL B-/Stable (Reaffirmed) Letter of credit & Bank Guarantee 2.25 CRISIL A4 (Reaffirmed) The ratings continue to reflect SPPL's small scale of operations in the highly fragmented high-density polyethylene (HDPE) pipes industry, and the weak financial risk profile, because of high gearing and weak debt protection metrics. These rating weaknesses are mitigated by the promoters' extensive industry experience. Key Rating Drivers & Detailed Description Weaknesses * Small scale of operations in a highly fragmented industry: Company has tender-based operations with limited capacity. Margins are low due to competitive bidding from other players. Numerous small scale unorganized players catering to local demands are highly fragmented resulting in intense competition. * Below-average financial risk profile: Financial risk profile is characterized by high gearing and small networth with high bank limit utilisation with instances of availing temporary overdrafts. Strength * Promoters' extensive experience in the pipes manufacturing segment, and established relationships with customers and suppliers: The promoters of SPPL have been in the HDPE pipes manufacturing segment for more than 2 decades. Outlook: Stable CRISIL believes SPPL will continue to benefit over the medium term from its promoters' extensive experience. The outlook may be revised to 'Positive' if significant revenue growth and improvement in working capital management strengthen the financial risk profile, particularly debt protection metrics and liquidity. Conversely, the outlook may be revised to 'Negative' in case of low profitability, resulting in lower cash accrual, or deterioration in working capital management. Established in 1990, SPPL, promoted by Mr Dinesh Gupta and Mr Rajender Kumar, manufactures and supplies Permanently Lubricated (PLB) High Density Polyethylene (HDPE) pipes , telecom ducts, Medium Density Polyethylene (MDPE) pipes, duct pipes, drip irrigation systems, sprinklers, and other such products. It has an installed capacity for manufacturing 4720 tonne of PLB HDPE pipes per annum at Parwanoo (Himachal Pradesh). Profit after tax was INR0.07 crore on net sales of INR29.42 crore in fiscal 2016, against a profit after tax of INR0.02 crore on net sales of INR15.58 crore in fiscal 2015. TOOLFAB ENGINEERING: CARE Ups Rating on INR19.92cr Loan to BB- -------------------------------------------------------------- The revision in the rating assigned to the bank facilities of Toolfab Engineering Industries Private Limited takes into account healthy growth in total operating income, achievement of net profit and comfortable gearing and debt protection metrics in FY16 (refers to period April 01 to March 31). The rating also derives comfort from the established track record of the company for more than three decades in the engineering industry with experienced promoters and reputed clientele base. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 19.92 CARE BB-; Stable Revised From CARE B However, the rating continues to be constrained by declining PBILDT margin, elongated operating cycle resulting in working capital intensive operations, short-term revenue visibility in order book position, exposure to customer and geographical concentration risks and highly fragmented and competitive nature of industry. Going forward, the ability of the company to increase its scale of operations and profitability, improve capital structure and debt coverage indicators and efficiently manage its working capital requirements will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Working capital intensive nature of operations: The collection period improved marginally to 151 days primarily due to reduction in credit period offered by TEIPL. TEIPL has consciously reduced the creditor's period which stood at 104 days in FY16. With high collection period and reduced creditor's period the working capital cycle stood moderately elongated at 96 days in FY16. Highly fragmented and competitive nature of industry: The industry in which TEIPL operates is highly fragmented with a large number of small to medium scale unorganized players. The competition leads the companies to restrict their quotation prices or narrow down capacity utilization, thereby leading to decline in profitability. Exposure to customer and geographical concentration risks: TEIPL's revenues are skewed towards few top customers in the wind power sector. However, Dependence on a few clients has declined in FY16. The company has also acquired orders from new customers in FY16. Furthermore, all the customers are located in Tamil Nadu region resulting into geographical concentration risk. Key Rating Strengths Established track record of the company for more than three decades in the engineering industry with experienced promoters: The company has more than three decades of industry experience and the promoters of the company are associated with TEIPL since acquisition and are all well experienced in this line of business. Reputed clientele base: The client portfolio of the company is reputed which includes Regen Powertech Private Limited, Win Wind Energy Private Limited, Neyveli Lignite Corporation Limited, Transstroy India Limited, Suzlon Towers and Structures Limited among others. Growth in total operating income and modest order book: The total operating income of the company grew by 12% to INR37.19 crore in FY16 over FY15 owing to increased job work orders where the conversion charges are received by the company. The company's order book stands at INR30.00 crore as on January 23, 2017 which is expected to be executed by March 2017. Achievement of net profit: The company achieved PAT of INR0.75 crore in FY16 as against net loss of INR0.77 crore in FY15 due to increase in PBILDT along with decrease in the deprecation costs and interest costs owing to reduction in the total debt. Comfortable gearing and debt protection metrics: The debt equity ratio and overall gearing improved marginally and stood comfortable at 0.06x and 0.54x respectively as on March 31, 2016 (0.25x and 0.68x respectively as on March 31, 2015) on back of reduction in the total debt associated with scheduled repayment of the term loans availed by the company. The debt coverage indicators of the company stood comfortable marked by interest coverage ratio of 3.19x and Total debt/GCA of 3.76x in FY16. Established in 1972 at Trichy, Tamil Nadu as a partnership firm, Toolfab Engineering Industries Private Limited was acquired by Mr. Madan Mohan in 1995 and was reconstituted as a private limited company in 2004. TEIPL, an ISO 9001:2008 certified company, undertakes engineering and fabrication work for wind mill towers, boiler pressure parts, mining equipments, pre- engineered buildings among others. TEIPL's manufacturing unit is located at Trichy, Tamil Nadu with an installed capacity of 50,000 metric ton per annum. Its clientele include reputed customers like Regen Powertech Private Limited (CARE BBB-; Stable/A3), Win Wind Energy Private Limited, Neyveli Lignite Corporation Limited, Transstroy India Limited, Suzlon Towers and Structures Limited (Suzlon), Bharat Heavy Electricals Limited, among others, with which the company has long standing relationships owing to its long track record of operations. In some of the work orders, the raw materials required for the execution are supplied by the customers themselves reducing raw material procurement risk of the company to that extent. Other than that, the company purchases windmill internal platforms and ladders etc. within Tamil Nadu. TEIPL is also executing projects for Southern Railways both through direct contracts and sub- contracts. In FY16 TEIPL reported a PAT of INR0.75 crore on a total operating income of INR37.19 crore, as against a net loss and TOI of INR0.77 crore and INR33.09 crore respectively in FY15. UNITY FABTEXT: CRISIL Lowers Rating on INR1.9MM LT Loan to B+ ------------------------------------------------------------- CRISIL has downgraded its rating on long term bank facilities of Unity Fabtext Industries Private Limited to 'CRISIL B+/Stable' from 'CRISIL BB-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 1.5 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Letter of Credit 0.6 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Proposed Long Term 1.9 CRISIL B+/Stable (Downgraded Bank Loan Facility from 'CRISIL BB-/Stable') Term Loan 6.0 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') The rating downgrade reflects weakening of its financial risk profile and tightly matched accruals against debt repayments. The group reported loss of INR81.13 lacs in fiscal 2016 as against INR38.58 lacs in fiscal 2015 due to initial stages of operations of UFIPL. Further during the year there were capital withdrawals of around INR65 lacs which further deteriorated the financial risk profile of the group leading to negative networth. Analytical Approach For arriving at its rating, CRISIL has combined the business and financial risk profiles of UFIPL and Unity Industries (UI). This is because the two entities, together referred to as the Unity group, have strong financial and operational linkages, and are under a common management. Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile: The financial risk profile has weakened due to losses incurred in fiscal 2016 leading to negative networth. * Weak liquidity: The liquidity profile is also weak as reflected in tightly matched accrual against its debt repayments. Cash accrual of INR2 crore is expected in fiscal 2017 against debt repayments of INR1.9 crore. Strength * Extensive experience of promoters and established relations with customers: The promoters have over 30 years of industry experience and have established healthy relations with customers, which should benefit business risk profile over the medium term. Outlook: Stable CRISIL believes the group's financial risk profile will remain weak due to the initial stages of operations. The outlook may be revised to 'Positive' if increase in profitability and cash accrual improves financial risk profile, particularly liquidity. The outlook may be revised to 'Negative' if decline in accrual lowers liquidity or sizeable debt-funded capex weakens financial risk profile. The Unity group, promoted by Mr Jagdish Karande, manufactures non-woven products such as designer carpets, shoe liners, industrial filters, and geo textiles; it also manufactures seat covers, trim pads, moulded headliners, moulded floor mats, and sun visors. UI was established in 1985, and UFIPL was incorporated in 2012. The group reported a loss of INR0.81 Crores on net sales of INR25.59 Crores for fiscal 2016, vis-a -vis INR0.39 Crores and INR27.43 Crores, respectively in fiscal 2015. ================= I N D O N E S I A ================= PERISAI PETROLEUM: Offers to Pay Bond Holders in Cash and Stocks ---------------------------------------------------------------- Marissa Lee at The Strait Times reports that Perisai Petroleum Teknologi, a Malaysian oil services firm that defaulted on US$89.3 million in bonds last October, is trying again to settle its debts with bond holders. According to the report, Perisai Petroleum is offering to pay US$3.4 million (SGD4.8 million) in cash and issue US$85.9 million worth of new instruments called "irredeemable convertible loan stocks". These "stocks" will be listed and tradeable on Malaysia's Bursa, Perisai told a bond holder meeting on March 7, the report relates. They can be converted into Perisai shares only after five years. The meeting on March 7 came a full five months after Perisai stopped communication with bond holders, ST notes. Last October, bond holders overwhelmingly voted down Perisai's request for a debt extension because the final terms differed from those that Perisai managing director Zainol Izzet had discussed with them as late as last August, the report recalls. He had promised that his company would set aside at least US$20 million for bond holders in its debt reorganisation, but this never materialized, ST relates. About 60 bond holders crowded a basement room in China Square Central on March 7 seeking answers from the Perisai board, but were urged instead to set aside "legacy issues," according to the report. One of those in attendance was Mr. Ravi Murarka, who had flagged Perisai's debt troubles to the board as early as 2015. Perisai Petroleum Teknologi Bhd. (KLSE:PERISAI) -- http://www.perisai.biz/-- is a Malaysia-based investment holding company engaged in the provision of management, administrative and financial support services to its subsidiaries. The Company operates in three segments: Drilling Units, which is engaged in the operations and maintenance service and the provision of offshore assets, which are primarily for oil and gas offshore drilling; Production units, which is engaged in the operations and maintenance service and the provision of offshore assets, which are primarily for oil and gas production, and Marine Vessels, which is engaged in the provision of vessels, barges and equipment on vessel charter services. Its subsidiaries include Alpha Perisai Sdn. Bhd., which is engaged in the provision of administrative support services; Perisai Offshore Sdn. Bhd., which is engaged in the provision of oil and gas services in upstream oil sector, and Perisai production Holdings Sdn. Bhd., which is an investment holding company, among others. As reported in the Troubled Company Reporter-Asia Pacific on Oct. 14, 2016, The Star Online said Perisai Petroleum Teknologi Bhd has been classified as a Practice Note 17 (PN17) company after its unit Perisai Capital (L) Inc defaulted on SGD125 million debt notes due on Oct. 3. The Star related that the upstream oil and gas provider said in a statement to Bursa Malaysia that it therefore must regularize its financial position within 12 months and implement the regularization plan within the timeframe stipulated by either the Securities Commission or Bursa Malaysia Securities Bhd. ========= J A P A N ========= TOSHIBA CORP: Speeds Up Nuclear Unit's Chapter 11 Filing -------------------------------------------------------- Jiji Press reports that Toshiba Corp. is accelerating a study on the possibility of filing for so-called Chapter 11 bankruptcy protection for its U.S. nuclear power plant unit, Westinghouse Electric Co., sources said. Toshiba has dispatched a team to the United States for assessing impact of the possible Chapter 11 filing for Westinghouse, sources said March 7, Jiji Press relates. Through the use of the bankruptcy proceedings, Toshiba is apparently considering cutting off the risk of incurring additional losses from its U.S. nuclear business, according to the sources, Jiji Press relays. Jiji Press notes that Chapter 11 of the U.S. bankruptcy code is seen as effective in helping a company achieve rehabilitation quickly in a transparent manner based on a turnaround program approved by a court while being allowed to continue business operations. Toshiba is speeding up its assessment work in the run-up to a board meeting for endorsing its consolidated earnings for April- December last year, which are set to be announced on March 14, the sources, as cited by Jiji Press, said. Specifically, the company has asked a U.S. law firm and others to estimate the amount of possible additional costs, the report says. In fiscal 2016, which ends on March 31, Toshiba expects to suffer a loss of JPY712.5 billion from its nuclear business, according to Jiji Press. According to the report, sources said Toshiba would be able to limit additional losses and burdens if it promotes revisions to its nuclear plant construction deals and reduces debt through the possible Chapter 11 filing. But as Toshiba has guaranteed Westinghouse's debt worth some JPY800 billion as of the end of March 2016, it could face additional losses, the sources said, notes the report. Jiji Press relates that a senior official from a financial institution said the Chapter 11 filing would increase Toshiba's losses by hundreds of billions of yen. If Westinghouse files for bankruptcy protection under Chapter 11 within this month, Toshiba could not only see negative shareholder equity but also face an excess of debts on a net asset basis, sources said, Jiji Press relays. As Toshiba's creditor banks could withdraw loans from the company under such circumstances, some Toshiba officials are cautious about using Chapter 11, the report notes. Jiji Press meanwhile reports that most Toshiba creditors have agreed to continue loans to the company through the end of this month. With some creditors urging Toshiba to drastically review its nuclear business, the company and creditor banks are expected to discuss financing for April and later at their meeting on March 15, the day after the planned announcement of the firm's earnings in the first three quarters of fiscal 2016, the sources said, adds Jiji Press. About Toshiba Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba Corporation's corporate family rating (CFR) and senior unsecured rating to Caa1 from B3. Moody's has also downgraded Toshiba's subordinated debt rating to Ca from Caa3, and affirmed its commercial paper rating of Not Prime. At the same time, Moody's has placed Toshiba's Caa1 CFR and long-term senior unsecured bond rating, as well as its Ca subordinated debt rating under review for further downgrade. The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings said it has lowered its long-term corporate credit rating on Toshiba Corp. to 'CCC+' and its short-term corporate credit and commercial paper program ratings on the company to 'C', all by one notch. All of these ratings remain on CreditWatch with negative implications. S&P also lowered its senior unsecured debt rating on Toshiba two notches to 'B-' from 'B+' and kept the rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the long- and short-term ratings on Toshiba on CreditWatch with negative implications at the same time as lowering the long-term ratings, in response to Toshiba's announcement that it might recognize several JPY100 billion in impairment losses related to goodwill arising from its acquisition of a nuclear power business through U.S.-based Westinghouse Electric Co. LLC, because the goodwill far exceeded the company's initial estimates. TOSHIBA CORP: To Hold Extraordinary Shareholders Meeting March 30 ----------------------------------------------------------------- Reuters reports that Toshiba Corp will hold an extraordinary shareholders meeting on March 30, according to a statement posted on the Japanese company's website. Reuters relates that the statement, posted on its website on March 3 yet dated March 15, said the meeting would be held at the Makuhari Messe convention centre in Chiba from 10:00 a.m. (0100 GMT.) A Toshiba spokesman said the company intended to send the meeting notification to shareholders on March 15, Reuters adds. About Toshiba Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba Corporation's corporate family rating (CFR) and senior unsecured rating to Caa1 from B3. Moody's has also downgraded Toshiba's subordinated debt rating to Ca from Caa3, and affirmed its commercial paper rating of Not Prime. At the same time, Moody's has placed Toshiba's Caa1 CFR and long-term senior unsecured bond rating, as well as its Ca subordinated debt rating under review for further downgrade. The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings said it has lowered its long-term corporate credit rating on Toshiba Corp. to 'CCC+' and its short-term corporate credit and commercial paper program ratings on the company to 'C', all by one notch. All of these ratings remain on CreditWatch with negative implications. S&P also lowered its senior unsecured debt rating on Toshiba two notches to 'B-' from 'B+' and kept the rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the long- and short-term ratings on Toshiba on CreditWatch with negative implications at the same time as lowering the long-term ratings, in response to Toshiba's announcement that it might recognize several JPY100 billion in impairment losses related to goodwill arising from its acquisition of a nuclear power business through U.S.-based Westinghouse Electric Co. LLC, because the goodwill far exceeded the company's initial estimates. TOSHIBA CORP: BlackRock Lends 46 Million Shares ----------------------------------------------- Tom Redmond and Taku Kato at Bloomberg News report that BlackRock Inc., the third-biggest owner of Toshiba Corp., indicated in a report to the finance ministry that there's been a huge increase in the stock it has out on loan. Bloomberg says the world's largest money manager said about 46 million Toshiba shares owned by its units, or about one-fifth of its total stake, are temporarily being held by others. That's up from just 1.4 million when it filed its last report in January. BlackRock wasn't available to comment, Bloomberg says. Borrowed shares are mainly used in short selling, betting that a company's stock will fall, Bloomberg notes. Short interest in Toshiba has surged since last month on speculation the company will be demoted to the second section of the Tokyo Stock Exchange or delisted, either of which would mean index funds would need to sell large amounts of the stock, according to Bloomberg. Short interest stood at 8.6 percent of Toshiba's free float on March 3, one of the highest levels among companies in the Nikkei 225 Stock Average, Bloomberg discloses citing IHS Markit data. The average for stocks in the equity gauge was 2.3 percent. The cost of borrowing Toshiba's shares is among the highest in the index, the data show. Toshiba's shares plunged 24% this year through March 7 close, the biggest decline on the Nikkei 225, as the company reels from a $6.3 billion writedown in its nuclear business and seeks to sell assets, including its prized chip unit, to stay afloat, Bloomberg discloses. Akira Kiyota, who heads the country's main bourse, said last month that Toshiba faces three risks that could lead to delisting, relays Bloomberg. The stock added 2.2% in March 8 trading in Tokyo. For one brokerage, which had recommended being short Toshiba, the depth of pessimism is now overdone, says Bloomberg. "It's sentiment-driven," said Amir Anvarzadeh, head of Japanese equity sales at BGC Partners in Singapore, who told clients last month to cover their Toshiba short sales, Bloomberg relays. Because it's getting harder to borrow the shares, there's a bigger chance of a short squeeze, he said. About Toshiba Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments. The Digital Products segment offers cellular phones, hard disc devices, optical disc devices, liquid crystal televisions, camera systems, digital versatile disc (DVD) players and recorders, personal computers (PCs) and business phones, among others. The Electronic Device segment provides general logic integrated circuits (ICs), optical semiconductors, power devices, large- scale integrated (LSI) circuits for image information systems and liquid crystal displays (LCDs), among others. The Social Infrastructure segment offers various generators, power distribution systems, water and sewer systems, transportation systems and station automation systems, among others. The Home Appliance segment offers refrigerators, drying machines, washing machines, cooking utensils, cleaners and lighting equipment. The Others segment leases and sells real estate. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba Corporation's corporate family rating (CFR) and senior unsecured rating to Caa1 from B3. Moody's has also downgraded Toshiba's subordinated debt rating to Ca from Caa3, and affirmed its commercial paper rating of Not Prime. At the same time, Moody's has placed Toshiba's Caa1 CFR and long-term senior unsecured bond rating, as well as its Ca subordinated debt rating under review for further downgrade. The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings said it has lowered its long-term corporate credit rating on Toshiba Corp. to 'CCC+' and its short-term corporate credit and commercial paper program ratings on the company to 'C', all by one notch. All of these ratings remain on CreditWatch with negative implications. S&P also lowered its senior unsecured debt rating on Toshiba two notches to 'B-' from 'B+' and kept the rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the long- and short-term ratings on Toshiba on CreditWatch with negative implications at the same time as lowering the long-term ratings, in response to Toshiba's announcement that it might recognize several JPY100 billion in impairment losses related to goodwill arising from its acquisition of a nuclear power business through U.S.-based Westinghouse Electric Co. LLC, because the goodwill far exceeded the company's initial estimates. ================ S R I L A N K A ================ SRI LANKA: S&P Affirms 'B+' LT Sovereign Credit Rating ------------------------------------------------------ S&P Global Ratings affirmed its 'B+' long-term and 'B' short-term sovereign credit ratings on the Democratic Socialist Republic of Sri Lanka. The outlook on the long-term rating remains negative. S&P also left its transfer and convertibility risk assessment on Sri Lanka unchanged at 'B+'. RATIONALE Over the past year, Sri Lanka's fiscal position has improved as a result of government-led reforms and IMF technical and funding assistance. However, high external debt, and low reserves continue to make Sri Lanka vulnerable to external shocks, in S&P's opinion. Other rating constraints on Sri Lanka include the high general government net debt burden (at 74.9% of GDP in 2016). Nevertheless, the average maturity of the general government debt profile at approximately seven years is unusually long compared with other emerging market peers'. With GDP per capita estimated at US$3,911 (2016), Sri Lanka's level of prosperity is low. The authorities, moreover, continue to face significant challenges in effectively addressing structural imbalances due to institutional constraints and a fragmented political landscape. These rating constraints weigh against Sri Lanka's sound growth potential, which speaks to strengths in the garment, tourism, and business process outsourcing sectors. During 2017-2020, S&P expects fiscal consolidation to reduce borrowing further. S&P projects annual growth in general government debt to average 4.4% of GDP for 2017-2020, versus an average of 7.0% annually from 2014-2016. In view of Sri Lanka's robust nominal GDP growth, S&P projects net general government debt to decline to 65% of GDP through 2020, assuming currency stability versus the dollar (and hence a degree of real exchange rate appreciation). At the same time, S&P expects only slow progress in reducing debt-servicing costs, which it estimates to account for more than 37% of government revenue in 2017. This is the third-highest ratio among all 131 sovereigns that S&P Global Ratings currently rates, trailing only Lebanon and Egypt. There are risks to S&P's baseline expectation of declining public debt as a percentage of GDP. In particular, an estimated 43% of Sri Lanka's high stock of central government debt is denominated in foreign currency. That means any significant exchange rate depreciation would again put public debt on a rising trajectory. S&P considers exchange rate stability will, therefore, remain a major priority for Sri Lanka's policymakers and its central bank, limiting monetary flexibility. If all of Sri Lanka's public debt were denominated in its own currency, this would not be a rating constraint. Sri Lanka's external liquidity position has stabilized over the past year, and should be bolstered by support from the IMF. However, Sri Lanka's external metrics are still beset by the following weaknesses: -- S&P estimates Sri Lanka's usable international reserves were US$3.0 billion as of January 2017, which represents less than two months' coverage of current account payments. These reserves include drawings on currency-swap facilities of US$700 million with the Reserve Bank of India (RBI), introduced in March 2016. -- S&P forecasts the trade deficit to amount to 9.3% of GDP in 2017, a slight improvement from an estimated 10.0% in 2016. While the regulatory regime has been re-calibrated to discourage overwhelming demand for vehicle imports, strong domestic consumption and a robust investment outlook will keep Sri Lanka's structural trade deficit in place. -- S&P's projection of net current transfers--mostly workers' remittances, of which more than half come from the Gulf states--suggests much slower growth than in previous years, in line with broad weakness in the source countries' economies. -- Short-term capital outflows remain a risk given Sri Lanka's tenuous net international investment position, and continued uncertainty surrounding U.S. monetary and economic policy. S&P expects external liquidity (measured by gross external financing needs as a percentage of current account receipts [CAR] plus usable reserves) to average 123% over 2017-2020, compared with 116% in 2015-2016. S&P also forecasts that the country's external debt (net of official reserves and financial sector external assets) will average 160% of CAR from 2017-2020, a notable deterioration from 136% in 2015. Securing external liquidity support from the IMF has eased the aforementioned external pressures for the time being. S&P believes the attendant risks could be further mitigated by allowing the Sri Lankan rupee to float more freely. Although the Central Bank of Sri Lanka (CBSL) has increasingly spoken in favor of a freely floating rupee in recent months, this has yet to manifest in substantially higher reserves. One structural factor in favor of Sri Lanka's external stability is its low banking sector external borrowings. The gaps S&P observes in Sri Lanka's policymaking capacity partly reflect the political uncertainty associated with deeply-rooted factionalism within the government. S&P believes this hinders responsiveness and predictability in policymaking and weighs particularly on business confidence, investment plans, and overall growth prospects. Elsewhere, S&P believes that the CBSL's ability to sustain economic growth while attenuating economic or financial shocks continues to improve. Although the CBSL is not independent of other policymaking institutions, the central bank is building a record of credibility, shown in reducing inflation through the use of market-based instruments to conduct monetary policy, as well as the planned introduction of an inflation-targeting regime. Sri Lanka's growth outlook continues to be underpinned by government investment (including rebuilding the war-torn northern districts), rising tourist arrivals, and moderate inflation, which S&P expects to remain in the single digits. S&P expects Sri Lanka's growth prospects to remain favorable. S&P believes the country will most likely maintain growth in real per capita GDP of 4.5% per year over 2017-2020 (equivalent to 5.2% real GDP growth). Stronger growth, in S&P's view, would require improved institutional settings and a pick-up in export markets. Combining S&P's view of Sri Lanka's state-owned enterprises and its small financial system (banks' loans to the private sector account for only about a third of GDP), we view the government's contingent liabilities as limited. OUTLOOK The negative outlook indicates that S&P could lower its rating on Sri Lanka in the next 12 months if (1) S&P sees signs of a reversal in reform momentum, (2) currency pressure leads to substantial increases in public debt, (3) reserve levels decline further, or (3) contingent liabilities from state-owned enterprises worsen the general government's financial position. S&P may revise the outlook back to stable if Sri Lanka's external and fiscal indicators continue to improve, or if S&P concludes that the nascent strengthening of Sri Lanka's institutions and governance practices is on a more sustainable footing. In accordance with S&P's relevant policies and procedures, the Rating Committee was composed of analysts that are qualified to vote in the committee, with sufficient experience to convey the appropriate level of knowledge and understanding of the methodology applicable. At the onset of the committee, the chair confirmed that the information provided to the Rating Committee by the primary analyst had been distributed in a timely manner and was sufficient for Committee members to make an informed decision. After the primary analyst gave opening remarks and explained the recommendation, the Committee discussed key rating factors and critical issues in accordance with the relevant criteria. Qualitative and quantitative risk factors were considered and discussed, looking at track-record and forecasts. The committee agreed that the fiscal profile had improved, while the economic growth outlook had weakened. All other key rating factors were unchanged. The chair ensured every voting member was given the opportunity to articulate his/her opinion. The chair or designee reviewed the draft report to ensure consistency with the Committee decision. The views and the decision of the rating committee are summarized in the above rationale and outlook. The weighting of all rating factors is described in the methodology used in this rating action. RATINGS LIST Ratings Affirmed Sri Lanka (Democratic Socialist Republic of) Sovereign Credit Rating B+/Negative/B Senior Unsecured B+ ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, and Peter A. Chapman, Editors. Copyright 2017. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552. *** End of Transmission ***