/raid1/www/Hosts/bankrupt/TCRAP_Public/170316.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 16, 2017, Vol. 20, No. 54
Headlines
A U S T R A L I A
DOVER FISHERIES: Goes Into Administration Amid Huge Debt
LIBERTY FUNDING 2017-1: Moody's Puts (P)B2 Rating on Cl. F Debt
KF & S PTY: First Creditors' Meeting Set for March 22
KIDZ LIDZ: First Creditors' Meeting Scheduled for March 24
OCEAN ABALONE: Receivers Seek Buyers for Abalone Producer
ROLLCANO PTY: First Creditors' Meeting Set for March 23
TOPSTYLE INVESTMENTS: First Creditors' Meeting Set for March 24
C H I N A
GUANGZHOU R&F: 2016 Results Demonstrates Deleveraging, Fitch Says
SHANDONG YUHUANG: S&P Assigns 'B+' CCR; Outlook Stable
SK E&S: Moody's Confirms Ba1 Preferred Stock Rating; Outlook Neg
H O N G K O N G
LIFESTYLE INT'L: 2016 Results in Line With Ba1 CFR, Moody's Says
I N D I A
ADMIRON LIFE: CARE Assigns 'D' Rating to INR59.25cr LT Loan
AMA INDIA: ICRA Reaffirms B+ Rating on INR9.50cr LT Loan
ANUPAM INDUSTRIES: CARE Lowers Rating on INR4.95cr Loan to D
B.P. ALLOYS: CARE Reaffirms B+ Rating on INR7.16cr LT Loan
BHOLANATH ZAVERI: CARE Assigns 'B+' Rating to INR6.75cr Loan
DECCAN HYDERABAD: CARE Assigns 'D' Rating to INR10cr LT Loan
ETHICS POLYSACK: ICRA Assigns 'B' Rating to INR6.0cr Loan
GUPTA COAL: Files for Insolvency; Owes INR2,580cr to 8 Banks
HARBIR AUTOMOBILE: CARE Assigns 'B' Rating to INR11cr LT Loan
KSK ENERGY: CARE Lowers Rating on INR195cr LT Loan to 'D'
KSK ENERGY VENTURES: CARE Lowers Rating on INR500cr Loan to D
L M COTEX: CARE Reaffirms B+ Rating on INR12.12cr LT Loan
MEENAXI EXPORTS: CARE Assigns 'B+' Rating to INR9cr LT Loan
MICROPLAST POLYTEX: CARE Ups Rating on INR12.32cr Loan to BB-
MIRAJ METALS: CARE Assigns 'D' Rating to INR42cr LT/ST Loan
MIRAJ RECYCLERS: CARE Assigns 'D' Rating to INR12cr LT/ST Loan
NANDI PIPES: CARE Assigns 'D' Rating to INR8.40cr LT Loan
PADMA LAXMI: CARE Reaffirms B+ Rating on INR12.35cr LT Loan
RAMKRUPA GINNING: CARE Reaffirms B+ Rating on INR20cr LT Loan
SEBACIC INDIA: CARE Reaffirms 'D' Rating on INR33.96cr LT Loan
SAI LILAGAR: CARE Lowers Rating on INR260cr LT Loan to 'D'
SATGURU AGRO: CARE Assigns 'B' Rating to INR20.20cr LT Loan
SHARP REALTORS: CARE Assigns 'B' Rating to INR85cr LT Loan
SHREE RAM: CARE Assigns B+ Rating to INR30cr LT Bank Loan
SHRI SAMARTH: CARE Assigns 'D' Rating INR9.76cr LT Bank Loan
STP LIMITED: ICRA Raises Rating on INR24cr Cash Loan to B
UNITED INFRAVENTURES: CARE Cuts Rating on INR9.05cr Loan to D
VANTAGE SPINNERS: CARE Reaffirms B+ Rating on INR68.75cr Loan
VANSHIKA SUGAR: ICRA Upgrades Rating INR14.50cr Loan to B+
VANYA DESIGNER: ICRA Assigns B+ Rating to INR7.50cr Cash Loan
VASAVI POWER: CARE Assigns 'D' Rating to INR50cr ST Bank Loan
J A P A N
TOSHIBA CORP: Delisting Looms after Earnings Deadline Missed
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A U S T R A L I A
=================
DOVER FISHERIES: Goes Into Administration Amid Huge Debt
--------------------------------------------------------
Luke Griffiths at The Advertiser reports that Dover Fisheries,
which claims to be one the world's largest abalone producers, has
gone into administration amid spiralling debt.
The Advertiser relates that the future of the company's eight
fulltime employees, who are joined by up to 50 casual workers
during peak periods, may be known if the Supreme Court rules that
it should be wound up.
New Zealand supplier Good Fortune instigated the action by
calling in a AUD500,000 debt, the report notes. Dover owes an
estimated AUD2 million in total, The Advertiser discloses.
LIBERTY FUNDING 2017-1: Moody's Puts (P)B2 Rating on Cl. F Debt
---------------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to notes to be issued by Liberty Funding Pty Ltd:
Issuer: Liberty Funding Pty Ltd in respect of the Liberty Series
2017-1 Trust
-- AUD100.0 million Class A1a Notes, Assigned (P)Aaa (sf)
-- AUD250.0 million Class A1b Notes, Assigned (P)Aaa (sf)
-- AUD82.5 million Class A2 Notes, Assigned (P)Aaa (sf)
-- AUD33.0 million Class B Notes, Assigned (P)Aa2 (sf)
-- AUD9.5 million Class C Notes, Assigned (P)A2 (sf)
-- AUD7.5 million Class D Notes, Assigned (P)Baa2 (sf)
-- AUD5.5 million Class E Notes, Assigned (P)Ba2 (sf)
-- AUD3.5 million Class F Notes, Assigned (P)B2 (sf)
The AUD8.5 million Class G Notes are not rated by Moody's.
The ratings address the expected loss posed to investors by the
legal final maturity. The structure allows for timely payment of
interest and ultimate payment of principal by the legal final
maturity.
RATINGS RATIONALE
The transaction is an Australian prime and non-conforming RMBS
secured by a portfolio of residential mortgage loans. A portion
of the portfolio consists of loans extended to borrowers with
impaired credit histories (5.6%) or made on a limited
documentation basis (6.2%).
This is the 21st non-conforming RMBS transaction sponsored by
Liberty Financial Pty Limited.
The ratings take account of, among other factors:
- Class A1a and Class A1b Notes benefit from 30.0% credit
enhancement (CE) and Class A2 Notes benefit from 13.5% CE,
while Moody's MILAN CE assumption, the loss Moody's expects
the portfolio to suffer in the event of a severe recession
scenario, is at 12.8%. Moody's expected loss for this
transaction is 1.3%. The subordination strengthens ratings
stability, should the pool experience losses above
expectations.
- A liquidity facility provided by Westpac Banking Corporation,
with a required limit equal to 3.0% of the aggregate invested
amount of the notes less the redemption fund balance. The
facility is subject to a floor of AUD600,000. If the facility
provider loses its P-1(cr), it must within 30 days either:
(1) Procure a replacement facility provider; or (2) Deposit
an amount of the undrawn liquidity commitment at the time
into an account with P-1 rated bank.
- The guarantee fee reserve account. The reserve account is
unfunded at closing and will build up to a limit of 0.30%
of the issued notional from proceeds paid to Liberty Credit
Enhancement Company Pty Limited as Guarantor, from the bottom
of the interest waterfall prior to interest paid to the Class
G noteholders. The reserve account will firstly be available
to meet losses on the loans and charge-offs against the
notes. Secondly, it can be used to cover any liquidity
shortfalls that remain uncovered after drawing on the
liquidity facility and principal. Any reserve account balance
used can be reimbursed to its limit from future excess
income.
- The experience of Liberty in servicing residential mortgage
portfolios. This is Liberty's 21st non-conforming
securitisation, which highlights the lender's experience as
a manager and servicer of securitised transactions.
- Interest rate mismatch arises when the movements of the
30-day BBSW are not (simultaneously) passed on to the
variable rate loans. To mitigate the basis risk, the
threshold rate mechanism obligates the Servicer to set
interest rates on the mortgage loans at a minimum rate above
1mBBSW, or higher if the trust's income is insufficient to
cover the obligations of the Trustee under the transaction
documents.
The key transactional and pool features are:
- The notes will initially be repaid on a sequential basis
until, amongst other stepdown conditions, the payment date
falls on or after the payment date in March 2019 and absence
of charge offs on any notes. Upon satisfaction of all
stepdown conditions Class A1b, Class A2, Class B, Class C,
Class D, Class E, and Class F Notes will receive a pro-rata
share of principal payments (subject to additional
conditions). The Class A1a will receive principal prior to
any other notes at all times, unless there is an event of
default. The Class G Notes do not step down and will only
receive principal payments once all other notes have been
repaid.
- The principal pay-down switches back to sequential pay across
all notes, once the aggregate loan amount falls below 20.0%
of the aggregate loan amount at closing, or following the
fourth anniversary of the closing date.
- The weighted average scheduled loan to value ratio of the
poolof 73.7%.
- The portfolio is geographically well diversified due to
Liberty's wide distribution network.
- The portfolio contains 5.6% exposure with respect to
borrowers with prior credit impairment (default, judgement or
bankruptcy). Moody's assesses these borrowers as having a
significantly higher default probability.
- 6.0% of loans were extended on an alternative documentation
basis and 0.25% of the loans were extended on a no
documentation basis. For the alternative documentation loans
Liberty performs additional verification checks over and
above the typical checks for low documentation products.
These checks include a declaration of financial position and
six months of bank statements, two quarters of Business
Accounting Statements or GST returns. Liberty's alternative
documentation loans have stronger arrears performance when
compared to traditional low documentation loans. Given the
additional verification checks and the stronger arrears
performance, these alternative documentation loans have been
assessed to have a lower default frequency than standard low
documentation loans.
- Investment and interest only loans: Investment and interest
only loans represent 38.0% and 37.9% of the pool
respectively. Whilst the proportion of interest only loans is
below the Australian mortgage market average, both are higher
than previous Liberty transactions. Moody's assesses that
investor buyers have a higher probability of default compared
to borrowers who live in the property that serves as security
for that loan. Similarly, Moody's MILAN analysis has factored
in a higher default probability for loans with interest-only
periods than loans amortising from loan origination without
interest-only periods.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2016.
Factors that would lead to an upgrade or downgrade of the
ratings:
Levels of credit protection that are greater than necessary to
protect investors against current expectations of loss could lead
to an upgrade of the rating. Moody's current expectations of loss
could be better than its original expectations because of fewer
defaults by underlying obligors or higher recoveries on defaulted
loans. The Australian job market and the housing market are
primary drivers of performance.
A factor that could lead to a downgrade of the notes is worse-
than-expected collateral performance. Other reasons for
performance worse than Moody's expects include poor servicing,
error on the part of transaction parties, a deterioration in
credit quality of transaction counterparties, fraud and lack of
transactional governance.
Moody's Parameter Sensitivities:
Parameter Sensitivities are designed to provide a quantitative
calculation of how the initial rating might change if key input
parameters used in the initial rating process - here the MILAN CE
and mean expected loss - differed. The analysis assumes that the
deal has not aged. Parameter Sensitivities only reflect the
ratings impact of each scenario from a quantitative/model-
indicated standpoint.
Based on the current structure, if the MILAN CE losses were to
increase to 19.2% from 12.8%, and the mean expected loss were to
increase to 2.0% from 1.3%, the model-indicated rating for the
Class A2 Notes would drop one notch to Aa1. Using these same
assumptions, the ratings on the Class B will drop two notches,
and the ratings on Class C and Class D Notes drop four notches.
The Class A1a and Class A1b Notes are not sensitive to any rating
migration using these same assumptions.
Moody's ratings address only the credit risks associated with the
transaction. Other non-credit risks have not been addressed, but
may have a significant effect on yield to investors. Moody's
ratings are subject to revision, suspension or withdrawal at any
time at Moody's absolute discretion. The ratings are expressions
of opinion and not recommendations to purchase, sell or hold
securities. Moody's issues provisional ratings in advance of the
final sale of securities and these ratings reflect Moody's
preliminary credit opinion regarding the transaction. Upon a
conclusive review of the final versions of all the documents and
legal opinions, Moody's will endeavour to assign a definitive
rating to the transaction. A definitive rating may differ from a
provisional rating.
KF & S PTY: First Creditors' Meeting Set for March 22
-----------------------------------------------------
A first meeting of the creditors in the proceedings of KF & S Pty
Ltd, trading as Kangaroo Fur & Sheepskin Products, will be held
at the offices of SV Partners, 5 Hicks Street, in Southport, Gold
Coast, Queensland, on March 22, 2017, at 10:00 a.m.
Ian Purchas, David Stimpson and Anne Meagher of SV Partners were
appointed as administrators of KF & S Pty on March 10, 2017.
KIDZ LIDZ: First Creditors' Meeting Scheduled for March 24
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Kidz Lidz
Salons Pty Limited will be held at Level 2, 32 Martin Place, in
Sydney, NSW, on March 24, 2017, at 10:00 a.m.
Ronald John Dean-Willcocks and Cameron Hamish Gray of Dean-
Willcocks Advisory were appointed as administrators of Kidz Lidz
on March 14, 2017.
OCEAN ABALONE: Receivers Seek Buyers for Abalone Producer
---------------------------------------------------------
Luke Griffiths at The Advertiser reports that receiver
McGrathNicol is seeking "urgent" expressions of interest in Ocean
Abalone Australia Group, which has hatchery and grow-out
facilities in Streaky Bay, a Port Lincoln processing facility,
and an operating site at Elliston. Thirteen jobs are at risk.
Formerly known as Australian Bight Abalone, OAAG was bought out
of receivership in 2014 by Brisbane-based company GP No. 3 Pty
Ltd, the report discloses.
The Advertiser, citing official documents, relates that GP
No. 3's director is Rankothge Bandula Jayaweera. Sometimes known
as Ben Jayaweera, he is also the sole shareholder of its parent
company, Growth Plus Holdings.
In February 2016, Mr. Jayaweera was permanently banned by the
Australian Securities and Investments Commission from providing
financial advice to any retail client, the report says.
"Mr. Jayaweera recommended that clients invest in an unregistered
aqua agriculture investment scheme, which was operated by Growth
Plus (Financial Group), without reasonably considering the
clients' goals and financial situation," ASIC said at the time,
the report relays.
Growth Plus Financial Group, of which Mr. Jayaweera is the sole
director and shareholder, is currently in the process of being
wound up by the Australian Taxation Office, says The Advertiser.
ROLLCANO PTY: First Creditors' Meeting Set for March 23
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Rollcano
Pty Ltd will be held at Level 3, 15 Ogilvie Road, in Mount
Pleasant, WA, on March 23, 2017, at 3:00 p.m.
Mervyn Kitay of Worrells was appointed as administrator of
Rollcano Pty on March 13, 2017.
TOPSTYLE INVESTMENTS: First Creditors' Meeting Set for March 24
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Topstyle
Investments Pty Ltd, trading as Oliver's on James, will be held
at the offices of Palisade Business Consulting, 22 Lindsay
Street, in Perth, WA, on March 24, 2017, at 11:00 a.m.
Jack Robert James and Paula Lauren Cowan of Palisade Business
Consulting Pty Ltd were appointed as administrators of Topstyle
Investments on March 14, 2017.
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C H I N A
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GUANGZHOU R&F: 2016 Results Demonstrates Deleveraging, Fitch Says
-----------------------------------------------------------------
Fitch Ratings says Guangzhou R&F Properties Co. Ltd.'s (Guangzhou
R&F, BB/Stable) leverage has fallen below the agency's
expectations, according to the 2016 annual results.
Leverage, as measured by net debt/adjusted net inventories, had
improved to around 50% by December 2016 from 57% in June 2016 and
60% in December 2015. The level is high for its rating, but is
sufficiently mitigated by a strong business profile commensurate
with a 'BB' to 'BB+' rating. Fitch expects leverage to stabilise
at around 55%-60% and to stay within the negative rating triggers
of 60% for the next two years. Total debt/contracted sales was at
0.5x, similar to the 0.6x in 2015. Fitch expects this ratio to
remain stable at around 0.5x-0.6x.
The EBITDA margin dropped to around 22%-23% from 26% in 2015 and
31% in H116. This was due to a lower contribution from the
higher-margin projects in Beijing and Guangzhou. The revenue from
Beijing and Guangzhou was CNY14.4bn (which accounts for 29% of
total revenue) compared with CNY22.3bn in 2015 (55% of total
revenue). Fitch expects the EBITDA margin to remain stable at
around 23%-25%, given its well-positioned land bank in Tier 1 and
2 cities - which represented 77% of the total land bank as of
December 2016.
Guangzhou R&F has become more selective and careful on its
criteria for buying land than had applied in 2014-2015. It
focused on Tier 1 cities and Tier 2 cities around the Yangtze
River Delta and Beijing-Tianjin regions, and moved away from Tier
3 cities and over-supplied Tier 2 cities. In 2016, the company
acquired 5 million square metres (sq m) of land at an average
cost of CNY5,041 per sq m, with a total land cost of CNY17.5bn.
The land cost/contracted sales ratio was around 28%, within the
industry norm of 20%-50%. Fitch believes the more carefully
selected land purchased from 2014-2016 will provide better
margins and cash flows in 2017-2018.
Guangzhou R&F is actively managing its debt-maturity profile and
replacing its high-cost borrowings -- including its offshore
notes, perpetual capital securities and trust loans -- which bear
interest rates of around 10%, with lower-cost domestic borrowing.
It issued several onshore bonds that raised CNY49bn in total at
an interest cost of 3.48%-5.20% between July 2015 to June 2016,
and issued offshore bonds of USD725m at 5.75% in December 2016.
This has extended its debt maturity profile further out to 2022
and beyond. In 2016, the effective cost of all borrowings
(including perpetuals) was at 6.30%% compared with 8.13% in 2015.
Fitch expects the company to maintain low interest costs in the
next 12-24 months. Its plans for 'A' share sales in China have
been delayed, but this is not putting pressure on the ratings.
SHANDONG YUHUANG: S&P Assigns 'B+' CCR; Outlook Stable
------------------------------------------------------
S&P Global Ratings said it assigned its 'B+' long-term corporate
credit rating to China-based commodity chemical producer and oil
refiner Shandong Yuhuang Chemical Co. Ltd. The outlook is
stable. At the same time, S&P assigned its 'B+' long-term rating
to the senior unsecured notes issued by Yuhuang's wholly-owned
subsidiary Rock International Investment Inc. and guaranteed by
Yuhuang. The issue rating is subject to S&P's review of the
final issuance documentation. In addition, we also assigned
S&P's 'cnBB' long-term Greater China regional scale rating to the
company and the proposed notes.
"The rating on Yuhuang reflects the company's small scale,
limited geographic and product diversification, average
profitability, and high financial leverage. We expect the
company's debt leverage will stay high over the next two years
because of steep capital expenditure for its U.S. gas-to-methanol
project," said S&P Global Ratings credit analyst Danny Huang.
S&P anticipates that Yuhuang's limited scale to remain a
constraint. Yuhuang's refining capacity of 44 thousand barrels
per day (kbpd) is small relative to China's national oil
companies as well as independent refineries. Yuhuang will remain
a small refiner even after its planned capacity expansion to 60
kbpd in 2017.
Yuhuang's operations are based in Shandong province, and it
generates revenue from Shandong and northern China. Its products
are primarily commodity chemicals, which are oversupplied in
China, and oil products including gasoline and diesel. Gasoline
demand in China remains solid on auto sales growth while diesel
demand is declining on weak industrial and transport activities.
S&P does not expect Yuhuang's plan of extending its production
chain to higher value-added chemical products to materially
enhance its profitability and competitive position over the next
12-24 months. This is because the demand for these high value-
added products is limited and Yuhuang's research and development
(R&D) capability is constrained by its small scale and
unsubstantial R&D investment. There is also a long lead time
between the development of Yuhuang's new products and their
acceptance and use by customers.
S&P believes that Yuhuang's plan to build a natural gas-to-
methanol plant in the U.S. using cheap shale gas could moderately
increase its business and geographic diversity following its
completion, which is expected by the first quarter of 2019.
However, S&P believes the execution risk of this project is high.
First, Yuhuang has no prior experience in operating a methanol
plant or operating in the U.S. Second, any delay in construction
of the project could lead to cost overruns because of the tight
supply of skilled labor for the construction of chemical
facilities in the U.S. Third, a rush of capacity expansion in
the U.S. by 2020 could cause oversupply and add to the risk of
fluctuating methanol prices and demand at the time of commercial
operations.
However, Yuhuang's plan to form a joint venture with Koch
Industries Inc. (unrated), a U.S.-based multinational corporation
involved in manufacturing, trading, and investments, could
mitigate some of the risks if successfully implemented.
Yuhuang's EBITDA margin should remain relatively stable because
of a fairly stable domestic petroleum market, which is closely
managed by the government, and some diversity in its chemical
products. S&P expects the company's EBITDA margin to slightly
improve as oil prices recover, resulting in higher margins for
oil products over the next 12 months.
Despite Yuhuang's increasing operating cash inflow on rising
margins, S&P anticipates gearing will remain high, with the ratio
of FFO to debt staying around 15% over the next two to three
years due to capital expenditure for its U.S. methanol project.
Yuhuang plans to fund 70% of the US$1.2 billion spending through
debt.
Yuhuang's substantial short-term debt negatively affects its
liquidity position. Liquidity pressure could emerge if product
prices or demand weakens, or the company's access to China's
domestic capital market is restricted such that it has difficulty
in refinancing its short-term debt. Management is trying to
replace its short-term debt with long-term debt, which will
improve the company's liquidity position if implemented. The
company's established relationships with major Chinese banks also
partly alleviates the refinancing risk.
S&P's rating on the proposed senior unsecured notes is equalized
to the issuer credit rating on Yuhuang. After this bond
issuance, S&P expect Yuhuang's ratio of priority debt to total
assets to moderately increase to 25%-30% from 23% as of 2015
December. The ratio is higher than S&P's 15% notching threshold
for speculative-grade issuers. However, S&P believes that the
holding of the operating assets at the parent level and the
concentration of debt at key subsidiaries helps to mitigate
structural subordination risk associated with debt at the holding
parent company level.
The issue rating is subject to S&P's review of the final issuance
documentation. S&P expects the company to use the issuance
proceeds mainly for its U.S. methanol project and general
corporate purposes.
The stable outlook reflects S&P's expectation that Yuhuang can
slightly expand its profitability, and keep its ratio of FFO to
debt comfortably above 12% over the next 12 months because of
moderately rising oil prices, and despite high capital
expenditure.
S&P sees limited possibility of an upgrade for Yuhuang in the
next 12-24 months, given that its high leverage is unlikely to
come down due to its investment in the U.S. methanol project.
S&P could raise the rating on Yuhuang if (1) its ratio of FFO to
debt rises above 20% on better-than-expected profitability
because of an expansion of high value-added chemicals or the
granting of crude oil import rights by the government that could
boost margins; and (2) S&P assess its liquidity as adequate,
which could happen if operating cash flow is stronger than S&P's
expectation or Yuhuang extends its average debt maturity.
S&P may lower the rating on Yuhuang if liquidity deteriorates to
a weak level. This could happen if Yuhuang's operating cash flow
weakens, its short-term debt increases, its banking relationships
worsen or access to the domestic bond market becomes restricted.
A downgrade would also be dependent on Yuhuang's ratio of FFO to
debt falling below 12%, due to: (1) profitability deteriorating
because competition drives down margins, a halt in operations due
to a major overhaul or accident, or an inability to secure raw
materials at reasonable prices; or (2) Yuhuang's debt level is
higher than S&P's expectation because of weak operations or
higher-than-expected capex for the U.S. methanol project due to
project delays and cost overruns.
SK E&S: Moody's Confirms Ba1 Preferred Stock Rating; Outlook Neg
----------------------------------------------------------------
Moody's Investors Service has confirmed SK E&S Co. Ltd.'s Baa2
issuer rating and Ba1 preferred stock rating.
The ratings outlook is negative.
Moody's rating actions conclude the review for downgrade for SK
E&S' ratings initiated in December 2016. The review was prompted
by the continued weakness in SK E&S' operating performance and
uncertainty surrounding its deleveraging measures, thereby
potentially holding back any meaningful recovery in the company's
credit quality over the medium term.
RATINGS RATIONALE
"The confirmation of SK E&S' ratings reflects Moody's opinions
that the company's credit quality will benefit from its parent,
SK Holdings Co Ltd's adequate ability and willingness to provide
extraordinary support to SK E&S in case of need, given SK E&S'
weakening fundamental credit strength," says Mic Kang, a Moody's
Vice President and Senior Analyst.
"However, such extraordinary support will not fully offset the
credit challenges faced by SK E&S, which stem from the ramp-up
risk associated with its new power plants amid weakening
operating conditions and its elevated debt leverage," adds Kang.
"These factors have resulted in a negative outlook on the
company's ratings."
Moody's believes that SK Holdings Co Ltd (unrated), a holding
company of SK Group, will maintain a strong willingness to
support SK E&S, in case of need, owing to SK E&S' growing
strategic importance as a core subsidiary in the group's
liquefied natural gas (LNG) value chain - spanning from the
sourcing of LNG to power and heat generation - and the high
reputational risk that could arise from a distress of the
subsidiary.
SK Holdings' willingness to support SK E&S is further evidenced
by the former's provision of a performance guarantee for SK E&S'
commitment to use the Freeport liquefaction facility in the US
for 20 years starting in 2019.
Moody's expects that SK Holdings will maintain an adequate
ability to provide support to SK E&S, if and when needed, over at
least the next 1-2 years, given the presence of its solid core
associates - SK Telecom Co., Ltd. (A3 stable) and SK Innovation
Co. Ltd. (Baa1 stable) - its well-diversified business portfolio
and strong access to the domestic capital markets.
Moody's projects that the incremental operating cash flow from SK
E&S' new power plants commencing commercial operations in 1H 2017
will result in SK E&S' funds from operation (FFO)/debt improving
to 14%-16% in 2017-2018 from Moody's estimates of around 7% for
2016, assuming no material ramp-up risk associated with the new
plants.
SK E&S' total generation capacity will increase to 3.7 gigawatts
at end-June 2017 from the 1.4 gigawatts registered at end-2016.
Moody's points out that such projected credit metrics are exposed
to downside risk, owing to ramp-up risk associated with the new
power plants, which will operate under its newly established LNG
value chain from sourcing, re-gasification at its new LNG
receiving terminal, and the generation of power and district
heating.
In addition, SK E&S will likely continue to experience
challenging operating conditions stemming from increasing
generation from baseload power plants and renewables; thereby
resulting in ongoing margin pressure on its core power generation
business.
SK E&S aims to improve its financial buffer through the
implementation of deleveraging measures, such as the sales of
non-core assets. However, the timing of the planned deleveraging
measures still remains uncertain, given the prolonged delays in
doing so.
SK E&S' issuer rating reflects its standalone credit profile,
which is consistent with the parameters of a Baa3 rating, and
also incorporates a one notch uplift, based on Moody's
expectation for extraordinary parental support from SK Holdings.
The negative ratings outlook reflects Moody's expectation that SK
E&S' credit quality will remain under pressure over the next 12-
18 months, due to ramp-up risk associated with its new power
plants, rising industry challenges, and continued delays in the
implementation of its planned deleveraging measures.
Moody's could revise SK E&S' ratings outlook to stable if its
incremental cash flows from its new power plants are within
Moody's expectations - without the company facing a significant
ramp-up risk - and/or it implements deleveraging measures, with
FFO/debt comfortably staying above 12%-14% and/or
debt/capitalization registering below 60%-62% on a sustained
basis.
Conversely, Moody's could downgrade SK E&S' ratings if its
FFO/debt falls below 12%-14% or debt/capitalization exceeds 60%-
62% on a sustained basis, against the backdrop of significant
ramp-up risk associated with the new power plants, a continued
weakening in industry fundamentals and/or any material increase
in investments.
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in October
2014.
SK E&S Co. Ltd. is a private independent power producer operating
a gas-fired plant in Gwangyang with a total capacity of 1,074
megawatts (MW) as of 31 December 2016, or around 1% of Korea's
(Aa2 stable) total power generation. It is also the largest
retail gas distribution company in Korea, with around a 22%
market share by sales volume.
SK E&S aims to start commercial operations of its new power
generation and co-generation plants currently under construction
in 1H 2017. The new plants will increase the company's power
generation capacity to 3,719 MW.
At Dec. 31, 2016, SK E&S was 100% owned by SK Holdings Co Ltd.
(unrated), which is in turn the holding company of SK Group.
================
H O N G K O N G
================
LIFESTYLE INT'L: 2016 Results in Line With Ba1 CFR, Moody's Says
----------------------------------------------------------------
Moody's Investors Services says that Lifestyle International
Holdings Limited's 2016 results are in line with its Ba1
corporate family and the Ba2 senior unsecured ratings on the
notes issued by LS Finance (2022) Limited and LS Finance (2025)
Limited, and guaranteed by Lifestyle.
The ratings outlook remains stable.
"Lifestyle's 2016 results show the resilience of its Hong Kong
operations, as its turnover declined only 2.9% year on year,
despite a difficult environment," says Gloria Tsuen, a Moody's
Vice President and Senior Analyst.
Retail sales in Hong Kong fell 8.1% year on year in 2016,
according to the Census and Statistics Department, due to weak
local demand, a decline in Mainland visitors to the city, and a
strong Hong Kong dollar, which prompted more visits and purchases
overseas.
However, Lifestyle's gross sales proceeds declined by only 4.6%
year on year, outperforming its industry, and its gross profit
margins held steady at 56.6%, compared with 56.4% in 2015.
At the same time, largely as a result of its acquisition in
November of a land lot in Kai Tak for HKD7.4 billion, Lifestyle's
total reported debt rose to HKD16.9 billion at end-2016 from
HKD12.5 billion at end-2015. The land will be developed into a
commercial and retail complex, housing a new SOGO department
store, which Lifestyle expects to start business in 2022.
Moody's estimates that Lifestyle's adjusted debt/EBITDA rose to
6.9x in 2016 from 4.3x in 2015, and its adjusted net debt/EBITDA
rose to 3.5x from 1.0x, due to both the loss of EBITDA
contribution Lifestyle China -- which was spun off in July -- and
the additional debt from the Kai Tak land purchase.
However, with relatively stable current operations, and after
repaying USD500 million in bonds in January, Lifestyle's gross
leverage will decline to the 5.0x-6.0x range this year, if there
is no new debt. The ratio could be higher if Lifestyle decides to
take out a construction loan to conserve more cash on hand.
Thus, on a net leverage basis, Moody's expects the ratio to
remain around 3.5x this year, which positions the company at a Ba
rating level.
Lifestyle's liquidity remains solid. It had HKD8.6 billion in
cash, including 50% of listed short-term financial assets at end-
2016, more than enough to cover its HKD7.3 billion in short-term
debt.
Moody's continues to notch down the senior unsecured debt ratings
on Lifestyle's notes, due to the subordination risk arising from
the company's high level of secured debt, which totalled around
47% of total debt and 38% of total assets at end-2016.
The principal methodology used in these ratings was Retail
Industry published in October 2015.
Listed on the Hong Kong Stock Exchange in 2004, Lifestyle
International Holdings Limited is a Hong Kong-based retail
operator that focuses on mid- to upper-end department stores. At
end-2016, the company operated two SOGO stores in Hong Kong. The
company completed the spin-off of its China operations, Lifestyle
China Group Limited (unrated), in July 2016.
=========
I N D I A
=========
ADMIRON LIFE: CARE Assigns 'D' Rating to INR59.25cr LT Loan
-----------------------------------------------------------
CARE has been seeking information from Admiron Life Sciences
Private Limited to monitor the rating vide e-mail communications/
letters dated Nov. 24, 2016, Feb. 16, 2017 and numerous phone
calls. However, despite CARE's 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 ALSPL's bank facilities
will now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 59.25 CARE D; ISSUER NOT
COOPERATING; Based on best
available information
The rating take into account delays in debt servicing on account
of stretched liquidity position of the company.
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
At the time of last rating in November 14, 2016, the following
were the rating weaknesses and strengths:
Key Rating Weaknesses
Delays in Debt Servicing: The company has been facing stretched
liquidity position with cash flow mismatch resulting in delays in
servicing of debt obligations.
Key Rating Strengths
Experienced Promoters: ALSPL is promoted by Mr. T Mohan Reddy,
who has masters in Pharmacy, with 30 years of experience in the
pharmaceutical industry. He worked in different managerial
positions in Gland Pharma Pvt Ltd and had been associated with
M/s. IDPL, Hyderabad and RICON Pharma LIC, Denville NJ/USA. The
other promoter Mr. T Subba Reddy has three decades of experience
and is into trading of pharmaceutical products. The company is
supported by other director Mr. V Chandra Mohan Reddy, who has 30
years of experience in API industry.
ALSPL, incorporated on December 06, 2010, is engaged in the
manufacturing of APIs and intermediates. The company has its
manufacturing facility located in Visakhapatnam with an installed
capacity of 386 Metric Tons Per Annum (MTPA).
AMA INDIA: ICRA Reaffirms B+ Rating on INR9.50cr LT Loan
--------------------------------------------------------
ICRA has reaffirmed its long-term rating of [ICRA]B+ on the
INR9.95-crore fund-based bank facilities of AMA India Enterprises
Private Limited. The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund-
Based-Term loan 0.45 [ICRA]B+ (stable), reaffirmed
Long-term Fund-
Based-Cash credit 9.50 [ICRA]B+ (stable), reaffirmed
Detailed Rationale
ICRA's rating reaffirmation takes into account the 14% decline in
the company's operating income in FY2016 due to lower sales
volumes as well as sales realisation on account of adverse
movements in currency fluctuation. Due to limited bargaining
power, the company was not able to revise its realisation
upwards, which also impacted the profitability. The decline in
profitability also affected the debt coverage indicators of the
company in FY2016. ICRA also takes note of the improvement in the
operating margin of the company in the current fiscal year due to
price revisions as well as the favorable exchange movement in
FY2017 and automation of some processes, which were previously
done manually, thereby improving the overall efficiency of the
company's manufacturing process. The company has also increased
its focus on the domestic market. ICRA's rating continues to take
into consideration the modest scale of operations along with the
vulnerability of AIEPL's profitability to foreign exchange
fluctuation risk.
The ratings continue to factor in the technical support available
to the company from its group companies - the company is a part
of the AMA Group, which has a global presence in the outfitting
and maintaining off-highway vehicles, agricultural and gardening
machines industry.
The company's ability to profitably scale up its operations as
well as diversify its customer and improve margins would remain
the key rating sensitivity.
Key Rating Drivers
Credit Strengths
* Part of Italy-based AMA Group, which provides sales, design
and marketing support
* Increased focus on domestic customers likely to help increase
scale of operations
Credit Weaknesses
* High geographical concentration as all exports are made to the
European market; limited success in efforts to increase
presence in the domestic market
* Exposure to foreign exchange fluctuation risk
* Depreciation of Euro coupled with downward price revision led
to a decline in profitability of the company in FY2016,
however, the operating profitability improved in FY2017
Detailed description of key rating drivers:
AMA Enterprises India Private Limited is involved in the
manufacturing of tractor linkage parts. Initially, the company
was only focused on the export market with majority of sales
being made to its group company in Italy. From 2011 however, the
company has been also actively pursuing business in the domestic
market.
AIEPL is a part of AMA S.P.A, Italy. The company obtains
sufficient help on technical, marketing and support services from
its group companies. The company has also been actively pursuing
business in the domestic market. The company's domestic sales
increased from INR0.67 crore in FY2016 to INR1.29 crore in the
current year. Increase in domestic sales is likely to support the
company's profitability going forward.
Majority of the company's sales are made to its group company AMA
S.P.A, Italy, thereby increasing the customer concentration risk
of the company. The company's operating income declined by 14% in
FY2016 due to depreciation of Euro, leading to a decline in sales
realisation of the company. The operating margins of the company
also declined in FY2016 due to downward price revision by the
company because of stiff competition from the unorganised market.
Incorporated in 1999, AMA Enterprises India Private Limited is
engaged in the manufacturing of tractor linkage parts. The
company is a part of AMA S.p.a., Italy. It started as a joint
venture between Mr. Alessandro Malavolti (50% shareholding) and
Mr. R.K. Magoo & Mr. M.K.Chopra (together 50% shareholding). Its
manufacturing plant is at Doraha in Ludhiana. Later in 2009, Mr.
Malavolti bought out the 25% stake of Mr. M.K. Chopra, thus
increasing his shareholding to 75%.
AIEPL reported an operating income (OI) of INR15.72 crore and a
net loss of INR0.62 crore in FY2016 as compared to an OI of
INR18.20 crore and a net profit of INR0.11 crore in the previous
year.
ANUPAM INDUSTRIES: CARE Lowers Rating on INR4.95cr Loan to D
------------------------------------------------------------
CARE has been seeking information from Anupam Industries (AI) to
monitor the rating(s) vide e-mail communications/letters dated
Oct. 19, 2016, Jan. 20, 2017 and Jan. 23, 2017 and numerous phone
calls. However, despite CARE's repeated requests, Anupam
Industries has not provided the requisite information for
monitoring the ratings. In line with the extant SEBI guidelines,
CARE's 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 Anupam
Industries' bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 1.68 CARE D; ISSUER NOT
COOPERATING; Revised from
CARE B+ on the basis of
best available information
Long-term/Short-
Term Bank Facilities 4.95 CARE D; ISSUER NOT
COOPERATING; Revised from
CARE B+/CARE A4 on the basis
of best available
information
The ratings have been revised on account of ongoing delays in
repayment of its bank facilities.
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 weaknesses:
As per banker interation, there have been delay in debt servicing
and account has been classified as NPA.
Established in April 2010, Anupam Industries (AI) was formed by
Mr. Anil Kumar Arora, Mr. Ravindra Singh Arora and Mr. Amit
Wadhwa. The firm has set up a manufacturing plant in Daman to
manufacture mild steel (MS) ingots, which commenced operations in
November 2012 with installed capacity of 21,600 tons per annum.
AI is established under the Spiderman group of companies engaged
in manufacture of MS Ingots with its plant in Daman. The firm
procures its raw materials i.e. iron, steel scrap and sponge iron
along with ferro & silico manganese from domestic market. The
final product (MS Ingots) is supplied to the steel manufactures
and rolling mills in the domestic markets through distributors.
B.P. ALLOYS: CARE Reaffirms B+ Rating on INR7.16cr LT Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
B.P. Alloys, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.16 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 7.00 CARE A4 Reaffirmed
The ratings assigned to the bank facilities of B.P. Alloys
Limited continue to be constrained by its small scale of
operations, weak financial risk profile characterised by losses
at operating level, weak solvency position and working capital
intensive nature of operations, susceptibility to volatility in
raw material prices, foreign exchange fluctuation risk and highly
competitive & fragmented nature of the industry. The constraints
are, however, partially offset by experienced promoters with long
track record of operations. Going forward, the ability of the
company to profitably scale-up its operations with improvement in
overall financial risk profile and efficient management of
working capital borrowings will remain the key rating
sensitivities.
Detailed description of the key rating drivers
Strengths
Experienced promoters and long track record of operations of the
company
BPAL is promoted by Mr. Baldev Prasad Gupta, Mr. Arun Gupta, Mr.
Abhishek Gupta and Mrs Samriti Gupta. The directors have an
experience ranging from one decade to five decades. Furthermore,
the company has been in operations since 1987 leading to well-
established relationships with customers and suppliers.
Weaknesses
Small and declining scale of operations along with losses at
PBILDT level
The total operating income of BPAL declined from INR23.82 crore
in FY15 to INR18.04 crore in FY16 due to lesser quantity sold
owing to lower orders received from the existing clients.
Furthermore, the company incurred losses at PBILDT level ;(-2.82)
% in FY16 due to decline in capacity utilisation which resulted
in increased cost owing to higher proportion of fixed cost.
Consequently, BPAL incurred net loss of INR1.91 crore in FY16.
Weak solvency position
The capital structure of the company is leveraged as reflected by
overall gearing ratio of 4.96x as on March 31, 2016.
Furthermore, the interest coverage ratio stood at (-)0.57x in
FY16. The same deteriorated from 0.95x in FY15 due to losses at
PBILDT level in FY16. Furthermore, total debt to GCA ratio
continued to remain weak at (-)5.32x for FY16.
Working capital intensive nature of operations
The operations of the company are working capital intensive in
nature as reflected by average operating cycle of 63 days
for FY16 (PY 55 days). BPAL is required to maintain adequate
inventory in the form of raw material which resulted in
average inventory period of 63 days for FY16. Furthermore, the
company has an average collection period of 119 days for
FY16.
Exposure to raw material price volatilities
The primary raw material for BPAL's products is steel scrap. On
account of fragmented nature and high competition prevailing in
the industry, the profitability margins of the company are
exposed to the fluctuations in the raw material prices.
Foreign exchange fluctuation risk
Imported raw materials constituted about 80% of the total raw
material procurement cost in FY16. The company does not enter
into any hedging contracts thereby exposing the company to the
negative consequences of forex fluctuations.
Cyclicality and fragmented nature of the industry
The steel industry is sensitive to the shifting business cycles,
including changes in the general economy, interest rates and
seasonal changes in the demand and supply conditions in the
market. Furthermore, the value addition in the steel construction
materials like steel ingots/ rods/flats is also low, resulting
into low product differentiation in the market.
BPAL is engaged in the manufacturing of steel ingots and steel
bar, rods & flats since 1987. BPAL is promoted by Mr. Baldev
Prasad Gupta (Chairman) who has an experience of more than 5
decades in the steel industry. The company has an installed
capacity (furnace unit) of 15,000 MTPA for manufacturing of steel
ingots and a Rolling Unit of 22,500 MTPA capacity for rolled
products, at its manufacturing facility located in Ludhiana,
Punjab. The company imported around 80% of its raw material
(scrap) from suppliers based in Dubai & U.A.E in FY16 (refers to
the period April 1 to March 31). BPAL sells its products under
the brand name "BP", which is an established brand of steel bar,
rods & flat across India including states such as Punjab, New
Delhi, Jammu & Kashmir, Uttar Pradesh, Maharashtra, West Bengal,
Tamil Naidu, Gujarat, Haryana, Rajasthan etc.
In FY16 (based on audited results), BPAL has achieved a total
operating income of INR18.04 crore with net loss of INR1.91
crore as against total operating income of INR23.82 crore with
net loss of INR0.71 crore in FY15. In 9MFY17 (Provisional),
the company achieved total sales of INR7.76 crore.
BHOLANATH ZAVERI: CARE Assigns 'B+' Rating to INR6.75cr Loan
------------------------------------------------------------
CARE Ratings assigned ratings on certain bank facilities of
Bholanath Zaveri Jewellers Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.75 CARE B+; Stable Assigned
Short-term Bank
Facilities 3.25 CARE A4 Assigned
The ratings assigned to the bank facilities of Bholanath Zaveri
Jewellers Private Limited are primarily constrained by small
scale of operations with low net worth base, low profitability
margins, leveraged capital structure and weak coverage
indicators. The ratings are further constrained by elongated
inventory holding period, vulnerability of margins to gold price
fluctuations and competition from various organized or
unorganized players with unfavorable supply outlook.
The ratings, however, draw comfort from the experienced promoters
and favorable location of its showroom.
Going forward, the ability of the company to manage raw material
price volatility risk along with improvement in profitability
margins and capital structure shall be the key rating
sensitivity.
Detailed description of the key rating drivers
Key rating weakness
Small scale of operations with low net worth base: BZJ's scales
of operations and net worth have remained low during FY16 (refers
to the period April 1 to March 31). The small scale limits the
company's financial flexibility in times of stress and deprives
it from scale benefits.
Low profitability, leveraged capital structure and weak coverage
indicators: The profitability margins of the company have
remained on lower side owing to highly fragmented and competitive
nature of business. Also, finance cost has further restricted the
net profitability of the company.
The capital structure of the company stood leveraged on account
of high dependence on external borrowing to meet the working
capital requirements coupled with low net worth base.
Furthermore, owing to low profitability and high dependence on
borrowing, coverage indicators also stood weak Elongated
inventory holding period: The inventory holding period stood
above 100 days attributable to variety stock of jewelry
maintained for display purpose and caters to immediate demand of
the customers. This results in significant finished goods
inventory leading to high working capital intensity of business
operations. The working capital limits remained around 80%
utilized for the 12 months ended December 2016.
Vulnerability of margins to gold price fluctuations: Due to
volatility experienced in gold prices the past, any adverse
change in prices of the same is likely to have a significant
impact on margins of the players in the G&J industry.
Competition from various organized or unorganized players and
unfavorable supply outlook: BZJ operates in the Gems &Jewellery
(G&J) industry, which is a fragmented industry with a high level
of competition from both the organized and unorganized sector.
There are number of small and regional players catering to the
same market which limits the bargaining power of the company
exerts pressure on its margins.
Key rating strengths
Experienced promoters: The company is being managed by directors
BZJ having rich experience of more than 3 decades in the business
through their association with this entity and earlier running
partnership firm (M/s Zaveri Jewellers).
Favorable location of showroom: BZJ showroom is located in Karol
Bagh, prime area for jewellery in New Delhi which ensures the
higher probability of footfall in its showroom, thereby, ensuring
a good customer base for the company.
Delhi-based Bholanath Zaveri Jewellers Private Limited was
incorporated in 2006 and is currently being managed by Mr. Sushil
Kapoor, Mr. Raj kapoor and Mr. Ashok Kapoor. The company has
taken over business of M/s Zaveri Jewellers (ZJL) in October
2011. The company is engaged in manufacturing, trading and
retailing of gold, silver and diamond jewellery and has its
office located in Karol Bagh, Delhi.
In FY16 (refers to the period March 1 to April 31), BZJ achieved
a total operating income (TOI) of INR21.81 crore and PAT INR0.08
crore, as against TOI of INR22.66 crore and PAT INR0.13 crore,
respectively, in FY15. The company has achieved total operating
income of INR18.94 crore in 10MFY16 (refers to the period April 1
to January 31; based on provisional results).
DECCAN HYDERABAD: CARE Assigns 'D' Rating to INR10cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned this rating to bank facilities of
Deccan Hyderabad Trade Impex Private Limited:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 10.00 CARE D; ISSUER NOT
COOPERATING; Based on best
available information
CARE has been seeking information from Deccan Hyderabad Trade
Impex Private Limited to monitor the rating vide e-mail
communications dated Sept. 29, 2016, Oct. 21, 2016, Oct. 26, 2016
and numerous phone calls. However, despite CARE's 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
Deccan Hyderabad Trade Impex Private Limited bank facilities and
will now be denoted as CARE D; ISSUER NOT COOPERATING.
The ratings take into account delays in debt servicing on account
of stretched liquidity position of the company.
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
At the time of last rating in Press Release dated April 5, 2016,
the following were the key rating weaknesses:
Key Rating Weaknesses
Continued delays in debt servicing obligations: Due to delay in
recovery of sales receivable, DHTPL's liquidity position was
stretched which resulted in instances of devolvement of Letter of
Credit.
Deccan Hyderabad Trade Impex Private Limited, incorporated in
2013, is promoted by Mr. Kristam Srinivasa Rani Rama Charan and
Mr. Vanga Seshi Reddy. The company belongs to the Nandi group of
Kurnool, Andhra Pradesh (A.P.). DHTPL commenced operation in May,
2013 and is into trading business of Poly vinly chloride (PVC)
Resin. The company imports the PVC resins mainly from Taiwan and
Korea and sells it to indigenous customers.
ETHICS POLYSACK: ICRA Assigns 'B' Rating to INR6.0cr Loan
---------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B with a 'Stable'
outlook to the INR1.40 crore cash credit facility and the INR4.60
crore term loans of Ethics Polysack LLP.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 6.00 [ICRA]B (Stable); assigned
Detailed Rationale
The assigned rating is constrained by the nascent stage of the
firm's operations and the risk associated with stabilisation of
the plant as per the expected operating parameters. The rating
also remains constrained by the highly fragmented nature of the
woven fabric industry, resulting in intense competitive pressures
which limit the price flexibility leading to modest
profitability; the low bargaining power with suppliers; and the
exposure of the firm's profitability to volatility in raw
material prices. Further, the assigned ratings take into account
the firm's financial profile, which is expected to remain
stretched in the near term given the debt-funded nature of the
project and impending debt repayment.
The assigned ratings, however, favorably factor in the experience
of the promoters in the woven fabric industry and the various
fiscal benefits available to the firm which are likely to support
the profitability.
Key rating drivers
Credit Strengths
* Experience of promoters in woven fabric industry spanning
5 years
* Various fiscal benefits in terms of capital and interest
subsidy extended by central and state government
Credit Weakness
* Risks associated with execution and stabilization of the
project as per expected operating parameters
* Capital structure is expected to remain highly leveraged due
to debt funded capital expenditure and high working capital
intensive nature of operations
* Profit margins are expected to remain low in initial years
due to high competitive intensity, fragmented industry
structure and high interest charges
* Low bargaining power with suppliers (Reliance Industries
Limited and Indian Oil Corporation Limited)
* Vulnerability of profitability to any adverse fluctuation
in prices of raw materials (PP/HDPE granules)
Detailed description of key rating drivers highlighted:
EPL is setting up a green field project at Tankara, Gujarat and
proposes to engage in manufacture of woven sacks, fabrics and
tarpaulin. The unit has a proposed installed capacity of
manufacturing 1500 tonnes of PP/HDPE laminated fabric per annum
and the project cost is INR8.49 crore. The company's commercial
operational are expected to commence by April 2017, as against
the planned commissioning in January 2017 owing to
non-availability of machinery with its suppliers. The timely
commissioning and completion of the project within the estimated
cost would remain important from a rating perspective. The
aggressive D/E ratio for the project and significant debt
repayments coupled with long gestation period is likely to keep
the credit profile constrained over the near term. The woven
fabric industry is highly fragmented and the company's ability to
compete with several other organised and unorganised players and
maintain adequate profitability despite volatility in raw
material prices remains the key rating sensitivities.
Nevertheless, the extensive experiences of promoters and fiscal
benefits extended by the state and central government are
expected to support the operations of the company.
Ethics Polysack LLP was established in March 2016 as a limited
liability partnership with Mr. Darshan Jivani, Mr. Jaysukh
Jivani, Mr. Mitesh Patel, Mr. Jayesh Fefar and Mr. Piyush Fefar
as partners. It is setting up a greenfield project at Tankara,
Gujarat and proposes to manufacture PP/HDPE based woven sacks,
fabrics and tarpaulin. The facility will be equipped with 1
extrusion plant, 33 looms, 1 lamination plant and 2 heat sealing
machines with a proposed installed capacity of manufacturing 1500
tonnes of PP/HDPE laminated fabric per annum. The company's
commercial operational are expected to commence by April 2017.
GUPTA COAL: Files for Insolvency; Owes INR2,580cr to 8 Banks
------------------------------------------------------------
Veena Mani at Business Standard reports that Nagpur-based Gupta
Coal India has filed for insolvency at the National Company Law
Tribunal. The petition says there are liabilities of INR2,580
crore towards eight major banks, the report discloses.
A source told Business Standard, "Allahabad Bank, ICICI Bank,
Indian Overseas Bank, Union Bank of India, Vijaya Bank, IDBI
Bank, Punjab National Bank and Bank of India are lenders."
This is one of the biggest amounts in question in a petition
filed since the Insolvency and Bankruptcy Code took effect, the
report notes.
Gupta Coal supplied to power generating companies, including
Monnet Ispat Energy. Gupta Coal also has joint ventures with
Maharashtra Vidyut Nigam, AP Coal Washeries and Monnet Daniels
Coal Washeries. The company was founded in 1940.
HARBIR AUTOMOBILE: CARE Assigns 'B' Rating to INR11cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Harbir
Automobile Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 11 CARE B; Stable Assigned
The rating assigned to the bank facilities of Harbir Automobile
Private Limited is constrained by moderate scale of operations
with net losses during last two financial years, leveraged
capital structure and weak debt coverage indicators.
The rating is further constrained by cyclicality associated with
auto industry and highly competition in the industry. The
rating, however, derives strength from experienced promoters,
company's association with an established brand name and
moderate operating cycle.
Going forward, the ability of the company to scale up its
operations while improving its profitability margins and overall
solvency position would be the key rating sensitivities.
Detailed Description of the Key Rating Drivers
Key Rating Strengths
Experienced promoters
Mr. Harbir Singh has an experience of three decades through his
association with Harbir Car Point, Force Motors which were
engaged into trading of vehicles, Speed Motors, and HAPL. Mr.
Maneet and Ms. Sangeeta have work experience of 5 years and one
decade, respectively, through their association with HAPL and
Speed Motors.
Association with an Established Brand Name
HAPL is an authorized dealer of Mahindra and Mahindra Limited
(M&M) (' CARE AAA'/ ' CARE A1+'). The Mahindra Group, through its
subsidiaries and group companies, has a presence in varied
sectors such as, information technology, financial services and
vacation ownership. HAPL's association with M&M helps it to
attract customers in the market.
Moderate Operating Cycle
The average operating cycle of the company stood moderate at 39
days for FY16 (refers to the period April 1 to March 31). The
average utilization of working capital limits stood at around 90%
for the last 12 months period ended January 2017.
Key rating weaknesses
Moderate scale of operations with net losses during last two
financial years
The total operating income of HAPL stood moderate at INR79.81
crore in FY16. The PBILDT margin of the company stood low at
1.60% in FY16. Furthermore, the company incurred net loss of
INR0.01 crore in FY16 owing to low PBILDT and high interest and
depreciation expenses.
Leveraged capital structure and weak debt coverage indicators
HAPL has leveraged capital structure with overall gearing ratio
of 2.95x as on March 31, 2016, due to company's dependence upon
borrowings to meet various business requirements. Furthermore,
the debt coverage indicators of the company stood weak marked by
interest coverage ratio of 1.36x in FY16 and total debt to GCA of
31.47x for FY16.
Cyclicality associated with Auto Industry
The auto industry is inherently vulnerable to the economic cycles
and is sensitive to the interest rate environment and the level
of fuel prices. Any hike in interest rates, increasing cost of
purchase coupled with high fuel prices is likely to dampen the
demand for vehicles.
Highly competitive nature of industry
The Indian auto dealership industry is highly competitive in
nature as there is large number of players operating in the
market like dealers of Maruti Suzuki India Ltd, Tata Motors,
Hyundai, Honda, Toyota, etc, in the passenger vehicle segment and
dealers of Bajaj Auto, Ashok Leyland, etc, in commercial vehicle
segment.
Harbir Automobile Private Limited was incorporated in January,
2015 with Mr. Harbir Singh, Mr. Maneet Singh and Ms Sangeeta as
its directors. HAPL is an authorized automobile dealer of
Mahindra and Mahindra Limited for commercial and passenger
vehicles (two wheeler and four wheelers). The company currently
operates a 3S facility (sales, spares and service) showroom in
Zirakpur, one additional service workshop in Chandigarh and one
sales showroom in Chandigarh. The company procures vehicles from
Mahindra and Mahindra Limited and the spare parts from local
wholesalers on cash basis. The customer base includes retail
customers located in Chandigarh, Zirakpur and nearby areas. The
company has a group concern namely Speed Motors, which is a
partnership firm established in 2007 and is an authorised dealer
of FIAT cars and Hyosung superbikes.
The company has achieved a Total Operating Income of INR79.81
crore with net loss of INR0.01 crore in FY16 (refers to the
period April 1 to March 31). In 10MFY17 (Provisional), the
company has achieved a TOI of INR70.00 crore.
KSK ENERGY: CARE Lowers Rating on INR195cr LT Loan to 'D'
---------------------------------------------------------
CARE Ratings revised rating on the bank facilities of KSK Energy
Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 195 CARE D Revised from
CARE BB
The revision in the rating assigned to the bank facilities of
KSK Energy Limited takes into consideration stretched liquidity
position of the company due to delay in implementation of
renewable energy resulting in delays in servicing of debt
obligations.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoter group
KSK group, promoted by Mr. K. A. Sastry and Mr. S. Kishore, has
been engaged in the business of power generation for more than
two decades and has set up a large number of renewable and non-
renewable power projects across India. The promoters have been
actively involved in the day-to-day business with Mr. Sastry
heading the operations and execution divisions and Mr. Kishore
taking care of the business development and capital formation
segment of the group.
Key Rating Weaknesses
Stretched liquidity position
KEL on a standalone basis had undertaken implementation of Solar
power project and had borrowed loans primarily for meetin the
advance requreiment of EPC Contractor. However, the project
implementation has not commenced and hence the advances could not
been recovered which has resulted in weak cash flow position on
commencement of debt servicing obligation. This apart, the
company is the investment holding company of KEVL (as on
March 31, 2016, KEL had 99.52% of its investments in shares held
in KEVL) under which the all the non-renewable power SPVs of KSK
group group operate. Hence the financial performance/cash flow
position of KEL is also derived from the performance of such
SPVs.
Given the weak operation of majority of SPVs, the liquidity at
consolidated basis also remained stretched. Hence, there has been
delay in debt servicing.
The KSK group has been promoted by Mr. Sethuraman Kishore and Mr.
K. A. Sastry and it is involved in consulting and developing
power projects since 1998. KSK Power Venture Plc, incorporated in
Isle of Man, is the holding company of KSK Group and is listed in
the London Stock Exchange (LSE). KEL, Mauritius, incorporated in
2005, is a wholly-owned subsidiary of KSKPV. KEL, through its two
subsidiaries KSK Energy Company Private Limited and KSK Energy
Ventures Limited, is engaged in development of various
infrastructure (power and non-power) projects.
KECPL via its separate Special Purpose Vehicles (SPVs) provides
services like coal transportation, water supply and other
infrastructure activities to the power plants, while KEVL's core
business is power generation. KEVL, has aggregate installed
capacity of around 2072 MW of power projects as on Dec. 31, 2016.
KEL, at present, has started focusing into renewable energy
segment by entering into development of 250 MW solar power
project under different SPVs of KSK group (125 MW in Tamil Nadu
and 125 MW in Rajasthan).
KSK ENERGY VENTURES: CARE Lowers Rating on INR500cr Loan to D
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
KSK Energy Ventures Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 100 CARE D Revised from
CARE BBB-
Short-term Bank
Facilities 230 CARE D Revised from
CARE A3
Long-term/Short-
term Bank Facilities 500 CARE D/CARE D Revised
from CARE BBB-/CARE A3
The revision in the ratings assigned to the bank facilities of
KSK Energy Ventures Limited takes into consideration delays in
servicing of debt obligations by the company due to its stretched
liquidity position with delay in implementation of major thermal
power project undertaken at subsidiary level and weak operational
and financial performance at consolidated level.
Detailed description of the key rating drivers
Key Rating Weaknesses
Subdued operational & financial performance of power generating
units of the KSK group, resulting in stretched liquidity
position.
KEVL is the holding company for all the power SPVs of the KSK
group and hence the financial performance of KEVL is mainly
dependent on the performance of major power generating units of
its SPVs. During FY16 (refers to the period April 1 to March 31),
the majority of operational SPVs have been facing operational
issues resulting in low PLF level reported (average PLF of the
group at 57%, ranging from 20% to 90% across the various SPVs).
Consequently, KEVL reported net loss (INR492.87 crore) and cash
loss (INR99.26 crore) in FY16, at consolidated level. This apart,
the cashflow has been strained due to significant cost and time
overrun in execution of under construction 2400 MW mega power
project under KSK Mahanadi Power Company Ltd (out of 3600 MW).
Consequently, there has been delays in debt servicing.
Key Rating Strengths
Experienced promoter group with continued financial support
KSK group, promoted by Mr. K. A. Sastry and Mr. S. Kishore, has
been engaged in the business of power generation for more than
two decades and has set up a large number of renewable and non-
renewable power projects across India. The promoters have been
actively involved in the day-to-day business with Mr. Sastry
heading the operations and execution divisions and Mr. Kishore
taking care of the business development and capital formation
segment of the group. The promoters have been infusing funds
continuously to support the business operation.
Analytical approach
KEVL operates through its subsidiaries, which are majorly
operating SPVs and hence the financial risk profile of the
company is derived from that of the subsidiaries. Given the
strong linkage as parent-subsidiaries, the overall financial
profile of KEVL and its subsidiaries have been considered for
analysis purpose.
Incorporated in 2001, KSK Energy Ventures Limited (KEVL), the
step-up holding company of power projects being developed by the
KSK group, is engaged in developing, operating and maintaining
power projects. The company also provides project management
services to various group Special Purpose Vehicles
(SPVs)/companies setting up power plants. It currently supplies
power through its SPVs to a combination of industrial and state-
owned consumers in India. As on December 31, 2016, the company
had six operational power plants (under subsidiaries) along with
two units (600MW X 2) of KSK Mahanadi Power Company Limited
(KMPCL) with total installed capacity of 2071.95 MW [Coal-based
1869 MW, gas-based 57.95 MW, lignite-based 135 MW and solar power
10 MW]. KMPCL is engaged in developing a relatively large size
thermal power plant of capacity 3600 MW of which 1200 MW has
become operational and 2400 MW is under construction.
During FY16, KEVL reported PBILDT of INR40.54 crore (FY15:
INR39.89 crore) and net loss of INR55.65 crore (FY15: INR5.87
crore) on a total operating income of INR57.56 crore (FY15:
INR56.21 crore). On a consolidated basis, during FY16, KEVL
reported PBILDT of INR1650.25 crore (FY15: INR525.73 crore) and
and net loss of INR493.87 crore (FY15: INR369.53 crore) on a
total operating income of INR4,418.48 crore (FY15: INR2,415.01
crore).
L M COTEX: CARE Reaffirms B+ Rating on INR12.12cr LT Loan
---------------------------------------------------------
CARE Ratings' rating assigned to the bank facilities of L M Cotex
Private Limited continues to remain constrained on account of its
leveraged capital structure, weak debt coverage indicators,
moderate liquidity position, susceptibility of its margins to
cotton price fluctuation and presence in the highly fragmented
industry with limited value addition and prices and supply for
cotton being highly regulated by the government.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.12 CARE B+; Stable Reaffirmed
The rating also factors in the decline in turnover and profit
margins in FY16 (refers to the period April 1 to March 31) and
improvement in liquidity position as on March 31, 2016.
The rating however, continues to derive strength from the
promoters' experience and their support in the form of
unsecured loans.
The ability of LMCPL to further increase its scale of operations,
improve profitability and capital structure would remain the key
rating sensitivities.
Detailed description of key rating drivers
Key Rating Strengths
Experienced Promoters
LMCPL is promoted by Mr. Harish Agrawal, Mr. Nitin Agrawal and
Mr. Pawan Agrawal. All the directors have one decade of
experience in the same line of business. Mr. Pawan Agrawal
handles overall operations of the company.
Key Rating Weaknesses
Decrease in turnover along with decline in profit margins
The total operating income (TOI) of LMCPL decreased by 13.79%
during FY16 over FY15 and remained at INR49.98 crore due to weak
monsoons which led to decline in crop production and prices of
cotton. During FY16, the PBILDT margin of the company reduced by
144 bps to 3.06% as against 4.50% during FY15. The PAT margin
improved and remained at 0.21% during FY16. The gross cash
accruals (GCA) also increased and remained moderate to INR0.57
crore for FY16 as against INR0.54 crore during FY15 due to
improvement in net profit.
Leveraged capital structure with weak debt coverage indicators
The capital structure of the company remained leveraged marked by
an overall gearing of 2.43 times as on March 31, 2016 (Audited)
as compared to 4.07 times as on March 31, 2015 on account of
lower total debt as against net worth. The debt coverage
indicators remained weak marked by total debt to GCA of 17.27
years [FY15: 29.79 years] and interest coverage of 1.65 times
[FY15: 1.27 times] in FY16 on account of decrease in total debt
as compared to GCA and lower utilization of working capital
during FY16.
Moderate liquidity position
The liquidity position of the company remained moderate marked by
operating cycle, which improved from 96 days during FY15 to 62
days during FY16. The company's cash flow from operations reduced
to INR5.14 crore during FY16 as against positive INR11.75 crore
during FY15 due to increase in outstanding receivables as on
balance sheet date.The current ratio of the company also remained
moderate at 1.59 times as on March 31, 2016 as against 1.34 times
as on March 31, 2015.
The average utilization of working capital limits remained around
100% during the past 12-months ended August 2016.
Susceptibility of profit margins to fluctuations in raw material
prices
The cotton industry is cyclical with prices driven by demand and
supply scenario in the market. The prices are driven primarily by
the existing demand and supply conditions with strong linkage to
weather conditions and availability of raw material. This results
into risk of price fluctuations.
Presence of operations in highly fragmented and competitive
cotton industry
Cotting ginning segment is a highly fragmented and unorganized
market with presence of large number of small sized players. The
industry is characterized by low entry barriers due to modest
capital required and easy access to clients and suppliers.
Rayagada-based (Odisha) L.M. Cotex Private Limited is a Private
Limited Company incorporated in 2008 by three directors namely
Mr. Harish Agarwal, Mr. Nitin Agarwal and Mr. Pawan Agarwal to
undertake the business of cotton ginning and pressing from cotton
seeds. LMCPL has installed manufacturing plant at Gunupur, Odisha
with a total installed capacity of cotton bales of 350 bales per
day and for cotton seeds of 1280 quintal per day as on March 31,
2016.
However, since 2008, the company operated from its leased
manufacturing plant located at Sillod (Maharashtra) with a
total installed capacity of 350 cotton bales per day and 1280
quintal cotton seed per day. However, from June 2013, the
company has closed their leased plant and shifted their
operations to a new unit at Gunupur, Odisha and started
manufacturing operations from November 2013.
LMCPL reported a PAT of INR0.11 crore on a total operating income
(TOI) of INR49.98 crore during FY16 as against a net profit of
INR0.01 crore on a TOI of INR57.98 crore during FY15.
MEENAXI EXPORTS: CARE Assigns 'B+' Rating to INR9cr LT Loan
-----------------------------------------------------------
CARE Ratings' ratings assigned to the bank facilities of Meenaxi
Exports (ME) remain constrained on account of its moderate scale
of operations, profitability and liquidity position, leverage
capital structure and weak debt coverage indicators during FY16
(refers to the period April 1 to March 31) along with working
capital intensive nature of operations. The ratings are further
constrained on account of susceptibility to the raw material
price fluctuations and presence in the highly fragmented and
competitive textile industry.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities/Short-
term Bank Facilities 9.00 CARE B+; Stable/CARE A4
Assigned
The ratings, however, continue to derive strength from the
extensive experience of the proprietor, located in the hub of
textile industry and various fiscal benefits and incentives from
the government.
Increase in the scale of operations and customer base along with
improving the profit margins, liquidity positions, debt service
indicators and fluctuations in prices are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate scale of operation and profit margins: The total
operating income of ME dipped by 14.36% y-o-y to INR35.50
crore during FY16. The PBILDT margin of ME remained moderate and
stood at 4.91% during FY16. The company reported net profit of
INR0.49 crore during FY16.
Moderate liquidity position and working capital intensive
operations: ME's liquidity position remained moderate marked by
current ratio and quick ratio of 1.34 times and 0.47 times,
respectively, as on March 31, 2016. The operating cycle of ME
remained elongated at 128 days. Furthermore, average CC
utilization remained high at 95% during the last 12 months ended
on January 31, 2017.
Leveraged capital structure and weak debt coverage indicators:
The firm had leveraged capital structure as marked by debt equity
ratio and overall gearing of 1.50 times and 4.91 times,
respectively, as on March 31, 2016. The total debt of ME stood at
INR12.91 crore as on March 31, 2016. Debt coverage indicators of
WE stood weak as marked by total debt to GCA (TDGCA) of 23.18
times in FY16. Interest coverage ratio also remained moderate at
1.47 times during FY16.
Presence in competitive and fragmented textile industry: Due to
large number of players and easy accessibility of infrastructure
and raw material, the competition within the players is very high
which in turn leads to a fragmented market and low profit
margins. As a result in order to bring in business, the profits
are squeezed sometimes.
Susceptibility of profit margins to volatility in raw material
prices: The profit margins of ME are exposed to risk of price
volatility as printing and dyeing of cloth depend on availability
and production of the raw materials, as well as demand supply
condition and fluctuations in market.
Foreign exchange fluctuation risk: The company exports to the
countries of Dubai and Kuwait. However, ME hedges majority of its
export receivables by booking forward contract with the customers
hence, the foreign exchange fluctuation risk is mitigated to some
extent.
Key Rating Strengths
Extensive experience of proprietor in the textile industry: Mr.
Narendra Dahyalal Modh, proprietor, aged 53 years, has an
experience of more than two decades in the textile industry.
Experience of the proprietor and focus on quality has helped
it to maintain strong relationship with the customers and
suppliers.
Location Benefit: ME operates in Surat city of Gujarat, which is
considered as hub for textile industry in India.
Various fiscal benefits and incentives from the Government: ME
being in a small and medium scale industry depends highly on the
incentives and subsidies provided by the government. ME is
eligible for 1% of Free on board (FOB) as export incentive. Also,
under Focus Product Scheme (FPS) it gets license worth @ 3% of
FOB value of export. Hence, such schemes and benefits give a
boost to such industries.
Surat-based (Gujarat) Meenaxi Exports was incorporated in 1989 by
Mr. Narendra Dahyalal Modh, proprietor, aged 53 years who has an
experience of more than two decades, manages the overall
operation of the firm. ME is engaged in the manufacturing and
trading of fabrics, sarees and dress material. They majorly
export to countries like Dubai and Kuwait.
During FY16 (A), ME reported net profit of INR0.49 crore on a TOI
of INR35.50 crore as against net profit of INR0.58 crore on a TOI
of INR41.45 crore during FY15. Till 10MFY17 (Provisional) ME
achieved a turnover of INR30 crore.
MICROPLAST POLYTEX: CARE Ups Rating on INR12.32cr Loan to BB-
-------------------------------------------------------------
CARE Ratings' revision in the rating assigned to the bank
facilities of Microplast Polytex Industries Private Limited to
CARE D factors in the delay in debt servicing of term loans
during October 2016. Furthermore, the rating has been revised to
CARE BB-; Stable (Double B Minus; Outlook: Stable) on account of
regular debt servicing track record in the said facility since
November 2016.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.32 CARE BB-; Stable Revised
from CARE BB- to CARE D
and revised to CARE BB-;
Stable
The rating continues to be constrained by modest scale of
operations with FY16 (refers to the period April 1 to March 31)
being the first full year of operations, highly leveraged capital
structure & weak debt coverage indicators, working capital
intensive nature of operations, susceptibility of profit margins
to volatile crude oil derivatives prices, customer concentration
risk and presence in highly competitive & fragmented technical
textiles industry.
The rating, however, continues to derive strength from
experienced promoters with over two decades of experience in
technical textiles and locational advantage.
The ability of MPIPL to increase the scale of operations and
improve profit margins amidst competition, and also improve
capital structure and liquidity position by efficiently managing
working capital requirement is the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management team: The promoters of the entity have
experience of over two and a half decades and also have held key
positions in various industrial associations thus benefitting the
entity in maintaining relations with the clients.
Locational advantage: MPIPL has set up manufacturing unit at
Wardha, Maharashtra, which is adjacent to MIDC and is near to
industrial city of Nagpur. Furthermore, the end user viz. cement
manufactures, sugar and rice industries are also located near to
unit. Thus, the strategic location of plant provides logistical
support to company along with lower transportation cost.
Key Rating Weaknesses
Modest scale of operations with weak financial risk profile: The
scale of operations of MPIPL stood small with FY16 being the
first full year of operations. Given the time taken for
stabilization of operations coupled with high depreciation costs,
the company posted net losses in the said year. The same resulted
in leveraged capital structure, given the high reliance on
external debt coupled with low capitalization, whereas the debt
coverage indicators stood weak.
Customer concentration risk: The customer profile of MPIPL is
concentrated with top 5 customers contributing to 69.91%
of the net sales in FY16.
The top 5 customers include APS Polymers Products Private
Limited, Central India Polysacks Private Limited, Kamal Poly
Pack, Sai Shree Woven Sack and SPC Fab Private Limited. However,
in FY17, the company has received orders from leading cement
manufacturing entity. Presence in a highly competitive and
fragmented business with low entry barriers: Poly woven sacks
industry is highly fragmented with presence of a large number of
unorganized regional manufacturers and rising imports from
Singapore, China and Thailand. Further, favorable government
policies like interest rate subsidy under Technology Upgradation
Fund Scheme (TUFS), concession in custom duty, etc, has led to
the entry of many new players in this industry, which intensify
the competition. The intense competition is also driven by low
entry barriers in terms of capital and technology requirements
and limited product differentiation.
Incorporated in 2013, MPIPL is jointly promoted by the Shamkule
and Roongta families. MPIPL is engaged in manufacturing of
polypropylene (PP) woven sacks/bags and fabrics (laminated and
un-laminated) as its plant Wardha, Maharashtra. MPIPL's products
find application as packing material in cement, sugar,
agriculture and other industries mainly for domestic market. At
present, the company possesses installed capacity of 3,600 MTPA
(utilized at approx. 52% in FY16).
During FY16, the total operating income of the company stood at
INR16.84 crore, whereas a net loss of INR1.62 crore was posted in
the same year.
MIRAJ METALS: CARE Assigns 'D' Rating to INR42cr LT/ST Loan
-----------------------------------------------------------
CARE Ratings has been seeking information from Miraj Metals to
monitor the rating(s) vide e-mail communications dated Feb. 20,
2017; Feb. 17, 2017; Dec. 13, 2016; Nov. 30, 2016; Nov. 17, 2016;
Nov. 3, 2016; Oct. 13, 2016; July 5, 2016 and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requiste information for monitoring the ratings.
In the absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating. In line
with the extant SEBI guidelines CARE's rating on Miraj Metal's
bank facilities will now be denoted as CARE D/CARE D; ISSUER NOT
COOPERATING. Users of this rating (including investors, lenders
and the public at large) are hence requested to exercise caution
while using the rating(s) indicated.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.00 CARE D; ISSUER NOT
Facilities-Cash COOPERATING
Credit
Long-term/Short-
term Bank Facilities 42.00 CARE D/CARE D; ISSUER NOT
COOPERATING
Detailed description of the key rating drivers
The ratings of Miraj Metal's factors in delay in servicing of
Bank loans by the company due to liquidity issues faced by it.
Established in 2010 by Mr. Hiten Mehta, Miraj Metals is a
supplier of non-ferrous metals scrap in India, which it imports
entirely from the Middle East countries. The Middle East
suppliers, in turn, provide the scrap materials at discounted
rates (maximum 10%) to the entity for making the same available
to the Indian market. Its group concern, Miraj Recyclers Private
Limited procures majority of its raw material requirements
(84.96% in FY15 [refers to the period April 1 to March 31]) from
Miraj Metals. MRPL is suppliers of non-ferrous metals scrap of
copper, aluminum and iron in India, and is also engaged in the
manufacturing of aluminum ingots & copper wire rods. The
customers of the entity include Rashtriya Metal Industries
Limited (rated ' CARE BBB-/CARE A3'), Senor Metals Private
Limited, Citizen Metalloys Limited, National India Refinery, and
many others.
During FY15, the total operating income of Miraj Metals was at
INR507.73 crore (vis-a-vis INR425.66 crore in FY14), whereas the
PAT during the same year was at INR1.55 crore (vis-a-vis INR1.04
crore in FY14).
MIRAJ RECYCLERS: CARE Assigns 'D' Rating to INR12cr LT/ST Loan
--------------------------------------------------------------
CARE Ratings has been seeking information from Miraj Recyclers
Private Limited to monitor the rating(s) vide e-mail
communications dated Feb. 20, 2017; Feb. 17, 2017; Dec. 13, 2016;
Nov. 30, 2016; Nov. 17, 2016; Nov. 3, 2016; Oct. 13, 2016; July
5, 2016 and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant SEBI
guidelines CARE's rating on Miraj Recyclers Private Limited's
bank facilities will now be denoted as CARE D/CARE D; ISSUER NOT
COOPERATING. Users of this rating (including investors, lenders
and the public at large) are hence requested to exercise caution
while using the rating(s) indicated.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities
(Fund Based) 3.00 CARE D; ISSUER NOT
COOPERATING
Long-term/Short-
term Bank Facilities
(Non-fud Based) 12.00 CARE D/CARE D; ISSUER
NOT COOPERATING
Detailed description of the key rating drivers
The ratings of Miraj Recyclers Private Limited factors in delay
in servicing of Bank loans by the company due to liquidity issues
faced by it.
Incorporated in April 2013 by Mr. Hiten Mehta and Mrs Harita
Mehta, Miraj Recyclers Private Limited is a supplier of non-
ferrous metals scrap of copper, aluminum and iron, and is also
engaged in the manufacturing of aluminum ingots & copper wire
rods. The company procures majority of its raw material
requirements (84.96% in FY15 [refers to the period April 1 to
March 31]) from its group concern; Miraj Metals. The scrap, after
procurement, is bifurcated into aluminum, copper and iron, of
which the recyclable aluminum and copper is used to manufacture
aluminum ingots and copper wire rods respectively, whereas the
non-recyclable metals scrap is sold off in the market. The
company has its recycling facility located in Bhavnagar, Gujarat.
During FY15, the total operating income of MRPL was at INR31.21
crore (vis-a-vis INR12.86 crore in FY14), whereas the PAT during
the same year was at INR0.21 crore (vis-a-vis INR0.08 crore in
FY14).
NANDI PIPES: CARE Assigns 'D' Rating to INR8.40cr LT Loan
---------------------------------------------------------
CARE ratings has been seeking information from Nandi Pipes
Private Limited to monitor the ratings vide e-mail
communications/letters dated Feb. 7, 2017, Jan. 2, 2017, Dec. 12,
2016 and numerous phone calls. However, despite CARE's 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
Pipes Private Limited's bank facilities will now be denoted as
CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.40 CARE D; ISSUER NOT
COOPERATING; Revised from
CARE B+ on the basis of best
available information
Short-term Bank
Facilities 1.00 CARE D; ISSUER NOT
COOPERATING; Revised from
CARE A4 on the basis of best
available information
The ratings have been revised on account of delays in debt
servicing.
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 Nandi
Pipes Private Limited takes into account delays in debt servicing
obligation.
Nandi Pipes Private Limited was incorporated in October 2011 by
Mrs V. Aravinda Rani, Mrs. S. Sujala and Mrs. S. Parvathi. The
company is engaged in manufacturing of PVC pipes with an
installed capacity of 6,000 Metric tons. The manufacturing
facility is located at Nandyal, Andhra Pradesh.
PADMA LAXMI: CARE Reaffirms B+ Rating on INR12.35cr LT Loan
-----------------------------------------------------------
CARE's ratings for the bank facilities of Padma Laxmi Sree Rice
Mill Pvt. Ltd continues to remain constrained by its project
stabilization risk, high government regulations, seasonal nature
of availability of paddy resulting in high working capital
intensity and exposure to vagaries of nature and fragmented and
competitive nature of industry. The ratings, however, derive
strength from its experienced promoters and proximity to raw
material sources.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.35 CARE B+; Stable Rating
suspension revoked and
reaffirmed
Short-term Bank
Facilities 0.30 CARE A4 Rating suspension
revoked and reaffirmed
Going forward, ability of the company to stabilize its recently
completed project, improve its scale of operation along with
profit levels and margins and efficient management of working
capital will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project stabilization risk: The project has been completed during
December 2016 and commercial operation started from Feb 2017. The
bank facilities have been sanctioned during January 2017.
However, as the operation has started in recent past, the project
stabilization risks lies with the company. However,
provisionally, the company has been doing a trading business of
rice during the last two financial years ending on FY16.
High government regulations: The Government of India (GOI), every
year decides a minimum support price (MSP - to be paid to paddy
growers) for paddy which limits the bargaining power of rice
millers over the farmers. The sale of rice in the open market is
also regulated by the GoI through the levy of quota, depending on
the target laid by the central government for the central pool.
Given the market determined prices for finished product vis-Ö-vis
fixed acquisition cost for raw material, the profitability
margins are highly vulnerable.
Seasonal nature of availability of paddy resulting in high
working capital intensity and exposure to vagaries of nature:
Rice milling is a working capital intensive business as the rice
millers have to stock rice by the end of each season till the
next season as the price and quality of paddy is better during
the harvesting season. Furthermore, the millers are required to
extend a credit period of around 2-3 weeks to its customers.
Also, paddy cultivation is highly dependent on monsoons, thus
exposing the fate of the company's operation to vagaries of
nature.
Fragmented and competitive nature of industry: PLSRM's plant is
located in Vaishali district, Bihar which is one of the hubs for
paddy/rice cultivating region. Owing to the advantage of close
proximity to raw material sources, large number of small units is
engaged in milling and processing of rice in the region. This has
resulted in intense competition which is also fuelled by low
entry barriers. Given that the processing activity does not
involve much of technical expertise or high investment, the entry
barriers are low.
Key Rating Strengths
Experienced promoters: The promoters of PLSM have long experience
in agro industry, chemical industry and engineering line of
business. Mr. Chittaranjan Ghosh (aged 63 years, M.Com) having an
experience of more than four decades in the agro-commodity and
chemical business, will look after the overall affairs of the
company. He will be adequately supported by his son, Mr. Sanjoy
Ghosh (aged 34 years, Engineer & MBA), having experience of
around a decade in agro commodity, chemical and engineering line
of business, will look after the marketing activities. Prior to
setting up of this company, both of them were engaged in same
activity through its associate concern namely Laxmisree Ricemill
Pvt. Ltd.
Proximity to raw material sources: PLSRM's plant is located in
Vaishali District, Bihar which is in the midst of paddy growing
region. The entire raw material requirement is met locally from
the farmers (or local agents) which helps the company to save
substantial amount of transportation cost and also procure raw
materials at effective price.
Padma Laxmi Sree Rice Mill Pvt. Ltd. was incorporated in June
2010 by Ghosh family of Birbhum District, West Bengal. The
company has been engaged to setup a rice milling unit at Vaishali
district of Bihar with a processing capacity of 48,000 metric
tonne per annum (MTPA), which is in the vicinity to a major rice
growing area. The project has been completed in December 2016 and
the commercial operation has started from February 2017. However,
provisionally, the company has been doing a trading business of
rice during the last two financial years ending on FY16.
During FY16, the company reported a total operating income of
INR0.93 crore (FY15: INR1.89 crore) and a PAT of INR0.01 crore
(in FY15: INR0.02 crore). Furthermore, the company has achieved a
total operating income of INR0.91 crore during 9MFY17 (refers to
the period April 1 to December 31).
RAMKRUPA GINNING: CARE Reaffirms B+ Rating on INR20cr LT Loan
-------------------------------------------------------------
CARE's rating assigned to the bank facilities of Ramkrupa Ginning
& Pressing Private Limited continues to be constrained on account
of decline in total operating income albeit with improvement in
profitability, leveraged capital structure and weak debt coverage
indicators. The rating continues to be constrained also on
account of presence of RGPPL in the cotton ginning business which
is at the lower end of the entire textile value chain that
involves limited value addition and seasonality associated with
the procurement of raw material resulting into working-capital
intensive nature of operations.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 20.00 CARE B+; Stable Reaffirmed
The rating, however, continues to draw strength from the wide
experience of the promoters in the cotton industry coupled with
location advantage in terms of proximity to the cotton seed
growing regions in Gujarat.
The ability of RGPPL to increase its scale of operations, improve
its profit margins, capital structure and better working capital
management in light of the competitive nature of the industry
continues to be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Decline in total operating income (TOI) albeit with improvement
in profitability: RGPPL's TOI decreased by 36% y-o-y in FY16 on
account of sluggish demand in both domestic and global market
coupled with low product prices. However, RGPPL's profitability
improved in FY16 due to overall reduction in cost of raw cotton
and control on overheads.
Leveraged capital structure: The overall gearing of RGPPL
deteriorated as on March 31, 2016 on account of increase in
working capital borrowings at year end and infusion of unsecured
loans from promoters which are payable on demand.
Seasonal procurement resulting in working capital intensive
nature of operations: Cotton production is seasonal in nature.
The cotton ginners usually have to procure raw cotton in bulk
thus there is significant requirement for working capital funds
especially during the peak season towards stocking of inventory.
Key Rating Strengths
Experienced promoters in the cotton value chain: The promoters
have good experience in cotton ginning and pressing business and
also in to commodity trading business which would aid them in the
operations of RGPPL Favourable location of the manufacturing
facility in proximity to the cotton producing belt of Gujarat:
The manufacturing facility of RGPPL is located in Saurashtra
region of Gujarat which is one of the largest cotton producing
states in India. Its presence in cotton producing region has a
locational advantage in terms of logistics cost and ready
availability of raw materials.
RGPPL incorporated in the year 2006, is promoted by Mr. Bipinbhai
Gondaliya. RGPPL is into the business of cotton ginning and
pressing and trading of clean cotton. RGPPL is a family centric
business and is completely owned and managed by the family
members with four directors, who have average experience of 15
years in the cotton industry. RGPPL produces cotton bales and
cotton lint with a manufacturing and production facility located
at Gondal region, Gujarat which is one of the leading cotton
producing states in India.
As per FY16 (refers to the period April 1 to March 31) audited
results, RGPPL reported total operating income (TOI) of INR65.28
crore and PAT of INR0.11 crore as against TOI of INR102.73 crore
and PAT of INR0.05 crore during FY15 (audited).
SEBACIC INDIA: CARE Reaffirms 'D' Rating on INR33.96cr LT Loan
--------------------------------------------------------------
CARE's ratings assigned to the bank facilities of Sebacic India
Limited continue to take into account the on-going delays
in its debt servicing on the back of stressed liquidity. The
liquidity has remained stressed as SIL continued to report
operating losses during FY16 (refers to the period April 1 to
March 31) as well as operated at high leverage.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 33.96 CARE D Reaffirmed
Short-term Bank
Facilities 0.46 CARE D Reaffirmed
Long-term/Short-
term Bank Facilities 15.93 CARE D/CARE D Reaffirmed
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delays in debt servicing: SIL continued to report
operating losses during FY16 on the back of inadequate orders
resulting in sub-optimal capacity utilization. Owing to this and
high leverage, SIL is facing acute liquidity stress leading to
delay in its repayment obligations.
Incorporated in September 2007, Vadodara-based (Gujarat) SIL is
promoted by Mr. Tushar Patel and Mr. Ashwin Patel. The company is
engaged in manufacturing of sebacic acid (derivate of castor oil)
and its by-products - refined capryl alcohol, sodium sulphate,
glycerin and mixed fatty acid. The products find application
across various sectors like lubricants, plastic, textile and
paper. SIL's manufacturing facility is located near Vadodara and
has an installed capacity of 9,600 metric tons per annum (MTPA)
for manufacturing of sebacic acid as on Dec. 31, 2016.
Based on FY16 audited results, SIL reported a total operating
income of INR29.29 crore (INR5.23 crore in FY15) with a net
loss of INR13.73 crore (INR19.03 crore in FY15).
SAI LILAGAR: CARE Lowers Rating on INR260cr LT Loan to 'D'
----------------------------------------------------------
CARE Ratings' revision in the ratings assigned to the bank
facilities of Sai Lilagar Power limited takes into consideration
the weakening of credit profile of the company as well as the
guarantor, KSK Energy Ventures Limited which has provided credit
enhancement in the form of unconditional and irrevocable
corporate guarantee for the entire bank facilities of SLPL. The
same has resulted in delays in debt servicing.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 260 CARE D Revised from
CARE BBB- (SO)
Short-term Bank
Facilities 15 CARE D Revised from
CARE A3 (SO)
Detailed description of the key rating drivers
Key Rating Weaknesses
Subdued operational & financial performance of resulting in
stretched liquidity position
The company has been reporting subdued operational performance
led by low PLF level (22.71% in FY16 [refer to the period April 1
to March 31]) with lower off-take of power by Chhattisgarh State
Power Trading Company Limited. While it reported stable revenue
in FY16, the decline in PBILDT coupled with high interest cost
(on increased debt level) resulted in net loss and cash loss
during the year.
During 9MFY17, the company has shut down one unit of 43 MW with
power being supplied to CSPTCL from its one unit. Consequently,
the PLF has reduced to about 6% during the period. This has
further pressurized the cash flow position resulting in delays in
debt servicing.
Key Rating Strengths
Experienced promoter group and funding support
KSK group, promoted by Mr. K. A. Sastry and Mr. S. Kishore, has
been engaged in the business of power generation for more than
two decades and has set up a large number of renewable and non-
renewable power projects across India. The promoters have been
actively involved in the day-to-day business with Mr. Sastry
heading the operations and execution divisions and Mr. Kishore
taking care of the business development and capital formation
segment of the group. The group has 2072 MW installed power
capacity as on December 31, 2016, and another 2400 MW is being
developed as a part of Mega Power Project undertaken under KSK
Mahanadi Power Company Ltd. The promoters have been supporting
the company through infusion of funds to meet the business
requirement.
Incorporated in April 2004, Sail Lilagar Power Limited [erstwhile
Arasmeta Captive Power Company Limited] is a special purpose
vehicle which was jointly promoted by KSK group and Lafarge India
Private Limited. As on March 31, 2016, KEFIPL had the 100%
shareholding in SLPL. The company is operating two thermal power
plants of 43 MW each (Phase I and Phase II) which was initially
set up (in year 2011) as a captive power plant for LIPL's cement
plants located at Arasmeta and Sonadih in Chhattisgarh.
Subsequently, the agreement with LIPL was terminated and the
company currently is supplying power to Chattissgarh State Power
Distribution Company Ltd. (CSPDCL) which is a quadpartite
agreement between Chhattisgarh State Power Trading Company Ltd.
(CSPTCL), CSPDCL, KSK Mahanadi Power Company Ltd (group company)
and SLPL.
During FY16, SLPL reported total operating income of INR113.35
crore (FY15: INR115.86 croe) with PBILDT of INR51.80 crore (FY15:
INR63.75 crore) and net loss of INR20.15 crore (FY15: PAT
INR12.95 crore).
SATGURU AGRO: CARE Assigns 'B' Rating to INR20.20cr LT Loan
-----------------------------------------------------------
CARE Ratings has been seeking information from Satguru Agro
Industries Limited to monitor the rating(s) vide e-mail
communications/letters dated February 21, 2017, February 15,
2017, February 13, 2017 and February 1, 2017. However, despite
CARE's repeated requests, the Satguru Agro Industries Limited 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.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 20.20 CARE B; ISSUER NOT
COOPERATING
The rating on Satguru Agro Industries Limited long term bank
facilities will now be denoted as CARE B; ISSUER NOT COOPERATING.
The ratings continue to derive strength from experienced
promoters and the company's track record in the company of over
25 years in the soya industry and locational advantage with
respect to close proximity of raw material.
The ratings however, remain constrained by financial risk profile
marked by declining scale of operation, thin profitability
margins, high overall gearing, customer and geographical
concentration, seasonal availability of raw material (soya bean)
and associated volatility in raw material prices, working capital
intensive nature of operations and presence in the highly
fragmented soya sector leading to competition.
Going forward, the ability of SATGURU to increase its scale of
operations, improvement in profitability margin, improvement in
capital structure along with effective management of working
capital requirement are the key rating sensitivities.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
rating(s) mentioned.
Detailed description of the key rating drivers
At the time of last rating at February 10, 2016, the following
were the rating strengths and weaknessess:
Key Rating Strengths
Extensive industry experience of the promoters
SATGURU has a wide experience of over 25 years and has
established itself as a well-known player in the soya industry.
SATGURU is currently managed by Mr. Praffulbhai G. Kalavadia, Mr.
Dinesh Kumar M. Kalavadia, Mr. Bharatbhai V. Changela, Mr. Paresh
Kiran Parmar, Mr. Kantilal Naranbhai Padodar and Mr. Ashiwin
Kumar Dayabhai Zalawadi as the director of the company. Mr.
Praffulbhai G. Kalavadi (B.Com) has an experience of more than
two and half decade in the soya industry and look after the
purchase department of SATGURU, Mr. DineshKumar M. Kalavadi
(B.Sc) has an experience of more than two and half decades in the
soya industry and look after the operation department of SATGURU,
Mr. Bharatbhai V. Changela (B.com) has an experience of more than
two and half decade in the soya industries and look after finance
and administration department of SATGURU and Mr. Kanish
Bharatkumar Changela (B.com) has an experience of more than 8
years in the soya industries and look after sale department of
SATGURU.
Key Rating Weaknesses
Concentrated geographical and customer base:
The total operating income of SATGURU is generally concentrated
in three states of Tamil Nadu which contributed about 45% of
total operating income during FY15, Karnataka which contributed
about 35% of total operating income during FY15 and Maharashtra
which consist of 25% of total operating income during FY15.
Moreover, the single customer (Cargill India Private Limited)
contributed about 25.61% of total operating income during FY15
(as compared to 52.61% of total operating income during FY14).
However, due to long standing presence in the business, the
company is able to secure repeat orders from existing customers
on regular basis.
Working capital intensive nature of operations:
The operating cycle for FY15 elongated to 40 days (as against 26
days during FY13) led by increase in receivable days to 24 days
during FY15 (as against 6 days during FY14) and decrease in
average payable days to 15 days during FY15 (as against 21 days)
which were partially offset by decrease in average inventory
periods to 31 days during FY15 (as against 41 days during FY14).
The current ratio has deteriorated to 1.09x as on March 31, 2015
(as against 1.44x as on March 31, 2014) on account of increase in
customer advance and working capital utilisation.
Analytical approach: Standalone
SATGURU was incorporated in November 1991 at Sholapur
(Maharashtra) which was promoted by the Khaitan family.
During 2004, SATGURU was acquired by current management which
includes Mr. Praffulbhai G. Kalavadia , Mr. Dinesh Kumar M.
Kalavadia, Mr. Bharatbhai V. Changela, Mr. Paresh Kiran Parmar,
Mr. Kantilal Naranbhai Padodar and Mr. Ashiwin Kumar Dayabhai
Zalawadi (directors).
SATGURU is engaged in the crushing and processing of soya bean
seed for extraction of soya de-oiled-cake (DOC), soya wash oil
and soya refinery with an installed capacity of 250 metric tonnes
per day (MTPD) for soya DOC and 50 MTDP for soya refinery.
SHARP REALTORS: CARE Assigns 'B' Rating to INR85cr LT Loan
----------------------------------------------------------
CARE Ratings has been seeking information from Sharp Realtors to
monitor the rating(s) vide e-mail communications dated Nov. 8,
2016, Dec. 7, 2016, Jan. 11, 2017, Feb. 11, 2017 and numerous
phone calls. However, despite CARE's repeated requests, the firm
has not provided the requisite information for monitoring the
ratings. In the absence of minimum information required for the
purpose of rating, CARE is unable to express opinion on the
rating. In line with the extant SEBI guidelines CARE's rating on
Sharp Realtors' bank facilities will now be denoted as CARE B;
ISSUER NOT COOPERATING. Users of this rating (including
investors, lenders and the public at large) are hence requested
to exercise caution while using the rating(s) indicated.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 85.00 CARE B; ISSUER NOT
Facilities-Term COOPERATING
Loan
Detailed description of the key rating drivers
At the time of last rating in July 14, 2015, the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced Partners: Mr. Deepak P Shah has an experience of 25
years in real estate business and Mr. Hemant Mhatre has also been
in the construction field for more than 15 years. They have
executed many residential and commercial projects.
Property Location: The mall is located in Vasai-Virar area which
is a rapidly growing area of western suburbs in Mumbai. It is
expected to have a greater footfall over a period of time
resulting into higher occupancy levels and revenue share.
Key Rating Weaknesses
Slower Execution: The original COD was March 2015, which was
revised to December 2015 at the time of last review.
Cocentration Risk: Only the top 5 clients were contributing more
than 84% of total leased area at the time of last review.
M/s Sharp Realtors (SR) is promoted by Swastik Group to execute a
residential-commercial-retail project as a part of "Yashwant Viva
Township" in the Alkapuri locality at Nallasopara (East), Thane.
Swastik group, engaged in construction business for more than 11
years was started by Mr. Deepak Shah, Mr. Hemant Mhatre, Mr.
Kishore Naik and Mr. Pankaj Thakur and has completed about 10.10
lsf of construction till date and has ongoing projects with total
area under construction of 10 lsf. SR has undertaken construction
of the said township project in phases. For the first phase
(Phase I), SR completed the development of a residential project
on land admeasuring 31,165 square meters (sqm) having a total
saleable area of 3.43 lakh square feet (lsf) namely ' Durvas'
residential project and it is a part of the Yashwant Viva
Township. For the second Phase (Phase II), SR is constructing a
Mall (named Viva Swastik Shopping mall) in Yashwant Viva Township
having a total area of 4.50 lsf. The estimated cost for the Mall
project has been revised from INR100 crore to INR155 crore due to
addition of area and cost escalation in MEP services. Total cost
is estimated to be funded by equity of INR70 crore , debt of
INR85 crore out of which debt of INR60 crore is already tied up
and remaining INR25 crore is being sought from their banker i.e.
Bank of Baroda. The another ongoing project "Swastik Epitome", is
recently launched and expected to be completed by December 2017.
It is a residential project in Virar East, with saleable area of
5.69lsf.
SHREE RAM: CARE Assigns B+ Rating to INR30cr LT Bank Loan
---------------------------------------------------------
CARE's rating assigned to the bank facilities of Shree Ram Cottex
Industries Private Limited is constrained by its moderate scale
of operations, high leverage, thin profitability and modest debt
protection indicators. The rating is further constrained by the
susceptibility of its operating margins to the volatile cotton
prices and its presence in a highly fragmented and working
capital intensive cotton ginning industry.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 30 CARE B+; Stable Assigned
The rating, however, derives strength from the vast experience of
the promoters in the cotton ginning business and benefits derived
from its favorable location - cotton-growing belt of Gujarat.
The ability of SRC to increase its scale of operations and
improve its profitability by moving up in the cotton value chain
along with an improvement in its capital structure and efficient
management of its working capital requirement would be the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate scale of operations along with thin profitability
margins
TOI of SRC grew by around 10% during FY16 (refers to the period
April 1 to March 31) at INR219.83 crore mainly on account of
increase in sales of cotton bales. However, PBILDT margin
declined by 52 bps during FY16 mainly on account of moderation in
the spread between average sales realisation and average raw
material cost. Furthermore, PAT margin also declined by 6 bps
during FY16 and stood low at 0.10%.
High leverage and modest debt coverage indicators
Overall gearing deteriorated and remained very high at 9.52x as
on March 31, 2016, due to infusion of funds by the promoters in
the form of unsecured loans to support operations of company.
Debt coverage indicators remained at modest level during FY15-
FY16 on the back of thin profitability margins and higher debt
levels owing to highly working capital intensive operations.
Key Rating Strengths
Experienced promoters
SRC is managed by Mr. Ramnik Bhalala and Mr. Dinesh Bhalala. Mr.
Ramnik Bhalala possesses more than 25 years of experience in the
cotton ginning industry and looks after finance and marketing of
SRC, while Mr. Dinesh has extensive experience of more than 12
years and oversees administrative and plant operations.
Favourable location with easy availability of raw cotton
The processing facility of SRC is located in Gondal (Gujarat)
which is one of the top producers of cotton in India and Gujarat
produced about 29% of the national production of cotton during
FY16. Hence, SRC's presence in the cotton producing region
results in benefit derived from lower logistic expenditure (both
on transportation and storage) along with easy availability and
procurement of raw materials at effective prices.
Gondal-based (Rajkot, Gujarat) SRC is engaged in cotton ginning
and pressing to produce cotton bales. Earlier, SRC operated as
partnership firm - Shree Ram Cottex Industries till its
conversion to private limited company in September 2013. SRC is
managed by Mr. Ramnik Bhalala and Mr. Dinesh Bhalala and has a
cotton ginning and pressing unit at Gondal (Rajkot) in Gujarat.
As per the audited results for FY16, SRC reported a total
operating income (TOI) of INR219.83 crore with a profit after tax
(PAT) of INR0.22 crore as against a TOI of INR199.51 crore with a
PAT of INR0.32 crore in FY15 (Audited).
SHRI SAMARTH: CARE Assigns 'D' Rating INR9.76cr LT Bank Loan
------------------------------------------------------------
CARE Ratings has been seeking information from Shri Samarth Paper
and Board Mill to monitor the rating(s) vide e-mail
communications from September, 2016 to February, 2017 and
numerous phone calls. However, despite CARE's repeated requests,
the Shri Samarth Paper and Board Mill has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on Shri Samarth Paper and
Board Mill's bank facilities will now be denoted as CARE D;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.76 CARE D; ISSUER NOT
COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
rating(s) indicated.
Detailed description of the key rating drivers
At the time of last rating on December 7, 2015, the following
were the rating strengths and weaknessess:
Key Rating Weaknesses
Delay in debt servicing: As per interaction with management and
bankers, there have been delays in the debt servicing due to weak
liquidity position owing to delay in to commencement of
operations at the manufacturing facility. Further the firm has
repaid 7 Quarterly EMI's to the tune of INR2.75 crore prior to
commencement of production, however the term loans instalments
were delayed by one quarter i.e for the period August to November
2015 and bankers have also charged the penal interest for same.
Furthermore, the working capital limit utilization remained full
during the last 7 months ended November 2015.
Shri Samarth Paper and Board Mill was established in 2006 by Mr.
Vijay Arjundas Gurwada, Mr. Rajkumar A. Gurwada, Mr. Pandurang V.
Vernekar and Dinesh P. Vernekar. Later in the year 2008, Mr.
Pandurang V. Vernekar and Dinesh P. Vernekar, partners retired
from the partnership and Mr. Rajkumar A. Gurwada, Mr. Aman R.
Gurwada, Mr. Akhil V Guruwada and Mr. Anuj V Gurwada joined as
partners. SSPBM is engaged in manufacturing of paper & board and
paper boards at its facility located at Kondi, Solapur. SSPBM was
incorporated in 2006; however the manufacturing activity was
started from May 2015. SSPBM's products are consumed by
corrugated box manufacturers, manufacturers of paper cone, paper
tubes, duplex boards and office files, etc. Currently, the
company has installed capacity of 1500 tons per month of paper &
paper board manufacturing.
STP LIMITED: ICRA Raises Rating on INR24cr Cash Loan to B
---------------------------------------------------------
ICRA has upgraded its long-term rating to [ICRA]B from [ICRA]B-
on the INR24.00-crore fund-based and INR2.00-crore non-fund based
bank facilities of STP Limited. ICRA has also reaffirmed its
short-term rating of [ICRA]A4 on the INR9.00-crore non-fund based
bank facilities of STPL. The outlook on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund-
Based-Cash credit 24.00 Upgraded to [ICRA]B (stable)
from [ICRA]B-
Long-term Non-
fund based 2.00 Upgraded to [ICRA]B (stable)
from [ICRA]B-
Short-term Non-
fund based 9.00 Reaffirmed at[ICRA]A4
Detailed Rationale
ICRA's rating action takes into account the improvement in the
operating profit margin of the company in FY2016 owing to the
increased share of margin-accretive products in the sales mix,
which supported the net cash accruals of the company. An
improvement in the operating profit margin coupled with a
moderation in the working capital intensity resulted in the
improvement in the debt protection metrics. Further, ICRA noted
that, the consistent financial support from the parent company
has been keeping the liquidity profile under check.
ICRA's ratings are, however, constrained by continued under-
utilisation of the plant capacity and under-absorption of fixed
overheads in the past few years, which have kept the return
indicators at low levels. Despite marginal improvement in the
profitability and moderation in the working capital intensity in
FY2016, the overall financial profile remained weak with high
utilisation of working capital borrowings, leveraged capital
structure and subdued coverage indicators.
The company's ability to increase the sales and improve its
profitability in a sustained manner to reduce the dependence on
external funding will be the key rating sensitivity. Timely
funding support from the holding company to meet the interim
funding requirements will also be closely monitored.
Key Rating Drivers
Credit Strengths
* Extensive experience of the promoters in the business
* Gradual improvement in the profitability in the past which
supported the net cash accruals in FY2016
* Demonstrated support of the promoters in terms of timely
infusion of funds into the company
* Demand of construction chemical is expected to improve in the
near-medium term owing to the Government's pledge on spending
on infrastructure especially in the road sector
Credit Weaknesses
* Sub-optimal utilisation of plant capacity leading to under
absorption of the overheads in the past and resulting in net
losses
* High working capital intensity owing to elevated inventory
holding requirements and often stretched receivable collection
period
* Product portfolio belongs to cyclical industry, demands of
which are dependent on the performance of infrastructure,
real estate, and construction segment. Sluggish performance
of these industries have quelled the demand of bitumen and
tar-coal based products
* The company hedges ~30% of the foreign exchange exposure of
the imports from Russia; however, major chunk still remains
unhedged.
Detailed description of key rating drivers:
STP Limited manufactures waterproofing chemicals, anti-corrosion
coating, sealant and other construction chemicals etc. from its
factories in five states namely Tamil Nadu, West Bengal, Uttar
Pradesh, Goa, and Jharkhand. The company supplies these products
to various infrastructure and construction companies through
intermediates.
The promoters of the company have extensive experience in this
line of business. The company's focus on operating margin-
accretive products in the past couple of years has resulted in an
improvement in the operating profit margins. Further, the company
has been able to negotiate favourable credit terms with its key
customers as well as suppliers which kept the working capital
intensity at approx. 26% as on March 31, 2016 compared to approx.
34% in the previous year. The company's net cash accruals also
increased from a cash loss of INR0.61 crore to a cash profit of
INR1.43 crore in FY2016. The holding company of STPL namely
Turner Morrison Limited has supported the company by infusing
funds as and when required; however, the dependence of STPL on
its holding company reduced in FY2016.
Under-absorption of fixed overheads resulting from sub-optimal
plant capacity utilisation in the past has kept the return
indicators at low levels. The operating profits margin of the
company has increased in FY2016 compared to the previous year,
but debt coverage indicators remained tepid owing to high
interest expenses. The liquidity level of STPL remained subdued
due to high working capital intensity led by stretched debtor
collection period and requirement of keeping high level of
inventory of different SKUs1.
UNITED INFRAVENTURES: CARE Cuts Rating on INR9.05cr Loan to D
-------------------------------------------------------------
CARE Ratings has been seeking information from United
Infraventures Limited (UIL) to monitor the rating(s) via e-mail
communications/letters dated Oct. 19, 2016, Jan. 20, 2017 and
Jan. 23, 2017 and numerous phone calls. However, despite CARE's
repeated requests, United Infraventures Limited has not provided
the requisite information for monitoring the ratings. In line
with the extant SEBI guidelines CARE's 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 United Infraventures Limited's bank facilities will
now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.05 CARE D; ISSUER NOT
COOPERATING; Revised from
CARE B+ on the basis of
best available information
Short-term Bank
Facilities 1.00 CARE D; ISSUER NOT
COOPERATING; Revised from
CARE A4 on the basis of
best available information
The ratings have been revised on account of ongoing delays in
repayment of its bank facilities.
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 weaknesses:
As per banker iteration, there have been delay in debt servicing
and account has been classified as NPA.
United Infraventures Limited was incorporated on August 18, 2012
to take over the business of United Construction Company (UCC)
which is, since 1963, engaged in civil construction works mainly
involved in sewage pipeline laying & repairs, repairs of
structures, road construction & repairs etc. The company carters
to Municipal Corporation of Greater Mumbai (MCGM), with major
operations in Mumbai, Maharashtra. UIL secures all its contracts
through its strong relationships with its clients and has been
consistently receiving repeat orders from them. The company is
registered as Class AA (AA to D) civil contractor with MCGM.
VANTAGE SPINNERS: CARE Reaffirms B+ Rating on INR68.75cr Loan
-------------------------------------------------------------
CARE's rating assigned to the bank facilities of Vantage Spinners
Private Limited continues to be constrained by limited track
record of the business in the textile industry, susceptibility of
profit margins to volatility in raw cotton prices, leveraged
capital structure, high inventory holding period and working
capital intensive nature of business. The rating also
factors in decline in profit margins in FY16 (refers to the
period April 1 to March 31) However, the rating is underpinned by
consistent growth in total operating income over the last three
years, geographical advantage for raw material availability and
eligibility to receive power and interest subsidies from the
Government of Andhra Pradesh.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 68.75 CARE B+; Stable Reaffirmed
The ability of the company to expand the scale of operations
while improving the profitability and manage the working capital
requirement efficiently are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management
The promoters and management team have presence of more than two
decades in the cotton industry.
Consistent growth in total operating income
The total operating income of VSPL has been growing at healthy
pace over the years with a y-o-y growth of about 48% in FY16 at
the back of increase in sales volume of coarse count size cotton
owing to first full year utilisation of open-ended (rotor based)
machine.
Eligibility of various subsidies from Government of India and
Government of Andhra Pradesh
The company is eligible to receive power subsidy and interest
rate subsidy (under Technology Upgradation Fund Scheme) from
Government of Andhra Pradesh and Government of India respectively
which favorably impacts the profitability.
Key Rating Weaknesses
Low profit level decline in margin during FY16
The company has relatively low profit level given the high input
cost, low bargaining power and relatively high capital charge.
The PBILDT margin of VSPL declined by 374 basis points to 11.24%
in FY16 due to higher decline in sales realisation from cotton
yarn prices than the decrease in raw cotton prices during FY16.
Also, the PAT margin declined marginally by 19 basis points, to
1.04% during FY16.
Leveraged capital structure
The capital structure and debt-protection metrics of VSPL
remained leveraged with overall gearing at 2.19x as on March 31,
2016 and PBILDT to interest coverage at moderate level 2.83x in
FY16.
Working capital intensive industry leads to high operating cycle
The company faces an elongated operating cycle led by high
inventory holding days. Given the seasonal raw material
availability, the company procures raw material in bulk during
the cotton season i.e. October to April which results in high raw
material period (117 days in FY16) and consequently stretched
operating cycle (129 days in FY16). Consequently, the utilization
of working capital limits has also been full.
Vantage Spinners Pvt. Ltd. was incorporated on July 28, 2006, by
Mr. Potluri Mohana Murali Krishna, Mr. Potluri Soma Sekhar and Ms
Nandamuri Meenalatha. VSPL is engaged in manufacturing of cotton
yarn (40s and 60s count) with an installed capacity of 31,500
spindles. The company's manufacturing plant is located at
Nuzividu Mandalam in Krishna district, Andhra Pradesh. The
company started commercial operation in February 2010.
During FY16, VSPL reported total operating income of INR146.28
crore (FY15: INR98.41 crore) with PBILDT of INR16.44 crore (FY15:
INR14.77 crore) and PAT of INR1.52 crore (FY15: INR1.21 crore).
VANSHIKA SUGAR: ICRA Upgrades Rating INR14.50cr Loan to B+
----------------------------------------------------------
ICRA has upgraded the long-term rating to [ICRA]B+ from [ICRA]B
on the INR26.50 crore fund-based facility and the INR10.00 crore
unallocated limits of Vanshika Sugar & Power Industries Limited.
The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 12.00 [ICRA]B+; upgraded from
[ICRA]B, Stable outlook
assigned
Warehousing Limit 14.50 [ICRA]B+; upgraded from
[ICRA]B, Stable outlook
assigned
Long-Term 10.00 [ICRA]B+; upgraded from
Unallocated [ICRA]B, Stable outlook
assigned
Rationale
The ratings revision factors in the improvement in outlook for
the company's business operations on the back of increase in the
domestic sugar realizations supported by lower domestic sugar
production during SY2016, exports of 1.6 million MT and the
expectations of further decline in the domestic sugar production
in SY2017 thereby, supporting the contribution margins. Moreover,
VSPIL has benefitted from the improvement in sugar recovery rate
in SY2016, which led to lower cost of production and translated
into healthy improvement in financial profile in FY2016 as
reflected by healthy cash accruals, reduced gearing levels and
improved debt coverage indicators. Moreover, the ratings continue
to favorably factor in the experience of the promoters in the
industry, the measures taken by the Government of India (GOI) for
the revival of the industry, the company's comfortable capital
structure and the favorable location of the plant.
However, the ratings continue to be constrained by the fact that
profitability of Madhya Pradesh-based sugar mills will continue
to remain vulnerable to the State Government of Madhya Pradesh's
policy on cane prices and export duty. The rating is further
constrained by VSPIL's modest operating profile characterised by
relatively small capacities and short crushing periods in the
past, resulting in limited economies of scale and lack of forward
integration into distilleries and co-generation. This makes the
company's performance more vulnerable to vagaries of the sugar
cycle. Profitability of the sugar mills will also remain
vulnerable to the cyclical nature of the sugar industry and the
agro-climatic risks related to cane production.
Going forward, continued firmness in sugar prices and favourable
policy environment, along with the company's ability to maintain
optimal working capital, will be the key monitorables.
Key Rating Drivers
Credit Strengths
* Favorable location within Madhya Pradesh, suitable climatic
conditions and presence of Narmada river imparting good
irrigation facilities.
* As the state does not have a State administered mechanism
(SAP) for determining cane prices, there is a partial linkage
between sugar and cane prices that extends protection in case
of downturns.
* The improved demand-supply position of the sugar industry and
increasing realisation is expected to aid well for sugar
mills.
Credit Weaknesses
* Cyclicality associated with sugar business. Risks get
amplified by lack of forward integration.
* Relatively small capacities, resulting in limited economies
of scale.
* Continued vulnerability to agro-climatic risks in the sugar
business.
Description of key rating drivers highlighted:
The sugar industry has witnessed a sharp increase in sugar
realisation in the last six months, which has benefitted the
company in terms of higher contribution margins. Although the
cane procurement cost increased from INR232 to INR260 per
quintal, however, the healthy sugar realisation has supported the
margins. Moreover, the recovery rates of the company also
improved from 8.47% in SY2015 to 9.56% in SY2017, leading to
higher sugar productions. Further improved production in the
current season will lead to healthy profitability for the company
due to continued firmness in sugar prices in the current year.
However, machinery breakdown in SY2016 led to a short crushing
period, limiting the production and profitability for that year.
Furthermore, the sugar industry remains vulnerable to its
cyclical nature and the agro-climatic risks related to cane
production, which is further aggravated by the lack of forward
integration of the entity.
VSPIL, incorporated in 2012, manufactures white crystal sugar and
its by-products. The company's cane processing plant is located
in Narsinghpur, Madhya Pradesh, with an installed crushing
capacity of 2,500 tonnes per day (TCD). The company commenced
commercial production from November 2014.
VSPIL recorded a net profit after tax (PAT) of INR0.73 crore on
an operating income of INR51.81 crore in FY2016 as against a net
profit of INR0.04 crore on an operating income of INR4.96 crore
in the previous year.
VANYA DESIGNER: ICRA Assigns B+ Rating to INR7.50cr Cash Loan
-------------------------------------------------------------
ICRA has assigned the long term rating of [ICRA]B+ with stable
outlook to the INR7.50 crore cash credit facility of Vanya
Designer.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits
Cash Credit 7.50 [ICRA]B+ (Stable) assigned
Rationale
The assigned rating is constrained by the firm's small scale of
operations, low profitability indicators, highly leveraged
capital structure and low coverage indicators. The rating is
further constrained by the intense competition prevailing in the
apparel industry in Surat (Gujarat) due to the presence of many
organised and unorganised players. The rating continues to remain
constrained by the working capital intensive operations due to
long working capital cycle.
The rating, however, favorably considers the long standing
experience of the partners in the apparel trading industry; its
diversified product portfolio; and the locational advantage in
terms of material procurement and outsourcing from downstream
processing units on account of being situated in Surat.
Key rating drivers
Credit Strengths
* Long standing experience of the partners in the apparel
trading industry
* Proximity to raw material suppliers and downstream processing
units in Surat
* Diversified product portfolio
Credit Weakness
* Small scale of operations with low profitability
* Highly leveraged capital structure and low coverage indicators
* High competitive intensity because of fragmented nature of
garment industry
* Working capital intensive operations owing to long debtor and
high inventory requirements due to long manufacturing cycle.
Description of key rating drivers highlighted:
Based out of Surat, Gujarat, VD started the operations with
selling of sarees and gradually diversified the product portfolio
to include salwar suits and lehangas. After purchasing the gray
fabric, VD outsource the key activities such as pre-treatment,
dyeing and printing, and embroidery from downstream processing
units based out of Surat and only low value added operations such
as cutting and packing are performed in-house. This has resulted
in lower operating margins for VD in the range of ~2-4.5% in the
last four fiscals. VD's operations are working capital intensive
due to the long manufacturing cycle for saree which required VD
to maintain the sufficient inventory of raw materials and support
fabrics to maintain the continuity of operations. High reliance
on working capital borrowing coupled with small net-worth base
has resulted into highly leveraged capital structure. The women
ethnic wear industry in Surat, Gujarat, is characterized by
presence of various large and small players resulting into
intense competition; however, the promoter's long standing
experience in the women ethnic wear industry, diversified product
portfolio and various marketing initiatives to increase the brand
visibility are expected to benefit the firm.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the VD's business risk profile, financial risk
drivers and management profile.
Surat-based Vanya Designer was established in June 2012 by Mr.
Rajesh Kedia and Mr. Rajesh Chhajed. It is engaged in selling
sarees, salwar suits and lehangas. VD sells its products under
its brand name "Heart & Soul".
VASAVI POWER: CARE Assigns 'D' Rating to INR50cr ST Bank Loan
-------------------------------------------------------------
CARE Ratings has been seeking information from Vasavi Power
Services Private Limited to monitor the ratings via e-mail
communications/letters dated Sept. 28, 2016, Feb. 16, 2017, and
numerous phone calls. However, despite CARE's 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 a fair rating. The ratings of Vasavi
Power Services Private Limited's bank facilities will now be
denoted as CARE D/CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 15.00 CARE D; ISSUER NOT
COOPERATING; Based on
best available information
Short-term Bank
Facilities 50.00 CARE D; ISSUER NOT
COOPERATING; Based on
best available information
The ratings take into account delays in debt servicing on account
of stretched liquidity position of the company.
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 January 18, 2016 the following were
the rating weaknesses and strengths:
Key Rating Weaknesses
Delays in debt servicing: The company has been facing stretched
liquidity position with cash flow mismatch resulting in delays in
servicing of debt obligations.
Key Rating Strengths
Experienced promoter and long proven track record of the company:
Mr. N. Ramaiah is the founder, Chairman & Managing Director of
the company who is a first-generation entrepreneur with more than
three decades of experience in providing end to end services
across the power generation spectrum. Mr. G Ramesh Babu and Mr. N
Kiran Kumar are the two Executive Directors of the company with
more than two decades of experience in various industries.
Vasavi Power Services Private Limited is primarily engaged in the
business of ETC (Erection, testing and commissioning) and MRO
(Maintenance, repair and overhauls) of power equipment. The
company was established as a proprietorship concern, Vasavi
Engineering Works, in 1980. In 1982, it was reconstituted as a
partnership firm. In 2001, it was reconstituted as a private
limited company, under its current name.
=========
J A P A N
=========
TOSHIBA CORP: Delisting Looms after Earnings Deadline Missed
------------------------------------------------------------
Leon Spencer at ARN reports that Toshiba Corp. could be delisted
from at least two stock exchanges if it is deemed to have not
improved its internal management system since its last review
late last year.
ARN says the company told shareholders on March 14 that the two
stock exchanges on which it is listed, the Tokyo Stock Exchange
(TSE) and the Nagoya Stock Exchange (NSE), will review a
submission on its internal management system and, if it has not
improved since its last submission, the company's stock will be
delisted.
As a result of "inappropriate accounting" in the past, the
company had previously been given notice that its stock would be
designated as ' Securities on Alert', effective from September
15, 2015, in accordance with their Securities Listing
Regulations, the report relates.
According to ARN, Toshiba was given notice by the TSE and NSE at
the time that improvements of its internal management system were
"highly necessary".
On September 15 last year, Toshiba submitted written confirmation
of its internal management system to TSE and NSE, the report
recalls.
This was examined by the exchanges which, in December last year,
informed Toshiba that they would continue the 'Securities on
Alert' designation, saying that they needed to further verify the
implementation and progress of measures Toshiba had taken to
improve its internal management systems, according to ARN.
Now, the company has resubmitted written confirmation of its
internal management system to the two exchanges, the report
notes.
Given that the decision as to whether the company will be de-
listed or not hinges on the exchanges' review of the submission,
the company's stock has subsequently been additionally designated
as ' Securities Under Supervision (Examination),' ARN says.
"Toshiba deeply regrets that the designation of its stock as a
Securities Under Supervision (Examination), and hereby apologises
to its shareholders, investors and stakeholders for causing them
great concern," the company told shareholders.
"Toshiba will channel all its efforts, and those of Toshiba Group
as a whole, into securing release from the current designation,"
it said.
The most recent review of the company's internal management
system by the exchanges comes just days after the company
requested, and was granted, its second extension to its third
quarter securities report submission deadline, adds ARN.
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.
*********
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, Ivy B. Magdadaro 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 ***