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T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, April 19, 2017, Vol. 20, No. 77
Headlines
A U S T R A L I A
K CARE: Attracts Interests from Potential Buyers
OPEN WINDOWS: Second Creditors' Meeting Set for April 27
B A N G L A D E S H
BANGLADESH: Moody's Affirms Ba3 Ratings on Strong Growth
I N D I A
ABHINAASH AGROFOOD: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
ADVANCE COOLERS: Ind-Ra Assigns 'B' Long-Term Issuer Rating
AGARWAL POLYSACKS: CARE Assigns 'B' Rating to INR12.50cr LT Loan
ALFA ONE: CARE Issues "CARE C; Issuer Not Cooperating" Rating
AMAR COTTEX: CARE Issues "CARE D Issuer Not Cooperating" Rating
ANGEL FIBERS: CARE Reaffirms B+ Rating on INR48.10cr Loan
ASHWANI GOYAL: CARE Upgrades Rating on INR9.38cr Loan to B+
ASSOCIATE BUILDERS: CARE Issues B+ Issuer Not Cooperating Rating
BAHRA EDUCATIONAL: ICRA Reaffirms 'D' Rating on INR29.73cr Loan
BALAJI GINNING: CARE Reaffirms B+ Rating on INR9cr LT Loan
BIDAR SOLAR: CARE Lowers Rating on INR76cr Loan to 'D'
BNT INNOVATIONS: Ind-Ra Issues D, Issuer Not Cooperating Rating
CHANDIGARH ROLLER: CARE Assigns 'B' Rating to INR12cr LT Loan
CHEMCOAT INDIA: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
CLEANTEC INFRA: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
COSYN LIMITED: Ind-Ra Affirms 'BB' Long-Term Issuer Rating
D. S. KULKARNI: CARE Lowers Rating on INR715.79cr Loan to 'D'
DASHMESH RUBBER: CARE Lowers Rating on INR6.80cr LT Loan to B
DREAM HOME: ICRA Assigns B+ Rating to INR13cr Fund Based Loan
DUTCH GLASS: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
ELITE MOTORS: CARE Issues B+ Issuer Not Cooperating Rating
ELEMENT CHEMILINK: Ind-Ra Migrates BB+ Rating to Non-Cooperating
EMCEE ENGINEERING: CARE Issues B Issuer Not Cooperating Rating
ENKEBEE INFRA: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
ESS PEE: Ind-Ra Migrates 'BB+' Rating to Not Cooperating
GARG & COMPANY: CARE Issues B+ Issuer Not Cooperating Rating
GENERAL POLYTEX: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
GOLKUNDA DIAMOND: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
GOYAL RICE: Ind-Ra Migrates 'B' Rating to Issuer Non-Cooperating
GREEN MIRROR: CARE Lowers Rating on INR11.50cr Loan to 'D'
HANS RUBBER: Ind-Ra Migrates 'B' Rating to Non-Cooperating
HARIOM PROJECTS: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
HEAVY METAL: CARE Reaffirms 'B' Rating on INR224.90cr LT Loan
HEMA CONSTRUCTION: CARE Issues 'B+ Issuer Not Cooperating' Rating
HERMAN PROPERTIES: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
INDIAN ART: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
ISHAN INTERNATIONAL: Ind-Ra Migrates B+ Rating to Non-Cooperating
JAGDISH SARAN: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
JK HITECH: CARE Reaffirms B+ Rating on INR10.05cr LT Loan
KAPIL ENTERPRISES: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
KAYTEE CORPORATION: Ind-Ra Migrates B+ Rating to Non-Cooperating
KRISHNA VALLEY: Ind-Ra Assigns 'D' Long-Term Issuer Rating
LS RICE: Ind-Ra Migrates 'B' Rating to Non-Cooperating
MANIKANTA COTTON: ICRA Reaffirms 'B' Rating on INR8cr Loan
MICKY METALS: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
MILIND PULSES: ICRA Reaffirms 'B' Rating on INR5cr LT Loan
MUKTAR AUTOMOBILE: CARE Reaffirms 'B' Rating on INR9.88cr Loan
MURARILAL AGARWAL: CARE Issues B+ Issuer Not Cooperating Rating
PARADISE POLYMERS: CARE Cuts Rating on INR8.10cr LT Loan to D
POLYLACE INDIA: CARE Reaffirms B+ Rating on INR3.0cr LT Loan
RIDHI SIDHI: CARE Issues B+ Issuer Not Cooperating Rating
SAMRAT SEA: ICRA Reaffirms 'D' Rating on INR4.25cr Term Loan
SHAH PRECICAST: ICRA Reaffirms B+ Rating on INR18.42cr LT Loan
SHREE JAGDAMBA: ICRA Reaffirms B/A4 Rating on INR11.50cr Loan
SHRI BALAJI: ICRA Reaffirms 'D' Rating on INR12cr Long Term Loan
SHYAM ENTERPRISES: ICRA Cuts Rating on INR9.49cr Loan to B+
SINGOLI CHARBHUJA: CARE Assigns B+ Rating to INR10cr LT Loan
TIRUMALA EDUCATIONAL: ICRA Reaffirms B+ Rating on INR9.74cr Loan
TRIKAAL LEASING: CARE Issues B+(FD); Not Cooperating Rating
I N D O N E S I A
SAKA ENERGI: Fitch Assigns BB+ IDR; Outlook Positive
J A P A N
TAKATA CORP: Rescue Talks Extended Even as Bankruptcy Risk Looms
TAKATA CORP: Ex-FBI Director Chosen to Oversee Air Bag Fund
TOSHIBA CORP: Foxconn Eyes Involving Sharp in Chip Unit Bidding
S I N G A P O R E
EZRA HOLDINGS: Updates Bond Holders as Firm Seeks Rescue
S O U T H K O R E A
DAEWOO SHIPBUILDING: Bondholders Approve Debt Rescheduling
KUMHO TIRE: Kumho Asiana Chief Passes on Buyback for Now
- - - - -
=================
A U S T R A L I A
=================
K CARE: Attracts Interests from Potential Buyers
------------------------------------------------
Sean Smith at The West Australian reports that K Care, the 40-
year-old Malaga manufacturer of aged care equipment put into the
hands of receivers earlier this month, has already attracted
interest from potential buyers.
The collapse of K Care, which was owned by Hills Holdings for 11
years before being sold to private equity group Anacacia Capital
in 2013, threatens nearly 160 jobs, including 68 at the company's
flagship Malaga plant, according to the report.
The West Australian notes that with insufficient cash to keep
K Care trading, receiver Alan Hayes from Hayes Advisory has been
forced to stand down most of the workforce without pay until
further notice while he assesses the financial state of the
business and pursues a sale.
According to the report, Mr. Hayes said he had been sounded out
by a couple of interested parties, but noted that some parts of
K Care were more attractive to buyers than others.
"I can't guarantee that everybody will be offered a job or that I
can sell it, but what I can guarantee is that we're doing our
best to get a sale away," the report quotes Mr. Hayes as saying.
Founded in 1976, K Care turned over about AUD30 million a year
from making and distributing equipment, including beds, walking
frames, physiotherapy tables, patient slings and shower commodes,
for hospitals, aged care homes and medical and community care
centres, the report discloses. However, more recently, it is
believed to have been hurt by increased competition from foreign-
made products.
Its directors had been seeking to sell K Care when Mr. Hayes was
called in, adds The West Australian.
Established in 1976, K Care -- http://www.kcare.com.au/--
manufactures and distributes hospital, residential aged care and
community care equipment for local and international markets.
The company employs about 100 people in Perth and 30 people
across Sydney, Melbourne and Brisbane.
On April 10, 2017, Trevor Pogroske and Philip Campbell-Wilson of
Ernst & Young were appointed as administrators of:
-- K Care Pty Ltd;
-- White Cell Rx Holdings Pty Ltd;
-- Emolior Industries Pty Limited; and
-- Oxford-Eme (Aust) Pty Limited.
Alan Hayes of Hayes Advisory was appointed Receiver and Manager
to the company on April 7, 2017 and is conducting a sale of the
business.
OPEN WINDOWS: Second Creditors' Meeting Set for April 27
--------------------------------------------------------
A second meeting of creditors in the proceedings of Open Windows
and Doors Pty Ltd has been set for April 27, 2017, at 11:00 a.m.,
at the offices of BRI Ferrier Western Australia, Unit 3, 99-101
Francis Street, in Northbridge, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 26, 2017, at 4:00 p.m.
Giovanni Maurizio Carrello of BRI Ferrier Western Australia were
appointed as administrators of Open Windows on March 13, 2017.
===================
B A N G L A D E S H
===================
BANGLADESH: Moody's Affirms Ba3 Ratings on Strong Growth
--------------------------------------------------------
Moody's Investors Service has affirmed the Government of
Bangladesh's Ba3 issuer and senior unsecured ratings and
maintained the stable outlook on the ratings. Moody's has also
affirmed Bangladesh's NP short-term issuer ratings.
Moody's decision to affirm the rating is driven by the following
factors:
1. Strong growth, macroeconomic stability, and access to
concessional funding;
2. A very narrow government revenue base that restricts fiscal
flexibility and very low institutional capacity that constrain
the investment climate and competitiveness.
The maintenance of the stable outlook reflects the expectation
that the balance of credit strengths and challenges described
above is unlikely to shift over the outlook horizon.
COUNTRY CEILINGS
Bangladesh's Baa3 local currency bond and deposit ceilings remain
unchanged. The Ba2 country ceiling for foreign currency (FC) debt
and B1 country ceiling for FC bank deposits also remain
unchanged.
RATINGS RATIONALE
STRONG GROWTH, MACROECONOMIC STABILITY, AND FAVORABLE DEBT
STRUCTURE
Bangladesh's Ba3 government bond rating is supported by the
country's robust and stable growth performance, a core credit
strength, and relatively low government debt burden. Between
FY2007 (fiscal year ending in June 2007) and FY2016, real GDP
growth averaged 6.2% year-on-year, which was significantly higher
than the median of 4.3% for Ba3-rated peers. As a result, the
size of Bangladesh's economy nearly tripled and real GDP per
capita increased by over 80% during the same time period.
Private consumption is a key contributor to Bangladesh's economy,
accounting for about 70% of total GDP. In addition, exports are
an important driver of growth, led by the ready-made garments
industry, which accounted for nearly 85% of total goods exports
in US dollar terms in 2016. Given Bangladesh's very low per-
capita income level (PPP, US$3,398 in 2015) and abundant labor
supply, garment exports have thrived based on the competitive
advantage of low-cost labor. Moody's expects Bangladesh's global
apparel market share (currently about 6%) to rise as China
continues to transition away from low-end manufacturing into
higher-value goods, while Bangladesh preserves its cost
competitiveness and improves its attractiveness to foreign direct
investment (FDI).
Remittances from overseas Bangladeshi workers, which were around
6% of GDP in FY2016, also support growth through their impact on
household income and consumption. However, remittances have
declined, as labor demand from the Gulf Cooperation Council (GCC)
economies, the source of about 55% of all remittances, has eased.
Moody's expects remittances flows to stabilize near current
levels, and potentially pickup in line with future increases in
global oil prices. An increase in Bangladeshi overseas worker
emigration in 2016, should provide some support to inflows later
this year. Nonetheless, if the current trend of falling
remittances does persist, it would likely have a negative credit
impact by dampening consumption and widening the current account
deficit.
Bangladesh's robust growth has occurred within a framework of
improving macroeconomic stability, as reflected in price, balance
of payments and fiscal indicators. Average CPI inflation falling
from 10.26% in FY2011 to 5.51% in FY2016, below the Bangladesh
Bank's target ceiling of 5.8%. Moody's expects price pressures to
remain contained, with inflation rising only marginally close to
6.0% by the end of 2017.
On the external front, strong export growth has supported an
increase in foreign exchange reserves to about $31 billion in
FY2017 from about $8 billion in FY2011. Meanwhile, remittances
accounted for about 30% of current account receipts in FY2015,
more than offsetting the trade deficit. Moody's expects the
recent decline in remittances, along with a rise in import
demand, to result in a very small current account deficit of
about 0.2% of GDP in FY 2017.
Fiscal deficits have averaged 3.3% of GDP over the past five
fiscal years and the debt-to-GDP ratio has declined to 27.2% in
FY2016 from 40.2% in FY2006. Bangladesh's government debt ratios
are significantly below the median of 41.3% for Ba-rated peers.
Multilateral and bilateral funding, much of it concessional,
accounts for about 46% of general government debt and 80% of
total external debt. This favorable debt structure mitigates debt
affordability risks stemming from weak government revenues.
Moody's expects the general government debt burden to rise
marginally to just below 30% over the next two years, and to
continue to be financed largely by concessional borrowing.
LOW REVENUE BASE RESTRICTS FISCAL FLEXIBILITY WHILE VERY LOW
INSTITUTIONAL STRENGTH CONSTRAINS INVESTMENT CLIMATE AND
COMPETITIVENESS
At approximately 10% of GDP in the FY 2016, Bangladesh's
government revenue ratio is one of the lowest among Moody's-rated
sovereigns. As a result, and despite recurrent underspending on
capital expenditure relative to budget plans, Bangladesh has
recorded continued fiscal deficits averaging about 3.3% of GDP
over the past 10 years. Bangladesh's weak revenue generation and
high cost of borrowing for the non-concessional portion of its
debt, results in weak debt affordability, with government
interest payments on debt equivalent to nearly 20% of revenues
per year. Moreover, the low revenue base constrains the
government's capacity to spend on physical and social
infrastructure.
In July 2017, a new automated VAT system is scheduled to be
implemented that will harmonize tax rates and facilitate tax
reporting and collection. The government has indicated that
reforms to the direct tax code and customs regime would
eventually follow. The successful implementation of these reforms
would go some way in addressing a key constraint on the sovereign
credit profile, although a material pick up in revenues will
likely lag policy implementation, and fiscal flexibility is
likely to remain limited over the next few years.
Bangladesh's weak revenue collection is also reflective of weak
institutions and competitiveness. The country ranks in the 15th
percentile of rated sovereigns for the World Bank Worldwide
Governance Indicator scores on government effectiveness, rule of
law and control of corruption. Meanwhile, it ranks 106th out of
138 countries in overall competitiveness, according to the World
Economic Forum Global Competitiveness Index, with particularly
weak sub-scores for institutions (125 of 138) and infrastructure
(114 or 138). The authorities aim to address these issues by
easing infrastructure gaps and improving the overall business
climate, supported by multilateral and bilateral financial and
technical assistance.
RATIONALE FOR MAINTAINING THE STABLE OUTLOOK
The stable outlook reflects a balance of positive and negative
pressures. While exposed to external risks through trade and
remittances, Bangladesh is likely to maintain a relatively robust
growth rate, macro-economic stability and relatively low
government debt levels. However, revenue and institutional
capacity weakness will likely constrain the rating over the
outlook horizon.
WHAT COULD CHANGE THE RATING UP
Triggers for a rating upgrade could stem from improvements in the
fiscal and operating environment. In particular, fiscal reforms
that contribute to increased government revenue generation and
improved debt affordability, would put positive pressure on the
rating. Additionally, material progress in developing critical
transportation and power infrastructure, combined with meaningful
improvements to the investment climate, could further raise
growth potential with positive credit implications.
WHAT COULD CHANGE THE RATING DOWN
Downward pressure would emerge if institutional or political
setbacks, such as prolonged and disruptive large-scale protests
or more frequent terrorist attacks, strained the economic or
fiscal profile. The crystallization of contingent liabilities
from the banking system, or a structural deterioration in the
external position could pressure the rating.
GDP per capita (PPP basis, US$): 3,398 (2015 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 7.1% (2016 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 5.5% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -3.1% (2016 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: 1.7% (2016 Actual) (also known as
External Balance)
External Debt/GDP: 15.4 (2016 Estimate)
Level of economic development: Low level of economic resilience
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On April 13, 2017, a rating committee was called to discuss the
rating of the Bangladesh, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have not materially changed. The
issuer's institutional strength/ framework, have not materially
changed. The issuer's fiscal or financial strength, including its
debt profile, has not materially changed.
The principal methodology used in these ratings was Sovereign
Bond Ratings published in December 2016.
The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.
=========
I N D I A
=========
ABHINAASH AGROFOOD: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Abhinaash
Agrofood Industries Private Limited's (AAFIPL) Long-Term Issuer
Rating at 'IND B+'. The Outlook is Stable. Instrument-wise
rating actions are:
-- INR32.56 mil. (reduced from INR38.75) Term loan affirmed
with 'IND B+/Stable' rating; and
-- INR30 mil. Fund-based limits affirmed with 'IND B+/Stable'
rating
KEY RATING DRIVERS
The ratings continue to reflect AAFIPL's small scale of
operations and weak credit metrics. Revenue was INR81 million in
FY16 (first year of operations), interest coverage (operating
EBITDA/gross interest expense) was 0.9x and net financial
leverage (total adjusted net debt/operating EBITDAR) was 12.2x.
The ratings also factor in the company's moderate liquidity
position as reflected by 86% utilization of fund-based limits
during the 12 months ended March 2017. However, the agency
believes the scale of operations and credit metrics to have
improved in FY17 based on the interim financials for 8MFY17,
which indicated revenue of INR192 million, EBITDA margin of 9%
and interest coverage of 3.6x.
However, the ratings continue to draw support from the promoter's
more than two-decade-long experience in the rice trading
business.
RATING SENSITIVITIES
Negative: Any deterioration in the credit metrics will be
negative for the ratings.
Positive: A substantial improvement in the scale of operations
along with an improvement in the credit metrics will be positive
for the ratings.
COMPANY PROFILE
AAFIPL was incorporated in 2014 and commenced commercial
operations in March 2015. The company has a rice milling
capacity of 18,000 tonnes per annum in Jharkhand. AAIFPL caters
to both domestic and overseas markets.
ADVANCE COOLERS: Ind-Ra Assigns 'B' Long-Term Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned M/s Advance
Coolers (AC) a Long-Term Issuer Rating of 'IND B'. The Outlook
is Stable. The instrument-wise rating actions are:
-- INR60 mil. Fund-based facilities assigned with
'IND B/Stable/IND A4' rating;
-- INR17.5 mil. Non-fund-based facilities assigned with
'IND A4' rating;
-- INR20 mil. Proposed long-term loan* assigned with
'Provisional IND B/Stable' rating; and
-- INR12.5 mil. Proposed non-fund-based facilities* assigned
with 'Provisional IND A4' rating
*The ratings are provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by AC to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect AC's small scale of operations and moderate
credit metrics. The revenue grew at a CAGR of 45.60% over FY13
to INR278 million in FY16 (FY15: INR214 million), net leverage
was 3.4x (3.3x) and interest coverage was 2.5x (2.1x). EBITDA
margin was 6.8% in FY16 (FY15: 6.3%). The ratings also factor in
the proprietorship form of organization.
The rating is constrained by its tight liquidity as reflected in
overutilization in its working capital facilities for up to 13
days during the six months ended March 2017. This was due to a
stretched cash conversion cycle of 128 days in FY16 (FY15: 100
days).
AC has indicated 1HFY17 revenue of INR170 million. The firm had
an outstanding order book worth INR1.000 billion at end-October
2016, which will be executed over the next six quarters.
The ratings are supported by the eight years of experience of the
company's promoter in the coolers manufacturing business.
RATING SENSITIVITIES
Positive: A sustained improvement in the liquidity position will
lead to a positive rating action.
Negative: Any decline in the profitability resulting in a further
stress on the liquidity position and long-term deterioration in
the credit profile of the company will lead to a negative rating
action.
COMPANY PROFILE
AC was set up in 2010 by Mr. Rishabh Saklecha. It manufactures
air coolers and fans at its facility in Thane, Mumbai
(Maharashtra). The firm exports air coolers to Saudi Arabia,
Bangladesh, Sudan, Egypt, Iraq, South Africa, UAE and Kuwait.
The firm has 90% of sales in domestic market and 10% in foreign
market. Companies such as Voltas Limited, Crompton Greaves, Usha
International Ltd, Bajaj Electricals Limited, Kelvinator Limited,
Singer Corporation and Spherehot are domestic customers.
AGARWAL POLYSACKS: CARE Assigns 'B' Rating to INR12.50cr LT Loan
----------------------------------------------------------------
CARE Ratings has assigned ratings to the bank facilities of
Agarwal Polysacks Limited (APL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.50 CARE B; Stable Assigned
Short-term Bank
Facilities 1.60 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of APL are primarily
constrained on account of its financial profile marked by
fluctuating profitability margins, moderately leveraged capital
structure, weak debt coverage indicators and stressed liquidity
position. The ratings, are further constrained on account of the
susceptibility of the company's profitability to fluctuations in
the raw material prices and its presence in the highly
competitive and fragmented woven sack industry The ratings,
however, favourably take into account long standing experience of
the promoters and management in the packaging industry, its
reputed customer base along with steady growth in its scale of
operations during last three financial years ended FY16 (refers
to the period April 1 to March 31.)
Ability of the company to increase its scale of operations while
improving profitability in light of the volatile raw material
prices and improvement in the solvency position as well as
efficient management of working capital would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Fluctuating profitability margins
The profitability of the company has exhibited fluctuating trend
during last three financial years ended FY16 albeit stood at
moderate level. PBILDT margin of the company has increased in
FY16 mainly on account of lower selling expense. Despite increase
in the PBILDT margin, PAT margin has declined marginally over
FY15 mainly due to higher interest and finance expenses.
Moderately leveraged capital structure along with stressed
liquidity position
The capital structure of the company stood moderately leveraged
and deteriorated as on March 31, 2016 due to availment of term
loan by the company. Furthermore, debt service coverage
indicators of the company stood weak with total debt to GCA of
46.70 times as on March 31, 2016, and interest interest at 1.26
times in FY16. Liquidity position of the company stood stressed
marked by elongated operating cycle and an average 90-95%
utilization of working capital bank borrowing limits in the last
twelve months ended December 31, 2017. The current ratio of the
company stood moderate.
Profitability vulnerable to volatile raw material prices along
with its presence in highly competitive and fragmented woven sack
industry
The primary raw material required for manufacturing of woven sack
bags is HDPE and PP granules, which is a crude oil derivative.
Over the years, prices of crude oil have been volatile and so are
the prices of polymers. Furthermore, the woven sack bag industry
is dominated by players operating in the small and medium-scale
sector, resulting in high fragmentation and intense competition.
Moreover, due to low product differentiation and value addition,
the industry is highly competitive with price being the key
differentiating factor.
Mr Sushil Agarwal, director, has more than three decade of
experience in the paper and packaging industry and looks after
the overall affairs of the company. Furthermore, he is assisted
by tier two management of the company having vast experience in
the packaging industry. Being present in the industry since a
long period of time, the promoters of the company have
established marketing network of its products. Reputed customers
base with good infrastructure facilities The company has
established good infrastructure base and reputed customer base.
The company sells its products all over India mainly to dairy
manufacturers.
Steady growth in Total Operating Income (TOI)
The scale of operations of the company witnessed a continuous
growth and has grew at a Compounded Annual Growth Rate (CAGR) of
around 16.78% in the last three financial years ended FY16
attributed to increase in sale volume of woven sack bags.
Jodhpur-based (Rajasthan) APL was incorporated in 1992 by
Mr. Sushil Agarwal as a private limited company and was converted
into a public limited company in 2000. The company is engaged in
the business of manufacturing of HDPE paper laminated bags,
Multiwall paper bags, High-Density Polyethylene
(HDPE)/Polypropylene (PP) Fabric bags/ Roll, Air Bubble Film
Rolls, Strech film rolls, PE foam rolls and HDPE/PP based woven
sack bags and fabrics which find its application in packaging
across various industries ranging from chemical to fertilizer
industry. The company is ISO 9001:2008 certified company.
Currently, it has an annual installed capacity of 42 lakh numbers
of HDPE & Multial Paper bags and 48000 numbers of Air Bubble
rolls as on March 31, 2016. Approximately 80% capacity is being
utilized by the company. It mainly sells its product to dairy and
cement industries.
ALFA ONE: CARE Issues "CARE C; Issuer Not Cooperating" Rating
-------------------------------------------------------------
CARE Ratings has been seeking information from Alfa One Hi-Tech
Infra Private Limited (AOHT), to monitor the rating(s) vide email
communications/ letters dated July 5, 2016, July 14, 2016,
March 20, 2017 and numerous phone calls. However, despite CARE's
repeated requests, the c 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. Furthermore, Alfa One Hi-Tech
Infra Private Limited has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. In line
with the extant SEBI guidelines CARE's rating on Alfa One Hi-Tech
Infra Private Limited.'s bank facilities and will now be denoted
as CARE C; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5 CARE C; ISSUER NOT
Facilities COOPERATING
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 on June 30, 2015, the following were
the rating strengths and weaknesses
Key Rating Strengths
Experience of the promoter in various other businesses
The promoter, Mr. Luthufuddeen, has around two decades of
experience in various other businesses. Before starting Alfa One
Hi-Tech Infra Private Limited, Mr. Luthufuddeen was engaged in
merchant trading and logistics business, based out of Dubai. He
entered the real estate business in 2008, through AOGB, which has
completed 2 residential projects ('Aquamarine' and 'Lamina') in
Kannur (Kerala). AOGB also has a concrete ready-mix division.
Key Rating Weaknesses
Stretched liquidity position due to elongated collection period
The company has a stretched liquidity position due to delayed
payments from its clients. AOHT had an outstanding receivable of
INR11.43 crore from one of its projects ('Thana Square') as on
March 31, 2014. Furthermore, the company also has disputed
payment receivables of INR56 lakh from another project towards
which the company has filed a suit in the court to recover its
dues. However, out of the total receivables of INR11.43 crore
from 'Thana Square' project, the company has received around INR3
crore as on June, 2015. The company had a very high overdraft
utilisation in the past 12 months ended May, 2015.
Small scale of operations
The scale of operations of AOHT is relatively small with a total
income of INR3.6 crore during FY14 (refers to the period April 1
to March 31). In its first four years of operations the company
has completed four projects of small size, with aggregate order
value of INR18 crore. The biggest of these projects, 'Thana
Square' with a project cost of INR14 crore was executed for its
group company AOGB. The company presently is constructing two
residential projects worth INR21.40 crore for AOGB.
Financial profile marked by negative net worth and weak coverage
indicators
As on March 31, 2014, AOHT had a negative net worth of INR1.02
crore. During FY14, the company incurred a net loss of INR1.5
crore on a total operating income of INR3.6 crore. The loss was
mainly on account of drop in contract revenues while the company
had to incur fixed operational costs. As on March 31, 2015, the
company has bank overdraft of INR5 crore towards its working
capital requirements. To support the operations of the company,
the promoter has extended unsecured loans to the company. As on
March 31, 2014, AOHT has unsecured loans of INR8.94 crore from
the promoter.
AOHT is a Kannur-based company promoted by Mr. P K Luthufuddeen
in 2011 and is engaged in civil constructions for commercial and
residential buildings. Since inception, AOHT has completed 2
commercial and 2 residential projects. As on June 2015, the
company has 2 residential projects under execution. AOHT
primarily undertakes construction activities for the projects of
Alfa One Global Builders Private Ltd (AOGB, also promoted by Mr.
P K Luthufuddeen in 2008 for development of residential and
commercial real estate projects), apart from other third party
contract works. AOGB is currently promoting a shopping mall in
Kannur, 'Thana Square', which has around 45,000 sq. ft. of retail
and office space and is also simultaneously executing 2
residential projects, 'Whitestreet' and 'French Reviera'. The
constructions for all these projects are undertaken by AOHT.
AMAR COTTEX: CARE Issues "CARE D Issuer Not Cooperating" Rating
---------------------------------------------------------------
CARE Ratings has been seeking information from Amar Cottex
Private Limited to monitor the rating(s) vide email
communications/letters dated October 5, 2016, January 7, 2017,
February 2, 2017, February 21, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the company has not
provided the requiste information for monitoring the ratings. In
line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the publicly available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. Further, Amar Cottex Private Limited has not paid the
surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating on Amar Cottex Private Limited's
bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 7 CARE D; Issuer not
Facilities cooperating; Revised from
CARE B+ on the basis of
Best available information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised since the account has become NPA on
the back of ongoing delay in its debt servicing.
Detailed description of the key rating drivers
Delay in debt servicing
The rating has been revised since the account has become NPA on
the back of ongoing delay in its debt servicing due to weak
liquidity position.
Rajkot-based ACPL was incorporated in March 2011, by Mr. Nilesh
Devjibhai Sakhiya and Mr. Naranbhai Karsanbhai Ramani as a
private limited company. ACPL is engaged in the cotton ginning
and pressing activity and started commercial production from
November 2011. Mr. Jayraj Vekariya is managing the overall
business operation of ACPL. ACPL has installed capacity of 6,800
metric tones per annum (MTPA) as on March 31, 2015, for cotton
bales at its sole manufacturing facility located at Rajkot
(Gujarat).
During FY16 (A), ACPL reported losses of INR5.46 crore on a TOI
of INR53.99 crore as against PAT of INR0.17 crore on a TOI of
INR47.98 crore during FY15.
ANGEL FIBERS: CARE Reaffirms B+ Rating on INR48.10cr Loan
---------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Angel Fibers Private Limited (AFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 48.10 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 1.50 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of AFPL are
constrained on account of high leverage on the back of the
recently concluded predominantly debt funded Greenfield project,
moderate debt coverage and working capital intensive operations.
The ratings are further constrained by susceptibility of its
profitability to volatile cotton prices and presence in the
highly fragmented and competitive cotton industry.
The weaknesses are partially offset by, experienced promoters and
strategic location of its manufacturing facilities in the cotton
producing cluster of Gujarat along with government's fiscal
benefits.
Increase in scale of operations along with generation of
envisaged cash accruals and reduction in debt levels are the key
rating sensitivity. AFPL's ability to pass on the volatility
associated with cotton prices to its customers and efficient
management of working capital requirements are also crucial from
a credit perspective.
Detailed description of the key rating drivers
Key Rating Weaknesses
High leverage and moderate debt coverage indictors: The Company
had leveraged capital structure as marked by high overall gearing
of 2.31 times as on March 31, 2016. The capital structure is
leveraged due to modest net-worth base on account of nascent
stage of operations, loans availed to fund capital expenditure of
manufacturing facility and working capital intensive nature of
operations. Furthermore, it had moderate debt coverage indicators
on account of high debt levels.
Working capital intensive nature of operations: The operations of
AFPL are working capital intensive as the company purchases most
of its raw material i.e. raw cotton in cash while it extends
credit period of 30 to 45 days to its customers and keeps
inventory of 40 to 60 days of raw materials The liquidity
indicators of AFPL were modest marked by high utilization of
working capital limits to fund its working capital requirements.
Susceptibility of profitability to volatile cotton prices and
presence in the highly fragmented and competitive industry:
AFPL's profitability margins are susceptible to volatility
associated with cotton prices. AFPL operates in a highly
fragmented and unorganized market of the textile industry marked
by a large number of small sized players. The industry
is characterized by low entry barrier due to minimal capital
requirement and easy access to customers and supplier.
Key Rating Strengths
Experienced promoters: The promoters of AFPL have over two decade
of experience in cotton ginning and pressing, which has helped it
in terms of raw material procurement, ease of managing day-to-day
operations and marketing. Strategically located manufacturing
unit along with government's fiscal benefits: AFPL's presence in
the cotton producing region has geographical advantage in terms
of lower logistics expenditure (both on the transportation and
storage) & ready availability of raw materials. AFPL's spinning
project is eligible for various incentives by the state as well
as central government.
Rajkot-based (Gujarat), AFPL is a private limited company
incorporated in February, 2014 by Mr. Ashok Dudhagara, Mr.
Kantilal Savalia, Mr. Parsotam Dudhagara, Mr. Bakulesh Jani and
Mr. Jaydeep Dobariya. AFPL manufactures carded, combed and
compact cotton yarn ranging between 20s to 50s counts. AFPL
commenced its operations in June, 2015 with manufacturing
capacity of 19,584 spindles [4,400 metric tonne per annum (MTPA)]
of cotton yarn. The major raw material for manufacturing cotton
yarn is ginned cotton which is being procured from the local
market of Rajkot.
As per audited financials of FY16 (refers to the period April 1
to March 31), AFPL reported total operating income (TOI) of
INR51.02 crore with net loss of INR1.05 crore. Based on
provisional financials of 9MFY17, AFPL reported TOI of INR67.47
crore with profit before interest, lease, depreciation and tax
(PBILDT) of INR9.49 crore.
ASHWANI GOYAL: CARE Upgrades Rating on INR9.38cr Loan to B+
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Ashwani Goyal (AMP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.38 CARE B+; Stable Revised
Facilities from CARE B
Detailed Rationale & Key Rating drivers
The revision in the rating assigned to the bank facilities of AMP
takes into consideration commencement of operations of entity
along with moderate profitability margins and capital structure.
The rating, however, continues to be constrained by cyclical and
competitive nature of the hospitality industry. The rating is
also constrained by subdued outlook for the hotel industry and
constitution of the entity being a proprietorship firm. The
rating, however, derives strength from experienced proprietor and
location advantage of the hotel.
Going forward, ability of the firm to scale up its operations
while improving its profitability margins and overall solvency
position would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Commencement of operations of entity along with moderate
profitability margins and capital structure The firm commenced
its operations in February, 2016 by opening up of a restaurant
and had achieved total operating income of INR2.49 crore in
11MFY17 (Provisional) The profitability margins stood moderate as
marked by PBILDT margin and PAT margin of 46.87% and 1.61% in
11MFY17. AMP has a moderate capital structure marked by overall
gearing ratio of 1.20x as on February 28, 2017.
Experienced proprietor
Mr Ashwani Goyal has around one and a half decades of experience
in construction and development of hotel projects and various
businesses such as cement manufacturing.
Location advantage
The hotel enjoys the benefit of advantageous location being
coming up at a central location in Patiala. Being centrally
located, the property is easily accessible from other demand
drivers of Patiala including main bus stop, shopping malls,
multiplexes, etc.
Key Rating Weaknesses
Cyclical and competitive nature of the hospitality industry: The
Indian hospitality industry is highly fragmented in nature with
presence of large number of organized and unorganized players
spread across various regions. Furthermore, the hotel industry is
region based and is highly sensitive to the untoward events such
as slowdown in the economy.
Subdued industry outlook: The hotel industry in India is
grappling with dual problem of huge influx of room inventory as
well as continued weak economic scenario. Though the Indian hotel
industry is on a revival track, the recovery is still at a
nascent stage. The performance of the premium hotel segment is
directly linked with the inflow of foreign tourists coupled with
corporate spending.
Constitution of the entity being a proprietorship firm: AMP's
constitution as a proprietorship firm has the inherent risk
of possibility of withdrawal of the proprietor' capital at the
time of personal contingency and the firm being dissolved
upon the death/retirement/insolvency of the proprietor.
AMP is a proprietorship firm established by Mr. Ashwani Goyal in
2004. However, the firm commenced the development of 4 Star hotel
project in 2013 with total capacity of 75 rooms and other
facilities such as bar restaurant, banquet, gymnasium and health
zone. The total project cost for setting up hotel was earlier
envisaged at INR16.85 crore. However, there is cost overrun due
to upgradation of project from 4 star hotel to 5 star hotel. The
project is now expected to be completed with total cost of INR24
crore. The hotel is run as a franchise of famous hotel brand
"Clarion Inn", a brand of Choice Hospitality India Private
Limited. The agreement for the same was signed in January, 2016.
The hotel was expected to commence commercial operations from
January, 2016. However, the firm commenced its operations in
February, 2016 by opening up of a restaurant.
In 11MFY17 (Provisional), AMP has achieved total operating income
of INR2.49 crore with PAT of INR0.04 crore.
ASSOCIATE BUILDERS: CARE Issues B+ Issuer Not Cooperating Rating
----------------------------------------------------------------
CARE Ratings has been seeking information from Associate Builders
and Traders, to monitor the rating(s) vide e-mail communications/
letters dated March 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 ratings. In line with the
extant SEBI guidelines CARE's rating on Associate Builders and
Traders bank facilities will now be denoted as CARE B+/CARE A4;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.15 CARE B+; Issuer not
Facilities cooperating
Short-term Bank 1.00 CARE A4; Issuer not
Facilities cooperating
Users of these ratings (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 April 9, 2015, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Small scale of operations: Despite being operational for nearly
two decades, the scale of operations has remained small. The
firm's business is tender driven and lowest bidder gets the
order. Small scale of operations and low net worth base restricts
the ability of the firm to scale up and bid for larger sized
contracts having better operating margins. Fluctuating and below
unity profitability margins coupled with leveraged capital
structure: The profitability margins of the firm have been
fluctuating and remained below unity for the past 3 financial
years (FY12-FY14) (refers to the period April 1 to March 31)
mainly due to competitive bidding. As on March 31, 2014, the
capital structure of the firm remained leveraged on account of
new term loan aailed coupled with low tangible net worth.
Client concentration risk coupled with concentrated order book:
In past ABT has been mainly undertaking orders from Public Works
Department (Uttar Pradesh). The firm has also executed few orders
for Pradhan Mantri Gram Sadak Yojana in Uttar Pradesh. Since most
of the orders are from single government organization, any change
in their policy towards contract allotment can impact the
operations of the firm.
The unexecuted order book of the firm as on March 31, 2015, stood
at INR30 crore approximately 1.04 times of its total operating
income for FY14, thereby giving short-term revenue visibility.
However, the order book is also concentrated with two large
orders forming approximately 58% of the unexecuted orders as on
March 31, 2015.
Presence in highly fragmented and competitive industry: The
initial capital expenditure requirement for this industry is
not very high and on account of the same the industry is abundant
with a number of players both in organized and unorganized
sector. Furthermore, the switching cost for the final consumer is
not very high. The industry is characterized as fragmented and
competitive nature as there are a large number of players at the
regional level. Furthermore, the award of contracts is under
bidding process and lowest bidder gets the work.
Key Rating Strengths
Experienced partners in execution of civil contracts and long
track record of operations: ABT was established as a partnership
firm in 1996. The current partners of the firm are Mr. Atal
Bihari Tripathi and Mr. Santosh Kumar Tripathi having equal
profit loss sharing ratio. Mr. Atal Bihari Tripathi is a graduate
and has close to two decades of experience in execution of civil
contracts through his association with ABT. Mr. Santosh Kumar
Tripathi is a post-graduate and has a decade of experience in
execution of civil contracts through his association with ABT.
They collectively look after the overall operations of the firm.
ABT was established as a partnership firm in 1996. The current
partners of the firm are Mr. Atal Bihari Tripathi and Mr. Santosh
Kumar Tripathi having equal profit loss sharing ratio. The firm
is engaged construction of roads, flyovers, civil construction,
etc, mainly in Uttar Pradesh region. The majority of the
contracts are obtained from Public Works Department (PWD) and
Municipal Corporation through competitive bidding process. Most
of the contracts are fixed price contracts with an execution
tenor of 6-9 months.
BAHRA EDUCATIONAL: ICRA Reaffirms 'D' Rating on INR29.73cr Loan
---------------------------------------------------------------
ICRA has reaffirmed the long-term rating for the INR29.73-crore
(reduced from INR39.23 crore earlier) fund-based bank facilities
and INR15.27-crore unallocated bank facilities of Bahra
Educational and Charitable Society (BECS) at [ICRA]D. The rating
suspension done in August 2016 stands revoked.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term: Fund-
Based facilities 29.73 [ICRA]D reaffirmed;
Suspension revoked
Unallocated bank
Facilities 15.27 [ICRA]D reaffirmed;
Suspension revoked
Detailed rationale
The rating reaffirmation reflects continued delays in debt
servicing by the society on account of its stretched liquidity
position. The group has been undertaking sizeable capital
expenditure over the past few years. Besides, fungibility of cash
flows between group entities as well as inadequacy of long-term
funds vis-a-vis funding requirements and consequent reliance on
short-term sources of finance continue to keep the group's
liquidity position stretched. Further, the group often faces cash
flow mismatches owing to lumpy nature of fee receipts (which are
collected on a half-yearly basis) vis-a-vis monthly interest
payment obligations and other operating expenses.
While reaffirming the rating, ICRA has taken a note of the
established presence of Rayat-Bahra Group in Punjab, where it
caters to over 30,000 students through more than 30 higher
educational institutes and varied course offerings. Further, ICRA
also takes a note of the society's healthy operating surplus
margins. Nevertheless, these strengths are largely offset by the
concerns mentioned above. In ICRA's view, the scale of capital
expenditure undertaken at the group level and adequacy and
timeliness of long-term funding availed to fund the same as well
the quantum of funding support extended to group societies would
be the key determinants of the group's liquidity profile and will
thus remain key rating sensitivities, going forward. Further, the
group's ability to improve its occupancy levels and hence its
scale of operations with the initiatives undertaken to revamp its
course offerings, while maintaining surplus margins, would be a
critical determinant of its debt-coverage indicators.
Key rating drivers
Credit strengths
* Established presence of the Rayat-Bahra Group in the Punjab
region, with strength of more than 30,000 students across
more than 30 colleges and two private universities
* Diversified course offerings which help in addressing a
wider student base
Credit weaknesses
* Continued delay in debt servicing due to liquidity pressure
resulting from cash-flow mismatches (frequency of fee receipts
vis-a-vis debt payments), excessive reliance on short-term
funds, regular capital expenditure undertaken at the group
level and fungibility of cash flows between group entities
* Pressure on admissions and hence consolidated revenue receipts
in an intensely competitive scenario, which together with
presence of fixed expenses resulted in a moderation in
operating surplus margins
Description of key rating drivers:
The Rayat-Bahra Group has an established presence in the higher
education space in Punjab, through its four educational societies
namely BECS, Rayat & Bahra Group of Institutes - An Educational &
Charitable Society (RBGI), Shri Balaji Literary and Charitable
Society (SBLCS) and Rayat Educational and Research Trust (RERT).
The group's operations are spread over eight campuses in three
states within the country and two overseas campuses. The group
offers a wide portfolio of courses across engineering,
management, law, nursing, dental and other streams, which in turn
support the large base of over 30,000 students. However, owing to
intense competitive pressures and adverse demand-supply scenario,
the group witnessed some pressure on admissions in the large-
ticket engineering and management courses, leading to a pressure
on revenue receipts. After remaining stagnant during FY2015,
revenue receipts across societies declined in FY2016. This
together with presence of fixed expenses (with employee expenses
accounting for about three-fourths of the total expenses)
resulted in a sequential decline in consolidated operating
surplus margins from ~50.65% in FY2014 to 47.8% in FY2015 and
further to 43.6% in FY2016, though these continued to be healthy.
Besides, the group has been undertaking aggressive expansion in
the past few years which resulted in large funding requirements
at the group level. However, only a part of the requirement has
been funded by incremental term debt, with a major part getting
funded by intra-group fund transfers as well as short-term
sources of funding such as overdraft facilities, keeping the
group's liquidity position stretched. Liquidity pressures
together with fungibility of cash flows across group companies
and cash flow mismatches caused by lumpy nature of fee receipts,
which are collected on a half yearly basis vis-a-vis monthly debt
obligations (interest payments2), resulted in consistent delay in
debt servicing by the entities in the group.
Analytical approach: For arriving at the rating, ICRA has taken
into account the consolidated business and financial risk
profiles of RBGI, BECS and SBLCS, given the common management and
financial inter-linkages between these entities. While there have
been financial transactions with other entities (besides the ones
mentioned above) in the group as well (such as RERT), updates on
operations and financials for those entities are not available.
Links to applicable Criteria
Bahra Educational and Charitable Society (BECS) was formed in
2009 and it has established a state private university in Shimla
called Bahra University. The university has six constituent
colleges which offer engineering, management, computer
applications, pharmacy, hospitality and law courses. The total
student strength across the six colleges during AY2016-17 stood
at ~1800.
Rayat-Bahra Group was established in 2001 through the
incorporation of Rayat Educational and Research Trust in Ropar
(Punjab). At present, the group is running more than 55
institutes across ten campuses (eight in India and one each in
the US and the UK) and two universities. In India, the group has
presence in Punjab, Himachal Pradesh and Delhi. The group caters
to over 30,000 students through its constituent colleges. Besides
these, the group operates four schools (two in Ropar campus and
one each in Mohali and Hoshiarpur campuses). While one school in
Delhi is affiliated to the Central Board of Secondary Education
(CBSE), three schools in Mohali are affiliated to Punjab School
Education Board (PSEB).
BALAJI GINNING: CARE Reaffirms B+ Rating on INR9cr LT Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Balaji Ginning and Pressing (BGP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BGP continues to
remain constrained on account of modest scale of operations of
entity with low capitalization and weak financial risk profile
marked by leveraged capital structure, weak debt coverage
indicators and thin profitability margins owing to limited value
addition nature of operations. The rating is further constrained
by exposure of profitability margins to fluctuation in raw
material price, presence of entity in highly competitive cotton
ginning and pressing industry along with susceptibility to
adverse changes in government regulations and partnership nature
of constitution. However, the rating continues to factor in
experience of promoters in cotton industry and location
advantage.
The ability of the entity to increase its scale of operations,
improve its solvency position and profitability margins alongwith
efficient management of working capital requirements remain the
key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management personnel with long track record of
operations of entity: BGP, established in 2001, is promoted by
four partners Mr. Ashok Nilwar, Mr. Sainath Motewar, Mr. Swapnil
Nilawar and Ms Shilabai Chintawar. The partners have an average
experience of more than a decade in cotton ginning & pressing
along with oil extraction. Being in the industry for more than a
decade has helped the promoter to gain adequate acumen about the
business which will aid in smooth operations of BGP.
Location advantage emanating from close proximity of entity to
raw material source: The manufacturing facility of BGP is located
at Parbhani in the Vidarbha region of Maharashtra. Out of the
total production of Maharashtra, 65% is contributed by Vidarbha
region. Hence, raw material is available in adequate quantity.
Furthermore, the presence of BGP in cotton-producing region also
fetches a location advantage of lower logistics expenditure.
Key Rating Weaknesses
Modest scale of operations with leveraged capital structure and
debt coverage indicators: The scale of operations of the company
remained small with low networth base in FY16 (refers to the
period April 1 to March 31), thus depriving it of scale benefits
and limiting its financial flexibility. Accretion to networth has
been slower owing to low profit margins subsequent to limited
value addition nature of business. Further high dependence of
entity on external borrowings resulted in leveraged capital
structure owing to low networth base.
Working capital intensive nature of operations of company:
Although, the operating cycle of BGP improved in FY16 it
continued to remain elongated. BGP offers collection period of
one and half month to its customers and receives credit period of
around one week from its suppliers. The entity has to maintain an
inventory period of around five months, so as to meet the
immediate demand of its customers.
Risk associated with seasonality and fragmented nature of
industry: Operations of cotton business is highly seasonal in
nature, as the sowing season is from March to July and the
harvesting season is spread from November to February.
Hence, the working capital utilization is high.
Susceptibility to government policies related to price and export
of cotton: The price of raw cotton in India is regulated through
function of MSP by the government. Furthermore, the price of raw
cotton is highly volatile in nature and depends upon factors like
area under production, yield for the year, international demand-
supply scenario, export quota decided by government and inventory
carry forward from previous year.
Partnership nature of constitution: Being partnership nature of
constitution, the firm is exposed to the risk of withdrawal
of capital by partners due to personal exigencies, dissolution of
firm due to retirement or death of any partner, withdrawal of
capital and restricted financial flexibility due to inability to
explore cheaper sources of finance leading to limited growth
potential.
Balaji Ginning and Pressing (BGP) was established as a
partnership concern in the year 2001. The firm is engaged in
ginning and pressing of cotton and extraction of oil from cotton
seed along with trading of cotton bales and cotton seeds. The
ginning and pressing unit and oil extraction unit is located at
Yavatmal, Maharashtra. The plant operates for 10 months in a year
(from October to July). It procures the raw material i.e. raw
cotton from the local market and sell its final product i.e.
cotton bales to the customers located in and around Yavatmal. The
firm has an installed capacity to gin and press 25000 bales per
annum and to extract 25000 quintals of oil per annum.
The entity reported TOI of INR33.30 crore with PAT of INR0.12
crore in FY16 against TOI of INR26.56 crore with a PAT of INR0.11
crore in FY15.
BIDAR SOLAR: CARE Lowers Rating on INR76cr Loan to 'D'
------------------------------------------------------
CARE Ratings has been seeking information from Bidar Solar Power
Private Limited (BSPPL), to monitor the rating vide e-mail
communications/letters dated August 18, 2016, February 16, 2017
and February 24, 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 on Bidar Solar Power Private Limited's bank facilities
will now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 76 CARE D; ISSUER NOT
Facilities COOPERATING; Revised from
CARE BBB-; Based on best
Available Information
The ratings have been revised on account stressed liquidity
position due to delay in receipt of payments from Gulbarga
Electricity Supply Company Limited. The same has resulted in
delays in servicing of debt obligation.
Users of these ratings (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
Key rating weakness:
BSPPL has entered into PPA with Gulbarga Electricity Supply
Company during July 2012, for sale of power upto 10 MW for the
period of 25 years from COD. However, delay in receipt of
payments from Gulbarga Electricity Supply Company Limited has
resulted in stressed liquidity position for the company. The same
has resulted in delays in servicing of debt obligation.
Bidar Solar Power Private Limited (BSPPL), is a special purpose
vehicle (SPV) sponsored by GKC Projects Ltd (GKCPL) for setting
up Solar PV (Photovoltaics) power plant in the Bidar district of
Karnataka on Design, Build, Finance, operate and Transfer (DBFOT)
basis. The company is headed by Mr. K V Raja Sekhar who is
founder Chairman of the company and has rich experience of over a
decade in the infrastructure industry. He is responsible for the
overall administration and management of the company. The
installed capacity of the plant is 10 MW. The project has
achieved commercial operational date (COD) on August 28, 2014.
For FY16 (refers to the period April 1 to March 31), BSPPL
reported a total operating income of INR7.26 crore, PBILDT of
INR3.63 crore and net loss of INR6.55 crore as against total
operating income of INR1.00 crore, PBILDT of INR0.03 crore and
net loss of INR0.32 crore during FY15.
BNT INNOVATIONS: Ind-Ra Issues D, Issuer Not Cooperating Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated B.N.T.
Innovations Private Limited's (BNT) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the rating exercise despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND D(ISSUER NOT COOPERATING)'on the agency's
website. The instrument-wise rating actions are:
-- INR80 mil. Fund-based limit (long- and short-term) migrated
to 'IND D(ISSUER NOT COOPERATING)' rating; and
-- INR20 Non-fund based-limit migrated to 'IND D(ISSUER NOT
COOPERATING)' rating
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Dec. 23, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1989, BNT is a Chennai-based company engaged in
the manufacturing and sale of knitted garments and their export
to US and EU countries.
CHANDIGARH ROLLER: CARE Assigns 'B' Rating to INR12cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Chandigarh Roller Flour Mills Private Limited (CRF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of CRF is constrained
by project execution & stabilisation risk associated with its
debt funded green field project, volatility in raw material
prices influenced by vagaries of nature & government policies and
company's presence in a highly fragmented & competitive industry.
The rating, however, derives strength from the experienced
promoters.
Going forward, the ability of the company to timely execute the
project while achieving envisaged sales of its products at
projected sales price would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Execution and stabilisation risk associated with its debt-funded
green-field project: FY18 (refers to the period April 1 to
March 31) will be the first year of operations for CRF. During
the initial phases of operations, the capital structure of the
company is expected to remain leveraged.
Being an agri-based commodity, the prospects are subject to the
vagaries of nature: Wheat, the major input for CRF is an
agricultural produce. Given the lack of adequate irrigation
facilities, the cultivated amount of wheat highly depends
upon monsoons and thus, is subjected to the vagaries of nature.
Volatility in raw material prices influenced by government
policies: The main raw material for production of white flour,
wheat flour, semolina and bran is wheat. Prices of wheat are
subject to government intervention since it is an agricultural
produce and staple food. Various restrictions including minimum
support price, control on exports, wheat procurement policies for
maintenance of buffer stocks etc. are imposed to regulate the
price of wheat in the market.
Fragmented and competitive nature of industry: The commodity
nature of the product makes the industry highly fragmented with
numerous players operating in the unorganized sector with very
less product differentiation.
Key Rating Strengths
Experienced promoters: Mr. Vinod Mittal has an industry
experience of three decades through his association with the
group concerns namely Chandigarh Flour Mills Private Limited
(CFM), VSN Enterprises Private Limited (VSN) and Zurvan
Industries Private Limited (ZIP). His son, Mr. Udit Mittal looks
after the commercial and production operations of CFM and is also
involved in looking after the operations of Extralogix Solutions
Private Limited (ESP). Mrs Kiran Singal has an experience of
almost three decades in the trading industry through her
association with one of the group concerns of CRF, i.e. K.S.
Enterprises Private Limited.
Chandigarh Roller Flour Mills Private Limited (CRF) was
incorporated in 2011 as a private limited company and is
currently being managed by Mr. Vinod Mittal, Mr. Udit Mittal and
Mrs Kiran Singal. The company is established with an aim to
engage in processing of wheat at its manufacturing facility
located in Banur, Punjab. The proposed installed capacity at its
manufacturing facility will be of 150 tonnes per day (TPD). The
commercial operations are expected to commence from April, 2017.
The product line of CRF would consist of wheat flour, white
flour, semolina and bran. CRF will sell its products to
wholesalers and institutional clients all over India. This
involves sales directly through the company and through group
entities' extensive dealer network (20 dealers) spread over
Himachal Pradesh, Uttar Pradesh, Punjab, Haryana, Delhi and
Chandigarh.
CRF has five group concerns namely Chandigarh Flour Mills Private
Limited (CFM) which was incorporated in 1989 and operates a wheat
flour mill, VSN Enterprises Private Limited (VSN), incorporated
in 2004 and is engaged in the trading of shares and stocks,
Extralogix Solutions Private Limited (ESP) which was incorporated
in 2005 and is engaged in providing IT services and trading of
multi products, K.S. Enterprises Private Limited (KSE) which was
incorporated in 1989 and is engaged in steel products trading and
Zurvan Industries Private Limited (ZIP) which was incorporated in
2005 and is engaged in providing warehousing facilities.
CHEMCOAT INDIA: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Chemcoat India
Enterprise Private Limited (CIEPL) a Long-Term Issuer Rating of
'IND B+'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR1 mil. Fund-based working capital limits assigned with
'IND B+/Stable/IND A4' rating; and
-- INR49 mil. Non-fund-based working capital limits assigned
with 'IND A4' rating
KEY RATING DRIVERS
The ratings reflect CIEPL's small scale of operations and
moderate credit profile. Revenue declined to INR182 million in
FY16 from INR427 million in FY15 owing to a fall in the number of
orders executed. CIEPL booked INR270 million in revenue for
11MFY17. CIEPL has an order book of INR32.75 million, which will
be executed by end-April 2017. At FYE16, EBITDA interest
coverage (operating EBITDA/gross interest expense) was 9.6x
(FYE15: 5.8x) and net leverage (total adjusted net debt/operating
EBITDAR) was 3.1x (0.3x). The deterioration in net leverage was
due to a decline in operating EBITDA (FY16; INR3 million; FY15;
INR7 million). EBITDA margin remained volatile at 3.0%-1.5%
during FY13-FY16 on account of changes in crude prices.
The ratings, however, draw support from the promoters' 10 years
of experience in the trading of industrial-based chemicals and
specialty products, and the company's comfortable liquidity
position. CIEPL has not yet started utilizing its working
capital facilities.
RATING SENSITIVITIES
Negative: Any decline in revenue or EBITDA margin and a
deterioration in overall credit metrics of the company will lead
to a negative rating action.
Positive: A sustained increase in the scale of operations and
EBITDA margin leading to a sustained improvement in credit
metrics could be positive for the rating.
COMPANY PROFILE
Incorporated in 2011, CIEPL is engaged in the trading of
industrial-based chemicals, which are used in the paint industry,
and specialty products. Of the total purchase, 60% and 40%
represent local suppliers and imports.
CLEANTEC INFRA: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Cleantec Infra
Private Limited's (CIPL) Long Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR20 mil. Fund-based working capital limits migrated to
Non-Cooperating Category;
-- INR40 mil. Non-fund-based working capital limits migrated
to Non-Cooperating Category;
-- INR20 mil. Proposed fund-based working capital limits
migrated to Non-Cooperating Category
-- INR120 mil. Proposed non-fund based working capital limits
migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 11, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2010, CIPL is engaged in the trading of
mechanized cleaning machines and spare parts. It also provides
services of mechanized cleaning of roads, lakes and waterways,
aerators, desilting, sand washing and waste management.
COSYN LIMITED: Ind-Ra Affirms 'BB' Long-Term Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Cosyn Limited's
Long-Term Issuer Rating at 'IND BB'. The Outlook is Stable. The
rating action takes into account the company's performance and
debt metrics in FY16. Ind-Ra expects the company's financial
performance to remain within the median range for the rating
category.
The ratings have been migrated to non-cooperating category. The
issuer did not participate in the surveillance exercise, despite
continuous requests and follow-ups by the agency. Thus, the
rating is on the basis of best available information. The rating
will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating action is:
-- INR20 mil. Fund-based working capital limit affirmed and
migrated to Non-Cooperating Category;
-- INR2.34 mil. Long-term loan affirmed and migrated to Non-
Cooperating Category
-- INR42.5 mil. Non-fund-based working capital limits affirmed
and migrated to Non-Cooperating Category
ISSUER NOT COOPERATING: Issuer did not cooperate; Based on best
available information
KEY RATING DRIVERS
The affirmation reflects Cosyn's small scale of operations as
reflected in its revenue of INR244 million in FY16. It is likely
to remain small as indicated by 9MFY17 results where revenue
stood at INR240.3 million.
The ratings continue to be supported by the company's strong
credit metrics as reflected in its interest coverage of 13.2x in
FY16 (FY15: 7.9x) and net leverage of 0.5x (0.8x).
RATING SENSITIVITIES
Positive: A substantial improvement in the scale of operations
along with maintenance of the credit metrics will be positive for
the ratings.
Negative: Any deterioration in the overall credit metrics will be
negative for the ratings.
COMPANY PROFILE
The company was incorporated in 1994 as Computer Synergetic
Private Limited. Over the years, its name has been changed a
number of times. It was named Cosyn Ltd in 2015. It provides
information technology enabled services in the area of utility
revenue management utility meter-to-cash operations, information
and data governance. It also delivers cloud-based business
productivity solutions for global SMEs. Cosyn has established a
fully owned subsidiary Cosyn LLC in the US.
D. S. KULKARNI: CARE Lowers Rating on INR715.79cr Loan to 'D'
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
D. S. Kulkarni Developers Limited (DSKDL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 715.79 CARE D Revised from
Facilities CARE BBB+
Non-Convertible 111.59 CARE C; Revised from
Debentures CARE BBB+
Fixed Deposits 33.86 CARE C (FD); Negative
Revised from CARE BBB+ (FD)
Detailed Rationale & Key Rating Drivers
The revision in rating is on account of ongoing delays in
servicing of debt obligations of bank facilities by DSKDL due to
its stretched liquidity position. The revision in rating of
instruments is on account of deterioration in overall financial
risk profile and stretched liquidity position.
The ratings continue to derive strength from the long track
record of the company for over two decades in real estate
development.
Going forward, the ability of the company to honor its debt
obligation on time, and establish a track record of regular
debt servicing, improvement in financial position by achieving
better sales momentum and timely execution of projects are the
key rating sensitivities.
Outlook: Negative (For rated instruments)
The outlook is 'Negative' on account of the company's stretched
liquidity position. The outlook may be revised to 'Stable' if
there is an improvement in company's liquidity profile and
regularization of debt servicing parameters of bank facilities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Ongoing delays in debt servicing
There are ongoing delays in servicing of its debt obligations of
bank facilities due to the company's stretched liquidity
position. However, the servicing of interest on the Non-
Convertible Debentures (NCD) has been regular.
Deterioration in financial risk profile
Total operating income of the company declined by 42.61% (Y-o-Y)
during 9MFY17 to INR107.03 crore as compared to INR186.50 crore
during 9MFY16 on account of slow sales momentum. During FY16, the
company had reported Profit After Tax (PAT) of INR12.46 crore on
TOI of INR205.54 crore as compared to PAT of INR18.26 crore on
TOI of INR97.02 crore.
DSKDL was incorporated in 1991 by Mr. D S Kulkarni. The equity
shares of the company were listed on stock exchanges in 1993.
DSKDL is the flagship company of the diversified DSK Group,
formed for the purpose of real estate development, initially
commencing from Pune. Between 1991-2015 the company developed 212
lakh square feet (lsf) (largest in Pune) of real estate projects
(predominantly residential properties). The company has developed
and delivered more than 65 projects comprising of more than
19,000 apartments in the recent past and has a significant
presence in Pune along with footprints in Mumbai, Nasik and
Bangalore in India and New Jersey in USA (through its fully owned
subsidiary).
During FY16, the company had reported Profit After Tax (PAT) of
INR12.46 crore on TOI of INR205.54 crore as compared to
PAT of INR18.26 crore on TOI of INR97.02 crore.
DASHMESH RUBBER: CARE Lowers Rating on INR6.80cr LT Loan to B
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Dashmesh Rubber Industries Private Limited (DRIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.80 CARE B; Stable Revised
Facility from CARE D
Short-term Bank
Facility 0.50 CARE A4 Revised from CARE D
Detailed Rationale and Key Rating Drivers
The revision in the ratings assigned to the bank facilities of
DRIPL was primarily due to improvement in its debt servicing
track record. The ratings continue to draw strength from
experienced promoters along with established marketing network.
The ratings also take into consideration improvement in turnover,
cash accruals, capital structure and debt coverage indicators
during FY16.
The ratings, however, continue to remain constrained on account
of moderately leveraged capital structure and moderate debt
coverage indicators along with stressed liquidity position during
FY16 (refers to the period April 1 to March 31). Furthermore, the
ratings remained constrained on account of fragmented nature of
rubber reclamation industry leading to intense competition and
exposure to volatility in prices of rubber.
DRIPL's ability to generate more revenue along with improvement
in profitability, capital structure, debt coverage indicators and
efficient management of its working capital requirement thereby
improving its liquidity position further would be the key rating
sensitivity.
Detailed description of the key rating drivers
Key rating weaknesses
Moderately leveraged capital structure, moderate debt coverage
indicators and stressed liquidity position Capital structure
marked by overall gearing stood moderately leveraged on the back
of moderate net worth base and debt level. Overall gearing stood
at 2.07x as on March 31, 2016. Furthermore, the debt coverage
indicators also stood moderate marked by total debt to GCA of
6.75 times as on March 31, 2016. However, Liquidity position
stood stretched as marked by below unity current ratio and quick
ratio in FY16. Fragmented nature of the rubber industry The
fortunes of the rubber reclamation industry are closely tied to
tyre manufacturing, which in turn is highly dependent upon the
growth in the automotive industry. This coupled with increased
capacities of the existing entities and new entrants in the
reclaimed rubber industry, has intensified the competition in the
rubber reclamation industry.
Key rating Strengths
Improvement in debt servicing
There has been an improvement in debt servicing since November
2016 and the conduct of account is regular since. The regularity
in debt servicing was on the back of improved realizations from
inventory and trade receivables.
Experienced promoters along with established marketing network
DRIPL was jointly established by Mr. Ashneetkaur Popli, Mr.
Amritpal Popli and Mr. Rajinder Singh in 2010. Mr. Amritpal is
equipped with over 16 years of experience in the rubber industry
and Mr. Rajinder Singh has over 4 decades of experience in the
manufacturing and trade of rubber reclaim and rubber crumb.
Lower prices of reclaimed rubber likely to translate into higher
demand in the long term
The products of DRIPL find application as raw material in the
production of tyres and other rubber products like conveyor
belts, bushings, etc. Tyres, which still contribute the highest
to the demand for rubber, can use 5-40% of reclaimed rubber,
depending on their usage. As the cost of the reclaimed rubber is
lower than that of Natural / Synthetic rubber [NR / SR], it
provides with an incentive to use higher quantum of reclaimed
rubber.
Valsad-based (Gujarat) Dashmesh Rubber Industries Private Limited
(DRIPL) was incorporated as a private limited company in
September 2010. It is an ISO 9001: 2008 certified company and is
engaged in the manufacturing of reclaim rubber with a
manufacturing capacity of 1400 MT per month as on March 31, 2016.
During FY16 (A), DRIPL reported PAT of INR0.07 crore on a TOI of
INR19.43 crore as against PAT of INR0.17 crore on a TOI of
INR14.28 crore during FY15. During 9MFY17 (Prov.), DRIPL has
achieved a turnover of INR16.44 crore.
DREAM HOME: ICRA Assigns B+ Rating to INR13cr Fund Based Loan
-------------------------------------------------------------
ICRA has assigned its long-term rating of [ICRA]B+ and short-term
rating of [ICRA]A4 on the INR23.0-crore fund-based bank
facilities of Dream Home Carpets Private Limited. The outlook on
the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based limit 13.00 [ICRA]B+(Stable); assigned
Fund-based limit 10.00 [ICRA]A4; assigned
Rationale
The assigned ratings are constrained by the exposure of the
company's profitability to fluctuations in currency exchange
rates. Additionally, the ratings reflect the weak financial
profile as evident from the moderate scale of operations, low net
worth base, elevated Debt/OPBDITA level and working capital
intensive operations. ICRA also takes note of the high
geographical concentration risk of the company, as more than 60%
of its revenues come from two countries, and limited product
diversification.
However, ICRA's rating favourably factors in the long experience
of DHC's promoters in the carpet-export business and the
established relationship with its key customers and suppliers.
ICRA also takes note of the funding support provided by
promoters/associate concerns in the past in the form of unsecured
loans.
The company's ability to increase its scale of operations in a
profitable manner while maintaining comfortable gearing and
working capital intensity will be the key rating sensitivity.
Credit strengths
* Adequate experience of the promoters in the carpet
manufacturing industry; established relationship with buyers
and weavers
* Fiscal incentives in terms of duty drawback and duty scrip
licenses (focus product) on exports
* Diversified customer base across Europe, the USA, Australia
and Gulf countries reduces geographical concentration risk
Credit weaknesses
* High gearing on account of high interest-free unsecured loan
from promoters (more than 25% of total debt in FY2016) and low
net-worth base of the business
* Moderate profitability and coverage indicators; however,
adequate cash accruals is expected to meet the repayment
obligation for term loans
* Vulnerability of profit margins to foreign currency
fluctuations due to the absence of proper hedging mechanism
for forex receivables
Description of key rating drivers
Incorporated in 2013, DHC manufactures hand woven and hand tufted
carpets. DHC exports most of its carpets to European counties
such as Denmark and the UK, North American counties such the USA,
Mexico and Canada, and Australia. Approximately 30-40% of the
total revenue comes from European countries, 10-20% from North
American countries and the rest from Australia and other parts of
the world. Apart from competition among domestic players, the
carpet industry also faces intense competition from the exporters
of China, Iran, Taiwan, Pakistan etc., which impacted the revenue
growth in the current fiscal. The manufacturing of hand tufted
and knotted carpet is highly labour intensive and the lead time
in the manufacturing of knotted carpet is around 6 months
compared to 3 months in the case of hand tufted carpet. The
company procures major raw material from domestic markets only.
DHC achieved INR48.62 crore operating income till December 2016
and the profitability is likely to be in line with last year's
performance.
DHC was incorporated in 2013 by Mr. Mohit Jain and Mr. Vinay
Jain. DHC manufactures hand woven and hand tufted carpets, rugs
(leather & fabric), bathmats, floor cushion, bean bags etc.
However, most of the revenue comes from the carpets only, which
caters primarily to the overseas buyers.
DUTCH GLASS: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Dutch Glass'
(DG) Long-Term Issuer Rating to non-cooperating category. The
issuer did not participate in the surveillance exercise, despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as
'IND B+(ISSUER NOT COOPERATING)' on the agency's website.
Instrument-wise rating actions are:
-- INR56.12 mil. Long-term loan migrated to Non-Cooperating
Category;
-- INR11.6 mil. Fund-based limit migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 15, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2014, DG is engaged in the glass processing
business.
ELITE MOTORS: CARE Issues B+ Issuer Not Cooperating Rating
----------------------------------------------------------
CARE Ratings has been seeking information from Elite Motors
Private Limited (EMPL), to monitor the rating(s) vide e-mail
communications/ letters dated October 06 & December 06 2016, and
January 03 & January 11, 2017 and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided
the requisite information for monitoring the rating. In the
absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating.
Furthermore, EMPL has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. In line
with the extant SEBI guidelines CARE's rating on Elite Motors
Private Ltd.'s bank facilities will now be denoted as CARE B+;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.39 CARE B+; ISSUER NOT
Facilities COOPERATING
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 on February 25, 2016, the following
were the rating strengths and weaknesses:
Key Rating Weaknesses
Working capital intensive operation owing to high inventory
holding: EMPL has a policy to maintain 25-45 days of sale as
inventory in hand for the display at the showroom. However,
significant rise in inventory holding is observed during the past
3 years due to sluggish demand in the market especially for PV
segment. VW's policies on inventory holding of 4 months and
transit period of cars of 10 to 15 days, led to high reliance on
bank borrowings for its working capital requirements.
Intense competition from other auto dealers exerts pressure on
margin: The nature of business being trading of automobiles is
characterized by high competition, low profitability margins,
high amount of working capital requirements, etc. EMPL has
limited negotiating power as the margins on products are set by
VW thereby restricting the company to earn incremental income.
Key Rating Strengths
Experienced promoters with reasonable track record in automobile
dealership: The key promoter of EMPL, Mr. Gurjith Singh (CMD) has
around three decades of experience in retail, distribution and
real estate business. The day-to-day operations of EMPL are
looked after by Mr. Gurjith Singh (CMD), who is adequately
supported by his two sons Mr. Jas Singh and Mr. Pavan Singh and a
group of professionals having rich business experience.
Lineage of brand image and adequate support from Volkswagen:
Volkswagen extends adequate support to EMPL in the form of cash
discounts, free accessories to customers, sharing of promotional
and marketing expenses.
Elite Motors Private Limited (EMPL) was promoted by Mr. Gurjit
Singh and Mrs Sonia Singh in September 2007. EMPL is an
authorized dealer for passenger vehicles (PV) of Volkswagen India
Private Limited (VIPL). It operates through one show room and one
yard having a capacity of parking 500 cars in Bangalore. The
showroom is occupied on leased premises and is equipped with 3-S
facilities (Sales, Service and Spare-parts). Elite group was
established in Bangalore in the year 1975, with the business in
trading of crockery and consumer durables. In the year 2005, the
group diversified into automobiles and since then established
three dealerships for Honda, Ford and Volkswagen.
ELEMENT CHEMILINK: Ind-Ra Migrates BB+ Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Element
Chemilink Private Limited's (ECPL) Long-Term Issuer Rating to
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. Instrument-wise rating actions are:
-- INR30 mil. Fund-based working capital limits migrated to
Non-Cooperating Category;
-- INR9.6 mil. Term loan migrated to Non-Cooperating Category;
and
-- INR20 mil. Non-fund-based working capital limits migrated
to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 8, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2006, ECPL manufactures bromine-based
intermediaries. The company has two manufacturing units, both
situated in Ankaleswar (Gujarat) with a combined capacity of 275
metric tonnes per month. It is a closely held private limited
company founded by Mr. Anish Parikh.
EMCEE ENGINEERING: CARE Issues B Issuer Not Cooperating Rating
--------------------------------------------------------------
CARE Ratings has been seeking information from Emcee Engineering
Works, to monitor the rating(s) vide e-mail communications/
letters dated dated July 05, 2016, July 19, 2016, November 09,
2016, March 16, 2016 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 ratings. In line with the extant SEBI
guidelines CARE's rating on Emcee Engineering Works's bank
facilities will now be denoted as CARE B/CARE A4; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 19.03 CARE B; Issuer not
Facilities Cooperating
Short-term Bank 6.00 CARE A4; Issuer not
Facilities cooperating
Users of these ratings (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 June 30, 2015, the following were
the rating strengths and weaknesses:
Key Rating Strengths
Growth in total income from operations
The total operating income grew by 54% in FY15 (refers to the
period April 1 to March 31) (Provisional) due to increase in
orders from BHEL and ISGEC. Consequently, PBILDT grew by 12%, PAT
by 15% and accruals grew by a 6% in FY15.
Furthermore, the firm has focused on manufacturing segment as
against job work. Manufacturing segment constituted 89% of its
total sales and income from job work of pressure parts components
contributed 11% of total sales.
Key Rating Weaknesses
Weak gearing and coverage indicators
The firm's capital structure remained weak with a gearing
hovering around 2-2.4x over the last three years. The firm
availed a WCTL for INR5 crore in FY15 which led to a
deterioration in the DER. The infusion of LT funds has improved
the liquidity position of the firm to some extent. The term debt
/GCA also has seen a deterioration on this count.
The firm is planning to invest in new machinery (Rs.1.88 crore)
and this is to be part funded that with term loan of INR1.41
crore and balance through internal accruals. The new machinery
will aid in the increase in its capacity utilization for its
own manufacturing as well as for the projects executed in favour
of BHEL.
Increase in operating cycle
Being in the capital goods industry and with limited bargaining
power with its customers firm's collections period remains high.
Also, the WIP inventory also remains high as the time taken for
fabrication is longer and the goods are not lifted by the
customers in time as there have been delays in shipment of the
finished goods.
EEW was established as a partnership concern in 1977, by Mr. G.
Balakrishnan and his brother in law Mr. K. Shanmugasundaram for
executing job work related to fabrication of small structural and
ducting for Bharat Heavy Electrical Limited (BHEL). EEW was
converted into proprietorship concern in 1980 after the exit of
Mr. K. Shanmugasundaram. In 1985, EEW forayed into fabrication of
heavy box, column, beam, auto welding etc. (on job work) which
are used in boiler manufacturing. From 2005, the firm started
fabrication of pressure parts components such as water wall
panel, coils, header, piping, loose bends etc. required for
boilers. In 2008, the firm commenced its second unit in Mandaiyur
Village, Pudukottai, Tamil Nadu for producing similar boiler
components for BHEL.
ENKEBEE INFRA: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Enkebee Infra's
(EI) Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as
'IND BB-(ISSUER NOT COOPERATING)' on the agency's website.
Instrument-wise rating actions are:
-- INR10 mil. Fund-based working capital limit migrated
to Non-Cooperating Category; and
-- INR50 mil. Non-fund-based working capital limit migrated to
Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 10, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Kolkata-based EI executes civil and structural projects.
The firm is managed by Niladri Kumar Basu, Dr Sulagna Basu and
Debjani Basu. This is a family run business.
ESS PEE: Ind-Ra Migrates 'BB+' Rating to Not Cooperating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated M/s Ess Pee Knit
Wear's (EPKW) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the surveillance
exercise, despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)'on the agency's
website. The instrument-wise rating actions are:
-- INR105 mil. Fund-based Limit migrated to Non-Cooperating
Category; and
-- INR3.5 mil. Non-fund-based limit migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 3, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
EPKW was setup as a partnership firm by Mr. N Palanisamy and his
family in Tirupur (Tamil Nadu) in 1991. The firm manufactures
readymade garments and exports them predominantly to Europe.
GARG & COMPANY: CARE Issues B+ Issuer Not Cooperating Rating
------------------------------------------------------------
CARE Ratings has been seeking information from Garg & Company to
monitor the rating(s) vide e-mail communications/ letters dated
February 22, 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 ratings. In line with the extant SEBI
guidelines CARE's rating on Garg & Company's bank facilities will
now be denoted as CARE B+/CARE A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 3.70 CARE B+; ISSUER NOT
Facilities COOPERATING
Short-term Bank 6.30 CARE A4; ISSUER NOT
Facilities COOPERATING
Users of these ratings (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 September 30, 2015, the following
were the rating strengths and weaknesses:
Key Rating Weaknesses
Small scale of operations: Garg & Company's (G&C) scale of
operations are small, which inherently limits the firm's
financial flexibility in times of stress and deprives it from
scale benefits.
Geographical and order book concentration risk: G&C is grade A
contractor with the government and undertakes different contracts
in the Haryana, India. The firm primarily receives contracts from
the government departments in Haryana. Due to high geographic
concentration, the firm is also exposed to unfavourable changes
in the government policy of that state.
The firm had total unexecuted order book of INR22.85 crore as on
August 31, 2015, to be executed in FY16 (refers to the
period April 1 TO March 31). The current unexecuted order book is
nearly 1.22x the total operating income achieved in FY15. The
order book of the firm is concentrated towards orders from
departments of Haryana government.
Furthermore, the single order accounts for ~50% of the total
order book of the firm as on August 31, 2015. Hence, effective
and timely execution of this contract has a direct bearing on the
firm's margins.
Weak financial risk profile: The profitability margins remained
low due to tender-driven nature of the business where the firm
has to sacrifice on its profitability to attain new contract. The
capital structure of the firm has historically remained leveraged
on account of new term loan availed for the acquisition of
construction equipments coupled with low capital base.
The debt service coverage indicators of the firm have also
remained weak over FY13-FY15 on account of low profitability
coupled with high reliance of external debt for the acquisition
of machinery and working capital requirements.
Highly fragmented and competitive industry: Indian construction
industry is characterized as fragmented and competitive nature as
there are a large number of players at the regional level. Hence,
going forward, due to increasing level of competition, the
profits margins are likely to be range bound. Also, the
construction industry plays an important role in the development
of a country's infrastructure, which is a key engine of economic
growth. Currently, given the high interest rates and volatile
economic environment, there has been slowdown in release of new
contracts, which has resulted in sluggish growth being witnessed
by the industry. Liquidity-related concerns and execution
challenges continue to impact the sector in the country. Delays
in obtaining statutory clearances and increasing working capital
needs have
put pressure on the financial profile of the companies in this
sector. Off late, the construction companies have concentrated
more on the execution of existing orders than over bidding.
Dependence on construction and infrastructure sector: The
business of G&C is highly dependent on construction and
infrastructure industry. Currently, given the volatile economic
environment, there has been slowdown in release of new contracts,
which has resulted in sluggish growth being witnessed by the
industry. Liquidity-related concerns and execution challenges
continue to impact the sector in the country. Delays in obtaining
statutory clearances and increasing working capital needs have
put pressure on the financial profile of the companies in this
sector. This has been compounded by the inability to pass on
input cost increases which has resulted in a fall in their
margins.
Key Rating Strengths
Experienced proprietor: G&C is managed by its proprietor Mr.
Shashank Garg who is a post graduate and has overall experience
of more than half a decade in the construction industry through
his association with this entity. The firm has been able to get
the repetitive orders from the government department which
demonstrates its ability to deliver quality work in the
prescribed time. Furthermore, the operations of the firm are also
supported the other members of his family.
G&C is a proprietorship firm established in 2011, by Mr. Shashank
Garg. The firm is a grade A contractor which undertakes civil
construction contracts primarily for government of Haryana. The
firm receives the orders mainly through tenders and the tenure of
the contracts is upto 24 months. In the past, the firm has
executed a number of contracts for government entities such as
Haryana Urban Development Authority, Public Works Department,
etc. The firm procures raw materials, ie, grits, stones, etc,
from private dealers. Additionally, the equipment's and machines
are owned by the firm.
GENERAL POLYTEX: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned General Polytex
Private Limited (GPPL) a Long-Term Issuer Rating of 'IND BB-'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR561.7 mil. Term loan assigned with 'IND BB-/Stable'
rating;
-- INR180 mil. Fund-based limit assigned with 'IND BB-/Stable'
rating; and
-- INR23 mil. Non-fund-based limit assigned with 'IND A4+'
rating
KEY RATING DRIVERS
The ratings reflect GPPL's short operational track record as it
started commercial operations in March 2015.
The ratings factor in the company's moderate scale of operations,
high profitability and moderate credit profile as it reported
revenue of INR361 million, EBITDA margin of 30.6%, interest
coverage (operating EBITDA/gross interest expense) of 1.08x and
net leverage (adjusted net debt/operating EBITDAR) of 6.28x in
FY16.
The ratings further factor in the company's tight liquidity
position as it reported maximum working capital utilization of
93% during the 12 months ended March 2017.
The ratings, however, are supported by three decades of
experience of GPPL's founder-promoter in the textile industry.
RATING SENSITIVITIES
Positive: Substantial improvement in the profitability leading to
improvement in the credit metrics could be positive for the
ratings.
Negative: Deterioration in the overall credit metrics from the
present level could be negative for the ratings.
COMPANY PROFILE
Incorporated in 2004, GPPL is engaged in manufacturing polyester
greige fabric. GPPL has a total annual installed capacity of
26.5million meters.
GOLKUNDA DIAMOND: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Golkunda Diamond
& Jewellery Limited's (GDJL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR350 mil. Fund-based working capital limit migrated to
Non-Cooperating Category; and
-- INR20 mil. Non-fund-based working capital limit migrated to
Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 16, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1960, GDJL manufactures and exports diamond
studded gold jewellery through its 500 pieces per day facility
located in Mumbai. The company has been listed in leading stock
exchanges since 1992.
GOYAL RICE: Ind-Ra Migrates 'B' Rating to Issuer Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Goyal Rice
Mills' (GRM) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR50 mil. Fund-based limit Migrated to Non-Cooperating
Category; and
-- INR16.50 mil. Term loan migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 13, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
GRM was incorporated in 2008 as a partnership firm and is engaged
in rice milling and sorting. The entity has a facility in Moonak
(Punjab).
GREEN MIRROR: CARE Lowers Rating on INR11.50cr Loan to 'D'
----------------------------------------------------------
CARE Ratings has been seeking information from Green Mirror
Buildcon Private Limited to monitor the rating(s) vide e-mail
communications/letters dated October 4, 2016, November 7, 2016,
January 18, 2017, January 30, 2017, February 28, 2017, March 1,
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. Further, Green
Mirror Buildcon Private Limited has not paid the surveillance
fees for the rating exercise as agreed to in its Rating
Agreement. The rating of Green Mirror Buildcon Private Limited
bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 11.50 CARE D; ISSUER NOT
Facilities COOPERATING; Revised
from CARE B on the
basis of best available
information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised on account of the delays in debt
repayment owing to weak liquidity position.
Detailed description of key rating drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: GMBPL has been irregular in
servicing its debt obligation as the term loan interest has
remained unpaid for a maximum period of around 60 days. The same
is due to weak liquidity position of the company.
Incorporated in September 2013, Ahmedabad (Gujarat)- based GMBPL
is promoted by two promoters namely Mr. Suresh Badgujar and Mr.
Jitendra Badgujar. GMBPL is undertaking a greenfield project to
manufacture Autoclaved Aerated Concrete (AAC) blocks/bricks with
proposed installed capacity of 1,00,000 Cubic Meters per Annum
(CMPA) at its plant located at Kheda district of Gujarat.
HANS RUBBER: Ind-Ra Migrates 'B' Rating to Non-Cooperating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Hans Rubber &
Sports Private Limited's (HRSPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR58 mil. Term loan migrated to Non-Cooperating Category;
-- INR50 mil. Fund-based limits migrated to Non-Cooperating
Category; and
-- INR10 mil. Non-fund-based limits migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 5, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
HRSPL was incorporated in 1983 and later in 1987 took over the
proprietorship unit Hans Rubber Industries (established in 1975).
It manufactures sports goods and equipment.
HARIOM PROJECTS: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Hariom Projects
Private Limited (HPPL) a Long-Term Issuer Rating of 'IND BB'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR90 mil. Fund-based limit assigned with 'IND BB/Stable'
rating; and
-- INR110 mil. Non-fund-based limit assigned with 'IND A4+'
rating
KEY RATING DRIVERS
The ratings reflect HPPL's moderate scale of operations and
credit metrics. In FY16, revenue was INR592 million (FY15:
INR458 million), net interest coverage (operating EBITDA/gross
interest expense) was 2.3x (2.3x) and net financial leverage
(total adjusted net debt/operating EBITDAR) was 5.3x (5.2x). The
slight deterioration in net financial leverage was due to an
increase in the debt of the company.
Operating EBITDA margin declined to 6.2% in FY16 from 6.9% in
FY15 due to a rise in the construction expenses. HPPL has booked
INR614.99 million in revenue for 11MFY17 (provisional).
The ratings, however, are supported by HPPL's directors' around
three decades of experience in the construction business.
RATING SENSITIVITIES
Negative: Decline in profitability leading to deterioration in
the credit metrics would be negative for the ratings.
Positive: Increase in revenue along with maintenance of the
credit metrics would be positive for the ratings.
COMPANY PROFILE
Incorporated in April 1989 as Hariom Builders (a partnership
firm), HPPL converted into a private limited company in 2003
under its current name. HPPL is promoted by Ahmedabad-based Mr.
Haresh Bhagchand Sangtani and family. The firm enjoys the status
of 'SS' (super specialist in building construction). It carries
out construction work as a military engineering services-approved
civil contractor, with specialization in building construction.
HEAVY METAL: CARE Reaffirms 'B' Rating on INR224.90cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Heavy Metal and Tubes Limited (HMTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 224.90 CARE B; Stable Reaffirmed
Short-term Bank
Facilities 12.00 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings of HMTL continue to be constrained on account of cash
losses reported by HMTL during past three years (ending FY16
[refers to the period April 1 to March 31]) resulting in
stretched liquidity, highly leveraged capital structure and weak
debt protection indicators. The ratings are further constrained
by susceptibility of profitability to volatile raw material
prices & foreign currency exchange rate fluctuation and its
presence in a highly competitive and cyclical steel industry. The
ratings, however, continue to draw strength from vast experience
of promoters in carbon steel (CS) and stainless steel (SS) tube
business, established track record of operations and infusion of
funds by promoters and group entity from time to time to support
HMTL's operations, in line with the debt restructuring package
approved by its lenders. The ratings also favorably factor in the
advanced payment made by HMTL towards its principal debt
repayment obligation till June 2018 by way of demerger and sales
of one manufacturing unit, corporate house and one windmill.
HMTL's ability to manage volatility associated with raw material
price and foreign currency exchange rate fluctuation, and
improvement in its profitability, and capital structure would be
the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Cash loss during FY16 resulting in stretched liquidity coupled
with high leverage position and weak debt protection indicators:
HMTL continued to report subdued operating performance during
FY16 and reported a net loss of INR23.13 crore during the period.
This resulted in erosion of net-worth base and consequently,
deterioration in overall gearing as on March 31, 2016. Debt cover
indicators (PBILDT/ Interest & Total Debt/ GCA) also continued to
remain weak during FY16. Further, operating cycle also elongated
during FY16 with almost full utilization of working capital
limits.
Presence in a highly fragmented steel industry with
susceptibility of profitability to volatile raw material prices:
Owing to the presence of large number of small & unorganized
players coupled with low value addition, steel industry is highly
fragmented and competitive which results in inherently thin
profitability. The same is further exposed to any adverse raw
material price movement, as the company orders its requirement in
bulk to avail discounts.
Key Rating Strengths
Vastly experienced and resourceful promoter group in steel
industry: HMTL has a track record of over two decades in
manufacturing of seamless pipes and tubes. It further derives
benefits in terms of marketing as well as financial support
from its promoters and group entity, SKM Steels Limited (SKM).
During FY16, HMTL has received financial support from promoter
group in the form of unsecured loans, equity share capital and
preference share capital to the tune of INR21.05 crore.
Incorporated in 1991, Ahmedabad-based (Gujarat) HMTL is engaged
in the manufacturing of carbon and alloy steel seamless tubes &
pipes. During FY12, HMTL also backward integrated to manufacture
hot finished carbon steel (HFCS) pipes. As on January 31, 2017,
HMTL had an installed capacity of 15,000 Metric Tons Per Annum
(MTPA) for carbon and alloy steel seamless tubes & pipes and
75,000 MTPA for HFCS tubes. The company also has 2.25 MW of wind
mill capacity to meet its captive power requirements. HMTL's
products find application in condensers, heat exchangers,
boilers, pressure vessels, instrumentation, hydraulic and
pneumatic systems used in industries such as oil & gas
refineries, steel plants, power plants and fertilizers.
Post reporting subdued operating performance in FY14, HMTL's
lenders had approved the restructuring of its debt repayment
obligations in March 2015. In line with the debt restructuring
package approved by its consortium lenders, the promoters have
infused INR24.60 crore & INR21.05 crore in FY15 & FY16
respectively in the form of equity, preference shares and
unsecured loans.
Further, during FY17, HMTL has demerged Unit I (manufacturing of
stainless steel pipes & tubes), corporate house & one windmill;
these assets were sold for a consideration of INR32.50 crore. The
sales proceeds from the demerger were transferred to the escrow
account and have been used for pre-payment of principal
obligations till June 2018.
As per the audited results of FY16, HMTL reported a net loss of
INR23.13 crore on a TOI of INR185.59 crore as against net loss of
INR37.28 crore on a TOI of INR282.86 crore in FY15.
HEMA CONSTRUCTION: CARE Issues 'B+ Issuer Not Cooperating' Rating
-----------------------------------------------------------------
CARE Ratings has been seeking information from Hema Construction
(HC), to monitor the rating vide e-mail communications/letters
dated February 17, 2017, January 30, 2017, November 21, 2016 and
numerous phone calls. However, despite of 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 ratings. Furthermore, HC has not paid the
surveillance fees for the rating exercise as agreed to in its
Rating Agreement. In line with the extant SEBI guidelines, CARE's
rating on Hema Cosntruction's bank facilities will now be denoted
as CARE B+/CARE A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 4.50 CARE B+; Issuer not
Facilities cooperating; Based
on best available
information
Short-term Bank 4.50 CARE A4; Issuer not
Facilities cooperating; Based
on best available
information
Users of these ratings (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 on March 4, 2016, the following were
the rating strengths and weaknesses.
Key rating weaknesses
Modest scale of operations and constitution as a proprietorship
concern
The scale of operations of HC is relatively modest, which
restricts its financial flexibility to an extent. Furthermore,
its constitution as a proprietorship concern with moderate net
worth base restricts its overall financial flexibility in terms
of limited access to external fund for any future expansion
plans. Furthermore, there is an inherent risk of possibility of
withdrawal of capital and dissolution of the firm in case of
death/insolvency of proprietor.
Moderate solvency position and moderate liquidity position
The capital structure of the firm stood comfortable as on
March 31, 2016, mainly on account of higher utilization of
working capital bank borrowings. However, debt service coverage
indicators stood weak in FY16 (refers to the period April 1 to
March 31).
The liquidity position of the firm stood moderate with full
utilization of working capital bank borrowings in last 12 month
ended February 2017.
Customer concentration and geographical concentration Client base
of HC is skewed towards government departments in Rajasthan. The
firm derives majority of its contracts from PWD and UIT. It has
no exposure to private sector. Furthermore, HC is a regional
player and all the projects are executed in Rajasthan only which
reflects geographical concentration risk. Also, its presence is
majorly in construction of roads and housing segment, which
exposes it to sectoral concentration risk as well.
High competitive intensity in the government civil construction
segment and absence of price escalation clause led to
vulnerability of margins.
The construction industry is highly fragmented in nature with
presence of large number of unorganized players and a few large
organized players coupled with the tender driven nature of
construction contracts poses huge competition and puts pressure
on the profitability margins of the players. Furthermore, as the
firm participates in tenders invited by large lead contractor,
high competition and lower bargaining power restricts its
profitability margins.
Furthermore, in all the contracts, the firm does not have any
price escalation clause that led to vulnerability of margins to
fluctuation in materials as well as employee cost.
Key rating strengths
Experienced management with long track record of operations HC
was formed in the year 1978 and hence, has a track record of more
than three decades. Mr. Harish Gaurav, proprietor, looks after
the overall affairs of the firm. It executes contracts mainly for
PWD, Urban Improvement Trust (UIT), RHB and PHED. Being presence
in the industry since 1978, it has established relationship with
government departments and same is reflecting through its strong
order book position as well as repeated orders from them.
Udaipur-based (Rajasthan) Hema Construction (HC) was formed in
1978, by Mr. Harish Gaurav as a proprietorship concern. HC is
mainly engaged in the business of construction, installation and
commissioning of water supply lines, construction of sewage lines
and sewage treatment plants and construction & repair of roads.
HC is registered 'AA' class (highest in the scale of AA to E)
approved contractor with Public Works Department (PWD),
Rajasthan, Rajasthan Housing Board (RHB), Railway Department,
Rajasthan Avas Vikas and Infrastructure Limited (RAVIL) and
Public Health Engineering Department (PHED). It gives labour work
on sub-contract basis to other contractors.
HERMAN PROPERTIES: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Herman
Properties Private Limited (HPPL) a Long-Term Issuer Rating of
'IND BB-'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR150 mil. Term loan assigned with 'IND BB-/Stable'
rating; and
-- INR50 mil. Fund-based limits assigned with
'IND BB-/Stable/IND A4+' rating
KEY RATING DRIVERS
The ratings reflect the risk of time and cost overruns in HPPL's
ongoing township projects across Kurukshetra, Ambala and Meerut,
with average booking of 55%.
The ratings are supported by around three decades of experience
of the company's promoter in executing residential and commercial
real estate projects and the company's established brand name
'Herman' with 18 completed projects.
The ratings factor in the receipt of 39% of the total project
value by HPPL. The project is in the final stage of completion
with major expenses already incurred. According to the
management, HPPL has already incurred INR1.089 billion (83%) of
the total cost and will spend additional INR215.38 million (17%).
RATING SENSITIVITIES
Negative: Time and cost overruns or cancellations of bookings for
sold plots leading to stressed cash flows could lead to a
negative rating action.
Positive: An improvement in the sales along with timely receipt
of advances from customers, leading to improvement in cash flows
as projected could lead to a positive rating action.
COMPANY PROFILE
HPPL was established in 1986 and is engaged in real estate
development. The company has a registered office in New Delhi.
INDIAN ART: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Indian Art
Gallery's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR100 mil. Fund-based limits migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 10, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 1996, Indian Art Gallery manufactures handmade and
handwoven carpets and rugs. The firm is located in Bhadohi
(Uttar Pradesh). It has SA 8000:2008, ISO 9001, OHSAS 18001, ISO
14001 and ISO 50001 certifications.
ISHAN INTERNATIONAL: Ind-Ra Migrates B+ Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Ishan
International's (ISIN) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR347.50 mil. Fund-based limit migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 23, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1999 in Haryana, ISIN is a partnership firm
engaged in the business of rice milling. The total installed
capacity of its plant is 40MT of paddy processing per day. The
firm uses paddy as raw material and rice is the final product.
JAGDISH SARAN: Ind-Ra Migrates 'BB' Rating to Non-Cooperating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Jagdish Saran's
(JS) Long Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as
'IND BB(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR65 mil. Fund-based limit migrated to Non-Cooperating
Category; and
-- INR200 mil. Non-fund-based limit migrated to Non-
Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings last reviewed on
Jan. 21, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
JS was established in 1969 and is engaged in the contract-based
construction work, mainly for organizations such as National
Highways authority of India (IND AAA/Stable), Uttar Pradesh
Public Works Department, Uttarakhand Public Works Department and
various central and state government bodies. The company is
located in Shahjahanpur (Uttar Pradesh).
JK HITECH: CARE Reaffirms B+ Rating on INR10.05cr LT Loan
---------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
JK Hitech Rice Mill Private Limited (JKH), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.05 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating of JKH continues to remain constrained by its nascent
stage of operations, volatility in profit margins subject to
government regulations, seasonal nature of availability of paddy
resulting in working capital intensity and exposure to vagaries
of nature and fragmented and competitive nature of industry.
These factors far outweigh the benefits derived from the
experienced promoters and proximity to raw material sources.
The ability of the company to increase its scale of operations
with improvement in profit levels and margins and effective
management of the working capital would be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Nascent stage of operations
JKH is engaged in the business of rice milling and processing.
The track record of the company is very short as it has commenced
commercial production from July 2, 2015. During 9 months of
operation in FY16 (refers to the period April 1 to March 31), JKH
achieved total operating income of INR22.55 crore.
Volatility in profit margins subject to 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
MSP of paddy was increased during the crop year 2016-17 to
INR1,470/quintal from INR 1,410/quintal in crop year 2015-16. The
sale of rice in 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-a-vis fixed acquisition cost for
raw material, the profitability margins are highly vulnerable.
Such a situation does not augur well for the company, especially
in times of high paddy cultivation.
Seasonal nature of availability of paddy resulting in working
capital intensity and exposure to vagaries of nature Rice milling
is a working capital intensive business, as the rice millers have
to stock paddy by the end of each season till the next season
since the price and quality of paddy is better during the
harvesting season. Furthermore, while paddy is sourced generally
on cash payment, the millers are required to extend credit period
to their customers. Also, paddy cultivation is highly dependent
on monsoons, thus exposing the fate of the company's operation to
vagaries of nature. The average utilization of bank borrowing was
high at around 98% in the last 12 months ended February, 2017.
Fragmented and competitive nature of industry
JKH's plant is located in Raxaul district, which is an important
paddy/rice cultivating region of Bihar. Owing to the advantage of
close proximity to raw material sources, more than 100 units are
engaged in milling and processing of rice in the district. 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.
The company is being promoted by Mr. Jata Shankar Prasad and his
sons Mr. Ghanshyam Kumar and Mr. Neeraj Kumar based out of Bihar.
Mr. Jata Shankar Prasad is having around three decade experience
in the agro industry through family businesses. He will be
adequately supported by his two sons Mr. Neeraj Kumar (aged 37
years, graduate) having an experience of around a decade in
trading of agro commodities and Mr. Ghanshyam Kumar (aged 33
years, graduate) who is relatively new to the business.
Proximity to raw material sources
JKH's plant is located at Raxaul in East Champaran district,
Bihar which is in the midst of paddy growing areas of the state.
The entire raw material requirement is met locally from the
farmers (or local agents) which helps the company to save on
substantial amount of transportation cost and also procure raw
materials at effective prices.
JK Hitech Rice Mill Private Limited (JKH) was incorporated in
February 9, 2012 by Mr. Jata Shankar Prasad and family based
out of Bihar, for the purpose of setting up a rice processing
unit. The company commenced operations in Jul. 2, 2015 with
paddy processing capacity of 38,400 metric tonne per annum
(MTPA). The milling unit of the company is located at Raxaul in
East Champaran disrict of Bihar.
During FY16, the company reported a total operating income of
INR22.55 crore and net loss of INR0.05 crore.
KAPIL ENTERPRISES: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kapil
Enterprises Private Limited's (KEPL) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the rating exercise despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR1.1 mil. Term loan migrated to Non-Cooperating Category;
and
-- INR70 mil. Fund-based limit migrated to Non-Cooperating
Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 6, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
KEPL is a rubber tyres and agricultural engineering equipment
manufacturer having manufacturing plants in Bhiwadi, Neemrana,
Kosi and a sales office in New Delhi. KEPL manufactures rubber
tyres and a wide variety of agricultural engineering equipment
such as tail wheels, leather goods, leather shoe, footwear,
uppers, steel rims, hubs, top link, chain links, and axle pin.
KEPL exports 100% of its products to the US.
KAYTEE CORPORATION: Ind-Ra Migrates B+ Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kaytee
Corporation Private Limited's (KCPL) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the rating exercise despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR222 mil. Fund-based working capital limit migrated to
Non-Cooperating Category;
-- INR10 mil. Non-fund-based working capital limit migrated to
Non-Cooperating Category; and
-- INR25 mil. Term loan migrated to Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 8, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
KCPL was established in 1944 as a trading concern, with interest
in cotton and yarns. It started manufacturing garments in 1974.
It was registered as a private limited company in June 1994. At
present, it is dealing in yarn, fabrics (trading) and garments
(manufacturing).
KRISHNA VALLEY: Ind-Ra Assigns 'D' Long-Term Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Krishna Valley
Power Private Limited (KVPPL) a Long-Term Issuer Rating of
'IND D'. Instrument-wise rating action is:
-- INR146.85 mil. Term loans (Long-term) assigned with 'IND D'
rating
KEY RATING DRIVERS
The ratings reflect KVPPL's continuous delays in servicing term
debt obligations over the six months ended March 2017, due to
stretched liquidity.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could lead to a positive rating action.
COMPANY PROFILE
KVPPL was primarily founded to develop hydro power projects. The
site for the proposed project has been identified approximately
15km downstream of the Bhatsa dam and approximately 9km
downstream of existing capacity and is located near village
Khutghar, Maharashtra with an installed capacity 1,500KW.
LS RICE: Ind-Ra Migrates 'B' Rating to Non-Cooperating
------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated LS Rice Exports
Pvt Ltd.'s Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR40 mil. Fund-based working capital limits migrated to
Non-Cooperating Category; and
-- INR13.1 mil. Term loan Migrated to Non-Cooperating
Category;
Note: ISSUER NOT COOPERATING: The ratings were suspended on
July 27, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2008 in Punjab, LS Rice Exports operates a rice
mill. The total installed capacity of its plant is 8,000MT/year.
The company uses paddy as raw material and rice is the final
product.
MANIKANTA COTTON: ICRA Reaffirms 'B' Rating on INR8cr Loan
----------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B for the
INR3.25 crore term loan facilities, INR8.00 crore cash credit
limits and INR0.15 crore bank guarantee facilities of Manikanta
Cotton Agro Industries (MCAI). ICRA has also reaffirmed the long-
term rating of [ICRA]B for the INR4.60 crore unallocated limits
of MCAI. The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 3.25 Reaffirmed at [ICRA]B (Stable)
Cash Credit 8.00 Reaffirmed at [ICRA]B (Stable)
Bank Guarantee 0.15 Reaffirmed at [ICRA]B (Stable)
Unallocated 4.60 Reaffirmed at [ICRA]B (Stable)
Rationale
The reaffirmation of rating is constrained by the weak financial
profile as reflected by low operating margin at 3.00% in FY2016,
high gearing of 7.70 times as on March 31, 2016 and modest
coverage indicators with interest coverage of 1.96 times and
NCA/TD of 6% for FY2016. The rating is also constrained by low
profitability owing to low value-additive nature of cotton-
ginning business and highly fragmented and competitive nature of
the industry which limits the ability of the firm to pass on any
hike in input prices. Besides, availability of cotton is exposed
to agro-climatic conditions and risks inherent in the partnership
nature of the firm. The ratings however continue to factor in the
growth in operating income by 26% from INR41.56 crore in FY2015
to INR52.43 crore in FY2016 on the back of increase in sale
volume of cotton lint from 16,853 quintals in FY2015 to 37,853
quintals in FY2016. The ratings also draw comfort from proximity
of the location of the firm to cotton growing areas of Telangana
which provides competitive advantage and fiscal benefits derived
under the Technology Upgradation Fund Scheme (TUFS).
Going forward, the ability of the firm to increase scale of
operations and maintain its profitability will remain the key
rating drivers.
Key rating drivers
Credit strengths
* Healthy growth in operating income by 26% from INR41.56 crore
in FY2015 to INR52.43 crore in FY2016 owing to increase in
sale volume of cotton lint from 16,853 quintal in FY2015 to
37,853 quintal in FY2016
* Proximity to cotton growing areas of Telangana provides
competitive advantage
* Fiscal benefits from the Telangana Government in the form
of subsidies like Pavala Vaddi subsidy, sales tax subsidy
and power subsidy provide an added advantage
Credit weaknesses
* Weak financial profile of the firm characterised by low
operating margin at 3.00% in FY2016, high gearing of 7.70
times as on March 31, 2016 and modest coverage indictors with
OPBITDA/Interest of 1.96 times and NCA/Debt of 6% for FY2016
* Availability and price of raw cotton depends on agro-climatic
Conditions
* Highly fragmented and competitive nature of the industry
resulting in low pricing power and vulnerability of
profitability to fluctuation in cotton prices
* Risks inherent in the partnership nature of firm
Description of key rating drivers:
MCAI was established as a partnership firm in 2013 by Mr. D Malla
Reddy and Mr. P. Ravinder Reddy and six other partners, with
ginning activity as its main operations. At present, the firm is
operating 36 gins and one press with a production capacity of
86,400 bales per annum. MCAI is a Technology Mission on Cotton
(TMC) unit, involved in extraction of cotton lint and cotton
seeds from cotton kapas. Cotton lint produced is sent for
pressing and then sold to various spinning mills located in
Telangana and Tamil Nadu through commission agents. Cotton seeds
extracted are sold to oil mills located in Haryana and Punjab
through commission agents.
The firm has witnessed healthy growth in operating income by 26%
from INR41.56 crore in FY2015 to INR52.43 crore in FY2016 due to
increase in sale volume of cotton lint from 16,853 quintals in
FY2015 to 37,853 quintals in FY2016. Cotton lint continues to
contribute 69% of total revenue in FY2016 followed by cotton seed
contributing ~31% of total sales. The firm's yield for the
ginning process for pure cotton is 33.36% in FY2016.
Analytical approach: For arriving at the ratings ICRA has
considered the standalone financial performance of MCAI along
with recent operational developments.
Manikanta Cotton Agro Industries (MCAI) was set up as a
partnership firm by Mr. D Malla Reddy and Mr. P. Ravinder Reddy
and six other partners, with ginning activity as its main
operations. The firm production facility is located at
Muthannapeta village, Karimnagar district, Telangana. At present,
the firm is operating 36 gins and one press with a production
capacity of 86,400 bales per annum
MICKY METALS: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Micky Metals
Limited's (MML) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the surveillance
exercise, despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions as:
-- INR150 mil. Fund-based working capital limit migrated to
Non-Cooperating Category
Note: ISSUER NOT COOPERATING: The rating was assigned on March 2,
2016. Ind-Ra is unable to provide an update, as the agency does
not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1995, MML manufactures and supplies various sizes
and grades of metallic thermo-mechanical treatment bars, rounds,
angles, channels, joists and flats. Its manufacturing facility
is located in Birbhum, West Bengal. The company is managed by
Mr. Sumit Agarwal, Mr. Sarwan Agarwal and Mr. Nagendra Agarwal.
MILIND PULSES: ICRA Reaffirms 'B' Rating on INR5cr LT Loan
----------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the INR5.00-
crore1 fund-based limits of Milind Pulses (MP). The outlook
assigned on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund-
based limits 5.00 [ICRA] B (Stable)/Reaffirmed
Rationale
The rating reaffirmation takes into account the firm's weak
financial risk profile marked by low profitability, adverse
capital structure and weak debt-coverage indicators. The rating
is further constrained by the vulnerability of the firm's
profitability to agro-climatic risks; and the inherently low
value-adding pulse processing business, which also has high
fragmentation and competitive pressures because of numerous small
and unorganised as well as established players in the industry.
ICRA further notes the risks inherent in the proprietorship form
of business, any significant withdrawals from capital account
could adversely impact the net worth of the firm and thereby its
capital structure.
The rating, however, continues to positively consider the long
experience of the promoter in the pulse processing industry and
the favourable outlook of the entity's products in the domestic
market, given the growing consumption of pulses in India.
Key rating drivers
Credit Strengths
* Promoter's extensive experience in the pulse processing
Industry
* Favorable demand outlook as pulses are a staple ingredient
in the Indian cuisine
Credit Weaknesses
* Weak financial risk profile characterised by low
profitability, high gearing levels and weak debt coverage
indicators
* Intense competitive pressures due to the presence of a large
number of organised and unorganised players in the pulse
processing industry
* Cash flows and working capital requirements of commodity
traders are exposed to market price fluctuation, which is
a function of the demand-supply scenario and regulatory
policies
* Risk associated with proprietorship firm; any significant
withdrawal from capital account could adversely impact the
net worth of the firm and thereby the capital structures
Description of key rating drivers:
The firm has focused more on processing split pigeon peas over
the past few years, making it the major product in its product
profile. The split pigeon peas constituted around 65% of the
total sales in FY2016, followed by gram pulse, comprising ~31% of
the total sales. The firm procures raw materials i.e. gram pulse,
lakhodi pulse and pigeon peas from local traders or through
brokers, who in turn source it either from traders or directly
from mandis. The firm also procures half-processed dal from
market and does sorting and sale under its own brand. The firm
maintains an inventory of ~30-45 days throughout the year,
exposing its profitability to fluctuations in raw material
prices, which account for majority of input costs. Furthermore,
raw material prices depend on various factors such as agro-
climatic conditions and government intervention to balance demand
and supply for ensuring optimum availability at fair prices.
The operating income of the firm improved by around 33% in FY2016
to INR75.45 crore from INR56.90 crore in FY2015 as a result of an
increase in average sales realisations. In the current fiscal,
the firm carried out sales worth INR78.00 crore till mid March
2017. The operating profitability remains thin due to low value-
adding business owing to the highly fragmented market. The
capital structure of the firm continues to remain aggressive as
witnessed from gearing of 8.78 times as on March 31, 2016, though
it improved from earlier level of 10.49 times as on March 31,
2015 on account of increase in net worth base with the increase
in net profitability and infusion of capital of INR0.40 crore in
spite of increase in total debt. In line with thin operating
profitability, stretched capital structure and high interest
cost, the coverage indicators for the firm remains low as
reflected in the interest coverage of 1.10 times and NCA/ Debt of
3% in FY2016. As firm has done higher amount of business in March
end because of which its working capital intensity increased in
FY2016 as witnessed from the NWC/OI ratio of 23% in FY2016
compared to 22% in FY2015. The cash flows of firm remained
negative in the last two fiscals due to increased working capital
requirements.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the debt-servicing track record of MP, its business
risk profile, financial risk drivers and the management profile.
Established in 2001, Milind Pulses (MP) trades and processes
pigeon peas (tuvar dal), gram pulse (chana dal) and lakhodi dal.
The firm is promoted by Mr. Milind and also managed by his father
Mr. Vijay Agrawal who have long experience in the pulse
processing industry. MP's plant is located at Nagpur and
currently has a combined capacity to produce 18,000 Metric Tonnes
Per Annum (MTPA) of pigeon peas, gram pulse and lakhodi pulse.
The firm markets premium quality of tur dal and chana dal under
"Vanraj Brand" and lakhodi dal under "Vina Brand" whereas lower
quality of tur and chana Dal is sold under "Milind Pulses" to
differentiate the various grades. MP introduced new brand for
medium quality of pulses namely "One Khesari" in June 2016.
MUKTAR AUTOMOBILE: CARE Reaffirms 'B' Rating on INR9.88cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Muktar Automobile Private Limited (MAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 9.88 CARE B; Stable Reaffirmed
Short term Bank
Facilities 3.00 CARE A4; Reaffirmed
Detailed Rationale
The rating assigned to the bank facilities of MAPL is constrained
by the Short track record coupled with limited experience of
about 6 years of the promoters in the automobile dealership
business, Linkage to the fortunes of Mahindra and Mahindra (M&M)
Limited , Working capital intensive nature of operations, Thin
Financial risk profile marked by the increase in the total
operating income albeit with highly leveraged capital structure
and weak debt coverage indicators. The ratings derive strength
from the Authorized dealer for Mahindra and Mahindra Limited in
Goa.
The ability of the company to increase its scale of operations as
envisaged, sustaining the improvement in its profitability
margins and efficient management of its working capital going
forward are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Linkage to the performance of Mahindra and Mahindra Limited (MML)
Around 80% of the revenue of MAPL comes from the sale of MML's
vehicles and remaining 20% from the sale of spare parts &
accessories, after sale services and commission on sale of
vehicle insurance. As MAPL is an authorized dealer to sell the
products of MML in Goa and Mangalore region.
Inherent constraints relating to pricing and margin pressure on
account of competitive intensity from various auto dealers in the
market
The business of vehicle trading has margins being set at a
particular level by the company (MML), thereby restricting
MAPL to earn incremental income along with increasing competitive
intensity.
In order to capture the market share, the auto dealers will have
to offer better buying terms like providing lucrative purchase
offers or allowing discounts on purchases. Such discounts offered
to customers create margin pressure, the absence of which would
negatively impact the revenue growth MAPL.
Financial risk profile marked by growth in the total operating
income, albeit with thin operating margins, highly leveraged
capital structure and weak debt protection indicators
The total operating income of the company registered a y-o-y
growth of 15.71% during FY16 to INR119.63 crore. The Company has
incurred loss on PBILDT level due to increase in the cost of
traded goods and increase in the overhead expense and that
resulted in the Decline in PBILDT margins to -0.33% in FY16 as
against 2.83% in FY15, coupled with high interest and
depreciation cost resulted into decline in the PAT margins from
0.39% during FY15 to -3.03%% during FY16.
Key Rating Strengths:
Short track record and limited experience of promoters in the
automobile dealership business
MAPL is promoted by Mr. Muktar Sheikh, his wife Mrs. Shamshun and
his daughter Miss Mizba. Mr. Muktar Sheikh began his career
within the construction domain when he inherited his father's
construction business in the year 1985. The promoters have a long
track record of almost three decades business in the iron ore
mining and expanded his footprint into other businesses such as
engineering, hospitality, logistics, shipping and automobiles
Muktar Automobiles Private Limited (MAPL) incorporated in May
2011 is an authorized dealer of passenger vehicles (PV) segment
for Mahindra & Mahindra Limited. MAPL is based out of Goa and is
engaged in the sale of new cars, servicing of the vehicles and
sale of the spare parts and accessories for MML.
MURARILAL AGARWAL: CARE Issues B+ Issuer Not Cooperating Rating
---------------------------------------------------------------
CARE Ratings has been seeking information from Murarilal Agarwal
Contractor Private Limited (MACPL), to monitor the ratings vide
e-mail communications/letters dated November 21, 2016,
January 30, 2017 and February 17, 2017 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.
Furthermore, MACPL, has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. In line
with the extant SEBI guidelines, CARE's rating on Murarilal
Agarwal Contractor Private Limited's bank facilities will now be
denoted as CARE B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10 CARE B+; ISSUER NOT
Facilities COOPERATING
Users of these ratings (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 on December 17, 2015, the following
were the key rating strengths and weaknesses:
Key rating weaknesses
Declining TOI and moderately stressed liquidity position: TOI of
MACPL has been declining over last three financial years ending
FY15 (refers to the period April 1 to March 31). The company has
adopted polity of raising bills after completion of each level of
task and receives bill amount within 90 days and payment to
labour contractor is paid on regular intervals of 30 days. In
such scenario, liquidity position of the company will remain
moderately stressed.
Absence of construction equipment and price escalation clause: As
per the agreement with group concern, all the materials would be
supplied by MACPL and there is no price escalation clause
attached in the contract.
High competitive intensity in the civil construction segment and
revenue linked to the cyclical real estate sector: The
construction industry is highly fragmented in nature with
presence of large number of unorganized players and a few large
organized players and MACPL is focussing on civil construction of
real estate projects. Hence, revenue of the company would be
linked the cyclical real estate industry.
Key rating strengths
Established track record with qualified management with
experience of executing large project: Directors of the company
has around two decades' of experience in jewellery business. The
management of the company is assisted by second tier management
who has vast experience in the construction of residential and
commercial buildings. The company has built a team of qualified
professionals over the years for execute the large size projects.
High Value single contract in hand: As on September 30, 2015,
MACPL has a high value single contract in hand worth INR100.26
crore. Furthermore, MACPL has signed Memorandum of Understanding
(MoU) for three other contracts of INR260 crore. The company has
already started construction work on its contract from SSKLPL and
booked revenue of INR5.87 crore. MACPL's ability to secure
further orders will be critical for maintaining the growth in
TOI.
Jaipur-based (Rajasthan) MACPL was incorporated in 2004, by Mr.
Murari Lal Agarwal, Mr. Nawal Singh Ratnawat and Ratnawat family.
Over the period, shareholding of the company changed and
currently, Mr. Bhupendra Singh Rathore and Mr. Narendra Singh
Rathore have entire shareholding. Earlier, the company was
engaged in civil and road construction along with toll collection
business. It had completed one road project from Nasirabad to
Deoli via Kekri on Build Operate Transfer (BOT) basis and
collected toll from 2007 to 2014. During FY15, the company
received a contract from Shree Shyam Kripa Landmart Private
Limited (SSKLPL) for construction of residential building
project. The company is also engaged in trading of building
materials which constituted around 48.21% of Total Operating
Income (TOI) of FY15.
During FY15 (refers to the period from April1 to March 31), MACPL
reported a total operating income of INR1.82 crore (FY14: INR2.52
crore) with a Net loss of INR0.07 crore (FY14: PAT of INR0.55
crore).
PARADISE POLYMERS: CARE Cuts Rating on INR8.10cr LT Loan to D
-------------------------------------------------------------
CARE Ratings has been seeking information from Paradise Polymers
Limited (PPL) to monitor the ratings vide e-mail
communications/letters dated July 14, 2016, October 14, 2016,
February 10, 2017, March 2, 2017, March 3, 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.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.10 CARE D; ISSUER NOT
Facilities COOPERATING; Revised
from CARE BB- on the basis
of best available
information
Long-term/Short- 2.00 CARE D/CARE D; ISSUER NOT
Term Bank COOPERATING; Revised from
Facilities CARE BB-/CAREA4 basis of
best available information
The rating on PPL's bank facilities will now be denoted as CARE
D; ISSUER NOT COOPERATING. The ratings have been revised on
account of devolvements in the letter of credit, which remained
overdue for more than 60 days.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
Key Rating Weakness
Delays in debt servicing: As per the interaction with the banker,
there have instances of LC devolvement in the last 12 months
ended March 2017 which remained overdue for more than 60 days.
Incorporated in 1988 by Mr. Randhirsingh Patil, Paradise Polymers
Limited (PPL) is engaged in the manufacturing of various flexible
packaging material, viz., PVC lamination, PVC confectionery
films, PVC cling films and reprocessed rim, finding application
in packaging vegetables, fruits, various food stuffs, frozen
products, candies, sweets & confectioneries, etc. PVC lamination
films are sold under the brand "Paradise", whereas PVC cling
films are sold through its associate concerns namely Simor-Tech
Polymers Limited under the brand "Tazza" and Solanki Polymers
Private Limited under the brand "Oxiwrap". The rest of the
products are sold directly by PPL. It has a wide dealer network
of over 50 dealers across India. Currently, exports constitute
around 15% of its revenue from the exports to Middle East
countries. The company sources its main raw materials viz., PVC
resins and plasticizers from China, whereas the total imports
constitute ~51% of the total purchases of the company.
The manufacturing facility of the company is located at MIDC in
Jalgaon, Maharashtra, possessing installed capacities of 1,080
MTPA of PVC lamination films, 500 MTPA of PVC confectionery
films, 2,040 MTPA of PVC cling films and 336 MTPA of reprocessed
rim as on December 11, 2015, which are utilized at ~50%
currently, except cling films, which are utilized at ~40%.
During FY16 (prov.) (henceforth referred to as FY16) (refers to
the period April 1 to March 31), the total operating income
of the company stood at INR23.03 crore (vis-a-vis INR20.59 crore
in FY15), whereas the PAT during the same year stood at INR0.61
crore (vis-a-vis INR0.41 crore in FY15).
POLYLACE INDIA: CARE Reaffirms B+ Rating on INR3.0cr LT Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Polylace India Private Limited (PIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short-
term Bank
Facilities 14.86 CARE B+/CARE A4 Reaffirmed
Long-term Bank
Facilities 3.00 CARE B+ Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of PIPL continues to
remain constrained by small scale of operations with net loses,
leveraged capital structure and weak debt service coverage
indicators. The rating is further constrained by working capital
intensive nature of operations and its presence in competitive
industry. The rating, however, continues to derive comfort from
the long standing experience of promoters. Going forward, the
ability of PIPL to profitably increase its scale of operations
and registering improvement in capital structure shall be the key
rating sensitivities.
Detailed description of the key rating drivers
Small scale of operation: The scale of operations continues to
remain small which limits the company's financial flexibility in
times of stress and deprives it from scale benefits.
Net losses, leveraged capital structure and weak debt service
coverage indicators: The Company had incurred net losses owing to
high depreciation expense on account of capex undertaken for
addition of plant and machinery. Further owing to high dependence
on external borrowings to meet the capex and working capital
borrowings the capital structure continues to remain leveraged.
Also, owing to high debt levels consequently resulting into high
interest and finance expenses the debt coverage indictors also
continue to remain weak.
Elongated operating cycle: The operating cycle of the company
continues to remain elongated owing to high inventory holding
period as the company mainly holds inventory of wide product line
of various varieties, sizes and colors for smooth production
process and to meet the immediate demand of its customers.
Further, company normally allows credit period of 4-5 months and
receives credit period of around 1-2 months from its suppliers.
Competitive Nature of Business PIPL: PIPL operates in a highly
fragmented industry marked by the presence of a large number of
players in the unorganized sector. Further, with presence of
various players, the same limits bargaining power which exerts
pressure on its margins.
Key Rating Strengths
Experienced Promoters PIPL is promoted by Mr. Rajinder Sharma and
his friend Mr. Rajeev Kalra who are currently acting as Directors
and has vast experience of over two decades respectively in zip
manufacturing and are aware of the demand and dynamics of the
business with their association with PIPL and sister concerns.
Wide distribution network and strong brand presence. The company
has an established distribution network of 40 wholesale
distributors in India which has enabled the company to cover all
the states across India and 23 wholesale distributors outside
India. The products are marketed under the brand "TONI", which
has presence since the 1999 and has established its reputation in
India.
Polylace India Private Limited (PIPL) was incorporated in
January, 1993. The company is currently being managed by Mr.
Rajinder Sharma and Mr. Rajeev Kalra. PIPL is engaged in
manufacturing of zip fasteners, commonly known as zippers. PIPL
manufactures wide range of zippers which finds its application in
different industries like garments, automobiles (seat cover),
shoes etc. PIPL has its manufacturing facility located in
Wazirpur (New Delhi). The main raw materials used for
manufacturing zippers are monofilament yarn, polyester yarn,
aluminum wire and brass wire which are mainly procured
domestically. Based on the requirements, the company also imports
from Taiwan and China. The company sells its products all over
India through an established network of wholesale and
distributors under the brand name 'TONI'.
PIPL has achieved a total operating income (TOI) of INR34.15
crore with net losses of INR0.26crore, respectively in FY16
(refers to the period April 01 to March 31) as against TOI of
INR24.63 crore and net losses of INR1.43 crore respectively in
FY15. During FY17, the firm has achieved total operating income
of INR35.31 crore till December 31, 2016 i.e. 9MFY17 (based in
provisional results).
RIDHI SIDHI: CARE Issues B+ Issuer Not Cooperating Rating
---------------------------------------------------------
CARE Ratings has been seeking information from Ridhi Sidhi Pulses
(RSP), to monitor the rating vide e-mail communications/ letters
dated March 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. Furthermore, RSP has not paid the
surveillance fees for the rating exercise as agreed to in its
Rating Agreement. In line with the extant SEBI guidelines CARE's
rating on Ridhi Sidhi Pulses bank facilities will now be denoted
as CARE B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.62 CARE B+; Issuer not
Facilities cooperating
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 on February 09, 2016, the following
were the rating strengths and weaknesses.
Key Rating Strengths
Experienced proprietor with established customer and supplier
base Mr. Shreekant Mantri, proprietor, looks after overall
affairs of the firm and is assisted by other family members. He
has more than a decade of experience in the trading of
agriculture commodities through its group concern, Jugal Kishore
Shanti Kishore and Gajadhar Girdhar Gopal. Being present in the
industry since long period of time, the management has
established customer and supplier base of its products.
Key Rating Weaknesses
Thin profitability, moderate solvency position and working
capital intensive nature of operations
The firm has started commercial operations from January 2014 and
FY15 (refers to the period April 1 to March 31) is the first full
year of operations of the firm. The profitability of the firm
stood thin mainly due to low value addition alongwith its
presence in a highly fragmented industry with seasonality
associated with the business. The capital structure of the firm
stood leveraged with an due to higher utilization of working
capital bank borrowings as on balance sheet date.
Furthermore, the business of the firm is working capital
intensive in nature with full utilization of its working capital
bank borrowings for the last 12 months ended December 2015.
Seasonality associated with agro commodities and Presence in
highly fragmented and government regulated industry As the firm
is engaged in the business of manufacturing of dall mill, the
prices of agriculture commodities remained fluctuating and depend
on production yield, demand of the commodities and vagaries of
weather. Hence, profitability of the firm is exposed to
vulnerability in prices of agriculture commodities.
Furthermore, the business of the firm is characterized by very
low value addition, highly fragmented and competitive in nature
as evident by the presence of numerous unorganized and few
organized players. The entry barriers in this industry are very
low on account of low capital investment and technological
requirement. Due to this, the players in the industry do not have
any pricing power. Furthermore, the industry is characterized by
high degree of government control both in procurement and sales
for agriculture commodities. Government of India (GoI) decides
the Minimum Support Price (MSP) payable to farmers.
Constitution as a proprietorship concern
Its constitution as a proprietorship concern with low net worth
base restricts its overall financial flexibility in terms of
limited access to external fund for any future expansion plans.
Furthermore, there is an inherent risk of possibility of
withdrawal of capital and dissolution of the concern in case of
death/insolvency of proprietor.
Merta City-based (Rajasthan) Ridhi Sidhi Pulses (RSP) was formed
in 2013, as a proprietorship concern by Mr. Shreekant Mantri with
an objective to set up a dall mill. RSP has completed its project
and started commercial operations from January, 2014. The firm is
engaged in the business of manufacturing of chana dall from chana
and moong mogar as well as moong polish dall from moong. It
procures raw material from the local mandis as well as from
farmers and sells it to wholesalers mainly Maharashtra,
Tamilnadu, Gujarat and Rajasthan. It sells its products in 30 kg
and 50 kg packets and markets under the brand name of Ridhi Sidhi
Pulses.
SAMRAT SEA: ICRA Reaffirms 'D' Rating on INR4.25cr Term Loan
------------------------------------------------------------
ICRA has reaffirmed a long-term rating at [ICRA]D assigned to the
INR2.75 crore cash credit, INR4.25 crore term loan and INR4.00
crore unallocated limits of Samrat Sea Brines Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash credit 2.75 [ICRA]D reaffirmed
Term loan 4.25 [ICRA]D reaffirmed
Unallocated limits 4.00 [ICRA]D reaffirmed
Rationale
The rating reaffirmation continues to remain constrained by
delays in term loan repayments and stretched liquidity profile as
reflected by fully utilized working capital limits owing to
stretched receivables. The rating further remains constrained by
small scale of operations coupled with almost stagnant revenues
over past two fiscals, highly leveraged capital structure and low
coverage indicators. The rating takes into account intensely
competitive business environment owing to low entry barriers and
the exposure to seasonality associated with the salt business.
The rating, however, continues to positively consider the long
standing experience of promoters in salt industry through other
group concerns and location advantage enjoyed by the company on
account of its proximity to railway station which offers ease of
finished goods transportation.
Key rating drivers
Credit Strengths
* Long standing presence of the promoters in the salt industry
* Location advantage by way of proximity to salt works in Kutch
resulting in ease of raw material procurement; ease of
finished goods transportation on account of proximity to
Railway station
Credit Weakness
* Delays in term loan repayments
* Tight liquidity position as reflected by fully utilized
working
capital limits
* Financial risk profile characterised by small scale of
operations, highly leveraged capital structure and low
coverage
indicators
* Exposure to seasonality associated with the salt business
Description of key rating drivers highlighted:
Samrat Sea Brines Private Limited (SSBPL) is engaged in
manufacturing of iodized salt and refined iodized salt at its
plant located at Santalpur, Gujarat. The promoters have long
standing experience in salt manufacturing and trading business
owing to their association with group concerns which are engaged
in similar line of business. One of the major cost for the
company is freight and transportation cost. Company's
manufacturing unit is located opposite to the railways station
which provides ease in transportation of finished goods. The
company needs to book the railway rack with submitting the
advance amount to Railway department. The company provides the
credit period up to 60 days to its customers, however, the
payments from the customers sometimes get stretched. Hence, the
advance payment for the rail transportation coupled with
stretched receivables resulted in stretched liquidity profile
which led to delays in debt repayments as well as near full
working capital utilization.
The operating income of the company remained almost stagnant for
FY2015 and FY2016, with slim moderation in FY2016 and further,
the operation income is expected to witness modest growth in
FY2017 due to lower sales volumes in the months of November and
December 2016. The capital structure of the company remained
highly leveraged as reflected by gearing at 4.83 times as on
March 31, 2016 and 5.38 times as on January 31, 2017 on account
of higher working capital borrowings.
Going forward, the company's ability to improve its liquidity
profile and in turn timely repaying debt obligations, improvement
in capital structure and efficiently managing working capital
cycle would be critical from credit perspective.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the SSBPL's business risk profile, financial risk
drivers and management profile.
Incorporated on September 29th, 2011, Samrat Sea Brines Private
Limited (SSBPL) is engaged in manufacturing of iodized salt and
refined iodized salt. The company's manufacturing unit is located
at Santalpur (District- Patan), Gujarat. The promoters and
directors have past experience in salt manufacturing/ trading
owing to their association in other concerns engaged in similar
operations.
SHAH PRECICAST: ICRA Reaffirms B+ Rating on INR18.42cr LT Loan
--------------------------------------------------------------
ICRA has reaffirmed the long term rating at [ICRA]B+ for the
INR18.42 crore (reduced from INR20.65 crore) fund based
facilities and the INR0.08 crore (reduced from INR4.35 crore)
unallocated limits of Shah Precicast Private Limited. ICRA has
also assigned the short term rating of [ICRA]A4 for the INR1.50
crore non fund based facilities of SPPL. The outlook on the long
term rating is stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term: Fund
Based Limits 18.42 [ICRA]B+ (Stable)/reaffirmed
Short Term: Non
Fund Based Limits 1.50 [ICRA]A4/assigned
Long Term Limits
(Unallocated) 0.08 [ICRA]B+ (Stable)/reaffirmed
Rationale
The ratings reaffirmed for long term and ratings assigned for
short term take into account the long standing experience of the
promoters in the casting industry as also the established
relations with major customers such as Virgo Valves & Controls
Limited and L&T Valves Limited. The rating however is constrained
by sub optimal capacity utilization in the past fiscals along
with higher customer concentration with ~74% of top line
contributed by 2 clients in FY2016. Further higher overheads have
also led to low operating margins in the past fiscals. Given the
weak net worth position, the capital structure remains leveraged
. The margins also remain vulnerable to raw material price and
foreign exchange fluctuation risk. Ramp up of operations through
improvement in optimal capacity utilization as also managing the
working capital remain the key rating sensitivities going
forward.
Key rating drivers
Credit Strengths
* Long standing experience of promoters in the steel and
stainless steel casting industry
* Established relations with the customers
Credit Weakness
* Stretched financial profile characterized by low operating
margins, leveraged capital structure and high working capital
intensity.
* Suboptimal capacity utilization in the past fiscals
* High client concentration risk with ~74% of the revenues
contributed by two clients (FY2016)
* Margins vulnerable to raw material price and foreign exchange
fluctuations.
Sensitivities
* Diversifying the client base
* Improvement in capacity utilization of the new foundry
Description of key rating drivers highlighted:
Shah Precicast Private Limited is engaged in manufacturing of
steel, stainless steel and high nickel alloy castings. The
promoters of the company have a two-decade long experience in the
steel and stainless steel casting industry. SPPL has several
domestic and international customers in its clientele, and
derives comfort from well established relations with the clients
which is reflected into repeated orders placed by customers. The
company has a diversified supplier base in order to ensure
uninterrupted supply of required amount of raw material, mainly
steel scrap.
Leveraged capital structure along with low coverage indicators
continues to remain a key concern for the company. The company
continues to show sub optimal capacity utilization as in past
fiscals. Higher customer concentration with ~74% revenue
contributed by two key clients exposes the company to high
customer concentration risk. The margins remain vulnerable to raw
material price, given limited ability of the company to pass
pricing fluctuations to its clients. Also, as the company imports
part of its raw material requirement from foreign markets and
sells its products to several foreign clients, the company is
exposed to foreign exchange fluctuations. However, the company
has recently started implementing hedging which is expected to
provide some comfort.
Established in 1997, SPPL is promoted by Mr. Nitin Shah, Mrs.
Sunita Shah and associates. The company is engaged in
manufacturing of steel, stainless steel and high nickel alloy
castings. The main types of castings manufactured are valve
castings followed by pump and general engineering castings. The
company has two foundry units for manufacturing of single piece
castings ranging from 15 Kgs to 3000 Kgs and one machine shop for
supply of fully machined components from 1" to 24". The
manufacturing units of SPPL are located in Sangli and the company
has a total installed capacity of 7800 MT per annum.
Recent Results:
During FY 2016, SPPL reported an operating income of INR73.06
crore and profit after tax (PAT) of INR0.67 crore as against an
operating income of INR81.22 crore and PAT of INR-1.35 crore
during FY 2015.
SHREE JAGDAMBA: ICRA Reaffirms B/A4 Rating on INR11.50cr Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term and short-term ratings on the
INR11.50-crore fund-based working capital facility of Shree
Jagdamba Poultry Private Limited at [ICRA]B and [ICRA]A4
respectively. The outlook on the long- term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Working 11.50 [ICRA]B(Stable)/[ICRA]A4
Capital Facilities Re-affirmed
Rationale
The rating reaffirmation takes into account the modest scale of
operations; the decline in OI due to weak performance of the
poultry segment; working capital intensity of business and weak
coverage indicators in FY2016. The company's net worth base is
modest alongside considerable debt in the form of bank loans
taken by pledging warehouse receipts (WHR), resulting in a
leveraged capital structure and considerable interest outflows.
The ratings are further constrained by the susceptibility of
operations in the poultry segment to risks of disease (bird flu)
outbreaks, seasonality in demand, limited pricing flexibility and
presence in the fragmented industry that has numerous unorganised
players. As significant revenue (over 75% of the total revenues)
is currently being generated from the trading segment (maize,
paddy, soya, poultry feed etc.), the margins are susceptible to
commodity price fluctuations given the high inventory holding.
The ratings, however, favourably factor in the long-standing
experience of the promoters in the poultry industry. ICRA also
takes note of the improvement in operating profitability and the
recovery from net losses in FY2016.
Key rating drivers
Credit strengths
* Long standing experience of promoters in the poultry
Industry
Credit weaknesses
Modest scale of operations; decline in OI and weak coverage
indicators in FY2016, however, there has been a recovery from net
losses High inventory levels in FY2016 has led to increase in
working capital intensity and high reliance on working capital
facility Leveraged capital structure; a modest net worth base
alongside considerable debt in the form of bank loan by pledging
warehouse receipts (WHR) Competitive pressures from numerous
unorganised players.
Description of key rating drivers:
Shree Jagdamba Poultry Private Limited (SJP) is a family managed
company engaged in the production of table eggs and trading of
paddy, maize, wheat, rice, animal and poultry feed. The company's
sister concern, Maa Gauri Poultry Private Limited is also engaged
in the production of table eggs and trading in wheat, rice,
paddy, animal and poultry feed. SJP was earlier exclusively into
poultry operations; however, because of vulnerability of poultry
operations to variety of factors including flu outbreaks it has
consciously increased its trading operations. Trading activities
picked up from FY2014 and has been accounting for over 75% of
revenues. With increase in trading operations, the inventory and
debt levels have escalated. The company pledges its commodities
stock namely soyabean, jawar, bajara, maize, soya cake through
warehouse receipts of an approved warehouse.
ICRA expects SJP to record modest y-o-y revenue growth in FY2017
on account of stabilisation of sales in the poultry segment, with
no major instances of bird flu outbreak in the year. However,
cases of bird flu outbreak in FY2015 and FY2016 in Amethi (Uttar
Pradesh), Bhopal (Madhya Pradesh), Telangana, parts of
Chattisgarh and Maharashtra had adversely affected the company's
poultry operations, leading to inventory (livestock) losses and
lower revenues from this segment.
In the near term, ICRA expects trading revenue share to be
significant while the revenue from the poultry segment will
remain range bound as the annual capacity of layers (0.66 lakh)
is expected to remain the same. No augmentation in the layers
capacity is expected in the near to medium term, as the
operations are severely impacted by bird-flu outbreaks. With
increasing revenue share from the trading segment, the inventory
levels is expected to remain high and the capital structure
leveraged due to high borrowings (loan against warehouse
receipts) against the trading stock maintained in business. This
will also render the stock vulnerable to price fluctuations. The
ability of the company to scale up its poultry operations against
the backdrop of seasonal demand for poultry products will be
crucial to improve the scale of operations. Conversely a
declining trend in operating income, lower-than-expected
profitability and inability to reduce working capital intensity
of business will have a negative impact on the key credit
metrics.
Analytical approach:
To arrive at the ratings, ICRA has taken into account the
standalone financials along with key operational developments in
the recent past. The firm operates as a standalone entity and
does not have any subsidiary.
Incorporated in 2001 and promoted by Mr. Rakesh Singh, Shree
Jagdamba Poultry Private Limited (SJP) is a family managed
company engaged in the production of table eggs and trading of
paddy, maize, wheat, rice, animal and poultry feed. Based in
Nagpur, the company operates six sheds on a five-acre land and
has a capacity of around 0.66 lakh layers and produces about 0.59
lakh eggs in a day. In the trading segment, the company sources
trading products from across India which are sold to distributors
and traders based in Nagpur.
SHRI BALAJI: ICRA Reaffirms 'D' Rating on INR12cr Long Term Loan
----------------------------------------------------------------
ICRA has reaffirmed the long-term rating for the INR12.00-crore
(increased from INR10.21 crore earlier) fund-based bank
facilities of Shri Balaji Literary and Charitable Society at
[ICRA]D. The rating suspension done in August 2016 stands
revoked.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term: Fund 12.00 [ICRA]D reaffirmed;
Based facilities Suspension revoked
Detailed rationale
The rating reaffirmation reflects continued delays in debt
servicing by the society on account of its stretched liquidity
position. The group has been undertaking sizeable capital
expenditure over the past few years. Besides, fungibility of cash
flows between group entities as well as inadequacy of long-term
funds vis-a-vis funding requirements and consequent reliance on
short-term sources of finance continue to keep the group's
liquidity position stretched. Further, the group often faces cash
flow mismatches owing to lumpy nature of fee receipts (which are
collected on a half-yearly basis) vis-a-vis monthly interest
payment obligations and other operating expenses.
While reaffirming the rating, ICRA has taken a note of the
established presence of Rayat-Bahra Group in Punjab, where it
caters to over 30,000 students through more than 30 higher
educational institutes and varied course offerings. Further, ICRA
also takes a note of the society's healthy operating surplus
margins. Nevertheless, these strengths are largely offset by the
concerns mentioned above. In ICRA's view, the scale of capital
expenditure undertaken at the group level and adequacy and
timeliness of long-term funding availed to fund the same as well
the quantum of funding support extended to group societies would
be the key determinants of the group's liquidity profile and will
thus remain key rating sensitivities, going forward. Further, the
group's ability to improve its occupancy levels and hence its
scale of operations with the initiatives undertaken to revamp its
course offerings, while maintaining surplus margins, would be a
critical determinant of its debt-coverage indicators.
Key rating drivers
Credit strengths
* Established presence of the Rayat-Bahra Group in the
Punjab region, with strength of more than 30,000 students
across more than 30 colleges and two private universities
* Diversified course offerings which help in addressing a
wider student base
Credit weaknesses
* Continued delay in debt servicing due to liquidity pressure
resulting from cash-flow mismatches (frequency of fee receipts
vis-a-vis debt payments), excessive reliance on short-term
funds, regular capital expenditure undertaken at the group
level and fungibility of cash flows between group entities
* Pressure on admissions and hence consolidated revenue receipts
in an intensely competitive scenario, which together with
presence of fixed expenses resulted in a moderation in
operating surplus margins
Description of key rating drivers:
The Rayat-Bahra Group has an established presence in the higher
education space in Punjab, through its four educational societies
namely BECS, Rayat & Bahra Group of Institutes - An Educational &
Charitable Society (RBGI), Shri Balaji Literary and Charitable
Society (SBLCS) and Rayat Educational and Research Trust (RERT).
The group's operations are spread over eight campuses in three
states within the country and two overseas campuses. The group
offers a wide portfolio of courses across engineering,
management, law, nursing, dental and other streams, which in turn
support the large base of over 30,000 students. However, owing to
intense competitive pressures and adverse demand-supply scenario,
the group witnessed some pressure on admissions in the large-
ticket engineering and management courses, leading to a pressure
on revenue receipts. After remaining stagnant during FY2015,
revenue receipts across societies declined in FY2016. This
together with presence of fixed expenses (with employee expenses
accounting for about three-fourths of the total expenses)
resulted in a sequential decline in consolidated operating
surplus margins from ~50.65% in FY2014 to 47.8% in FY2015 and
further to 43.6% in FY2016, though these continued to be healthy.
Besides, the group has been undertaking aggressive expansion in
the past few years which resulted in large funding requirements
at the group level. However, only a part of the requirement has
been funded by incremental term debt, with a major part getting
funded by intra-group fund transfers as well as short-term
sources of funding such as overdraft facilities, keeping the
group's liquidity position stretched. Liquidity pressures
together with fungibility of cash flows across group companies
and cash flow mismatches caused by lumpy nature of fee receipts,
which are collected on a half yearly basis vis-a-vis monthly debt
obligations (interest payments2), resulted in consistent delay in
debt servicing by the entities in the group.
Analytical approach: For arriving at the rating, ICRA has taken
into account the consolidated business and financial risk
profiles of RBGI, BECS and SBLCS, given the common management and
financial inter-linkages between these entities. While there have
been financial transactions with other entities (besides the ones
mentioned above) in the group as well (such as RERT), updates on
operations and financials for those entities are not available.
Operational since 2009, SBLCS is a part of Punjab-based Rayat-
Bahra Group, which operates more than 35 colleges spread across 5
campuses and one Private University. SBLCS currently operates
five colleges through one campus which is located at Patiala
(Punjab) and offers engineering, management, computer
applications, pharmacy and diploma courses under various colleges
in the campus. The total student strength across the five
colleges during AY 2016-17 was ~1700 students.
About the group:
Rayat - Bahra Group was established in the year 2001 through the
incorporation of Rayat Educational and Research Trust in Ropar
(Punjab). Currently the group is running more than 55 Institutes
across ten campuses (eight in India and one each in USA and UK)
and two Universities. In India, the group has presence in Punjab,
Himachal Pradesh and Delhi. The group caters to over 30,000
students through its constituent colleges. Besides these, the
group operates four schools (two in Ropar Campus and one each in
Mohali & Hoshiarpur Campuses). While one school in Delhi is
affiliated to Central Board of Secondary Education (CBSE), three
schools in Mohali are affiliated to Punjab School Education Board
(PSEB).
SHYAM ENTERPRISES: ICRA Cuts Rating on INR9.49cr Loan to B+
-----------------------------------------------------------
ICRA has revised the long-term rating to [ICRA]B+ from [ICRA]BB-
for the INR11.60 crore long-term fund based bank facility of
Shyam Enterprises. The outlook assigned to the long-term rating
is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 9.49 [ICRA]B+ (stable); downgraded
from [ICRA]BB-(Stable)
Unallocated Limits 2.11 [ICRA]B+ (stable); downgraded
from [ICRA]BB-(Stable
Detailed rationale
The ratings revision factor in the firm's deteriorated financial
profile characterised by dip in profitability and increase in
debt levels, which have led to deteriorated coverage indicators.
The net losses incurred, along with the withdrawal of capital by
the promoter, have eroded the net-worth base and the capital
structure has remained adverse in FY2016. Being a proprietorship
firm, comfort is derived from the net-worth of the proprietor.
However, capital structure at the consolidated level has also
deteriorated. ICRA notes the small scale of operations in a
highly fragmented industry with low entry barriers and
susceptibility to Government regulations in import and export.
The ratings also take into account the exposure to regulatory
risks due to business constitution as a proprietorship concern.
The ratings, however, consider the experience of the promoter in
license trading business, along with the firm's established
relationship with its suppliers and customers, and the low
working capital intensive nature of operations.
Going forward, the ability of the firm to increase its scale of
operations and improve profitability margins, while managing its
working capital borrowings will be crucial. The extent of capital
infusion will also be crucial to support any further
deterioration in the capital structure, and hence will remain the
key rating sensitivities.
Key rating drivers
Credit Strengths
* Promoter's experience and operating track record of more
than a decade in the license trading business
Credit Challenges
* Deteriorated financial profile as reflected by dip in
operating profit levels, net losses incurred, and increase
in debt levels that have led to weak coverage indicators.
* Erosion of the net-worth base at the entity level because
of net losses incurred in FY2016 and capital withdrawals
have led to adverse capital structure; gearing at consolidated
level (including proprietor's personal net-worth) has also
deteriorated.
* Although the firm has reported constant growth in turnover,
the scale of operations continues to remain moderate, limiting
operational and financial flexibility to an extent.
* Fragmented nature of the industry with low entry barriers
* Business constitution as proprietorship concern; exposed to
less regulatory controls and capital withdrawal risk
Detailed description of key rating drivers:
Shyam Enterprises profitability in FY2016 has been impacted by
the bad debts written off by the firm to the tune of INR1.78
crore. Coupled with this, the increase in cost of procurement of
the licenses traded has also pressurised the profit levels and
the firm has reported a net loss of INR0.17 crore in FY2017. This
has eroded the net-worth base of the firm. Moreover, the
continuous withdrawals of capital by the proprietor and increase
in debt levels have also led to deterioration of the capital
structure. With the decline in profit levels, the coverage
indicators have also declined as reflected by OPBDITA/Interest of
1.03 times (3.53 times as on March 31, 2015) and Total
Debt/OPBDITA of 8.35 times (2.59 times as on March 31, 2015) as
on March 31, 2016. Furthermore, the operations of the firm
remains exposed to the competitive pressures prevailing in the
industry, which affects the pricing flexibility.
Nevertheless, the firm's long track record in the license trading
business backed by its established relationships with its
customers and suppliers lends some comfort.
Analytical approach: For arriving at the ratings, ICRA has taken
into account the debt servicing track record of SE, its business
risk profile, financial risk drivers and management profile.
Established by Mr. Ashok Avadh in 2006, Shyam Enterprises (SE) is
engaged in the trading of import licenses (scrips). Shyam
Enterprises procures licenses from exporters, mainly
pharmaceutical and agro-based companies, and sells them to other
traders who re-sell it to end users, i.e., importers. SE also
provides consultancy services, i.e., preparation of application,
submission and follow-up with concerned authorities for claiming
export incentive on behalf of exporters. The firm's registered
office is at Dadar, Mumbai.
SE recorded a net loss of INR0.17 crore on an operating income of
INR66.61 crore for the year ending March 31, 2016. As per
provisional financials for nine months, the firm has recorded a
profit before tax of INR1.56 crore on an operating income of
INR58.30 crore.
SINGOLI CHARBHUJA: CARE Assigns B+ Rating to INR10cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Singoli (Charbhuja) Krishak Sewa Sahakari Sanstha Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 10.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SCKSSSL is
primarily constrained on account of its modest scale of
operation, limited resource profile and leveraged capital
structure. The rating, however, derives strength from the
experience management with long track record of operation and
established supplier base. The rating, further derive strength on
account of healthy profitability, moderate liquidity position and
satisfactory asset quality with minimum regulatory norms.
Ability of SKSSSL to achieving its objective with increase in
scale of operations and improvement in profitability are the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Modest scale of operation with constitution a cooperative society
The scale of operation of the firm stood modest with TOI and PAT
of INR4.51 crore and INR1.26 crore respectively in FY16 (refers
to the period April 1 to March 31) and tangible net-worth of
INR3.22 crore as on March 31, 2016.
Limited resources profile and leveraged capital structure
The major sourcesof funding for SCKSSSL is deposits received from
members of the society. The total debt comprises of deposits
received from members and interest payable. The capital structure
of the company stood leveraged marked by overall gearing at 4.76
times and Total debt to GCA at 88.95 times as on March 31, 2016.
Interest coverage ratio stood moderate.
Key Rating Strengths
Experienced management with long track record of operation and
established supplier base
SCKSSSL is formed as a cooperative society in 1975 by its members
and sponsor by Bank of Baroda and management of the society has
two decade of experience. Being present in the industry since
1975, formed as a cooperative society and sponsor by Bank of
Baroda the management of the society has established strong
supplier base.
Healthy profitability and moderate liquidity position
The profitability of the cooperative society stood healthy with
PBILDT and PAT margin of 28.12% and 3.65% respectively in FY16.
The liquidity position of the SCKSSSL stood comfortable marked by
working capital cycle of 59 days due to higher inventory holding
period for maintaining requirement of members. Satisfactory asset
quality and minimum regulatory norms As on March 31, 2016, the
society has reported NIL number of NPA accounts and SCKSSL is
registered under Rajasthan Cooperative Societies Act of 2001. The
bye-laws are set up in accordance to the rules and guidelines
mentioned in the Act.
Singoli-based (Rajasthan) Singoli (Charbhuja) Krishak Sewa
Sahkari Sanstha Limited (SCKSSSL) was formed as cooperative
society by its members in 1975 and sponsored by Bank of Baroda
with an aim to take care of all the requirement of small farmers
in rural areas.
During FY16, SCKSSSL has reported a total operating income of
INR4.51 crore with a net profit of INR1.26 crore.
TIRUMALA EDUCATIONAL: ICRA Reaffirms B+ Rating on INR9.74cr Loan
----------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B+ assigned to
the INR0.20 crore cash credit limits, INR9.74 crore (revised from
INR7.91 crore) term loan limits and INR0.06 crore (revised from
INR0.59 crore) unallocated limits of Tirumala Educational
Institutes. The outlook on long term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limits 0.20 [ICRA]B+(Stable)/Reaffirmed
Term Loans 9.74 [ICRA]B+(Stable)/Reaffirmed
Unallocated Limits 0.06 [ICRA]B+(Stable)/Reaffirmed
Rationale
The reaffirmation of rating is constrained by TEI's moderate
financial profile characterized by high gearing of 7.43 times and
moderate coverage indicators with interest coverage of 1.90 times
as on March 31, 2016 and modest scale of operations in the field
of education. The rating also factors in competition from other
established institutions in the region that could impact the
student strength and subsequently the profitability levels. ICRA
also notes the proposed debt funded capital expansion plans of
the institute to accommodate the expected increase in student
strength which is likely to adversely impact the capital
structure and debt coverage indicators going forward. The rating
however positively factors in the long experience of the promoter
in the field of education; consistent growth in revenues from
INR1.18 crore in FY2012 to INR11.55 crore in FY2016 owing to
increase in strength coupled with increase in fees of school &
colleges; and reputation enjoyed by the institute in Rajahmundry
and the surrounding regions. Further, ICRA notes the increase in
strength in annual year (AY) 2016-17 by 40% would augment the
revenues substantially in FY2017 for the institute.
Going forward, the ability of the institute to complete the capex
without time and cost overruns, and improvement in occupancy
levels will be key rating sensitivities from credit perspective.
Key rating drivers
Credit Strengths
* Consistent growth in revenues from INR1.18 crore in FY2012 to
INR11.55 crore in FY2016 owing to increase in strength coupled
with increase in fees of school & colleges
* Long experience of promoter in the field of education
* Reputation enjoyed by school and college at Rajahmundry,
Andhra Pradesh, and surrounding regions
Credit Weakness
* Competition from other established institutions in the region
could impact student strength and subsequently profitability
levels
* Leveraged capital structure characterized by gearing of 7.43
times and moderate interest coverage ratio of 1.90 times as
on March 31, 2016
* Significant debt-funded capital expenditure incurred as well
as planned expansion of infrastructure facilities might exert
pressure on debt protection metrics in the near term
Description of key rating drivers highlighted above:
TEI operates one school and three junior colleges spread across
an 8.8 acres campus. The student strength of the institute has
increased to 5,968 students in AY2016-17 from 4,256 students in
AY2015-16.The strength of day-scholars has always been higher
than TEI's hostel strength; and for AY2016-17, 57% of students
are day-scholars. The institute is promoted by Mr.N. Tirumala Rao
who has more than two decades of experience in the field of
education. The school and colleges operated by the institute
enjoys reputation in Rajahmundry, Andhra Pradesh, and surrounding
regions.
The capital structure for the institute is highly leveraged with
gearing of 7.43 times as on March 31st,2016 owing to term loans
availed from lenders coupled with unsecured loans availed from
related parties for capital expansion over the years. The
institute faces competition from other established institutions
in the region that have presence across the state. The institute
has been continuously investing in the development of the
infrastructure. The institute has significant debt funded
expansion plans in near term to support the increase in strength
which would be the debt protection metrics.
Tirumala Educational Institutes (TEI) was established in the year
2011-12 by Mr. N Tirumala Rao. The institute campus is spread
over 8.8 acres, about 9 km from Rajahmundry, Andhra Pradesh. The
institute runs a school and three junior colleges. It has both
hostel and day scholars studying at its institutions. The total
strength of the institute for the academic year (AY) 2016-17
increased to 5,968 students from 4,256 students in AY2015-16.
In FY2016, TEI reported a net profit of INR0.49 crore on
operating income of INR11.55 crore as against net profit of
INR0.18 crore on operating income of INR7.53 crore during FY2015.
TRIKAAL LEASING: CARE Issues B+(FD); Not Cooperating Rating
-----------------------------------------------------------
CARE Ratings has been seeking information from Trikaal Leasing
and Finance Limited (TLF), to monitor the rating(s) vide e-mail
communications/letters dated October 6, 2016, November 2, 2016,
December 6, 2016, January 3, 2017, January 28, 2017, February 21,
2017, March 14, 2017, March 22, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the TLF 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. Furthermore, TLF has not paid the surveillance fees for
the rating exercise as agreed to in its Rating Agreement. The
rating on TLF Ltd.'s instruments will now be denoted as CARE
B+(FD); ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Medium-term 2.87 CARE B+(FD); Issuer Not
Instruments- Cooperating; Based
Fixed Deposit on best available
information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating.
The rating takes into account its small size of operations and
high regional concentration, concentrated resource profile,
weak asset quality, low product diversification, inherent risk
associated with target lending segment. However, the rating
derives strength from the experience of the promoters in the
industry, comfortable capital adequacy levels and satisfactory
profitability margins.
Detailed description of the key rating drivers
At the time of last rating on February 24, 2016 the following
were the rating strengths and weaknesses (updated for the
information available from Annual Report:
Key Rating Weakness
Small size of operations and high regional concentration: TLFL
has small scale of operation spread over four districts of
Karnataka. The portfolio-outstanding as on March 31, 2016 was
INR7.10 crore (PY: INR 6.54 crore). Although strong presence in a
particular region helps the company to understand the dynamics of
the region, it is exposed to geographical concentration risk with
100% of its portfolio concentrated in Karnataka.
Concentrated resource profile: Company's major source of funding
continues to be equity capital and fixed deposit from the public.
As on March 31, 2016, fixed deposits and equity finance 65% of
the asset book.
Decline in Net Interest Margin: The NIM has fallen from 7.13% in
FY15 to 5.05% in FY16, on account of lower yield and increasing
cost of borrowings. Operating expenses also increased impacting
the PAT margin and ROTA. ROTA declined to 0.97% in FY16 as
against 2.81% in FY15. The PAT margin declined to 8.05% in FY16
as against 21.83% in FY15.
Weak asset quality
TLFL has weak asset quality with gross NPA% and Net NPA% at 8.89%
and 7.45%, respectively, as on March 31, 2015, deteriorating from
gross NPA% and Net NPA% of 8.09% and 3.80% as on March 31, 2014.
Low product diversification
TLFL is primarily engaged in financing of used Light Commercial
Vehicles (LCV). As on March 31, 2015, the outstanding loan
portfolio stood at INR6.54 crore, completely financing used
LCV's. However, during 9MFY16, the company has diversified by
financing new vehicles and used heavy commercial vehicles. TLFL
has financed 3 autos aggregating to INR0.04 crore, around 6 to 7
used heavy commercial vehicles aggregating to INR0.62 crore.
Rating Strengths:
Experience of the promoters in the industry
Mr Ravi Deshpande, the Managing Director of TLFL has over 23
years of experience in managing pre-owned commercial vehicle
finance business. He is a post graduate in commerce and law, has
served as group finance manager for BEMCO Hydraulics Ltd for 10
years and general manager finance at The Mysore Kirloskar Ltd for
5 years. Mr. M.K. Shevade, Director, is a Chartered Accountant,
and has 45 years of experience in audit and taxation. He is a
director at the Poly Hydron group of companies. Mr. Ravi
Deshpande manages the day-to-day operations of the company.
Comfortable capital adequacy
The capitalization level of TLFL is comfortable. However, the CAR
witnessed moderation from 74.54% as on March 31, 2013, to 66.21%
as on March 31, 2015, and further to 61.40% as on December 31,
2015, due to increase in the loan portfolio.
Trikaal Leasing & Finance Ltd (TLFL), is a Dharwad based Deposit
taking NBFC involved in business hire purchase of used commercial
vehicles to individuals in Karnataka. The company was
incorporated in June, 1992. TLFL has presence in four districts
of Karnataka, namely Hubli-Dharwad, Gadag, Haveri and Belgaum.
Mr. Ravi N Deshpande is the Managing Director (CMD) who handles
the day to day operations of the company.
=================
I N D O N E S I A
=================
SAKA ENERGI: Fitch Assigns BB+ IDR; Outlook Positive
----------------------------------------------------
Fitch Ratings has assigned PT Saka Energi Indonesia's Long-Term
Foreign-Currency Issuer Default Rating (IDR) of 'BB+'. The
Outlook is Positive. The agency has also assigned Saka's proposed
senior unsecured US dollar notes an expected rating of
'BB+(EXP)'.
The final ratings on the proposed notes are contingent upon the
receipt of documents conforming to information already received.
Saka's ratings are linked to its parent, PT Perusahaan Gas Negara
Tbk (PGN, BBB-/Positive), due to its strong operating and
strategic linkages with PGN in line with Fitch's Parent and
Subsidiary Rating Linkage criteria. The strong linkage largely
arises from Saka's mandate to improve the vertical integration of
PGN, together with the substantial financial assistance provided
to Saka by PGN to expand its scale since its inception in 2011.
Saka's ratings are, however, notched down by one notch from PGN's
ratings to reflect its small size of operations, particularly its
still-limited contribution to PGN's revenues and minor share of
PGN's gas volume requirement.
The government plans to transfer PGN's shareholding to PT
Pertamina (Presero) (BBB-/Positive) to consolidate government
state-owned enterprise holdings; Pertamina has been identified as
the holding company for the oil and gas sector. Fitch does not
anticipate any immediate change to the rating linkages between
PGN and Saka from the proposed ownership change. However, any
further restructuring involving PGN and Saka, which could weaken
linkages between the two entities, will be treated as an event
risk.
KEY RATING DRIVERS
Strong Linkages with Parent: Fitch assesses Saka's linkages with
is parent PGN to be strong, driven by strategic and operational
linkages. Fitch consequently use a top-down approach in line with
Fitch's Parent Subsidiary Linkage Criteria, and notch SAKA down
by one notch from PGN's rating. Saka PGN's largest subsidiary and
the only one engaged in the upstream oil and gas (exploration and
production) business. Fitch believes Saka plays a key role in
PGN's vertical integration strategy. Saka has also tried to
acquire and develop oil and gas fields closer to PGN's
infrastructure to improve operational integration. Fitch expects
increasing integration between Saka and PGN to boost Saka's
contribution to PGN's earnings over the medium term.
Small-but-Diversified Operations: Saka's small operating scale
reflects its short existence. The company's proven reserves of 59
million barrels of oil equivalent (mmboe) and proven and probable
reserves of 112.1 mmboe as of end-2016, as well as production of
13.9 mmboe in 2016 (2015: 10.9 mmboe) are small; similar to the
production levels of most 'B' category oil and gas peers.
However, the operations are diversified across Indonesia with
eight concessions and one asset in the US. The company has
expanded its reserves and production largely through acquisitions
in the past three years. Fitch expects the company to continue
expanding organically and inorganically, although its reserves
and production size is likely to remain small and in line with
other 'B' rated upstream peers over the medium term.
Improving Cost Structure: Saka's cost of operations have
significantly decreased over the previous three years. The
company's production cost fell to around USD8.7 per barrel (bbl)
in 2016, from around USD16.4/bbl in 2013, supported by higher oil
and gas production volume, better operational efficiencies and
cost optimisation. Fitch expects Saka's production costs to
remain competitive and benefit from greater scale in the near- to
medium term.
Less Price Volatility: Saka's domestic gas output, barring one
field, is subject to fixed prices under the concession terms,
which include certain escalation terms over the contract's life.
Overall, broadly 45% of Saka's 2016 oil and gas output on a boe
basis was subject to fixed pricing, significantly cutting margin
volatility from global oil and gas price changes against many
peers.
Improving Financial Profile: Fitch expects Saka's financial
profile to improve over the medium term, driven by higher
operating profits. Fitch expects increasing production, a gradual
oil and gas price recovery and competitive production costs
expand Saka's EBITDA and operational cash flow. This is likely to
improve Saka's FFO net leverage to around 2.5x by 2019 (2016:
8.0x) and help its free cash flows turn positive by 2020, based
on its planned organic growth profile. However, Fitch believes
Saka may continue to look for merger and acquisition
opportunities that will slow its deleveraging. Fitch expects Saka
to increase its financial independence from PGN as it has
achieved scale but continue to believe that PGN will still
provide financial assistance for any large mergers and
acquisitions in the medium term.
'B+' Standalone Profile: Saka's small scale, when balanced
against its diversification, lower price volatility and strong
liquidity, places its standalone profile at 'B+'. Any positive
movement in this standalone assessment will be predicated on Saka
substantially increasing its scale while maintaining a financial
profile appropriate for the 'BB' category.
DERIVATION SUMMARY
Saka's ratings are notched down from the ratings of its parent,
PGN. The ratings are driven by Saka's strong operating and
strategic linkages with PGN and result in a top-down approach, in
line with Fitch's rating criteria. Saka's strategic objective is
to improve its parent's vertical integration by increasing supply
of gas for its transmission and distribution operations. PGN has
extensively supported Saka since its creation in 2011, including
providing most of its funding requirements. The notch down
reflects Saka's small size of operations, which result in a
limited portion of PGN's gas volume requirement being addressed
by Saka. This is set to improve with its organic and probable
inorganic expansion, but Fitch does not expects the status quo to
change much over the medium term.
Fitch expects Saka will be required to finance its operations
more independently, although PGN is still likely to provide
financial support for larger mergers and acquisitions. There are
some legal linkages arising from cross-default language in PGN's
debt that involve Saka, but there are no guarantees from PGN.
Saka's standalone rating of 'B+' reflects its stable gas prices,
competitive cost position, increasing scale, strong liquidity and
improving financial profile compared with peers such as Kuwait
Energy (B-/Rating Watch Negative) and Kosmos Energy Ltd.
(B/Stable).
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Oil price of USD52.5/bbl, USD55/bbl and USD60/ bbl for 2017,
2018 and 2019 respectively, and USD65/bbl thereafter. Natural gas
prices of USD2.8 million British thermal units (mmbtu) in 2017,
USD3.0/mmbtu in 2018 and 2019 and a long-term price of
USD3.3/mmbtu, in line with Fitch's oil price deck.
- Expansion in oil and gas production by nearly 30% in 2017,
supported by fields under development - Muara Bakau, Bangkanai
and gas production in Saka's Ketapang field - coming on stream,
and new production from its Sanga-Sanga acquisition.
- Oil and gas production marginally falling in 2018 and
increasing by over 10% in 2019.
- Extension of production sharing contracts for Sanga-Sanga in
2018, although at a lower share.
- No major acquisitions in the medium term.
- Capex of USD300 million per annum over the next three years.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Further strengthening of linkages with PGN, particularly legal
linkages that are sustainable in the long term.
- A positive rating action on PGN, provided the rating linkages
between the two entities remain intact
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Any significant weakening of strategic or operational linkages
with PGN.
- A negative rating action on PGN.
For PGN's rating, the following sensitivities were outlined by
Fitch in its rating action commentary of 17 April 2017:
Developments that May, Individually or Collectively, Lead to
Positive Rating Action:
- Positive rating action on the sovereign, provided PGN's
linkages with the state remain intact.
Fitch does not anticipate positive rating action on PGN's
standalone rating - given Fitch expectations of continued
pressure on the company's gas distribution margin.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action:
- Revision of Fitch Outlook on the sovereign's IDRs to Stable
from Positive
PGN's standalone rating could be negatively affected by major
negative regulatory developments
- Further weakening of business profile
- Financial leverage (net adjusted debt/FFO) increasing to over
4.0x for a sustained period (2016: 2.0x). If PGN's standalone
rating falls below that of Indonesia's IDR, a rating uplift of
one notch would be provided on account of its moderate linkages
with the state as per Fitch's Parent and Subsidiary Rating
Linkage criteria.
LIQUIDITY
Comfortable Liquidity: Fitch expects Saka's liquidity to be
comfortable with the proposed issue of US dollar notes that are
likely to be used to refinance its existing bank debt. The
company has a policy of maintaining cash of USD100 million at all
times and has strong access to domestic banks driven by its
linkages with its parent. The refinancing of the bank debt will
further improve Saka's liquidity over the next two years in the
absence of any significant debt maturities.
=========
J A P A N
=========
TAKATA CORP: Rescue Talks Extended Even as Bankruptcy Risk Looms
----------------------------------------------------------------
Reuters reports that potential rescuers of Takata Corp have
extended talks, already in their 14th month, for a deal to take
over the air bag maker at the heart of the auto industry's
biggest safety recall, people briefed on the process said.
Car-parts maker Key Safety Systems Inc (KSS) and Bain Capital LLC
are the preferred bidder for Takata, whose faulty air bags have
been blamed for at least 16 deaths worldwide, Reuters says.
Discussions that include the steering committee tapped by the air
bag maker to oversee the search for a financial sponsor,
automaker clients, suitors and bankers are now likely to run on
until at least end-May, three people told Reuters.
Reuters says the parties have already moved beyond an informal,
self-imposed end-March deadline to thrash out a deal.
Recent talks, described by two participants as "chaotic", have
focused on issues such as an indemnity agreement to cover
reimbursement costs for air bag recalls, estimated to be as high
as $10 billion, according to Reuters.
KSS, a U.S.-based maker of air bags, seatbelts and steering
wheels, and Bain, a U.S. private equity fund, are still
conducting due diligence, one of those close to the matter said,
Reuters relays.
Another said KSS -- which was bought last year by China's Ningbo
Joyson Electronic Corp -- and Bain plan to offer around
JPY200 billion ($1.8 billion) for Takata, says Reuters.
According to the report, automakers including Honda Motor Co,
which have been footing the bill for recalls dating back to 2008,
want Takata restructured through a transparent court-ordered
process such as bankruptcy, which would wipe out the firm's
shareholder value, four automaker sources have told Reuters.
"There's no other option," Reuters quotes one automaker executive
as saying. "A privately arranged restructuring would require them
to repay billions. They can't afford that." But Takata, the
world's second-biggest air bag maker, is holding out for a
"private restructuring" that would preserve some of the founding
Takada family's 60% stake, Reuters says.
According to Reuters, the clock is ticking for Takata, whose
stock has cratered 90% since the recall crisis began escalating
in early 2014. U.S. federal Judge George Steeh in February cited
the potential for Takata to collapse if it couldn't find a buyer,
Reuters states.
Reuters says Takata pleaded guilty in Steeh's District Court to a
felony charge as part of a $1 billion settlement with automakers
and victims of its inflators, which can explode with excessive
force, blasting shrapnel into passenger areas.
The company, which began as a textiles firm and became an early
maker of seatbelts, is also trying to settle legal liabilities in
the United States, where it faces a class-action lawsuit, and
other countries where its air bag inflators have exploded, says
Reuters.
Takata has denied speculation it would have to seek some form of
bankruptcy protection from creditors in the United States or
Japan, the report notes.
According to Reuters, the company has not been allowed to simply
disappear as the auto industry needs it to keep producing the
millions of inflators needed to replace recalled air bags -
though some automakers have switched to rival suppliers.
Also, the government in Tokyo is keen to preserve a major
Japanese maker of air bags in a global industry dominated by just
three companies, adds Reuters.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts. The
Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
In May 1995, a voluntary recall in the U.S. affecting 8 million
predominantly Japanese built vehicles made from 1986 to 1991 with
seat belts manufactured by the Takata was conducted.
Large recalls of vehicles due to faulty Takata-made airbags began
in 2013.
Takata is presently facing massive costs of recalling 100 million
defective airbag inflators worldwide and lawsuits tied to at
least 16 deaths and numerous injuries.
As of May 19, 2015, Takata has already recalled 40 million
vehicles across 12 vehicle brands for defective airbags.
In November 2015, Takata was fined $200 million by U.S. federal
regulators for mishandling the way it recalled its air bag
inflators. The fine is the largest civil penalty in NHTSA
history.
TAKATA CORP: Ex-FBI Director Chosen to Oversee Air Bag Fund
-----------------------------------------------------------
Hiroko Tabuchi at The New York Times reports that Robert S.
Mueller III, the former director of the Federal Bureau of
Investigation, is set to oversee nearly $1 billion that
Takata Corp has agreed to pay to victims and automakers affected
by its defective airbags.
Takata pleaded guilty on Feb. 27 to fraud charges, acknowledging
that it had provided false safety-test data to cover up a defect
in its airbags, the report says. According to The New York
Times, the defect causes its airbags to rupture violently when
triggered, shooting metal shards toward the car's occupants, and
has been linked to at least 11 deaths and more than 180 injuries
in the United States.
The New York Times relates that the company also agreed to pay a
criminal penalty, set up a compensation fund for victims and pay
restitution to automakers caught up in the recall of nearly
70 million airbags in 42 million vehicles in the United States,
and millions more overseas.
In a notice posted on April 6, Judge George Caram Steeh of
Federal District Court in Detroit said he intended to appoint
Mr. Mueller to administer those payments, the report says.
Parties to the agreement can still object to the appointment.
Mr. Mueller, an F.B.I. director during the Bush and Obama
administrations, has made a new career for himself overseeing
complex settlements, The New York Times discloses. He previously
mediated talks that led to Volkswagen's $14.7 billion settlement
of claims stemming from its diesel emissions cheating scandal.
The New York Times notes that details of the Takata victims'
compensation fund still need to be worked out, including a
timetable for setting up the program and accepting claims.
Mr. Mueller and Takata will also have to agree on who will be
eligible for compensation, and what proof they will have to
submit, adds The New York Times.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts. The
Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
In May 1995, a voluntary recall in the U.S. affecting 8 million
predominantly Japanese built vehicles made from 1986 to 1991 with
seat belts manufactured by the Takata was conducted.
Large recalls of vehicles due to faulty Takata-made airbags began
in 2013.
Takata is presently facing massive costs of recalling 100 million
defective airbag inflators worldwide and lawsuits tied to at
least 16 deaths and numerous injuries.
As of May 19, 2015, Takata has already recalled 40 million
vehicles across 12 vehicle brands for defective airbags.
In November 2015, Takata was fined $200 million by U.S. federal
regulators for mishandling the way it recalled its air bag
inflators. The fine is the largest civil penalty in NHTSA
history.
TOSHIBA CORP: Foxconn Eyes Involving Sharp in Chip Unit Bidding
---------------------------------------------------------------
Nikkei Asian Review reports that Hon Hai Precision Industry, now
the parent of Japanese electronics giant Sharp, is considering
including the Japanese unit in its bidding team attempting to buy
Toshiba Corp.'s spun-off chipmaking unit.
Nikkei says Hon Hai, also known as Foxconn, is believed to have
already asked SoftBank Group of Japan and American tech giant
Apple to join it in the bidding.
Hon Hai's keenness on Toshiba's chip business has raised concerns
that Japanese technology could drain out to China or Taiwan,
according to Nikkei. The Taiwanese iPhone assembler appears to be
trying to fend off such concerns by involving the Japanese unit,
more than 60% of which is owned by Foxconn, in the bidding, to
ensure that negotiations with Toshiba go smoothly, the report
says.
According to Nikkei, Hon Hai is believed to have successfully
passed the first round of the bidding process with an offer of
some JPY3 trillion ($27.5 billion). Toshiba plans to close the
second round of bidding in mid-May and select bidders for
priority negotiations, the report relates. Hon Hai has not yet
finalized its offer details.
In addition to its signature liquid crystal displays, Sharp is
committed to enhancing production of camera parts for
smartphones, the report states. Acquiring Toshiba's competitive
memory chip business, which supplies parts for iPhones, will be
an advantage for the Hon Hai group to expand business
opportunities, Nikkei notes.
The report says Toshiba seeks to sell the business for
JPY2 trillion or so to fill the hole left in its finances by
massive losses in its U.S. nuclear operations.
Participants in the first bidding round also included Western
Digital of the U.S. and SK Hynix of South Korea, as well as U.S.
chipmaker Broadcom, Nikkei discloses. U.S. investment funds,
such as Silver Lake Partners, were also reported to have
submitted bids.
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 March 21, 2017, that S&P Global Ratings
has lowered its long-term corporate credit rating on Japan-based
capital goods and diversified electronics company Toshiba Corp.
two notches to 'CCC-' from 'CCC+' and lowered the senior
unsecured debt rating three notches to 'CCC-' from 'B-'.
Both ratings remain on CreditWatch with negative implications.
Also, S&P is keeping its 'C' short-term corporate credit and
commercial paper program ratings on the company on CreditWatch
negative. The long- and short-term ratings on Toshiba have
remained on CreditWatch with negative implications since December
2016, when S&P also lowered the long-term ratings because of the
likelihood that the company might recognize massive losses in its
U.S. nuclear power business; S&P kept them on CreditWatch
negative when it lowered the long- and short-term ratings in
January 2017.
=================
S I N G A P O R E
=================
EZRA HOLDINGS: Updates Bond Holders as Firm Seeks Rescue
--------------------------------------------------------
Jacqueline Woo at The Strait Times reports that Ezra Holdings
bond holders are still unsure if their investments can be
recovered despite the firm concluding an informal meeting with
investors on April 17.
The Strait Times relates that the debt-laden offshore services
group met with bond holders for the first time since it filed for
Chapter 11 bankruptcy protection in the United States last month.
The firm has SGD150 million of 4.875 per cent notes due in April
next year, and faces debt of up to US$2 billion (SGD2.8 billion),
the report discloses.
Emotions were largely kept under control in the two-hour session,
attended by about 100 people, despite a few terse moments, the
report says. It was moderated by Mr David Gerald of Securities
Investors Association (Singapore). Ezra's management, including
founder and chairman Lee Kian Soo and managing director Lionel
Lee, and its advisers were there to provide updates and take
questions from investors, according to the report.
The Strait Times relates that Mr. Goh Thien Phong, the firm's
adviser and a partner at PwC, said the company is still working
through possible rescue solutions, which may include bringing in
new investors or doing an equity swop. He added that Ezra's
bankers continue to be supportive of the company, the report
relays.
A key concern among bond holders that surfaced during the meeting
revolved around Ezra's corporate guarantees, which accounted for
some 85% of its overall liabilities, the report relays. Mr. Lee
Kian Soo explained that the corporate guarantees were accumulated
over the years, when the group entered into contracts or loans.
A bond holder, who wanted to be known only as Mr. Tan, told The
Straits Times after the meeting that he was disappointed Ezra did
not unveil any new developments in terms of its restructuring
efforts.
"I was hoping they would say something about getting a 'white
knight', but they didn't, which I guess wasn't surprising given
the current market situation," the report quotes Mr. Tan as
saying. "But at least the management has been forthcoming, unlike
others that threatened their bond holders."
He added that he is mentally prepared to write off his Ezra
investment, which he bought two years ago, but remains hopeful
the firm might be able to come up with a viable solution to turn
itself around. "All we can do now is to wait," he said.
The Singapore Exchange (SGX) had said earlier that it was taking
steps to aid Ezra bond holders, including getting the firm to
convene April 17 meeting, the report adds.
It noted that there are 373 holders of Ezra notes that are
custodised with the Central Depository, the Strait Time says.
The Strait Times notes that the SGX has compiled details of these
bond holders for the note's trustee, HSBC Institutional Trust
Services (Singapore), which will act in the interests of the bond
holders and take action upon instruction.
Industry observers have said that a workable solution for Ezra
would be for its creditors -- both the banks and bond holders --
to agree to various restructuring proposals, which could include
deferring the repayment dates of liabilities, waiving some of the
liabilities or converting part or all of them into equity, the
report says.
"A likely scenario, in our view, is that (Ezra's) shareholders
will get wiped out while creditors will swop for equity," said
KGI Securities analyst Joel Ng, noting that similar developments
are taking place at highly leveraged energy companies in the
United States, the report relays. But the worry is that a
sufficiently large injection of equity may be unlikely, given the
still-downbeat market conditions, adds The Strait Times.
About Ezra
Ezra is incorporated in Singapore with its registered office at
15 Hoe Chiang Road #28-01 Tower Fifteen Singapore 089316. Its
shares were listed on the SGX Sesdaq on Aug. 8, 2003, and moved
to the Mainboard of the Singapore Exchange since Dec. 8, 2005.
It also issued certain notes (S$150,000,000 4.875% Notes due 2018
comprised in Series 003) which have been listed on the Singapore
Exchange since 2013.
Ezra established and maintains an office in the United States
located at 75 South Broadway, Fourth Floor, Office Number 489,
White Plains, NY 10601. Ezra also has a wholly owned New York
subsidiary, Ezra Holdings (NY) Inc., which was incorporated in
the United States of America with 200 shares at a nominal issue
price per share.
Founded in 1992, Ezra Holdings Limited --
http://www.ezraholdings.com/-- is an offshore contractor and
provider of integrated offshore solutions to the global oil and
gas industry. The Group has three main business divisions,
namely Subsea Services, Offshore Support and Production Services,
and Marine Services offering a full range of seabed-to-surface
engineering, construction, marine and production services
globally. Under the EMAS branding, the Group operates in more
than 16 locations across six continents spanning Africa, the
Americas Asia, Australia and Europe.
EMITS, a wholly owned subsidiary of Ezra, provides supporting
services to each of the Ezra Group's business divisions. The
services provided are information technology services including
procuring data center services, Microsoft licenses, network
connectivity, computing support, shared IT equipment and service
support, email service, project management IT services support,
software applications and support and servers from various
service
providers.
Ezra Marine is also a wholly owned subsidiary of Ezra. It has a
leasehold interest in the marine base in Singapore located at 51
Shipyard Road, Singapore 628139 and leases out the base's
facilities and provides various support services in connection
with the marine base to the Ezra Group's operating entities.
These support services in connection with the marine base include
provision of power and potable water, various rental equipment,
manpower and management services, storage space and supplies.
The Ezra Group's joint venture ECS, and certain of its affiliate
companies filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of Texas on Feb. 27, 2017. ECS'
wholly- owned subsidiary, EMAS-AMC AS, has also been placed under
members' voluntary liquidation in Norway. As Ezra has guaranteed
substantial charter hire liabilities of the ECS Group, as well as
certain loans owed by the ECS Group to financial institutions,
Ezra faces potentially significant contingent liability if the
creditors call on the guarantees.
Ezra received statutory demands from Svenska Handelsbanken AB
(Publ), Singapore Branch and Forland Subsea AS on Jan. 24, 2017,
and Feb. 6, 2017, respectively. These statutory demands have
since expired under Singapore law and these two creditors are at
liberty to commence winding up applications against Ezra. Ezra
also received a statutory demand from VT Halter Marine, Inc. on
March 9, 2017.
For fiscal year ended Aug. 31, 2016, the Ezra Group, on a
consolidated basis, realized revenue of approximately $525
million, with corresponding cost of sales of approximately $540
million, for a gross loss of approximately $15 million. The Ezra
Group also incurred other expenses, including administrative
expenses, in excess of $835 million, for a net loss from
continuing business operations of approximately $850 million.
Ezra's books and records reflect, as of Aug. 31, 2016, long-term
assets valued at approximately $515 million, and current assets
valued at approximately $220 million. On a consolidated basis,
for the same time period, the Ezra Group reflected long-term
assets valued at approximately $1.3 billion, and current assets
valued at approximately $623 million.
====================
S O U T H K O R E A
====================
DAEWOO SHIPBUILDING: Bondholders Approve Debt Rescheduling
----------------------------------------------------------
Yonhap News Agency reports that Daewoo Shipbuilding & Marine
Engineering Co. on April 18 got the nod from its investors who
hold some KRW1.3 trillion (US$1.14 billion) worth of bonds,
paving the way for the troubled shipyard to receive a fresh cash
injection from its creditors.
Earlier on April 18, investors with some KRW410 billion approved
the debt rescheduling proposal drawn up by the shipyard's
creditors, Yonhap says. On April 17, holders of some KRW940
billion worth of Daewoo Shipbuilding bonds also agreed to the
debt rescheduling proposal.
Yonhap says the lifeline outlines a debt-for-equity swap for half
of the company's debt and a delay in the payment for the dues for
three years.
According to Yonhap, the approval by bondholders was widely
expected as the National Pension Service (NPS), the largest
investor in Daewoo Shipbuilding bonds, on April 17 accepted the
plan to keep the troubled shipbuilder afloat.
Yonhap relates that the NPS, which owns some 30% of the
shipbuilder's corporate bonds, said it has taken into account
that Daewoo Shipbuilding, the state-run Korea Development Bank
(KDB) and the Export-Import Bank of Korea (Eximbank) -- the two
main creditors of the shipyard -- all agreed to measures that
would better ensure the repayment of corporate bonds that would
be rescheduled.
The report says the pension fund had been in drawn-out talks with
main creditor banks to discuss ways to keep the shipyard, which
has been suffering from a serious liquidity crunch due to a
slowdown in global demand, in operation.
In addition to holding a large part of Daewoo's bonds, the NPS
owns 45.5% of KRW200 billion worth of bonds sold by Daewoo
Shipbuilding that comes due April 21, Yonhap relays.
Under the overall rescue plan, half of the shipyard's corporate
bonds and commercial papers will be converted into equity with
the rest being rolled over to give Daewoo some leeway, Yonhap
relays. KDB and Eximbank will in exchange inject KRW2.9 trillion
into the company to allow it to stay in business, adds Yonhap.
About Daewoo Shipbuilding
Headquartered in Seoul, South Korea, Daewoo Shipbuilding &
Marine Engineering Co. -- http://www.dsme.co.kr/-- is engaged in
building ships and offshore structures. Its product portfolio
includes commercial ships, such as liquefied natural gas (LNG)
carriers, oil tankers, containerships, liquefied petroleum gas
(LPG) carriers, pure car carriers; offshore structures, such as
FPSO vessels, drilling rigs, drillships and fixed platforms, and
naval vessels, including submarines, destroyers, rescue ships and
patrol boats.
The shipyard, along with two other major South Korean
shipbuilders, are currently undergoing self-created debt-
restructuring plans in the face of a decrease in new orders
caused by the protracted global economic slump, according to
Yonhap News.
Daewoo Shipbuilding has been saddled with a deepening liquidity
shortage amid a plunge in new orders, Yonhap said.
The shipbuilder suffered an operating loss of KRW1.61 trillion
(USAUD1.44 billion) last year following an operating loss of
KRW2.94 trillion in 2015. Its net loss narrowed to KRW2.71
trillion last year from a loss of KRW3.3 trillion a year earlier
with sales also dipping 15.1% on-year to reach KRW12.74
trillion.
KUMHO TIRE: Kumho Asiana Chief Passes on Buyback for Now
--------------------------------------------------------
The Korea Herald reports that Kumho Asiana Group Chairman Park
Sam-koo confirmed on April 18 that he will not exercise the right
of first refusal on the sale of a controlling stake in Kumho
Tire.
Calling the process of selling led by state-run Korea Development
Bank "unjust and unfair," Kumho Asiana said it will "no longer
participate in the sale," the report relates.
This decision means the 42.01% controlling stake in Kumho Tire
will be sold to Chinese tire maker Doublestar, which signed a
stock purchase agreement with creditors in March, says the Korea
Herald.
According to the report, Doublestar and Kumho Tire's nine
creditors have to seal the KRW955 billion ($831 million) deal
within six months. If Doublestar does not buy the controlling
stake within the time frame, it would lose its status as the
preferred bidder and Park would be given a new pre-emptive right,
the report says.
Kumho Asiana also urged creditors for a fair rebid and to allow
Park to form a consortium through a press release, the report
relates.
Kumho Asiana said the group will not initiate legal actions
against creditors for now, according to the Korea Herald.
"Taking the acquisition to court is burdensome for the entire
Kumho Asiana Group. There are unresolved issues Doublestar and
the nine creditors have to agree on, which Park seems to view as
unlikely to be settled within six months," the report quotes
Lee Sang-hyun, an analyst at IBK Securities, as saying.
The Korea Herald notes that Doublestar's use of the Kumho Tire
trademark is an obstacle Doublestar and the creditors have to
overcome.
Creditors and Doublestar agreed on a maximum 20-year use of the
Kumho Tire trademark, which has not yet been negotiated with the
trademark rights holder Kumho Industrial, the report says.
"It is important for the Doublestar to use the trademark, as the
Chinese tire maker produces tires for commercial vehicles," the
report quotes Mr. Lee as saying. "The Chinese firm may refuse to
proceed with the deal or to pay the full price without access to
the Kumho Tire trademark."
Kumho Tire was placed under a creditor-led workout program in
2009 after its parent company was hit by a liquidity problem
following its takeover of Daewoo Engineering and Construction Co.
At that time, Park was given a priority option to buy back the
country's tiremaker should the creditors of Kumho Tire decide to
sell the company, according to Yonhap News Agency.
The creditors signed a deal earlier this month to sell their
combined 42.01% stake in the tiremaker to Doublestar for
KRW955 billion (US$831 million), added Yonhap.
*********
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 ***