/raid1/www/Hosts/bankrupt/TCRAP_Public/170529.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, May 29, 2017, Vol. 20, No. 105
Headlines
A U S T R A L I A
AIR FREIGHT: First Creditors' Meeting Slated for June 2
BBY LTD: Liquidators Pursue Insolvent Trading Claims v. Directors
MODEC SECURITY: First Creditors' Meeting Slated for June 5
NOVO IT: First Creditors' Meeting Set for June 2
SOUTH TOWNSVILLE: First Creditors' Meeting Set for June 2
VALUI PTY: First Creditors' Meeting Slated for June 2
* Australian Auto ABS Delinquencies Rise in Q1 2017, Moody's Says
C H I N A
HYDOO INTERNATIONAL: Moody's to Monitor Potential Sale of Firm
LOGAN PROPERTY: Fitch Puts B Rating to US$ Perpetual Securities
LOGAN PROPERTY: Securities Issue No Impact on Moody's Ba3 CFR
H O N G K O N G
NOBLE GROUP: Yancoal Au. Not Concerned Over Firm's Fin'l Strength
NOBLE GROUP: Fitch Cuts IDR to B-; Puts on Rating Watch Negative
I N D I A
AARVEE COLD: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
AIC INFRASTRUCTURES: Ind-Ra Migrates B+ Rating to Non-Cooperating
ARJUN PULP: CRISIL Reaffirms 'D' Rating on INR22.6MM LT Loan
B. L. CONTAINERS: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
BAIJNATH SCRAP: CRISIL Assigns B- Rating to INR6MM Cash Loan
C.L. GULHATI: CRISIL Downgrades Rating on INR25MM Cash Loan to D
CLARA SWAIN: CRISIL Assigns 'D' Rating to INR7.5MM Term Loan
CRAVE CLOTHING: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
DEVANS MODERN: CRISIL Reaffirms 'D' Rating on INR50.7MM Cash Loan
DEVIPRASAD CONSTRUCTIONS: CRISIL Cuts INR15MM Loan Rating to B+
DIVINE CONSTRUCTIONS: CRISIL Cuts Rating on INR6MM Loan to 'B'
FAIRWEALTH HOUSING: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
GANESH YADAV: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
GAJRA DIFFERENTIAL: CRISIL Assigns 'C' Rating to INR10.1MM Loan
GLENMARK PHARMACEUTICALS: S&P Affirms 'BB' CCR; Outlook Negative
H. P. ZALA: CRISIL Reaffirms B- Rating on INR5MM Cash Loan
HINDUSTAN AUTOHOUSE: CRISIL Cuts Rating on INR8MM Loan to 'B'
HINDUSTAN FERRO: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
IDASA INDIA: CRISIL Lowers Rating on INR7.9MM Cash Loan to 'B'
IDBI BANK: Moody's Lowers Bank Deposit Ratings to Ba2
JAIKA VEHICLE: CRISIL Reaffirms B- Rating on INR19MM Cash Loan
JAYACHANDRAN INDUSTRIES: CRISIL Ups Rating on INR9.77M Loan to B+
JAYESH INDUSTRIES: CRISIL Reaffirms B- Rating on INR10.25MM Loan
JUST TEXTILES: CRISIL Upgrades Rating on INR9.22MM Loan to 'B'
K.S.PIPE: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating
KRIPA ANAND: CRISIL Lowers Rating on INR9.5MM Cash Loan to 'B'
M C MEDICAL: CRISIL Reaffirms 'B' Rating on INR8.2MM LT Loan
MADHAV INDUSTRIES: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
MAGBRO HEALTHCARE: CRISIL Reaffirms B- Rating on INR7MM Loan
MAHALAKSHMI TELESERVICES: Ind-Ra Puts D Rating to Non-Cooperating
MANTRA SOFTECH: CRISIL Assigns B+ Rating to INR10MM Cash Loan
MONA TOWNSHIPS: CRISIL Assigns 'B' Rating to INR35MM Term Loan
MULCHAND FIBER: CRISIL Raises Rating on INR8.92MM Term Loan to B+
NOSLAR INTERNATIONAL: Ind-Ra Puts BB Non-Cooperating Rating
PRIME URBAN: Ind-Ra Raises Long-Term Issuer Rating to 'BB+'
PUDUCHERRY CANCER: CRISIL Assigns 'D' Rating to INR10MM Loan
PUNNAMI HATCHERIES: CRISIL Assigns B Rating to INR8.01MM LT Loan
R.K. STEEL: CRISIL Lowers Rating on INR12.75MM Cash Loan to 'B'
RAJ POLY: CRISIL Downgrades Rating on INR14MM Cash Loan to 'B'
RAJ RAYON: Ind-Ra Affirms 'D' Long-Term Issuer Rating
RAJEEV ELECTRONICS: CRISIL Cuts Rating on INR14MM Cash Loan to B
RAJENDRAGURU GROUP: CRISIL Rates INR24MM Term Loan at B-
SHILPI CABLE: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
SHIVAM MOBILE: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
SHYAM & COMPANY: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
SIR BIO: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating
SOND KNIT: Ind-Ra Migrates 'B' Rating to Non-Cooperating
SRI GANESH: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
SRI VAIBHAVA: CRISIL Reaffirms 'C' Rating on INR9.2MM LT Loan
SYNERGY REMEDIES: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
TRUVALUE AGRO: Ind-Ra Affirms 'BB+' Long-Term Issuer Rating
TVC ELECTRONICS: CRISIL Cuts Rating on INR4MM Cash Loan to 'B'
TURAKHIA POLYMERS: CRISIL Cuts Rating on INR10MM Cash Loan to B
USHA FABS: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
VARDHMAN KNIT: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan
VIJAY SHEETS: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
WRC ENGINEERING: Ind-Ra Migrates 'B-' Rating to Non-Cooperating
J A P A N
TOSHIBA: Remains Negative on Selling Chip Unit to Western Digital
S I N G A P O R E
RICKMERS GROUP: To Face Insolvency if Restructuring Plan Rejected
S R I L A N K A
KOTAGALA PLANTATIONS: Fitch Cuts National Long-Term Rating to CC
V I E T N A M
VIETNAMESE BANK: Fitch Affirms B+ LT IDR; Revises Outlook to Pos.
- - - - -
=================
A U S T R A L I A
=================
AIR FREIGHT: First Creditors' Meeting Slated for June 2
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Air
Freight Solutions Pty Ltd will be held at Astro Dish Motor Inn,
10-16 Bogan Street, in Parkes, New South Wales, on June 2, 2017,
at 10:00 a.m.
Andrew James Barnden and Will Griffiths of Rodgers Reidy were
appointed as administrators of Air Freight on June 2, 2017.
BBY LTD: Liquidators Pursue Insolvent Trading Claims v. Directors
-----------------------------------------------------------------
The Sydney Morning Herald reports that liquidators to collapsed
stock broker BBY are pursuing an insolvent trading claim against
former company directors including tennis great Ken Rosewall and
his son Glenn Rosewall.
Another former company director, David Perkins, is also subject
to the claim from KPMG regarding the lead-up to the biggest stock
broker collapse in recent history, the report says.
The size of the claim is unclear but is expected to be in excess
of AUD10 million, SMH notes.
According to the report, liquidators from KPMG said BBY's
shortfall of client money is AUD23 million and some of that
shortfall was "a result of misuse of client funds".
SMH says the civil claim comes after explosive revelations at the
public examinations into the affairs of the company last year,
including that then managing director Glenn Rosewall had used the
services of psychic and vibrational healer Nevine Rottinger to
help him make crucial investment decisions.
Liquidators are also considering separate claims against Ken
Rosewall's company Ficema and his son Glenn Rosewall's private
superannuation fund over voidable transactions that could slug
the family more than AUD11 million, the report says.
About BBY Ltd
Founded in 1987, BBY Limited is a boutique investment firm that
offers brokerage and financial advisory services. The company
provides merger and acquisition, initial public offering, private
placement, equity trading, and market and business research
services. Additionally, it offers capital raising, restructuring,
due diligence, valuation, relationship management, and clearing
services.
On May 18, the directors of BBY Limited have appointed KPMG as
Voluntary Administrators. The appointment comes after a number
of run-ins with regulators over its capital requirements and
failing to repay an intraday loan to St George Bank, according to
The Sydney Morning Herald.
KPMG found that clients faced a combined shortfall in their
accounts of AUD16 million, SMH disclosed.
MODEC SECURITY: First Creditors' Meeting Slated for June 5
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Modec
Security (QLD) Pty Ltd will be held at Level 31 Waterfront Place,
1 Eagle Street, in Brisbane, Queensland, on June 5, 2017, at
11:30 a.m.
Ozem Kassem & Alan Walker of Cor Cordis Chartered Accountants
were appointed as administrators of Modec Security on May 24,
2017.
NOVO IT: First Creditors' Meeting Set for June 2
------------------------------------------------
A first meeting of the creditors in the proceedings of Novo IT
Pty Ltd will be held at Eclipse Tower Level 19, 60 Station
Street, in Parramatta, NSW, on June 2, 2017, at 10:00 a.m.
David Ian Mansfield and Neil Robert Cussen of Deloitte Financial
Advisory Pty Ltd were appointed as administrators of Novo IT on
May 23, 2017.
SOUTH TOWNSVILLE: First Creditors' Meeting Set for June 2
---------------------------------------------------------
A first meeting of the creditors in the proceedings of South
Townsville Investments Pty Limited will be held at HoskingHurst
Pty Ltd, Level 3, 65 York Street, in Sydney, New South Wales, on
June 2, 2017, at 11:00 a.m.
David Anthony Hurst of HoskingHurst was appointed as
administrator of South Townsville on May 23, 2017.
VALUI PTY: First Creditors' Meeting Slated for June 2
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Valui Pty
Ltd will be held at the offices of Cor Cordis, Level 29, 360
Collins Street, in Melbourne, Victoria, on June 2, 2017, at
3:00 p.m.
Glenn J Spooner and Jeremy J Nipps of Cor Cordis Chartered
Accountants were appointed as administrators of Valui Pty on
May 23, 2017.
* Australian Auto ABS Delinquencies Rise in Q1 2017, Moody's Says
-----------------------------------------------------------------
Moody's Investors Service says that the performance of Australian
auto loan asset-backed securities (ABS) deteriorated in Q1 2017.
"Delinquencies typically increase in Q1, after the end-of-year
holiday season," says Alena Chen, a Moody's Vice President and
Senior Analyst.
In addition, lower exposure to better performing receivables such
as novated leases, and higher exposure to worse performing
receivables such as consumer loans, accounted for a portion of
the higher delinquencies. The natural amortization of auto ABS
portfolios also had a large impact on the delinquency rates of
some older and smaller deals.
Specifically, the average 30+ day delinquency rate rose to 1.72%
at March 31, 2017 from 1.43% at 31 December 2016 and 1.59% at
March 31, 2016.
"We expect delinquencies to continue to increase through 2017,
and defaults and losses will rise from current low levels," adds
Chen.
Chen was speaking on the release of Moody's quarterly Australian
auto ABS Indices for Q1 2017.
Macquarie Leasing Pty Limited's SMART transactions had the lowest
weighted-average 30+ day delinquency rate of 1.22% at March 31,
2017, but this was up from 0.98% at 31 December 2016.
The weighted-average 30+ day delinquency rate of St. George
Finance Limited's Crusade transactions increased to 2.50% at
March 31, 2017 from 2.00% at 31 December 2016.
Liberty Financial Pty Limited's Liberty transactions had the
highest weighted-average 30+ day delinquency rate of 9.02% at
March 31, 2017, up from 7.74% at 31 December 2016. This program
securitizes auto loans from both prime and non-conforming
borrowers.
By contrast, the weighted-average 30+ delinquency rate of BOQ
Equipment Finance Limited's REDS transactions was at 1.17% at
March 31, 2017, down from 1.26% at 31 December 2016.
Despite the overall increase in delinquencies during Q1 2017,
default and loss levels remained low. At March 31, 2017, the 2013
vintage - the most seasoned of the outstanding pools - registered
a cumulative default rate of 2.28%, and a net loss rate of 1.12%.
Recovery rates for all vintages stayed stable in Q1 2017, at
around 45%-50%.
=========
C H I N A
=========
HYDOO INTERNATIONAL: Moody's to Monitor Potential Sale of Firm
--------------------------------------------------------------
Moody's Investors Service says that it will monitor developments
related to the potential sale of Hydoo International Holding
Limited (B2 negative) by its largest shareholders.
"Moody's will closely monitor the potential sale of Hydoo and
whether -- if completed -- the change in ownership will trigger
the repayment of USD220 million notes," says Kaven Tsang, a
Moody's Vice President and Senior Credit Officer.
If the sale goes through, Moody's will also review the impact on
Hydoo's liquidity position, and any contingency plans of the new
shareholders to address the change of control put option
applicable to Hydoo's bond, if triggered.
On May 23, 2017, Hydoo announced that its two largest
shareholders, who also form the founding family of the company,
have been approached by an independent third party with a
preliminary proposal to purchase all or part of their 59.03%
ownership in the company.
Moody's will also assess any resultant impact on Hydoo's future
business strategy, changes to its senior management and financial
policies.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Established in 2010, Hydoo is a Chinese property developer that
specializes in developing and operating trade centers in low-tier
cities. As of the end of 2016, the company had a land bank of
about 11.5 million square meters in nine provinces and autonomous
regions in China.
LOGAN PROPERTY: Fitch Puts B Rating to US$ Perpetual Securities
---------------------------------------------------------------
Fitch Ratings has assigned Logan Property Holdings Company
Limited's (BB-/Stable) proposed US dollar subordinated perpetual
capital securities an expected 'B(EXP)' rating.
Logan says the proceeds of the proposed securities will be used
for refinancing outstanding indebtedness and other general
corporate purposes. However, the use of proceeds may be
reallocated in response to changing market conditions. The final
rating and equity credit are contingent upon the receipt of final
documents conforming to information already received.
Fitch expects to accord 50% equity credit to the proposed
perpetual capital securities until year 2032, five years before
the replacement language lapses, which is the effective maturity
date of the perpetual securities in accordance with Fitch's
Treatment and Notching of Hybrids in Non-Financial Corporate and
REIT Credit Analysis criteria. Assigning equity credit to the
perpetual securities is not likely to change Fitch expectations
that Logan's leverage will increase in the next 12-18 months.
Logan's ratings are supported by its well-located land bank in
Shenzhen city and the Guangdong region. This provides the company
with stronger contracted sales and margin visibility over the
next 24 months compared with rated peers of similar size.
KEY RATING DRIVERS
Leverage to Increase: Fitch expects Logan's leverage, measured by
net debt/adjusted inventory, to rise to 40%-45% in the next 12-18
months. Its 2016 leverage increased to 37%, from 32% in 2015,
after it acquired well-located sites in Shenzhen to reposition
its land bank. Fitch expects the company to replenish its land
bank in Shenzhen from 2017, mostly via redevelopment projects due
to the limited land parcels available in the open market. This
may result in lower land cost and more spread-out land payment
terms.
Robust Contracted Sales, Margins Maintained: The company's
contracted sales have increased by over 40% a year since 2014, to
CNY29 billion in 2016. The Fitch-calculated EBITDA margin widened
to 30% in 2016, compared with 26% in 2014. Fitch expects average
selling prices to improve given Logan's well-positioned land
bank, although sales by gross floor area are likely to drop.
Fitch expects the company to meet its consolidated contracted
sales target of CNY35 billion for the next 12-18 months and
maintain its margin at 29%-30% over the next two years.
Cash Outflow for JVs: Fitch expects Logan to buy back stakes in
its joint ventures (JVs) held by financial investors once
contracted sales in these projects start in 2017. Logan says
these investors have committed CNY8.7 billion to the JVs. Fitch
expects a cash outflow of around CNY4.4 billion in 2017 related
to these stake purchases, which will leave CNY4.3 billion to be
purchased later.
Concentration Risks: Fitch believes the well-located and high-
quality land bank mitigates Logan's concentration risks over the
next year or two. Logan's contracted sales are highly
concentrated in the Guangdong region, with Shenzhen city
contributing around 43% of 2016 contracted sales. The cities of
Shenzhen, Shantou, Foshan and Nanning - all in the Pearl River
Delta region - accounted for over 80% of contracted sales in 2015
and 2016. Fitch expects Shenzhen to continue to account for 30%-
45% of Logan's total attributable contracted sales in 2017-2018.
However, the concentration in Guangdong means Logan's sales
performance is strongly correlated with the local economy and
local policy changes compared with developers that have more
geographically diversified operations.
DERIVATION SUMMARY
Logan's contracted sales are comparable with other 'BB-' rated
Chinese developers that have contracted sales of CNY28billion-32
billion. These peers include KWG Property Holding Limited (BB-
/Stable), China Aoyuan Property Group Limited (BB-/Stable) and
CIFI Holdings (Group) Co. Ltd. (BB-/Positive).
Logan's EBITDA margin is also similar to that of margin-focused
homebuilders such as KWG and Yuzhou Properties Company Limited
(BB-/Stable). The increase in Logan's leverage to 37% at end-2016
puts it in line with that of peers such as KWG, with leverage of
40%-42%, Yuzhou's 38%-42% and Times Property Holdings Limited
(B+/Positive), with 38%-40%.
No Country Ceiling or parent/subsidiary aspects affect the
rating. Operating environment risks make it unlikely for
companies in this sector to be rated above 'BBB+'.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Contracted sales by gross floor area to decrease by 35%
in 2017 and increase by 2% in 2018
- Average selling price for contracted sales to increase by
60% in 2017 and 2% in 2018
- EBITDA margin stays at 29%-30% in 2017-2018
- Cash out flow of around CNY4.4 billion in 2017 to buy back
financial investors' JV stakes
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Substantial increase in its scale, with annual attributable
contracted sales sustained above CNY30 billion
- Sustained leadership position in key cities in the greater
Guangdong area
- Achieving sustainable neutral or positive cash flow from
Operation
- EBITDA margin sustained above 30%
- Net debt/adjusted inventory sustained below 35%
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Net debt/adjusted inventory above 45% for a sustained period
- EBITDA margin below 25% for a sustained period]
LIQUIDITY
Sufficient Liquidity: Logan had CNY15 billion of cash on hand,
including CNY1.2 billion of restricted cash, at end-2016,
compared with short-term debt of CNY5.1 billion. The company had
a high cash collection ratio of above 90% for the past two years.
Over 75% of Logan's total debt is denominated in Chinese yuan, as
the company continued to tap onshore debt markets, including
CNY7.4 billion raised in 2016.
LOGAN PROPERTY: Securities Issue No Impact on Moody's Ba3 CFR
-------------------------------------------------------------
Moody's Investors Service says that Logan Property Holdings
Company Limited's issuance of USD350 million perpetual securities
on May 25, 2017 will not immediately impact its Ba3 corporate
family rating or the stable outlook on the rating.
The securities are unsecured and subordinated to the claims of
all other present and future senior and subordinated creditors of
the issuer.
"The issuance will lengthen Logan Property's debt maturity
profile," says Anthony Lee, a Moody's Analyst.
"The issuance will also not materially impact its credit metrics,
because the company will use the majority of the proceeds to
refinance existing indebtedness, and because the securities will
receive a 100% debt treatment from Moody's," adds Lee, who is
also Moody's Lead Analyst for Logan Property.
Logan Property will use approximately 65%-70% of the proceeds
from its issuance of the bond on May 17, 2017 and perpetual
securities on May 25, 2017 for refinancing purposes.
Moody's notes that the company's corporate family rating will
come under pressure, if spending on its land acquisitions for the
remainder of 2017 is at a level that is higher than Moody's
expects, or its debt leverage - as measured by revenue to
adjusted debt - does not improve to above 70% within the next 6-
12 months. Moody's points out that Logan's debt leverage of 62%
at end-2016 was weak for its Ba3 rating.
Logan Property's Ba3 corporate family rating reflects its proven
track record of developing mass-market residential properties in
Guangdong, Guangxi and Shenzhen.
The rating also considers the company's high gross profit margin
- when compared to its Ba-rated domestic property development
peers - supported by its strong cost management and low cost land
bank.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Logan Property Holdings Company Limited engages in property
development, with a focus on low- to mid-market residential
projects in Shenzhen and other cities in the Pearl River Delta,
Shantou in Guangdong, and Nanning in Guangxi.
The Shenzhen-based company listed on the Hong Kong Stock Exchange
in December 2013, and is 77%-owned by the Kei family trust and
Ms. Kei Perenna Hoi Ting.
================
H O N G K O N G
================
NOBLE GROUP: Yancoal Au. Not Concerned Over Firm's Fin'l Strength
-----------------------------------------------------------------
Reuters reports that Yancoal Australia said it was not concerned
"at this stage" over the financial strength of its No. 2
shareholder Noble Group, and that its acquisition of Rio Tinto's
coal mines did not hinge on funding from the commodities trader.
Yancoal is expected to raise nearly $2 billion to fund the
purchase, valued at $2.45 billion, of Rio's Coal and Allied
Division, Reuters says. Under that scenario, Noble would have to
contribute about $260 million to avoid dilution of its 13 percent
stake.
"From Yancoal's standpoint, I see no concern at this stage,"
Yancoal Australia Chief Executive Reinhold Schmidt told Reuters.
"We have an independent board committee who are working on what
the capital raising structure is going to look like," Reuters
quotes Mr. Reinhold as saying. "It will be defined as we get
closer and the market will show what that structure will look
like."
This month, Singapore-listed Noble posted a shock quarterly loss
and warned it would not be profitable for the next two years,
sparking a slump in its stocks and bonds, Reuters relates.
Subsequently, rating agencies downgraded their outlook.
Yancoal is 78% owned by Yanzhou Coal Mining. Yanzhou is in turn
owned 56% by the government of Shandong Province, Reuters
discloses.
About Noble Group
Hong Kong-based Noble Group Limited (SGX:N21) --
http://www.thisisnoble.com/-- engages in supply of agricultural,
industrial and energy products. The Company supplies agricultural
and energy products, metals, minerals and ores. Agriculture
products include grains, oilseeds and sugar to palm oil, coffee,
and cocoa. Energy business includes coal, gas and liquid energy
products. In metals, minerals and ores (MMO), it supplies iron
ore, aluminum, special ores and alloys. The Company operates
nearly in 140 locations. It supplies growth demand markets in
Asia and Middle East. Alcoa World Alumina and Chemicals is the
subsidiary of this company.
As reported in the Troubled Company Reporter-Asia Pacific on
May 24, 2017, S&P Global Ratings lowered its long-term corporate
credit rating on Noble Group Ltd. to 'CCC+' from 'B+'. The
outlook is negative. At the same time, S&P lowered the long-term
issue rating on Noble's outstanding senior unsecured notes to
'CCC' from 'B'. In addition, S&P lowered its long-term Greater
China regional scale rating on the company to 'cnCCC+' from
'cnBB-' and on the notes to 'cnCCC' from 'cnB+'.
S&P downgraded Noble because S&P believes the company's capital
structure is not sustainable. This is due to continuing weak
cash flows and profitability, and Noble's access to funding will
have further weakened following its weak results for the three
months ending March 31, 2017.
The TCR-AP reported on May 18, 2017, that Moody's Investors
Service has downgraded Noble Group Limited's corporate family
rating and senior unsecured bond ratings to Caa1 from B2, and the
rating on its senior unsecured medium-term note (MTN) program to
(P)Caa1 from (P)B2. The ratings outlook remains negative.
NOBLE GROUP: Fitch Cuts IDR to B-; Puts on Rating Watch Negative
----------------------------------------------------------------
Fitch Ratings has downgraded Hong Kong-based commodities trader
Noble Group Limited's Long-Term Foreign-Currency Issuer Default
Rating (IDR) to 'B-' from 'BB-'. At the same time, the agency has
downgraded Noble's senior unsecured rating and the ratings on all
its outstanding senior unsecured notes to 'B-' from 'BB-' and
assigned a Recovery Rating of 'RR4'. The IDR, senior unsecured
ratings and outstanding senior unsecured notes have also been
placed on Rating Watch Negative.
The downgrade and Rating Watch Negative reflect the need for
Noble to address debt maturities of USD2.0 billion-2.1 billion
over the next 12 months. The continuous negative news about the
company and resultant weak sentiment is likely to make
refinancing negotiations more difficult than Fitch expected when
Fitch last downgraded the company on May 16, 2017, despite the
strength of Noble's balance sheet, with a high working
capital/total debt ratio, low portion of secured debt and
significant amount of assets available to pledge.
Most immediately, the company has USD2.0 billion of secured
borrowing base facilities, of which approximately USD600 million
was drawn down as of 1Q17, which matures in June 2017. Fitch
believes lender banks may be inclined to roll a large part of
this facility over, given the company's high level of liquid
working capital available to be pledged, but on less favourable
terms. The Rating Watch Negative will be resolved if Noble
successfully addresses its near-term liquidity problems and
refocuses on improving profitability.
KEY RATING DRIVERS
Liquidity Under Pressure: Noble needs to address debt maturities
of around USD2.0 billion-2.1 billion between June 2017 and May
2018; comprising of approximately USD600 million of secured debt,
a USD1.1 billion unsecured term loan and USD380 million of senior
notes. Fitch estimates its cash balance to be around USD900
million at end-May 2017, following the repayment of its unsecured
term loan of USD650 million. Fitch also estimates that Noble will
have around USD500 million in committed undrawn facilities at
end-May 2017.
The company generated negative operating cash flow in 1Q17, a
trend Fitch expects to only moderately improve over the next few
quarters. Noble's USD600 million drawn under the maturing
borrowing base facilities is self-liquidating. However, a
successful rollover of a large part of these maturing facilities
is critical for its on-going liquidity.
Balance Sheet Remains Intact: Noble's ratio of working
capital/total debt, including 50% of its perpetual securities,
remained close to 1.3x at end-1Q17 (end-2016: 1.4x). This ratio
is in line with that of higher-rated peers in the investment
grade range. Noble's secured debt also remains low, at less than
20% at end-1Q17, with a significant amount of assets available
for pledges on its balance sheet to be used toward secured
financing.
Sustained Weak Profitability: Noble's quarterly working capital
return, which has been below Fitch 3.0% negative ratings trigger
since 3Q15, deteriorated further to an average of 0.7% in 2016
and turned negative in 1Q17. Fitch believes it is unlikely that
Noble will be able to generate returns at previous levels and it
is uncertain whether the company can improve its return
generation in the next six to 12 months, as the operating
environment remains challenging for trading companies like Noble.
Fitch recognise that Noble has restructured its portfolio to
reflect market conditions and that its weak EBITDA generation in
2016 does not reflect its true 2016 return, as it was largely
attributable to Noble's focus on business restructuring and
balance-sheet improvements. However, Fitch expects weak profit
generation to challenge Noble's ability to access financing on an
unsecured basis, as it had done in the past. Noble has been
switching its focus toward extensive use of borrowing base
facilities secured by working capital for both the issuance of
letters of credit and financing needs. This heavier emphasis on
secured financing is consistent with Noble's current rating
level.
Negative Operating Cash Flow: Noble's cash flow from operation
(CFO) has been negative since 2014 due to a decrease in accounts
payable. Fitch believes this was due to credit-related events in
2015 and 1Q16 that lowered vendor and bank credit lines. This
effect diminished in 2H16, which was evident in improved CFO to
USD56 million in 4Q16, from negative USD486 million in 1Q16; this
was helped by a USD226 million accounts payable increase compared
with falls in previous quarters. However, the improvement was not
sustained in 1Q17 and it remains uncertain whether CFO can
recover, as it can be affected if the company decides to increase
working capital to drive profitability.
Recovery Rating of 'RR4': The Recovery Rating for Noble's senior
unsecured notes based on its 1Q17 balance sheet is 'RR3'. This
suggests notching its senior unsecured ratings up by one notch;
however, based on Fitch expectations that the company will move
toward more secured debt financing, Fitch has assigned a Recovery
Rating of 'RR4'.
DERIVATION SUMMARY
Noble's rating is primarily driven by its poor liquidity and weak
profitability, which outweigh its high working capital/total debt
levels.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Borrowing base facilities due in June 2017 is rolled over.
- Greater reliance on secured debt.
- Exceptional 1Q17 losses in energy coal caused by market
dislocation to moderate from 2Q17.
- Sales volume in 2017 to remain similar to 2016 levels.
- Discretionary capex of USD100 million a year.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Failure to address financing needs for debt due through
1H18 in the next three to six months.
- Failure to display a trend of normalising profitability,
leading to negative cash flow from operation for a sustained
period.
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- The Rating Watch Negative may be removed and the ratings
affirmed at 'B-' if Noble addresses short-term maturities,
including the rollover of the borrowing base facilities in
June 2017.
LIQUIDITY
Noble needs to address debt maturities of around USD2.0 billion-
USD2.1 billion between June 2017 and May 2018. Fitch estimates
its cash balance to be around USD900 million at end-May 2017,
with committed undrawn facilities at around USD500 million. The
company generated negative operating cash flows in 1Q17, a trend
Fitch expects to only moderately improve over the next few
quarters. Noble's USD600 million drawn under the maturing
borrowing base facilities is self-liquidating. However, a
successful rollover of a large part of Noble's maturing debt,
currently in progress, is critical for its on-going liquidity.
=========
I N D I A
=========
AARVEE COLD: Ind-Ra Migrates 'BB+' Rating to Non-Cooperating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Aarvee Cold
Chain Logistics Private Limited's (ACCL) 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 action is:
-- INR120 mil. Term loans migrated to non-cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 17, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Aarvee Cold Chain Logistics started commercial operations in
February 2011. The company provides cold chain logistics
services for agriculture products and other food products.
AIC INFRASTRUCTURES: Ind-Ra Migrates B+ Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated AIC
Infrastructures' 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 B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR140 mil. Fund-based facilities migrated to non-
cooperating category; and
-- INR60 mil. Non-fund-based facilities migrated to non-
cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 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 1995, AIC Infrastructures is a Mumbai based
partnership firm engaged in infrastructural development
activities for road construction.
ARJUN PULP: CRISIL Reaffirms 'D' Rating on INR22.6MM LT Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL D' rating on the long-
term bank facility of Arjun Pulp and Paper India Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 22.6 CRISIL D (Reaffirmed)
The delays in debt servicing have been caused by weak liquidity,
driven by inadequate cash flows from weak operations.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: High gearing (2.03 times as on
March 31, 2016) and modest interest coverage constrain the
financial risk profile.
Strengths:
* Promoters' experience: Business risk profile should remain
supported by the promoters' experience and support of other group
entities.
APPPL was originally established as Vesuvio Paper Pvt Ltd; the
company was renamed in fiscal 2010. It manufactures tissue paper.
Commercial operations started in January 2015, with a
manufacturing unit at Tirunelveli, Tamil Nadu. The company is a
part of the Arjun group, promoted by Mr Chandra Sekhar and his
family.
For 2015-16 (refers to financial year, April 1 to March 31),
APPPL reported net loss of INR15.11 Crore on total revenue of
INR9.17 Crore, against net loss of INR3.86 Crore on total revenue
of INR1.27 Crore for 2014-15.
B. L. CONTAINERS: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned B. L. Containers
Private Limited (BLCPL) a Long-Term Issuer Rating of 'IND BB-'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR70.0 mil. Fund-based working capital limits assigned with
'IND BB-/Stable/IND A4+' rating;
-- INR2.5 mil. Non-fund-based working capital limits assigned
with 'IND A4' rating;
-- INR49.5 mil. Term loans assigned with 'IND BB-/Stable'
rating
KEY RATING DRIVERS
The ratings are constrained by BLCPL's moderate scale of
operations and credit metrics. According to provisional
financials for FY17, revenue increased to INR546 million (FY16:
INR455.09 million) and EBITDA margin rose to 6.82% (2.52%) on
account of the addition of new customers and an increase in
installed and utilized capacity levels. Meanwhile, interest
coverage (operating EBITDA/gross interest expense) was 5.17x
(5.18x) and net leverage (total adjusted debt/operating EBITDAR)
was 3.78x (5.14x). The improvement in net leverage was driven by
an increase in EBITDA margin.
The ratings are also constrained by BLCPL's presence in an
intensely competitive packaging industry.
The ratings, however, are supported by BLCPL's promoters' over
two decades of experience in the industry and comfortable
liquidity position. Its average utilization of fund-based limits
was about 50% during the 12 months ended March 2017.
RATING SENSITIVITIES
Negative: A decline in EBITDA margin leading to deterioration in
credit metrics will be negative for the ratings.
Positive: A significant improvement in revenue and/or
diversification of the revenue base while maintaining or
improving credit metrics will be positive for the ratings.
COMPANY PROFILE
Incorporated in 1991 by Mr. Pawan Bajaj, BLCPL is engaged in the
manufacturing and supply of corrugated boxes in northern India.
It has an installed capacity of 20,000 metric tons per annum.
BAIJNATH SCRAP: CRISIL Assigns B- Rating to INR6MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B-/Stable' rating on the
long-term bank facility of Baijnath Scrap Centre (BSC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit/
Overdraft facility 6 CRISIL B-/Stable
The rating reflects below average financial risk profile of the
firm and low operating margins. These strengths are partially
offset by extensive experience of the promoters in the iron and
steel industry.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile
Financial risk profile is weak, marked by high gearing estimated
at 5.20 times as on March 31, 2017, led by large reliance on
external working capital debt, and the small networth, estimated
at INR0.86 crore as on same date. Debt protection metrics are
also weak, marked by interest coverage and net cash accrual to
total debt (NCATD) ratios, estimated at 1.11 times and 0.01 time,
respectively, for fiscal 2017.
* Low operating margin
Operating margin was low, at an estimated 1.05% for fiscal 2017,
due to the trading nature of business.
Strengths
* Extensive experience of the promoters:
Benefits from the three decade-long experience of the promoters
in the iron and steel industry, and their established
relationships with customers, ensuring a regular flow of repeat
orders, will continue to support the business risk profile.
Outlook: Stable
CRISIL believes BSC will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if the company reports substantial growth in revenue
and profitability, and better working capital management. The
outlook may be revised to 'Negative' in case of lower-than-
expected cash accrual, or a considerable stretch in the working
capital cycle.
BSC was set up as a sole proprietorship firm, by the promoter, Mr
Baijnath Aggarwal, in 1984. Operations are managed by his son, Mr
Kartikey Aggarwal. The Agra-based firm trades in iron casting and
scrap, and caters to local customers.
Net profit of INR0.08 crore was reported on net sales of INR19.01
crore in fiscal 2016, against INR0.07 crore and INR29.92 crore in
the previous fiscal.
C.L. GULHATI: CRISIL Downgrades Rating on INR25MM Cash Loan to D
----------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
loan facilities of C.L. Gulhati and Sons Limited (CLG) to 'CRISIL
D' from 'CRISIL C'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 25 CRISIL D (Downgraded from
'CRISIL C')
Proposed Long Term
Bank Loan Facility .2 CRISIL D (Downgraded from
'CRISIL C')
The downgrade reflects the company's delay in meeting interest
payments on its cash credit limit, due to stretched liquidity on
account of operating loss and continuously declining revenue.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: The financial risk profile is weak
because of increasing working capital requirement and negative
cash accrual, leading to high reliance on short-term borrowings
and overdrawn cash credit limit.
The financial risk profile is also constrained by negative
networth because of operating losses and declining revenue over
the four fiscals through 2017. As a result, debt protection
metrics have also been poor.
* Exposure to supplier concentration risks:
CLG deals with only one supplier, Tata Motors Ltd (TML). The
company has to abide by the agreement for exclusive operations in
its region. It cannot operate dealership of any other passenger
car, light commercial vehicle (CV), or heavy CV manufacturer in
Jammu & Kashmir. However, TML can offer dealerships to other
players in the region. The supplier concentration risk is
mitigated by the high market share of CLG in the region. CLG also
generates good revenue for TML through its widely established
marketing, distribution, and service network.
Strengths
* Established Relationship with the principal: CLG has long
standing relationship of 17 years with TML. The company would
continue to benefit the established relationship over the medium
term.
CLG was set up as private limited company in 1956 by Mr. C L
Gulhati and his associates. It became a public limited company.
Since its inception, CLG has been a dealer for the entire range
of TML's CVs. It became a dealer of TML's passenger vehicles in
2000.
Net loss and net sales were at INR5.82 crore and INR114.80 crore,
respectively, for fiscal 2016, against INR7.91 crore and
INR132.25 crore, respectively, for the previous fiscal.
CLARA SWAIN: CRISIL Assigns 'D' Rating to INR7.5MM Term Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL D' rating on the long-
term bank facility of Clara Swain Hospital J.V. (CSH). The rating
reflects instances of delay in servicing the term debt; the
delays were caused due to stretched liquidity on account of low
occupancy at the hospital.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 7.5 CRISIL D
Financial risk profile is weak, constrained by small networth,
high gearing and below-average debt protection metrics. However,
CSH benefits from its long track record of operations.
Key Rating Drivers & Detailed Description
Weakness
* Instances of delays in term debt repayment: Insufficient cash
accrual, due to the low occupancy levels at the hospital, led to
delay in servicing of debt obligation.
* Weak financial risk profile: Financial risk profile is weak,
marked by a small networth of INR1.45 crore and debt of INR30.0
crore, with high gearing of around 20.6 times as on March 31,
2016.
Strengths
* Long track record of operations: CSH was set up in 1870s and is
amongst one of the first mission hospitals operating in India.
Benefits from the long track record of operations and established
presence in the region will continue to support the business risk
profile of the hospital.
Clara Swain Hospital (CSH), based in Bareilly (Uttar Pradesh) was
set up in the early 1870s by Dr Clara Swain. In 2009, the Ritam
Charitable & Education Society and Methodist Church of India
entered into a joint venture (JV) agreement for running its
operations. Currently it is operating a super-specialty hospital
with a 150-bed and a nursing collage, in Bareilly.
CRAVE CLOTHING: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Crave Clothing
Company Private Limited's (CCCPL) 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. Instrument-wise rating actions are:
-- INR160 mil. Fund-based working capital limits migrated to
non-cooperating category;
-- INR19 mil. Long-term loans migrated to non-cooperating
category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 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 2003, CCCPL is a Mumbai-based garments
manufacturer. The company has two units based in Daman with a
total installed capacity of 12,70,000 units.
DEVANS MODERN: CRISIL Reaffirms 'D' Rating on INR50.7MM Cash Loan
-----------------------------------------------------------------
CRISIL Ratings has been following up with Devans Modern Breweries
Limited (DMBL) for obtaining information through letters and
emails (dated March 5 and March 6, 2017, among others), apart
from telephonic communication. However, the issuer continues to
be non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Cash Credit 45 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 22.3 CRISIL D (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
Term Loan 50.7 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.'
Detailed Rationale
CRISIL has reaffirmed its 'FD' rating on the fixed deposits of
DMBL, and its 'CRISIL D/CRISIL D' ratings on the company's bank
facilities. The ratings reflect recent instances of delay by DMBL
in servicing its term loan, because of stretched liquidity.
DMBL scores high ('L') on availability of past information. It
scores low ('L') on future information due to unavailability of
management's public stated stance on future expectations,
strategic decisions, and capital expenditure (capex), and low
('L') on the stability attributes listed in CRISIL's criteria for
surveillance of ratings of non-cooperative issuers. On the basis
of the aforementioned, CRISIL believes the available information
is consistent with a 'CRISIL D' category rating.
Key Rating Drivers & Detailed Description
Weakness
* Delay in servicing term debt: There have been instances of
delay in servicing of term debt in the recent past because of
stretched liquidity.
Strengths
* Established and recognized Godfather brand in ENA segment
The group's flagship company, DMBL's Godfather brand is an
established and well recognised brand in the strong ENA segment,
especially in northern and eastern India. The company has an
established market presence, supported by a wide and established
distribution base in over 20 states.
DMBL, set up in 1962 as a liquor-bottling unit, manufactures malt
spirit, beer, and Indian-made foreign liquor.
For fiscal 2014, DMBL had a net loss of INR9.01 crore on net
sales of INR243.07 crore, against a net loss of INR10.39 crore on
net sales of INR223.24 crore for the previous year.
DEVIPRASAD CONSTRUCTIONS: CRISIL Cuts INR15MM Loan Rating to B+
----------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Deviprasad Constructions Private Limited (DCPL) to 'CRISIL
B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 9 CRISIL A4 (Downgraded from
'CRISIL A4+')
Cash Credit 15 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in the financial risk
profile, particularly liquidity, due to a stretched working
capital cycle. Revenue, estimated at about INR27.5 crore for
fiscal 2017, has stagnated and is lower than CRISIL's earlier
expectations because of major delays in execution of orders from
Karnataka Housing Board. The stretched working capital cycle has
adversely affected liquidity as indicated by a very limited
cushion in the working capital bank line. While there is a
moderate order-book of INR60 crore in hand, its timely execution
along with efficient working capital management will remain a key
rating sensitive factor over the medium term.
Key Rating Drivers & Detailed Description
Weakness
Modest scale of operations in the competitive civil construction
industry
Revenue is estimated at a modest INR27.5 crore for fiscal 2017.
The civil construction industry is highly fragmented and is
dominated by a few large players such as Larsen & Toubro Ltd
(rated 'CRISIL AAA/Stable/CRISIL A1+') and Vishwas Infrastructure
India Ltd, and several small regional players. A modest scale of
operations will continue to constrain the business risk profile.
Below-average financial risk profile
The gearing was 1.47 times and the networth INR8 crore, as on
March 31, 2017. The net cash accrual to total debt and interest
coverage ratios were around 0.11 time and 1.75 times,
respectively, in fiscal 2017. The small networth and continued
high reliance on short-term debt due to working capital-intensive
operations will continue to constrain the financial risk profile
over the medium term.
Strengths
Extensive industry experience of the promoters
The company was set up by Mr K Vasudeva Shetty in 1984 in a small
way but gradually became a reputed contractor. The promoter's
experience has also helped to establish a healthy relationship
with key suppliers, ensuring smooth sourcing of raw materials.
Outlook: Stable
CRISIL believes DCPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of sustained improvement in the working
capital cycle or long-term fund infusion, leading to better
liquidity. The outlook may be revised to 'Negative' if there is a
stretch in the working capital cycle or large, debt-funded
capital expenditure, leading to deterioration in the financial
risk profile.
DCPL, set up in 1984 by Mr Shetty, is based in Udupi, Karnataka.
The company undertakes civil construction. This includes
construction of residential complexes, buildings, temples, and
roads for government and private entities.
For fiscal 2016, profit after tax (PAT) was INR0.57 crore on net
sales of INR28.12 crore. Estimated PAT and net sales are INR0.58
crore and INR27.34 crore, respectively, for fiscal 2017.
DIVINE CONSTRUCTIONS: CRISIL Cuts Rating on INR6MM Loan to 'B'
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Divine
Constructions (DCS) for obtaining information through letters and
emails dated January 24, 2017, and February 14, 2017, among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Issuer Not
Cooperating; Downgraded from
'CRISIL A4+')
Cash Credit 6 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Divine Constructions. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for Divine Constructions is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL B rating category or lower.' Based on
the last available information, CRISIL has downgraded the rating
to 'CRISIL B/Stable/CRISIL A4'.
DCS, established as a partnership firm in 1993, is a civil
construction contractor and undertakes construction works for
buildings. The firm is a registered contractor with the central
government and state government and primarily undertakes
construction work for the various government departments and
entities in Odisha. It caters to some private parties as well.
DCS has a Super Class Contractor's License under the State
Government of Orissa and Super Class-1 civil Category under
Central Public Works Department, Government of India. The
operations of the firm are primarily managed by Mr. Susant Misra.
FAIRWEALTH HOUSING: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Fairwealth
Housing Private Limited's (FHPL) a Long-Term Issuer Rating of
'IND BB-'. The Outlook is Stable. The instrument-wise rating
actions is:
-- INR400 mil. Term loan assigned with 'IND BB-/Stable' rating
KEY RATING DRIVERS
The ratings reflect the risk of time and cost overrun stemming
from FHPL's ongoing residential project in Bhiwadi. Also,
payments are received for only 9% of the 64% bookings. The
ratings also factor in the absence of a strong real estate brand
as Breezehomes is the first residential project of the company.
The project is around 40% completed. According to the
management, HPPL has already incurred INR447.63 million (40%) of
the total cost and will spend additional INR658.97 million (60%).
The ratings, however, are supported by the project's proximity to
the nearest railway station and proposed metro station. Also,
Bhiwadi is emerging as the next big industrial hub.
RATING SENSITIVITIES
Negative: Time and cost overruns or cancellations of bookings for
the 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
Incorporated in 2009, FHPL is executing its first real estate
project - Breezehomes - at Sector 95A in Bhiwadi over an area of
7 acres. The company has a registered office in Gurgaon,
Haryana.
GANESH YADAV: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Ganesh Yadav a
Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. The
instrument-wise rating actions are:
-- INR150 mil. Non-fund-based limit assigned with 'IND A4+'
rating
KEY RATING DRIVERS
The ratings reflect Ganesh Yadav's small scale of operations and
strong credit metrics. According to provisional financials for
FY17, revenue was INR233 million (FY16: INR172 million) and
EBITDA margin was 8.02% (8.7%). Meanwhile, gross interest
coverage (operating EBITDA/gross interest expense) was 18.70x in
FY17 (FY16: 5.9x) and net leverage (net debt/EBITDA) was 0.53x
(0.3x).
The ratings also reflect the partnership nature of business, high
geographical concentration and high execution risk. All orders
under the current outstanding order book, which stands at
INR1.162 billion, are from Jharkhand.
The ratings, however, are supported by the partners' over two
decades of experience in the construction business.
RATING SENSITIVITIES
Negative: A decline in EBITDA margin leading to deterioration in
credit metrics would lead to a negative rating action.
Positive: Revenue growth, along with the maintenance of credit
metrics, would lead to a positive rating action.
COMPANY PROFILE
Ganesh Yadav was formed in 1990 as a proprietorship firm. In
2013, Ganesh Yadav is engaged in civil construction works such as
roads, bridges, highways and flyovers for the government of
Jharkhand. Moreover, it has executed three projects in Bihar.
GAJRA DIFFERENTIAL: CRISIL Assigns 'C' Rating to INR10.1MM Loan
---------------------------------------------------------------
CRISIL Ratings has revoked the suspension of its rating on the
long term bank facilities of Gajra Differential Gears Limited
(GDGL) and has assigned its 'CRISIL C' ratings to the bank
facilities. CRISIL had suspended the ratings on December 23,
2015, as GDGL had not provided necessary information required to
maintain a valid rating. GDGL has now shared the requisite
information, enabling CRISIL to assign ratings to its bank
facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10.1 CRISIL C (Assigned;
Suspension Revoked)
The ratings reflects modest scale of and working capital
intensive operations in highly competitive auto-component
industry. These rating weaknesses are partially offset by
extensive experience of promoters.
Analytical Approach
CRISIL has treated unsecured loans of INR16.15 crore from a group
company as neither debt nor equity as these are subordinated to
bank borrowing, and are expected to be retained in the business
over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: The scale of operations remained
modest marked by modest estimated revenues of INR32 Cr. in fiscal
2017. The modest scale of operations continue to constrain the
business risk profile.
* Large working capital requirements: The operations of the
company are working capital intensive as indicated by high
estimated gross current asset of about 326 days as on March,
2017. This is primarily attributable to high estimated inventory
about of 270 days as on March, 2017. The large working capital
requirements has led to stretched liquidity as indicated by
highly utilised bank limits.
Strengths
* Extensive experience of the promoters and a long track record
in the gears industry: GDGL benefit from the extensive experience
of promoters of over 4 decades in gear industry. Its business
risk profile will continue to benefit from the extensive
experience of promoters and established relationships with
customers and suppliers.
Established in 1991, GDGL is engaged in manufacturing of wide
range of differential gears which includes crown wheel and
pinions, bevel gears, bevel pinions, spider kit assemblies and
differential cages for commercial vehicles. The company is a part
of Gajra group and is promoted by Mrs. Rita Gajra.
GDGL had a profit after tax of INR0.39 crore on net sales of
INR30.85 crore in fiscal 2016, vis-a-vis INR0.26 crore and
INR29.22 crore, respectively, in fiscal 2015.
GLENMARK PHARMACEUTICALS: S&P Affirms 'BB' CCR; Outlook Negative
----------------------------------------------------------------
S&P Global Ratings revised to negative from stable the outlook on
its 'BB' long-term corporate credit rating on India-based
generics pharmaceutical company Glenmark Pharmaceuticals Ltd. At
the same time, S&P affirmed the rating at 'BB'. S&P also
affirmed its 'BB' issue rating on the company's senior unsecured
notes.
The negative outlook reflects the risk of delayed deleveraging
for Glenmark, resulting in a ratio of debt to EBITDA of about
2.8x in fiscal 2018, against S&P's previous expectation of below
2.0x. S&P estimates Glenmark will continue to register negative
free operating cash flow on the back of relatively slower revenue
growth with profitability constrained by natural price erosion,
elevated research and development and capital expenditure
(capex), and higher working investments. S&P still expects the
company to maintain a ratio of debt to EBITDA of below 3x.
However, lower revenue growth due to a weaker-than-expected rate
of new approvals, continuing generic price compression, and
negative working capital movement together could result in a
ratio of debt to EBITDA of above 3x, resulting in a downgrade. A
higher tax incidence for the company will also result in a
significantly weaker ratio of funds from operations (FFO) to debt
of about 20%-25%
Glenmark's revenues in fiscal 2017 were in line with S&P's
expectations though lower than management's expectations. A
pricing pressure in the U.S., slowdown due to the impact of
demonetization on the India business, and the devaluation of the
pound sterling weighed on the company's EBITDA margin. Sales
from its first large exclusivity opportunity from a generic
Zetia, a cholesterol drug, were lower than estimates. As a
result, EBITDA margin was nearly 300 basis points lower than
S&P's earlier expectation of about 22.7%. In addition, estimated
continuing negative working capital movement of over Indian rupee
(INR) 4 billion resulted in adjusted debt rising to INR49 billion
in fiscal 2017 (from INR42 billion in fiscal 2016), compared with
S&P's previous expectation of a reduction in gross debt.
S&P expects slower revenue growth in fiscal 2018 from fiscal 2017
levels due to continuing generic price compression in U.S.
markets, only partial contribution of generic Zetia exclusivity
revenues, and significant dependence on new approvals in the
U.S., which could constrain growth in the case of any delays.
Further, the company's management now expects overall Zetia sales
to be in the range of US$180 million to US$200 million, compared
with US$200 million to US$250 million previously. Product
approvals by the U.S. Food and Drug Administration (USFDA) slowed
considerably in the second half of fiscal 2017 on the expectation
that the USFDA would inspect some its plants. The inspections
have since been completed and observations addressed. Although
S&P understands from the company that product approvals are
likely normalizing, timely approvals and supply chain readiness
are essential for commercial success and revenue and cash flow
growth. S&P now expects EBITDA margin to stabilize at about 19%-
20%, with EBITDA of about INR20 billion in fiscal 2019, compared
with S&P's previous expectation of INR25 billion.
Glenmark's working capital cycle is longer than most of its peers
and S&P expects it to remain elevated. This, coupled with
continuing capex, is likely to limit significant improvement in
financials -- a departure from S&P's previous expectations.
S&P's negative outlook reflects the potential for continuing
negative free operating cash flows leading to slower-than-
expected deleveraging over the next six to nine months. S&P
expects liquidity to remain adequate over this period.
S&P may lower the rating if revenue growth lags its expectation
due to slower new product approvals or lower revenue from such
products. S&P may also lower the rating if it sees working
capital needs, capex, acquisitions or shareholder remuneration
divert cash flow away from the stated purpose of debt reduction
such that the currently expected leverage profile seems
unattainable. A debt-to-EBITDA ratio failing to improve
significantly below 2.5x or a ratio of FFO to debt remaining
below 25% would be a downgrade trigger.
S&P may revise the outlook to stable if the company generates
free operating cash flows and reduces debt such that its debt-to-
EBITDA ratio is sustainably better than 2.5x and FFO to debt
sustainably above 25%. A revision to stable would also be
contingent on the company adhering to such a leverage profile and
prudently managing working capital, growth investments, or
shareholder returns.
H. P. ZALA: CRISIL Reaffirms B- Rating on INR5MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of H. P. Zala (HPZ) at 'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Cash Credit 5 CRISIL B-/Stable (Reaffirmed)
The ratings reflect modest scale of operations, high geographical
concentration in revenue, and a below-average financial risk
profile because of a small networth and low cash accrual. These
weaknesses are partially offset by the extensive experience of
the proprietor in the civil construction industry and his funding
support.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and geographical concentration in
revenue: Sales were modest at INR7.99 crore in fiscal 2016 and
are largely concentrated in Gujarat. Hence. revenue is
susceptible to changes in state government policies and any
adverse political conditions in the state.
* Below-average financial risk profile: The networth was small at
INR2.29 crore and the total outside liabilities to adjusted net
worth ratio high at 4.7 times, as on March 31, 2016.
Strength
* Extensive industry experience of the proprietor: The
proprietor's family has been engaged in the civil construction
industry in Gujarat for over 35 years. This has helped the firm
to establish a strong relationship with suppliers and customers.
Outlook: Stable
CRISIL believes HPZ will continue to benefit from the established
presence of its proprietor in the construction industry in
Gujarat. The outlook may be revised to 'Positive' in case of a
substantial increase in the scale of operations arising from a
larger order book and timely realisation of debtors. The outlook
may be revised to 'Negative' in case of lower-than-anticipated
cash accrual on account of lower-than-expected scale of
operations or profitability, or a significant increase in working
capital requirement, leading to weaker liquidity.
HPZ was set up in 1976 as a proprietorship concern by Mr H P
Zala. Operations were taken over by Mr Naresh H Zala. It
undertakes civil construction activities, such as drainage work
and sewerage lines, in Gujarat, mainly for state government
entities.
Profit after tax (PAT) was INR0.48 crore on operating income of
INR7.99 crore in fiscal 2016, against PAT of INR0.38 crore on
operating income of INR6.13 crore in fiscal 2015.
HINDUSTAN AUTOHOUSE: CRISIL Cuts Rating on INR8MM Loan to 'B'
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Hindustan
Autohouse Private Limited (HMIL) for obtaining information
through letters and emails dated January 24, 2017, and
February 13, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB-/Stable')
Proposed Long Term 2 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL BB-/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Hindustan Autohouse Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for Hindustan Autohouse Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL B
rating category or lower.' Based on the last available
information, CRISIL has downgraded the rating to 'CRISIL
B/Stable'.
Incorporated in 2003, HAPL is a Jaipur-based company and
authorised dealer for passenger vehicles of HMIL for Jaipur. It
operates one 3S (sales-service-spares) showroom and two service
centres. HAPL is owned and managed by members of the Jagwani
family.
HINDUSTAN FERRO: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Hindustan Ferro
Alloy Industries Pvt Ltd's (HFAIPL) 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:
-- INR180 mil. Fund-based facilities migrated to non-
cooperating category; and
-- INR65 mil. Non-fund-based facilities migrated to non-
cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 9, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Promoted by Kantilal H. Oswal, HFAIPL manufactures bright bars
including wire drawing of bright bars of various shapes, sizes
and grades. Till end 2009, it primarily traded bright bars. The
company started manufacturing bright bars from early 2010. It
owns two bright bar manufacturing units, one each in Narhe and
Chakan.
IDASA INDIA: CRISIL Lowers Rating on INR7.9MM Cash Loan to 'B'
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Idasa
India Ltd (IIL) for obtaining information through letters and
emails dated January 24, 2017, and February 14, 2017, among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.9 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB-/Stable')
Proposed Long Term 4.6 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL BB-/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Idasa India Ltd.. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for Idasa India Ltd. is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL B rating category or lower.' Based on
the last available information, CRISIL has downgraded the rating
to 'CRISIL B/Stable'.
IIL was set up in 1985, and is promoted by Mr Suresh Kumar
Aggarwal. The company processes milk and manufactures skimmed
milk powder and ghee under its brand, IDASA. The processing unit
is situated in Malerkotla (Punjab).
IDBI BANK: Moody's Lowers Bank Deposit Ratings to Ba2
-----------------------------------------------------
Moody's Investors Service has downgraded IDBI Bank Ltd (the
bank)'s local and foreign currency bank deposit ratings to
Ba2/Not Prime from Baa3/Prime-3.
Moody's has also downgraded the bank and its branch, IDBI Bank
Ltd, DIFC Branch's senior unsecured debt and senior unsecured
medium-term note (MTN) program ratings to Ba2/(P)Ba2 from
Baa3/(P)Baa3, respectively.
At the same time, Moody's has downgraded the bank's baseline
credit assessment (BCA) and Adjusted BCA to caa1 from b1.
Following the change in the BCA, Moody's has downgraded the bank
and DIFC Branch's subordinated MTN program and the junior
subordinated MTN program to (P)Caa1/(P)Caa2 from (P)B1/(P)B2
respectively.
Furthermore, Moody's has downgraded the Counterparty Risk
Assessment to Ba1(cr)/Not Prime(cr) from Baa3(cr)/P-3(cr) for
both the bank and DIFC Branch.
Moody's has placed long-term deposit ratings, senior unsecured
ratings, MTN program ratings and BCA/Adjusted BCA under review
for further downgrade.
RATINGS RATIONALE
The rating actions reflect the significant deterioration in
IDBI's financial profile, driven by asset quality issues and the
heightened risk to its solvency position.
Its capitalization position is extremely weak. At the end of
March 2017, the bank reported a common equity Tier 1 (CET1) ratio
of 5.64% (on a standalone basis), which is just above the minimum
regulatory requirement of 5.5% but is not sufficient to meet the
CET1 plus capital conservation buffer requirement of 7.375%
through March 2018, as required by the Reserve Bank of India
(RBI).
In mid-March 2017, the bank received a capital injection of INR19
billion ($280 million) from the government of India (Baa3
positive), which helped it meet the minimum Basel III CET1
requirement at the end of March 2017.
Over the next 12-18 months, Moody's expects asset quality issues
to persist, which will put pressure on the bank's profitability
profile, and limit its ability to generate internal capital. At
the end of March 2017, IDBI's impaired loans (nonperforming loans
plus standard restructured loans) ratio rose to 29% versus 19% a
year earlier. In addition, loan loss reserves, when adjusted for
the restructured loans, stood at about 34% at the end of March
2017; a result which was one of the weakest among Moody's-rated
public sector banks in India.
Moody's points out that the bank's buffers against further asset
quality stress remain weak. Its capacity for internal capital
generation will remain constrained by low net interest margins
and high credit costs. As such, Moody's expects the bank to
remain dependent on capital infusions from the government to meet
the minimum capital standards.
Despite its weak solvency profile, Moody's notes that the bank's
funding and liquidity position have remained fairly stable.
Nevertheless, the banks' funding profile is relative weaker
compared to other public sector banks in India as measured by its
low current and savings account deposit ratio and the dominance
of corporate deposits.
The review for downgrade will focus on: (1) the bank's asset
quality and profitability performance, (2) any capital injection
from the government of India, which will help IDBI restore its
capitalization level to above the minimum Basel III requirements,
(3) any form of regulatory forbearance, if any, provided by the
RBI, which will help the bank meet its obligations to creditors
and (4) assessment of government support to the bank.
At the same time, Moody's has maintained its assumption of a very
high probability of government support for deposits and senior
unsecured debt, in spite of the bank's weak standalone credit
profile. In Moody's opinion, given the current fragile financial
strength of many public sector banks - including IDBI - any
reduction in government support will result in lower levels of
confidence in such banks, and could negatively affect systemic
stability.
WHAT COULD CHANGE THE RATING UP:
Given the rreview for downgrade, Moody's expects limited upward
pressure on the banks' ratings. Nevertheless, the ratings could
be affirmed, if the pressure on the banks' solvency position
diminish materially. For instance, if IDBI receives a substantial
amount of capital infusion from the government, or the bank
manages to improve its profitability and capital position on an
internally generated basis.
WHAT COULD CHANGE THE RATING DOWN:
A further deterioration in the bank's solvency and liquidity
levels will put negative pressure on its BCA and ratings. Given
that the bank's ratings incorporate a very high level of
government support, any changes to Moody's expectation of
government support will also translate into negative pressure on
the bank's ratings.
Following this action, IDBI Bank Ltd's ratings are:
- BCA and Adjusted BCA downgraded to caa1 from b1, Review for
further downgrade
- LT Bank Deposits (Local & Foreign currency), Downgraded to Ba2
from Baa3, Review for further downgrade
- ST Bank Deposits (Local & Foreign currency), Downgraded to Not
Prime from Prime-3
- Foreign curency senior unsecured debt rating downgraded to Ba2
from Baa3, Review for further downgrade
- Foreign currency senior unsecured MTN program rating downgraded
to (P)Ba2 from (P)Baa3, Review for further downgrade
- Foreign currency subordinate MTN program rating downgraded to
(P)Caa1 from (P)B1, Review for further downgrade
- Foreign currency junior subordinate MTN program rating
downgraded to (P)Caa2 from (P)B2, Review for further downgrade
- CR Assessment downgraded to Ba1(cr)/Not Prime(cr) from
Baa3(cr)/P-3(cr).
Following this action, IDBI Bank Ltd, DIFC Branch's ratings are:
- Foreign curency senior unsecured debt rating downgraded to Ba2
from Baa3, Review for further downgrade
- Foreign currency senior unsecured MTN program rating downgraded
to (P)Ba2 from (P)Baa3, Review for further downgrade
- Foreign currency subordinate MTN program rating downgraded to
(P)Caa1 from (P)B1, Review for further downgrade
- Foreign currency junior subordinate MTN program rating
downgraded to (P)Caa2 from (P)B2, Review for further downgrade
- CR Assessment downgraded to Ba1(cr)/Not Prime(cr) from
Baa3(cr)/P-3(cr).
The principal methodology used in these ratings was Banks
published in January 2016.
Headquartered in Mumbai, IDBI Bank Ltd held assets totaling
INR3.62 trillion ($55.8 billion) at end-March 2017.
JAIKA VEHICLE: CRISIL Reaffirms B- Rating on INR19MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B-/Stable' rating on
the long-term bank facilities of Jaika Vehicle Trade Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 19 CRISIL B-/Stable (Reaffirmed)
Proposed Cash
Credit Limit 8.25 CRISIL B-/Stable (Reaffirmed)
Term Loan .75 CRISIL B-/Stable (Reaffirmed)
The rating continues to reflect its modest scale of operations
and weak financial risk profile.These weaknesses are partially
offset by the extensive experience of the company's promoters in
the automobile dealership business and their funding support.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in fragmented industry: The company
has a track record of five years in an intensely competitive
luxury segment of automobile dealership business leading to
modest scale of operations.
* Weak financial risk profile: The financial risk profile of the
company is weak marked by highly leveraged capital structure.
Debt protections metrics is modest with estimated interest
coverage and net cash accrual to total debt ratios of 1-1.2 times
and 0.03-0.05 time, respectively, in fiscal 2017.
Strengths
* Extensive experience of promoters: Presence of more than five
decades in the automobile dealership business has enabled the
promoters to establish strong relationship with principals.
Business risk profile will benefit from promoters' longstanding
presence.
* Funding from promoters: Unsecured loans from promoters stood at
INR15.75 crores as on March 31, 2017.
Outlook: Stable
CRISIL believes JVTPL will benefit over the medium term from the
extensive experience of its promoters and association with the
Audi brand. The outlook may be revised to 'Positive' if
significant improvement in revenue and profitability or better
capital structure and debt protection metrics strengthens key
credit metrics. The outlook may be revised to 'Negative' if
decline in revenue and profitability or stretch in working
capital cycle further weakens financial risk profile.
Incorporated in 1994 and promoted by Kale family of Nagpur, JVTPL
is a part of the Jaika group and is an authorised dealer for
passenger vehicles of Audi India division of Volkswagen Group
Sales India Pvt Ltd (Audi) in Chhattisgarh and Vidharbha. It
acquired Audi dealership in March 2012.
Profit after tax (PAT) was INR(2.47) crore on net sales of
INR47.50 crore in fiscal 2016 against INR(2.78) crore and
INR58.70 crore in fiscal 2015.
JAYACHANDRAN INDUSTRIES: CRISIL Ups Rating on INR9.77M Loan to B+
-----------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Jayachandran Industries Private Limited (JIPL) to
'CRISIL B+/Stable' from 'CRISIL B/Stable', and reaffirmed the
short-term rating at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 4 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Cash Credit 6.4 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Foreign Bill
Negotiation 3.00 CRISIL A4 (Reaffirmed)
Proposed Fund- 9.77 CRISIL B+/Stable (Upgraded
Based Bank Limits from 'CRISIL B/Stable')
Term Loan .38 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects improved liquidity on account of reduction
in debt repayment and increase in cash accrual, as per CRISIL's
earlier expectation. Cash accrual is estimated to be INR2.55
crore and INR2.78 crore against debt obligation of INR1.56 crore
and INR0.37 crore in fiscals 2017 and 2018, respectively. Also,
reduction in term debt improved gearing to 7.15 times as on
March 31, 2016, from 9.29 times in the previous year; gearing,
though weak, is estimated to be 4.7 times as on March 31, 2017.
Interest coverage and net cash accrual/adjusted debt (NCAAD)
ratios are estimated to have increased to 2.46 times and 0.23
time, respectively, in fiscal 2017 from 1.99 times and 0.16 time,
respectively, in fiscal 2016 on account of decline in term debt.
Also, operating income increased to INR39.9 crore in fiscal 2016
and is estimated at INR49.9 crore in fiscal 2017.
The ratings reflect JIPL's average financial risk profile and
small scale of operations in the intensely competitive lead acid
battery segment. These weaknesses are partially offset by the
experience of its promoters.
Key Rating Drivers & Detailed Description
Weakness
* Average financial risk profile
Gearing is estimated to be high at 4.7 times and networth modest
at 2.38 crore as on March 31, 2017 respectively.
* Small scale of operations
Despite increase in revenue to an estimated INR49.9 crore in
fiscal 2017 from INR39.9 crore in fiscal 2016, scale remains
modest in the competitive battery segment that has many large and
small players.
Strengths
* Experience of promoters
JIPL is a part of the Jayachandran group, which has been trading
in ferrous and non-ferrous scrap for more than three decades
through Eswari Metal Industries and Jayachandran Alloys Pvt Ltd.
Outlook: Stable
CRISIL believes JIPL will benefit over the medium term from its
promoters' experience. The outlook may be revised to 'Positive'
if increase in scale of operations and profitability improves
capital structure and debt protection metrics. The outlook may be
revised to 'Negative' if low cash accrual or substantial debt to
fund incremental working capital requirement or capital
expenditure further weakens financial risk profile.
Established in 2009 in Coimbatore by Mr. Anbalagan and his
family, JIPL manufactures lead-acid batteries for automotives and
inverter systems.
For fiscal 2016, net profit was INR0.05 crore on net sales of
INR39.96 crore, against a net profit of INR0.02 crore on net
sales of INR37.8 crore for fiscal 2015.
JAYESH INDUSTRIES: CRISIL Reaffirms B- Rating on INR10.25MM Loan
----------------------------------------------------------------
CRISIL Ratings has been seeking information and a discussion with
the management of Jayesh Industries Limited (JIL) since March
2017. Despite several emails and calls, the firm has not
submitted any information. CRISIL had, through a senior director
letter dated April 24, 2017, informed the firm of the extant
guidelines and requested for cooperation. The issuer, however,
remains non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.2 CRISIL A4 (Issuer Not
Cooperating; Removed
from 'Notice of withdrawal';
Rating Reaffirmed)
Buyer`s Credit 5.0 CRISIL B-/Stable (Issuer Not
Cooperating; Removed from
'Notice of withdrawal';
Rating Reaffirmed)
Cash Credit 10.25 CRISIL B-/Stable (Issuer Not
Cooperating; Removed from
'Notice of withdrawal';
Rating Reaffirmed)
Proposed Long Term 3.49 CRISIL B-/Stable (Issuer Not
Bank Loan Facility Cooperating; Removed from
'Notice of withdrawal';
Rating Reaffirmed)
Standby Line of 1.00 CRISIL B-/Stable (Issuer Not
Credit Cooperating; Removed from
'Notice of withdrawal';
Rating Reaffirmed)
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.'
Detailed Rationale
CRISIL has reaffirmed its 'CRISIL B-/Stable/CRISIL A4' ratings on
the bank facilities of JIL and removed them from 'Notice of
Withdrawal', in line with its revised policy on withdrawal of
ratings.
Inadequate information and lack of management cooperation
restrict CRISIL from taking a forward looking view on the credit
quality of the firm. JIL scores low ('L') on availability of past
information. It scores low ('L') on future information due to
unavailability of management's public stated stance on
expectations, strategic decisions, and capital expenditure
(capex). It also scores low ('L') on the stability attributes
listed in CRISIL's criteria for surveillance of ratings of non-
cooperative issuers. The available information is consistent with
a 'CRISIL B' category rating, leading to reaffirmation of the
ratings.
Outlook: Stable
CRISIL believes JIL will continue to benefit over the medium term
from the promoter's extensive industry experience and established
relationship with customers. The outlook may be revised to
'Positive' if the revenue and profitability margin increase
substantially, or if working capital cycle improves. Conversely,
the outlook may be revised to 'Negative' in case profitability
margin declines, or capital structure deteriorates because of a
large, debt-funded capital expenditure plan or stretched working
capital cycle.
JIL was earlier known as Amson Polymer Pvt Ltd, a company which
was taken over by the Shah family in 1995; following the
takeover, the name was changed to the current one. Mr. Jayesh
Shah, the director, manages the operations. The company
manufactures ferroalloy powders and lumps for the electrodes
industry and steel plants, respectively, and is based in Navi
Mumbai (Maharashtra).
Profit after tax (PAT) was INR0.68 crore on net sales of INR39.70
crore in fiscal 2016, against PAT of INR0.34 crore on net sales
of INR41.84 crore in fiscal 2015.
JUST TEXTILES: CRISIL Upgrades Rating on INR9.22MM Loan to 'B'
--------------------------------------------------------------
CRISIL Ratings has upgraded its ratings on the bank facilities of
Just Textiles Ltd (JTL) to 'CRISIL B/Stable/CRISIL A4' from
'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9.22 CRISIL B/Stable (Upgraded from
'CRISIL D')
Letter of Credit .78 CRISIL A4 (Upgraded from
'CRISIL D')
The upgrade reflects improvement in liquidity backed by
increasing cash accrual. The term loans have been entire repaid.
With a healthy operating margin of close to 15% and steady growth
in revenue, cash accrual is expected at about INR4.5 crore in
fiscal 2018 against which there is no fixed debt repayment
currently. However, liquidity is expected to remain constrained
as working capital-intensive operations will result in marginal
cushion in the working capital bank line. Timely and commensurate
enhancement in the bank line will remain key for maintenance of
liquidity over the medium term considering the continued working
capital-intensive operations.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in a highly competitive industry
Revenue is estimated at around INR35.58 crore for fiscal 2017.
The textile industry is highly competitive due to a number of
small companies. Currently the company has an installed capacity
of around 30 lakh metre per month for processing fabric. The
scale of operations is likely to remain small over the medium
term.
Strengths
* Extensive experience of the promoter in the textile industry:
JTL is a 51:49 joint venture between the Mr Pradeep Modi group
and Morarji Textiles Limited (part of the Ashok Piramal group).
The promoters' extensive experience in the textile industry has
helped the company develop a strong relationship with customers
and suppliers. Customers include Siyarams Ltd, Bombay Rayon
Fashion Ltd, Samman Fabrics Pvt Ltd, and Vigneshwar Exports Ltd,
from which repetitive orders are received.
Outlook: Stable
CRISIL believes JTL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case a sustainable increase in revenue or
profitability enhances cash accrual, or if significant fund
infusion shores up liquidity. The outlook may be revised to
'Negative' if the working capital cycle deteriorates, or any
large capital expenditure weakens the financial risk profile.
JTL was incorporated in 1989, promoted by Mr Pradeep Modi. The
company undertakes job work for dying, printing, processing, and
finishing of grey fabric. It is based in Ambernath, Maharashtra.
The company has a capacity of 30 lakh metre per month for
processing fabric.
Profit after tax (PAT) and net sales are estimated at INR32 lakh
and INR35.58 crore for fiscal 2017. In fiscal 2016, PAT was
INR62.74 lakh on net sales of INR44.41 crore.
K.S.PIPE: Ind-Ra Affirms 'BB-' Long-Term Issuer Rating
------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed K.S.Pipe
Fittings Private Limited's (KSPF) Long-Term Issuer Rating at 'IND
BB-'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR70 mil. Fund-based working capital facility affirmed with
'IND BB-/Stable/IND A4+' rating; and
-- INR50 mil. Non-fund-based working capital facility affirmed
with 'IND A4+' rating
KEY RATING DRIVERS
The ratings continue to reflect KSPF's small scale of operations,
moderate-to-weak credit metrics and working capital intensive
nature of business. According to FY17 provisional figures,
revenue was INR170.15 million (down 6.53% yoy), net leverage
(adjusted net debt/operating EBITDAR) was 4.07x (FY16: 3.96x),
gross interest coverage was 1.89x (1.40x) and net cash conversion
cycle deteriorated to 586 days (FY16: 458days). The financial
performance deteriorated in FY17, mainly on account of a slowdown
in the sectors the company caters to.
The ratings further reflect KSPF's tight liquidity profile as
evident from its 97.79% average peak utilization of the fund-
based limits during the 12 months ended April 2017.
The ratings are supported by KSPF's continued strong EBITDA
margins of 12.93% in FY16 (FY15: 12.55%) and over 10 years of
promoter's experience in the pipe & fittings industries. The
ratings are also supported by the company's established customer
base which includes Bharat Heavy Electricals Limited
('IND AA+'/Negative), Hindustan Petroleum Corporation Limited
('IND AAA'/Stable), Indian Oil Corporation Limited
('IND AAA'/Stable).
RATING SENSITIVITIES
Negative: Any further dip in the revenue and/or elongation of
working capital cycle will lead to a negative rating action.
Positive: Substantial growth in the revenue along with an
improvement in net cash conversion cycle with EBITDA margins
being sustained will lead to a positive rating action.
COMPANY PROFILE
Incorporated in 2007, KSPF manufactures a large variety of pipes
and fittings. The company is located in Faridabad, Haryana. It
is managed by its directors Bhagwan Dass Sharma and Kavita
Sharma.
KRIPA ANAND: CRISIL Lowers Rating on INR9.5MM Cash Loan to 'B'
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Kripa
Anand Rishi Cellular Private Limited (Kripa) for obtaining
information through letters and emails dated January 24, 2017,
and February 14, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9.5 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB/Stable')
Proposed Long Term .5 CRISIL B/Stable ((Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL BB/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Kripa Anand Rishi Cellular
Private Limited. This restricts CRISIL's ability to take a
forward looking view on the credit quality of the entity. CRISIL
believes that the information available for Kripa Anand Rishi
Cellular Private Limited is consistent with 'Scenario 1' outlined
in the 'Framework for Assessing Consistency of Information with
CRISIL B rating category or lower.' Based on the last available
information, CRISIL has downgraded the rating to 'CRISIL
B/Stable'.
Kripa, incorporated in 2006 and promoted by Pune (Maharashtra)-
based Dudhedia family, distributes Samsung mobile handsets,
accessories, and tablets in Pune.
M C MEDICAL: CRISIL Reaffirms 'B' Rating on INR8.2MM LT Loan
------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of M C Medical
Services Pvt Ltd (MCMS) continues to reflect the company's
nascent stage in the multi-speciality hospital segment, and
below-average financial risk profile because of weak capital
structure and insufficient cash accrual vis-a-vis debt
obligation. These weaknesses are partially offset by the
extensive experience of its promoters and their funding support.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2.0 CRISIL B/Stable (Reaffirmed)
Long Term Loan 8.2 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2.3 CRISIL B/Stable (Reaffirmed)
Analytical Approach
Unsecured loans of INR2.8 crore received from the promoters as on
March 31, 2017, have been treated as neither debt nor equity as
the loans bear nominal interest, and are to remain in business
over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and geographical concentration in
revenue: Scale remains small due to start-up phase of operations.
Revenue was modest at INR22 crore in fiscal 2017, MCMS' second
full year of operations. Business risk profile will also remain
constrained due to geographical concentration in revenue.
* Below-average financial risk profile: Negative accretion in
fiscal 2017 led to a small networth of INR1.7 crore as on March
2017. Since cash accrual is insufficient to meet debt obligation,
promoters have infused equity of INR3.6 crores in fiscal 2017.
Strengths
* Extensive experience of promoters: Longstanding presence in the
healthcare industry has enabled the promoters, who are seasoned
doctors, to develop strong reputation in Coimbatore.
Outlook: Stable
CRISIL believes MCMS will continue to benefit over the medium
term from the extensive experience of its promoters. The outlook
may be revised to 'Positive' if significant and sustained
improvement in revenue and cash accrual leads to improvement in
financial risk profile, especially liquidity. The outlook may be
revised to 'Negative' if lower-than-expected cash accrual further
weakens capital structure and liquidity.
Incorporated in 2009 and promoted by Dr. K Chockalingam and Dr. K
Madeswaran, MCMS operates a multi-speciality hospital in
Coimbatore
MCMS booked Net loss of INR2.87 crores on revenues of INR14.87
crores in fiscal 2016 against Profit after tax of INR25.94 lakhs
on revenues of INR3.92 crores in fiscal 2015.
MADHAV INDUSTRIES: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Madhav
Industries' 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 B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR148.7 mil. Term loan migrated to non-cooperating
category;
-- INR30 mil. Fund-based facilities migrated to non-cooperating
category; and
-- INR20 mil. Non-fund-based facilities migrated to non-
cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 18, 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 2015, Madhav Industries manufactures fine and
speciality inorganic chemicals such as molecular sieves,
activated alumina, zeolite and silicon dioxide.
MAGBRO HEALTHCARE: CRISIL Reaffirms B- Rating on INR7MM Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Magbro Healthcare Private Limited (MHPL) at 'CRISIL B-
/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B-/Stable (Reaffirmed)
Letter of Credit 2 CRISIL A4 (Reaffirmed)
The ratings continue to reflect stretched liquidity due to large
working capital requirement, as reflected in regular
overutilization of working capital limit. However, funding from
promoters and the absence of term loans support liquidity.
Estimated operating revenue of INR16.5 crore for fiscal 2017
improved from INR14.6 crore in fiscal 2016 on account of higher
sales following expansion of product profile. Operating
profitability also improved to an estimated 12.7% from 11.2% due
to higher share of exports in total sales. Revenue is expected to
remain stable over the medium term.
The ratings continue to factor in MHPL's small scale of
operations and large working capital requirements. The rating
weaknesses are partially offset by the promoters' extensive
experience.
Analytical Approach
Unsecured loans of INR3.9 crore (as on March 31, 2017) from
promoters have been treated as neither debt nor equity as these
are non-interest bearing, are subordinated to bank debt, and are
expected to be retained in business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations
With an estimated operating income of INR16.5 crore in fiscal
2017, scale remains modest, which limits bargaining power with
customers and suppliers. With no major capacity addition or
expansion of clientele, scale will remain subdued over the medium
term.
* Large working capital requirement
Gross current assets are estimated at over 350 days as on
March 31, 2017, due to stretched receivables of around 160 days
and sizeable inventory of around 200 days. However, this is
mitigated by healthy credit from suppliers against letter of
credit, reflected in payables of around 200 days.
Strengths
* Extensive experience of promoters
Presence of around 15 years in the pharmaceutical industry has
enabled the promoters to establish healthy relationships with
various corporates.
Outlook: Stable
CRISIL believes that MHPL will continue to benefit over the
medium term from its promoters' extensive experience. The outlook
may be revised to 'Positive' if efficient working capital
management or capital infusion by promoters leads to a better
financial risk profile, especially liquidity. The outlook may be
revised to 'Negative' if financial risk profile deteriorates
because of substantially low profitability or revenue, large,
debt-funded capital expenditure, or further stretch in working
capital cycle.
Incorporated in 2006 and promoted by Mr. Sudhir Maingi and his
brother, Dr. Sukhdev Maingi, MHPL manufactures pharmaceuticals
formulations (capsules, liquids/syrups, tablets, and ointments)
under its own brands for the domestic and global markets, and
also undertakes contract manufacturing for other pharmaceutical
companies. Facilities are in Village Mehsa Tibba, Punjab.
Profit after tax was INR57 lakh on net sales of INR14.6 crore in
fiscal 2016, against net loss of INR98.5 lakh on net sales of
INR13.4 lakh in fiscal 2015.
MAHALAKSHMI TELESERVICES: Ind-Ra Puts D Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Mahalakshmi
Teleservices' 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. Instrument-wise rating actions are:
-- INR20 mil. Fund-based working capital limits (long-term and
short-term) migrated to non-cooperating category;
-- INR50 mil. Term loans (long-term) migrated to non-
cooperating category; and
-- INR25 mil. Non-fund-based working capital limits
(short-term) migrated to non-cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 4, 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 2001, Mahalakshmi Teleservices offers services for
telecom infrastructure buildings including design, supply,
installation and maintenance of towers, optic fiber network,
wireless network etc.
MANTRA SOFTECH: CRISIL Assigns B+ Rating to INR10MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Mantra Softech India Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable
The rating reflects the company's weak financial risk profile
because of small networth, low operating margin, and large
working capital requirement. These weaknesses are partially
offset by strong clientele and extensive experience of promoter.
Government policies such as demonetisation and Digital India
Programme also affect industry scenario.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: Networth was small at
INR5.75 crore and gearing high at 1.35 times as on March 31,
2017. Capital structure will remain leveraged over the medium
term.
* Working capital-intensive operations: Gross current assets were
100 days as on March 31, 2017, due to stretched receivables of 67
days; inventory was modest at 17 days. Hence, bank limit
utilisation averaged 89%. Any stretch in operating cycle or sharp
increase in revenue may further increase working capital
requirement.
Strengths
* Extensive experience of promoter: Presence of over two decades
in the security and surveillance products segment has enabled the
promoter to establish strong relationship with customers and
suppliers.
Outlook: Stable
CRISIL believes MSIPL will benefit over the medium term from its
established relationship with customers and extensive experience
of promoter. The outlook may be revised to 'Positive' in case of
substantial scale of operations and profitability, while
improving financial risk profile. The outlook may be revised to
'Negative' if decline in revenue or profitability or further
stretch in working capital cycle puts pressure on liquidity.
Set up In 2003 and promoted by Mr. Hiren Bhandari, Ahmedabad-
based MSIPL provides varied security, surveillance, and tracking
products such as biometrics security, access control and
attendance system, RFID (Radio frequency Identification)
security, and smartcard technologies.
For fiscal 2017 , MSIPL's net profit (on provisional basis) was
INR2.10 Cr. on net sales of INR121.26 crore, against a net profit
of INR21 lakhs on net sales of INR29.85 crore for fiscal 2016.
MONA TOWNSHIPS: CRISIL Assigns 'B' Rating to INR35MM Term Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facility of Mona Townships Private Limited (MTPL).
The rating reflects susceptibility to risks related to completion
& saleability of the ongoing residential real estate project and
to cyclicality in the Indian real estate industry and economic
cycles. These rating weakness are partially offset by the
extensive experience of the promoters in the real estate
industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 35 CRISIL B/Stable
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks relating to cyclicality in Indian real estate
industry and economic cycles: MTPL's business risk profile is
susceptible to slowdown in the Indian real estate industry. The
real estate sector in India is cyclical and is marked by volatile
prices, opaque transactions, and a highly fragmented market
structure. The execution of the real estate projects in India is
affected by multiple property laws and non-standardized
government regulations across the states. The risk is compounded
by aggressive timelines for completion with shortage of man power
(project engineers and skilled labour in this sector. The recent
slowdown in the real estate sector has adversely delayed the
execution and saleability of several ongoing projects. With the
increase in supply, and attractive prices offered by various
builders and constant regulatory changes the profitability of
various real estate players is expected to come under strain over
the medium term. Also, the continuous changes in fiscal and
monetary measures will cause a variation in interest rates
impacting the demand for housing loans.
* Project funding, implementation and off-take risk : Total
project cost is to be funded between promoter funds, debt and
customer advances in the proportion of 25% 36% 39% for Mona Green
II & in the proportion of 25% 28% 47% for Mona City respectively.
As a major part of the funding is through customer advances any
slowdown in consumer interest and delays in receiving customer
advances can affect the project funding.
Strength
* Experience of promoters in residential real-estate
construction: Tejinder Pal Setia have experience of more than a
decade in the real estate sector. He is well qualified & takes
active part in developing the project under MTPL.
Outlook: Stable
CRISIL believes that MTPL will benefit over the medium term from
its promoters extensive experience in the real estate industry.
The outlook may be revised to 'Positive' if the company exhibits
significant progress in bookings and flow of advances for the
project. Conversely, the outlook may be revised to 'Negative' in
case of large than expected debt funding of the project or lower-
than-expected consumer interest in the projects.
MTPL is presently developing 2 project Mona Green IIA & Mona
City. The project comprise of total 466 luxury apartments (160
apartments in Mona Green II & 306 apartments in Mona City) along
with club & other facilities.
MTPL is was incorporated in in 2011 by Mr Tejinder Pal Setia.
MTPL reported profit after tax (PAT) of INR32 lakh on net sales
of INR51.24 crore for fiscal 2016 and PAT of INR30.0 lakh for net
sales of INR41.20 crore for fiscal 2015.
MULCHAND FIBER: CRISIL Raises Rating on INR8.92MM Term Loan to B+
-----------------------------------------------------------------
CRISIL Ratings has upgraded its ratings on the long-term bank
facilities of Mulchand Fiber Private Limited (MFPL; part of the
Mulchand group) to 'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 8.92 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects the strength of the support that MFPL gets
from its parent Mulchand Phulchand Krishi Udyog Pvt Ltd (MPKUPL;
rated at CRISIL BB-/Stable). MPKUPL holds 60 per cent stake in
MFPL, while the rest is held by the Agarwal family. MPKUPL is
expected to provide need based financial support to MFPL.
The ratings continue to reflect large working capital
requirements and moderate scale of operations. These rating
weaknesses are partially mitigated by the promoters' extensive
experience in the cotton industry and funding support from parent
and average financial risk profile, because of moderate gearing
and debt protection metrics.
Analytical Approach
CRISIL has factored in the operational and financial support from
MUFL's parent, MPKUPL. This is because both the companies,
together referred to as the Mulchand group, are promoted by the
same family, engaged in similar business activities and have
business and financial inter-linkages. Moreover, MPKUPL has 60
percent stake in MFPL with remaining held by promoters in
individual capacity.
Key Rating Drivers & Detailed Description
Weakness
* Moderate working capital requirements
The MUFL's operations are working capital intensive because of
inventory of 70 days. Cotton is a seasonal crop, and is available
from September to February. Hence, the group has to stock raw
material. It provides credit period of 15-30 days. Its gross
current assets are expected to remain high, at around 100 days.
* Moderate scale of operations
The MUFL's scale is moderate, estimated at INR60 cr for 2016-17
(refers to financial year, April 1 to March 31), The cotton
industry is largely unorganised and has numerous small players.
In addition, entry barriers are low because of low capital and
technology requirement and limited differentiation in end
products of different players.
Strengths
* Promoters' extensive experience in the cotton industry
The MUFL's promoter family has been in the cotton industry since
2003 through MPKUPL. The promoters' experience has helped the
group establish a healthy clientele of more than 200 customers
for cotton seeds in Rajasthan and Haryana, and a strong supplier
base of more than 200 in Maharashtra and Andhra Pradesh. MPKUPL
has invested INR2.95 cr in MUFL and is expected to support the
MUFL over the medium term. CRISIL believes the group will
continue to benefit over the medium term from its promoters'
industry experience and support from parent.
* Average financial risk profile
The MUFL has a high gearing, at 2.6 times as on March 31, 2016,
the gearing is expected to improve over the medium term with debt
repayment. The debt protection metrics are moderate with interest
coverage of 2.4 times and net cash accruals to total debt of 0.19
times respectively for 2016-17.
Outlook: Stable
CRISIL believes the MUFL will continue to benefit over the medium
term, from its promoters' extensive industry experience and
support from its parent. The outlook may be revised to
'Positive', if sizeable cash accrual on sustainable basis,
supported by enhanced scale of operations and profitability or
fund infusion by parent improves liquidity. Conversely, the
outlook may be revised to 'Negative', if financial risk profile
and liquidity weaken, because of significantly low cash accrual
or stretched working capital cycle.
MFPL was founded by Mr. Ashok Phulchand Agrawal and Ms. Chaya
Ashok Agrawal, in Jalna in 2012. The company undertakes cotton
ginning, de-linting of cotton seeds and oil extraction.
MPKUPL was incorporated in 2003 in Jalna by Mr. Ashok Agrawal and
undertakes ginning of cotton.
MFPL reported a profit after tax (PAT) of INR52 lakhs on net
sales of INR67.3 cr for 2015-16, as against net loss of INR77
lakhs on net sales of INR74.7 cr for 2014-15.
MPKUPL reported a profit after tax (PAT) of INR29 lakhs on net
sales of INR65.5 cr for 2015-16, as against PAT of INR28 lakhs on
net sales of INR50.1 cr for 2014-15.
NOSLAR INTERNATIONAL: Ind-Ra Puts BB Non-Cooperating Rating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Noslar
International Ltd.'s (NIL) 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:
-- INR139 mil. Fund-based working capital limits migrated to
non-cooperating category; and
-- INR30 mil. Non-fund-based limits 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
Incorporated in 1974, NIL is a premium bicycle tyres and tubes
brand in India and abroad. It is situated in Mandideep, Bhopal
and has an installed capacity of producing 6 million tyres and
3.6 million tubes per annum.
PRIME URBAN: Ind-Ra Raises Long-Term Issuer Rating to 'BB+'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Prime Urban
Development India Limited's (PUDIL) Long-Term Issuer Rating to
'IND BB+' from 'IND BB'. The Outlook is Stable. The instrument-
wise rating actions are:
-- INR200 mil. (reduced from INR300) Fund-based facility raised
to 'IND BB+/Stable' rating;
-- INR200 mil. (reduced from INR300) Fund-based facility
affirmed with 'IND A4+' rating
KEY RATING DRIVERS
The upgrade reflects PUDIL's improvement in credit metrics since
FY15. According to 9MFY17 financials, interest coverage
(operating EBITDA/gross interest expense) increased to 20.39x
(FY16: 11.9x; FY15: 1.6x) on account of the repayment of
interest-bearing inter-corporates loans during 1HFY16. Also, net
leverage and profitability margins remained comfortable in
9MFY17, despite showing deterioration due to a decline in EBITDA.
This was on account of a significant decrease in the revenue
contribution from real estate division to 33% in 9MFY17 (FY16:
49%) out of the total revenue. Adjusted net debt/operating
EBITDAR was 0.7x in 9MFY17 (FY16: 0.3x; FY15: 4.2x) and EBITDA
margins were 23% (36.2%; 12.5%).
The ratings continue to factor PUDIL's moderate scale of
operations. Revenue declined to INR362 million in 9MFY17 (FY16:
INR697 million; FY15: INR508 million) due to the increase in the
revenue earned from the real estate segment. PUDIL has orders of
INR106.55 million from the textile division, to be executed
during 1HFY18.
The ratings are supported by the company's eight-decade-long
operational track record in trading cotton yarn and comfortable
liquidity with its utilization of the working capital limits
being 68% on average for the 12 months ended April 2017. The net
working capital cycle improved to 96 days in FY16 (FY15: 154
days) because of an improvement in receivable days as goods are
exported once the payment is received.
RATING SENSITIVITIES
Positive: A substantial improvement in the scale of operations
and maintenance of the credit metrics could be positive for the
ratings.
Negative: A decline in the profitability or elongation of working
capital cycle resulting in deterioration of the credit metrics
can be negative for the ratings.
COMPANY PROFILE
PUDIL started operations in 1936. The company is in the business
of real estate and textiles.
PUDUCHERRY CANCER: CRISIL Assigns 'D' Rating to INR10MM Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL D' rating to the long-
term bank facility of Puducherry Cancer Trust (PCT). The rating
reflects delays in meeting term debt obligations due to weak
liquidity. The rating also factors in a small scale of operations
in a fragmented industry, and a weak financial risk profile.
These weaknesses are partially offset by the extensive experience
of the promoter.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 10 CRISIL D
Key Rating Drivers & Detailed Description
Weakness
* Small scale and initial phase of operations in a fragmented
industry: The trust's hospital commenced operations from October
2014. The scale of operations is small owing to the initial stage
and occupancy is low as the hospital has still to establish
itself in the region. Moreover, competition is expected from
other bigger hospitals in the nearby areas and metros.
* Below-average financial risk profile: The networth is negative
driven by losses in the initial years of operations. Though the
networth is likely to improve in the long term, it is expected to
remain negative over the medium term due to a small scale of
operations and losses from the past. This has also resulted in
negative debt protection metrics.
Strengths
* Extensive industry experience of the promoter and established
relationship with doctors: The promoter, along with his friend
who is also a doctor, has been instrumental in the opening of
cancer hospitals in Erode and Tanjore, both in Tamil Nadu. Over
the years, the promoter has developed a strong relationship with
doctors and other medical professionals as well as corporates and
third-parties like insurance agencies in the region; this is
expected to benefit the operations of the new hospital.
Established in April 2011, PCT is promoted by Dr M A S
Subramaniam along with other trustees. The trust has set up a
30-bed cancer speciality hospital in Puducherry.
For fiscal 2016, PCT made a net loss of INR2.67 crore on total
income of INR1.17 crore, against a net loss of INR2.70 crore on
total income of INR0.97 crore for the previous fiscal.
PUNNAMI HATCHERIES: CRISIL Assigns B Rating to INR8.01MM LT Loan
----------------------------------------------------------------
CRISIL Ratings has assigned its rating of 'CRISIL B/Stable' for
the bank facilities of Punnami Hatcheries (PH).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 6.49 CRISIL B/Stable
Cash Credit 3.00 CRISIL B/Stable
Long Term Loan 8.01 CRISIL B/Stable
The ratings reflect PH's modest scale of operations in an
intensely competitive poultry farming industry, working capital
intensive operations and the Average financial risk profile
marked by high gearing. These rating weaknesses are partially
offset by the extensive experience of PH's promoters in the
poultry business.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in an intensely competitive poultry
farming industry: The firm reported revenue of INR21.72 crores in
fiscal 2017 in an intensely competitive poultry farming industry
which has many unorganized players. The modest scale restricts
the economies of scale enjoyed by the large players.
* Working capital-intensive operations: Working capital
requirement is large as reflected in gross current assets at 251
days as on March 31, 2016, driven by inventory of 119 days and
debtors of 114 days.
* Average financial risk profile: PH's financial risk profile is
Average, marked by expected networth of INR4.73 crores and high
gearing of 2.9 times in fiscal 2017.
Strengths
* Extensive experience of promoters in the industry: The
promoters of PH have been in the poultry farming industry for
more than a decade and on account of their extensive experience,
the promoters have established relations with customers and
suppliers resulting in steady demand and steady supply of raw
materials.
Outlook: Stable
CRISIL believes that PH will continue to benefit over the medium
term from the extensive experience of promoters in the industry.
The outlook may be revised to 'Positive' if the firm improves its
revenues and profits over the medium term which also improving
the capital structure. Alternately the outlook may be revised to
'Negative' if the revenues or profits fall, leading to lower cash
accruals or if the working capital stretches or if the firm
undertakes large debt-funded capex impacting the liquidity.
Established in 2010 as a partnership firm, Hyderabad (Telangana)
based PH is engaged in production of commercial eggs.
PH's reported net loss of INR0.96 crore on total revenue of
INR16.59 Cr for fiscal 2016, against a PAT of INR0.15 crore on
total revenue of INR13.17 Cr for fiscal 2015.
R.K. STEEL: CRISIL Lowers Rating on INR12.75MM Cash Loan to 'B'
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with R.K. Steel
Udyog Private Limited (RK Steels) for obtaining information
through letters and emails dated January 24, 2017, and
February 13, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12.75 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB+/Stable')
Electronic Dealer 10.00 CRISIL B/Stable (Issuer Not
Financing Scheme Cooperating; Downgraded from
(e-DFS) 'CRISIL BB+/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of R.K. Steel Udyog Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for R.K. Steel Udyog Private
Limited is consistent with 'Scenario 2' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB rating category or lower.' Based on the last available
information, CRISIL has downgraded the rating to 'CRISIL
B/Stable'.
RK Steel was set up in 1982 as a partnership concern by Mr.
Ranjith Kumar Surana and his family members, and was
reconstituted as a private limited company in 2004. The company
trades in various steel products such as mild steel billets,
thermo-mechanically treated bars, channels, angles, billets,
squares, blooms, and rounds. It is based in Hyderabad, Telangana.
RAJ POLY: CRISIL Downgrades Rating on INR14MM Cash Loan to 'B'
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Raj Poly
Products Limited (RPPL) for obtaining information through letters
and emails dated January 24, 2017, and February 13, 2017, among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 14 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL B+/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Raj Poly Products Limited.
This restricts CRISIL's ability to take a forward looking view on
the credit quality of the entity. CRISIL believes that the
information available for Raj Poly Products Limited is consistent
with 'Scenario 2' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB rating category or
lower.' Based on the last available information, CRISIL has
downgraded the rating to CRISIL B/Stable.
Incorporated in 1992, RPPL trades in plastic granules such as
low-, linear low- and high-density polyethylene (LDPE, LLDPE &
HDPE), polyvinyl chloride (PVC) etc. used in manufacturing
buckets, pens, and pipes. Mr. Rajendra Salot, Ms. Hema Salot and
Mr. Pankaj Salot are the promoters.
RAJ RAYON: Ind-Ra Affirms 'D' Long-Term Issuer Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Raj Rayon
Industries Limited's (RRIL) Long-Term Issuer Rating at 'IND D'.
The rating action reflects the continued decline in the company's
financial performance and its classification as a non-performing
asset by the bankers under consortium.
The ratings have also been migrated to the 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 D(ISSUER NOT
COOPERATING)' on the agency's website. The instrument-wise
rating action is:
-- INR2.538.5 bil. Term loan (Long-term) affirmed and migrated
to non-cooperating category;
-- INR2.571.8 bil. working capital term loans (Long-term)
affirmed and migrated to non-cooperating category;
-- INR1.023.8 bil. Fund-based working capital limits (Long-
term/Short-term) affirmed and migrated to non-cooperating
category; and
-- INR42.5 mil. Non-fund-based limits (Short-term) affirmed
and migrated to non-cooperating category
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information
KEY RATING DRIVERS
The affirmation reflects the continued decline in revenue to
INR2.466 billion in 9MFY17 (9MFY16: INR3.999 billion) and EBITDA
losses suffered over the past seven quarters. The revenue
decrease and EBITDA losses in 9MFY17 is attributed to the
slowdown in demand for RRIL's products as well as closure of its
Silvasssa plant in December 2016.
The ratings also reflect the auditors comments in 9MFY17 results,
published on the Bombay Stock Exchange, which stated that RRIL
was classified as a non-performing asset by the bankers under the
consortium.
RATING SENSITIVITIES
Positive: Recovery from the strategic debt restructuring scheme
and a sustainable profitability, along with timely debt
servicing, would lead to a positive rating action.
COMPANY PROFILE
RRIL is a public limited company manufacturing polyester yarn at
its plant, located in Silvassa. Its products include polyester
texturised yarn, partially oriented yarn, fully drawn yarn,
twisted yarn and polyester chips. Mrs. Rajkumari Kanodia is the
promoter and Mr. Sushil Kanodia is the CEO of the company.
RAJEEV ELECTRONICS: CRISIL Cuts Rating on INR14MM Cash Loan to B
----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Rajeev
Electronics Private Limited (REPL) for obtaining information
through letters and emails dated January 24, 2017, and
February 14, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 14 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Rajeev Electronics Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for Rajeev Electronics Private
Limited is consistent with 'Scenario 2' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB rating category or lower.' Based on the last available
information, CRISIL has downgraded the rating to 'CRISIL
B/Stable'.
Incorporated in 1995, REPL is an authorised distributor in Sikkim
for various brands such as Whirlpool, Panasonic, Onida, Hitachi
and LG. In addition, the company has three retail showrooms in
Gangtok from where in retails goods of various brands. The
company is promoted by Sikkim-based Mishra family, who are into
distribution business for over two decades.
RAJENDRAGURU GROUP: CRISIL Rates INR24MM Term Loan at B-
--------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B-/Stable' rating to the
long-term bank facility of Rajendraguru Group (RG).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 24 CRISIL B-/Stable
The rating reflects exposure to risks related to implementation
of its ongoing project and the subsequent stabilisation of
operations. The rating also factors in susceptibility of RG's
operations to volatility in cotton prices. These rating
weaknesses are partially offset by the extensive experience of
the partners in cotton ginning industry.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks related to implementation of an ongoing
project and stabilisation of operations: The firm is setting up a
cotton ginning unit with a capacity of 40 tons per day at a cost
of about INR31 crore. The unit is expected to commence commercial
operations in September 2017. Successful ramp up in scale of
operations and operating profitability will depend on timely
completion of the on-going project.
* Susceptibility of margins to volatility in cotton prices: The
operating margin of cotton ginners such as RG are susceptible to
changes in cotton prices. Apart from demand and supply factors,
cotton prices are also influenced by government policies.
Strengths
* Extensive industry experience of the partners: The partners
have an extensive experience in the cotton ginning industry
during the course of which the partners have developed healthy
relationship with a base of suppliers and customers.
Outlook: Stable
CRISIL believes RG will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' in case of better-than-expected revenues and margins,
backed by timely stabilisation of operations, leading to
improvement in the financial risk profile. The outlook may be
revised to 'Negative' in case of a delay in commissioning or
stabilisation of the plant, resulting in lower-than-expected cash
accrual.
RG was established in 2016 as a partnership firm by Mr Rishabh
Jain and Mr Kishor Jain. The firm is setting up a cotton ginning
unit in Vijayapura, Karnataka.
SHILPI CABLE: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shilpi Cable
Technologies Limited's Long-Term Issuer Rating to
'IND D(ISSUER NOT COOPERATING)' from 'IND BBB-(ISSUER NOT
COOPERATING)'. The Outlook was Negative.
The issuer did not participate in the surveillance exercise,
despite continuous requests and follow-ups by the agency. Thus,
the rating is based on the best available information and
feedback from a banker, indicating liquidity issues with respect
to debt repayments not being timely. The instrument-wise rating
actions are:
-- INR2.660 bil. Fund-based working capital (Long-/short-term)
lowered to 'IND D(Issuer Not Cooperating)/Ind D(Issuer not
cooperating) rating;
-- INR7.790 bil. non-fund-based working capital (Long-/short-
term) lowered to 'IND D(Issuer Not Cooperating)/
Ind D(Issuer Not Cooperating) rating;
-- INR2.050 bil. Proposed working capital (Long-/short-term)*
lowered to Provisional IND D(Issuer not
Cooperating)/Provisional IND D(Issuer Not Cooperating
Note: ISSUER NOT COOPERATING
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by Shilpi Cable Technologies to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The downgrade reflects defaults on debt obligations during the 12
months ended May 15, 2017.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months
could result in a rating upgrade.
COMPANY PROFILE
Incorporated in 2006 by Mr Mukesh Gupta, Shilpi Cable
Technologies primarily manufactures RF feeder cables, battery
cables, auto cables, wiring harness sets, house wires and copper
conductors. The company's international subsidiaries are involved
in trading.
SHIVAM MOBILE: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shivam Mobile
Services Private Limited's (SMSPL) 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:
-- INR60 mil. Fund-based working capital limits migrated to
non-cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Feb. 9, 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, SMSPL is a distributor of Samsung mobile
products in Surat.
SHYAM & COMPANY: Ind-Ra Affirms 'B+' Long-Term Issuer Rating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Shyam &
Company's Long-Term Issuer Rating at 'IND B+'. The Outlook is
Stable. The instrument-wise rating action is:
-- INR100 mil. (reduced from INR150) Fund-based limits
affirmed with 'IND B+/Stable' rating;
KEY RATING DRIVERS
The affirmation reflects the deterioration in Shyam & Company's
credit metrics as expected by the agency, due to a rise in
financial cost to INR15 million in FY17 (FY16: INR2 million) on
account of full year utilization of the fund-based limit.
Interest coverage (operating EBITDA/gross interest expense) was
1.4x in FY17 (FY16: 4.4x) and net financial leverage (total
adjusted net debt/operating EBITDA) was 4.6x (9.7x). Moreover,
the scale of operation declined to INR405 million in FY17 from
INR622 million in FY16, because of a decline in sales volume of
coal. FY17 financials are provisional in nature.
The ratings, however, are supported by the company's comfortable
liquidity profile as reflected in its 71% utilization of the
fund-based limit during the 12 months ended April 2017 and the
improvement in EBITDA margin to 5.3% in FY17 from 1.6% in FY16 on
account of a decline in the cost of goods traded.
RATING SENSITIVITIES
Positive: A substantial improvement in the scale of operations
and EBITDA margins will be positive for the ratings.
Negative: Deterioration in the EBITDA margins could be negative
for the ratings.
COMPANY PROFILE
Established in 2013, Shyam & Company trades coal and different
kinds of iron and steel products. The firm is managed by its
directors Sharad Kumar Sarawgi (associated with Atibir Hi-Tech
Private Limited ('IND BB+'/Stable)) and Arpit Sarawgi (associated
with Bir Steels Pvt Ltd ('IND BB'/Stable)).
SIR BIO: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sir Bio Tech
India Limited (SBTIL) a Long-Term Issuer Rating of 'IND BB+'.
The Outlook is Stable. Instrument-wise rating actions are:
-- INR61.8 mil. Term Loan-1 assigned with 'IND BB+/Stable'
rating;
-- INR350 mil. Term Loan-2 assigned with 'IND BB+/Stable'
rating;
-- INR250 mil. Term loan-3 assigned with 'IND BB+/Stable'
rating;
-- INR200 mil. Term Loan-4 assigned with 'IND BB+/Stable'
rating;
-- INR23 mil. Fund-based facility assigned with
'IND BB+/Stable/IND A4+' rating; and
-- INR150 mil. Non-fund-based facility assigned with 'IND A4+'
rating
KEY RATING DRIVERS
The ratings reflect SBTIL's small scale operations and moderate
credit metrics due to its presence in diversified businesses.
According to FY17 provisional financials, revenue declined to
INR426 million (FY16: INR463 million) on account of losses
incurred in the peanut processing business, resulting from poor
peanut cultivation in Uttar Pradesh. EBITDA margin improved to
12.9% in FY17 (FY16: 10.1%) on the back of reduction in factory
and plant maintenance expenses as the company decided to
discontinue its manufacturing business to focus on its
hospitality business.
In FY17, net leverage deteriorated to 3.1x (FY16: 2.0x) owing to
an increase in debt during 4QFY17 for construction of Dehradun
hotel project, while EBITDA interest coverage (operating
EBITDA/gross interest expense) improved to 11.2x (7.5x) due to an
increase in EBITDA and steady repayment of term loans.
However, the ratings are supported by SBTIL's comfortable
liquidity position with 15% average utilization of working
capital facilities over the 12 months ended April 2017.
The ratings also draw support from the promoter's more than two
decades of experience in diversified businesses.
RATING SENSITIVITIES
Positive: A significant increase in the scale of operations and
operating profitability, leading to a sustained improvement in
the credit metrics could be positive for the ratings.
Negative: A substantial decline in the top-line or operating
profitability and a sustained deterioration in the overall credit
metrics will lead to a negative rating action.
COMPANY PROFILE
Incorporated in 1995, SBTIL is involved in trading of iron ore,
plastic polymer, raw cotton, copper rods, alkaline battery, metal
products; manufacturing of herbal dye and processing of peanuts.
It is also engaged in the hospitality and real estate businesses.
The company has partnered with Hyatt Group to operate a five-star
hotel in Dehradun. The construction of the hotel is expected to
complete in FY19-FY20.
SOND KNIT: Ind-Ra Migrates 'B' Rating to Non-Cooperating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sond Knit
Garments' 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 ratings will
now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR100 mil. Fund-based working capital limit migrated to
non-cooperating category; and
-- INR13.5 mil. Non-fund based limit migrated to non-
cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 4, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
KEY RATING DRIVERS
Sond Knit Garments is a partnership firm, formed in 2006; it
manufactures hosiery and readymade garments and exports these to
the US, the Middle East, Canada and Europe.
SRI GANESH: Ind-Ra Assigns 'BB-' Long-Term Issuer Rating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sri Ganesh
Electricals (SGE) a Long-Term Issuer Rating of 'IND BB-'. The
Outlook is Stable. The instrument-wise rating action is:
-- INR60 mil. Fund-based working capital limits assigned with
'IND BB-/Stable' rating
KEY RATING DRIVERS
The ratings reflect SGE's moderate credit profile and liquidity,
due to the trading nature of the business. The firm's revenue
increased at a CAGR of around 12.02% over FY13-FY17, and was
INR420.0 million in FY17 (provisional) as against INR385.5
million in FY16. Net leverage (net adjusted debt/operating
EBITDAR) was 2.38x in FY17 (FY16: 1.32x) and interest coverage
(operating EBITDA/gross interest expense) was 1.60x (2.8x).
EBITDA margin was 3.17% in FY17 (FY16: 3.31%). EBITDA margin has
been in the range of 2.6%-3.3% since FY13. The firm's use of the
working capital limits was around 85% for the 12 months ended
March 2017.
The ratings also factor in the partnership structure of the
organization and intense competition.
The ratings are supported by SGE's partners more than two decades
of experience in the trading of electrical products.
RATING SENSITIVITIES
Positive: A sustained improvement in the revenue while
maintaining or improving the profitability, credit metrics will
be positive for the ratings.
Negative: A sustained decline in the revenue, a rise in the
margin pressures or deterioration in the credit metrics and
liquidity will be negative for the ratings.
COMPANY PROFILE
Established in 1988, as a partnership firm, by Mr. S. Selvamani
and his wife Mrs. S. Thillaikkarasi, SGE is engaged in the
trading of electrical products, paints and pigments, plumbing
materials, home accessories, luminaries and other hardware
products. It has a showroom-cum-warehouse at Anna Salai,
Pondicherry.
SRI VAIBHAVA: CRISIL Reaffirms 'C' Rating on INR9.2MM LT Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long term bank
facilities of Sri Vaibhava Lakshmi Enterprises Private Limited
(SVLEPL) at 'CRISIL C'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 9.2 CRISIL C (Reaffirmed)
Open Cash Credit 2.8 CRISIL C (Reaffirmed)
The rating reflects a weak financial risk profile, because of
modest net worth, high gearing and weak debt protection metrics.
The ratings also factor in risks related to ongoing expansion
project and, exposure to inherent risks in the poultry industry.
However, the company benefits from the extensive industry
experience of its promoters.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile
SVLEPL's gearing is estimated at 3.5 times as on March 31, 2017
with a modest net worth of INR5.4 crore. Debt protection metrics
are estimated to have remained weak in fiscal 2017.
* Exposure to inherent risks in poultry industry
The poultry industry is driven by regional demand and supply
factors. Low capital intensity and entry barriers facilitate
entry of the players in the unorganised sector resulting in
intense competition.
* Project risks
SVLEPL's credit risk profile would remain constrained by risks
related to its ongoing project of setting up a layer farm with
3.5 lakh birds. The cost of the project is estimated at INR24
crores with INR18.75 crores funded through bank term loans and
rest through equity and accruals. The project is expected to
commence operations from September 2017.
Strengths
* Extensive entrepreneurial experience of promoters
The promoter family has been active in the poultry industry for
the past 11 years. The promoters have established relationships
with key customers and suppliers.
Set up in 2013, SVLEPL is engaged in the poultry business. It has
farms in Nandigama Village, Krishna District (Andhra Pradesh).
Mr. Venkata Narayan and his family are the promoters.
Profit after tax (PAT) and operating income were INR0.39 crore
and INR12.1 crore, respectively, for fiscal 2016, against a PAT
of INR0.15 crore on operating income of INR10.6 crore for the
previous fiscal.
SYNERGY REMEDIES: Ind-Ra Migrates 'B+' Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Synergy Remedies
Private Limited'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:
-- INR47 mil. Fund-based working capital limits migrated to
non-cooperating category;
-- INR20 mil. Non-fund-based working capital limits migrated
to non-cooperating category;
-- INR177 mil. Proposed term loan limits migrated to non-
cooperating category;
-- INR153 mil. Term loans migrated to non-cooperating
category;
-- INR133 mil. Proposed fund-based working capital limits
migrated to non-cooperating category
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 22, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Synergy Remedies was incorporated in 2011 to manufacture APIs at
its 413 tonnes per day plant in Chittoor district (Andhra
Pradesh).
TRUVALUE AGRO: Ind-Ra Affirms 'BB+' Long-Term Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Truvalue Agro
Ventures Private Limited's (TAVPL) Long-Term Issuer Rating at
'IND BB+'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR20 mil. Fund-based facilities affirmed with
'IND BB+/Stable/IND A4+' rating;
-- INR140 mil. Non-fund-based facilities assigned with
'IND A4+' rating;
-- INR30 mil. proposed fund-based facilities* assigned with
provisional IND BB+/Stable/provisional IND A4+ rating; and
-- INR210 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 TAVPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The affirmation reflects TAVPL's moderate scale of operations and
tight liquidity position as expected by Ind-Ra. According to
provisional financials for FY17, revenue increased 48.4% yoy to
INR2.174 billion, driven by a rise in orders from new and
existing customers. Moreover, TAVPL's utilization of working
capital limits was almost full during the 12 months ended April
2017.
The ratings continue to reflect comfortable, albeit deteriorated,
credit metrics. In FY17, EBITDA interest coverage (operating
EBITDA/gross interest expense) was 15.4x (FY16: 275.4x) and net
leverage (adjusted debt net of cash/EBITDA) was 1.2x (0.4x). The
deterioration in credit metrics was due to an increase in total
debt to INR68.6 million in FY17 (FY16: INR4.2 million). EBITDA
margin improved but remained thin at 0.3%-2.6% during FY15-FY17
due to the commoditized nature of raw materials.
The ratings are constrained by TAVPL's presence in a highly
fragmented and competitive grain trading business.
The ratings, however, continue to be supported by the promoters'
almost 10-year experience in the agro trading business that lead
to well-established relationships with customers and suppliers.
RATING SENSITIVITIES
Negative: Any decline in EBITDA margin leading to net leverage
exceeding 2.5x could result in a negative rating action.
Positive: Sustained growth in revenue and EBITDA margin leading
to an improvement in credit metrics could result in a positive
rating action.
COMPANY PROFILE
Incorporated in December 2014, TAVPL is engaged in the trading of
rice, grains, pulses, sugar, spices, palm oil, black eyed beans,
betel nuts and animal feeds. It commenced operations in February
2015.
TVC ELECTRONICS: CRISIL Cuts Rating on INR4MM Cash Loan to 'B'
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with TVC
Electronics (TVC) for obtaining information through letters and
emails dated January 19, 2017, and February 9, 2017, among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL B+/Stable')
Proposed Long Term 2.5 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL B+/Stable')
Standby Line of Credit .5 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL B+/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of TVC Electronics. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for TVC Electronics is consistent with
'Scenario 2' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BB rating category or lower.' Based on
the last available information, CRISIL has downgraded the rating
to 'CRISIL B/Stable'.
Established as a proprietorship firm in 1992, TVC retails
consumer durables (white goods and small home appliances) through
five outlets spread across Tamil Nadu. Based in Neyveli (Tamil
Nadu), the firm is promoted by Mr. S G Ajith Kumar.
TURAKHIA POLYMERS: CRISIL Cuts Rating on INR10MM Cash Loan to B
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Turakhia
Polymers Private Limited (TPPL) for obtaining information through
letters and emails dated January 19, 2017, and February 9, 2017,
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4 (Issuer Not
Cooperating; Downgraded from
'CRISIL A4+')
Cash Credit 10 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB+/Stable')
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Turakhia Polymers Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for Turakhia Polymers Private
Limited is consistent with 'Scenario 2' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB rating category or lower.' Based on the last available
information, CRISIL has downgraded the rating to 'CRISIL
B/Stable/CRISIL A4'.
TPPL, set up in 2003 in Mumbai, is a DCA and consignment stockist
for IOCL since 2010 for Mumbai, Goa, Daman, and Silvassa regions.
The company deals in polymers such as polypropylene, high-density
polyethylene, and linear low-density polyethylene for IOCL.
Moreover, TPPL imports and trades in polymers (other than those
it deals for IOCL).
The operations are managed by Mr. Janak Turakhia and his sons,
Mr. Dharmesh Turakhia and Mr. Mitesh Turakhia.
USHA FABS: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Usha Fabs
Private Limited (UFPL) a Long-Term Issuer Rating of 'IND B+'.
The Outlook is Stable. The instrument-wise rating action is:
-- INR60 mil. Fund-based limits assigned with
'IND B+/Stable/IND A4' rating
KEY RATING DRIVERS
The ratings reflect UFPL's small scale of operations and moderate
credit metrics. Revenue was INR 294.5 million in 9MFY17 (FY16:
INR 285.5 million), EBITDA margin was 9.58% (9.94%), interest
coverage was 2.2x (1.4x) and net financial leverage was 4.4x
(7.4x). The improvement in the credit metrics was on account of
repayment of a term loan and improvement in EBITDA.
However, the ratings are supported by the promoter's experience
of around two decades in the garments manufacturing business.
RATING SENSITIVITIES
Negative: A significant improvement in the revenue and operating
profitability leading to an improvement in the overall credit
metrics will be positive for the ratings.
Positive: A decline in the revenue and operating profitability
leading to deterioration in the overall credit metrics will be
negative for the ratings.
COMPANY PROFILE
Incorporated as a private limited company in 1980, UFPL is
engaged in manufacturing and exporting of garments. The
company's manufacturing facility is located in Gurugram.
VARDHMAN KNIT: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Vardhman Knit (VK) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1 CRISIL B+/Stable (Reaffirmed)
The rating reflects the firm's small scale of, and working
capital-intensive operations in a highly fragmented industry. It
also has weak financial risk profile because of high gearing and
small networth. These weaknesses are partially offset by the
extensive experience of its promoters in the textile industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensely competitive
industry: With revenue of INR16 crore in fiscal 2016, scale
remains small in the intensely competitive textiles segment,
which prevents the firm from enjoying benefits of economies of
scale.
* Working capital intensive operations: Working capital-intensive
operations reflected in gross current assets of 258 days, is on
account of average inventory of six months and debtors of three
months.
* Weak financial risk profile: Financial risk profile is expected
to remain weak because of modest networth of INR3.1 crore and
high gearing of 3.2 times, as on March 31, 2017 on account of
high short-term debt and unsecured loans which are repayable on
demand.
Strengths
* Experience of promoters: Presence of over two decades in the
textile industry has enabled the promoters to establish healthy
customer and supplier relationship.
Outlook: Stable
CRISIL believes VK will continue to benefit over the medium term
from the extensive experience of its promoters in the textile
industry. The outlook may be revised to 'Positive' if increase in
scale of operations and profitability, while maintaining working
capital management, leads to higher-than-expected accrual. The
outlook may be revised to 'Negative' if financial risk profile,
especially liquidity, weakens because of larger-than-expected
debt-funded capital expenditure or inefficient working capital
management.
Set up as a partnership firm by Jain family, VK manufactures
ready-made garments and hosiery products at its facility in
Ludhiana.
Profit after tax was INR0.24 crore on net sales of INR15.72 crore
in fiscal 2016, against a profit after tax of INR0.45 crore on
net sales of INR16.65 crore in fiscal 2015.
VIJAY SHEETS: Ind-Ra Migrates 'BB-' Rating to Non-Cooperating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Vijay Sheets &
Strips Private Limited's (VSSPL) 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:
-- INR345 mil. Fund-based working capital limits migrated to
non-cooperating category; and
-- INR10 mil. non-fund-based working capital limits migrated
to non-cooperating category;
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 25, 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 2007 as a private limited company, VSSPL trades
steel products.
WRC ENGINEERING: Ind-Ra Migrates 'B-' Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated WRC Engineering
Company Private Limited'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:
-- INR3 mil. Term loans migrated to non-cooperating category;
-- INR28 mil. Fund-based limits migrated to non-cooperating
category;
-- INR40 mil. Non-fund-based limits migrated to non-
cooperating category;
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 7, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
WRC Engineering Company was established as WRC Engineering
Company in 1995 and was converted to its current constitution in
2007. It is engaged in designing and manufacturing dust control
equipment.
=========
J A P A N
=========
TOSHIBA: Remains Negative on Selling Chip Unit to Western Digital
-----------------------------------------------------------------
The Japan Times reports that Toshiba Corp. has told its creditor
banks that it will be difficult to select joint venture partner
Western Digital as the buyer of its chip business after talks
between the partners sputtered the previous day, sources close to
the matter said May 25.
In a meeting with major banks including Sumitomo Mitsui Financial
Group and Mizuho Financial Group in Tokyo on May 25, Toshiba
revealed that all of the bidders offered at least JPY2 trillion
($17.9 billion) for Toshiba Memory, which the company is eager to
sell to fund its turnaround, the sources said, the report relays.
The Japan Times relates that the creditors repeated their demand
that Toshiba sell off the flash memory business early to improve
its finances, adding that it needs to avoid logging a second
consecutive year of negative net worth in the year to next March.
According to the report, Western Digital CEO Steve Milligan and
Toshiba President Satoshi Tsunakawa met in Tokyo after the U.S.
joint venture partner in the chip unit based in Yokkaichi, Mie
Prefecture, reportedly offered to buy it for JPY2 trillion.
While Toshiba is reluctant to accept Western Digital's proposal,
it told the banks that the two companies will continue to seek
common ground, according to the sources, the report relays.
Toshiba also told them it is inclined to choose a U.S.-Japan
consortium that includes state-backed turnaround fund Innovation
Network Corp. of Japan and the state-owned Development Bank of
Japan, as the buyer, the sources said.
Discussions were also held over the issue of using Toshiba Memory
shares as collateral for fresh loans - a measure Toshiba has been
unable to carry out due to Western Digital's opposition, the
report relates.
Earlier this month, Western Digital took legal action against
Toshiba's plan to sell a majority stake in Toshiba Memory, asking
the International Court of Arbitration of the Paris-based
International Chamber of Commerce to block the sale. The U.S.
firm has also demanded an exclusive negotiation, The Japan Times
adds.
The Japan Times notes that Toshiba, reeling from its worst
financial crisis ever, has been in the process of trying to sell
a majority stake in Toshiba Memory to raise at least JPY2
trillion to offset huge losses in its nuclear power business and
eliminate its negative net worth by March. Failure to do so would
likely cause it to be delisted from the Tokyo stock market.
Toshiba holds a 50.1 percent stake in the joint venture and
Western Digital the rest, the report discloses. Last month,
Toshiba spun off the chip business into the newly established
Toshiba Memory, which also took over Toshiba's joint venture
interest. Western Digital slammed the procedure and said the
transfer and subsequent selling process breaches their joint
venture contract.
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
=================
RICKMERS GROUP: To Face Insolvency if Restructuring Plan Rejected
-----------------------------------------------------------------
Seatrade Maritime reports that Rickmers Group has warned
bondholders that the company will face insolvency if they do not
vote in favor of financial restructuring plans.
"Should the noteholders not consent to the proposed resolutions,
this would presumably result in the insolvency of Rickmers
Holding," the report quotes Rickmers as saying in a Q&A on its
bond restructuring.
Should Rickmers be declared insolvent unsecured claims would be
met only to the amount of the insolvency quota, Seatrade says.
According to the report, Rickmers said that insolvency
specialists Brinkmann & Partner the "best case" scenario for
insolvency would see bondholders being paid less than the amount
of the 8.875% interest payment due on June 11 that they would
"certainly receive" if the proposed authorisation was given.
Earlier this month Rickmers failed to hit the required quorum of
bondholders with noteholders corresponding to only 17.37% of the
outstanding bond capital voting, Seatrade says. A quorum of 50%
was required.
Rickmers has called a second meeting of the bondholders in form
of a physical meeting on June 1, 2017, the report notes.
Seatrade relates that the situation is reminiscent of that
experienced by Singapore-listed shipping trust spin-off Rickmers
Maritime which failed to get approval for its planned
restructuring from bondholders and is now being wound-up.
Under the proposed restructuring, sole shareholder Bertram
Rickmers is prepared to reduce his stake from 100% to 24.9% to
allow key stakeholders to majority control the company, adds
Seatrade.
Rickmers Maritime (SGX:B1ZU) -- http://www.rickmers-maritime.com/
-- is a Singapore-based business trust that owns and operates
containerships mainly under fixed-rate time charters to global
container liner companies. The Trust owns a portfolio of
approximately 20 containerships ranging from 3,450 twenty foot
equivalent unit (TEU) to 5,060 TEU, offering a total capacity of
approximately 66,410 TEU. The Company's subsidiaries include
Kaethe Navigation Limited, Richard II Navigation Limited, Henry
II Navigation Limited, Moni II Navigation Limited, Vicki Rickmers
Navigation Limited, Maja Rickmers Navigation Limited, Laranna
Rickmers Navigation Limited, Sabine Rickmers Navigation Limited,
Clan Navigation Limited and Ebba Navigation Limited. The Trust is
managed by Rickmers Trust Management Pte. Ltd.
================
S R I L A N K A
================
KOTAGALA PLANTATIONS: Fitch Cuts National Long-Term Rating to CC
----------------------------------------------------------------
Fitch Ratings Lanka has downgraded Sri Lanka-based Kotagala
Plantations PLC's National Long-Term rating to 'CC(lka)' from
'B+(lka)'. The agency has also downgraded the National Long-Term
rating on Kotagala's outstanding listed senior secured debentures
of LKR1 billion to 'CC(lka)' from 'B+(lka)'.
The downgrade follows continued deterioration in the company's
liquidity, as its operating EBITDA weakened further in the
financial year ending-March 2016 (FY16) due to falling tea and
rubber prices, high labour costs and poor labour productivity.
Consequently, Kotagala's operating EBITDA of LKR30 million was
insufficient to cover its borrowing costs of LKR503 million and
the company had to utilise cash reserves to meet most of its
financial obligations.
The company's EBITDA recovered to LKR247 million in 9MFY17, from
LKR198 million in 9MFY16, driven by improving tea and rubber
prices. However, Fitch expects EBITDA to fall short of meeting
the company's borrowing costs and operating lease rent in the
next 12 months-18 months. Kotagala has around LKR546 million of
bank loan maturities due in FY18. The company has benefitted from
banks' willingness to restructure its borrowings in the past.
However, principal repayments on its listed senior secured
debenture will fall due in FY19, starting with LKR250 million
principal due in May 2018.
KEY RATING DRIVERS
Weak Liquidity; High Refinancing Risk: Kotagala faces substantial
debt maturities from FY18 and Fitch believes it will be
challenging for the company to meet its obligations due to its
low cash balance and negative free cash flow generation in the
next two years. Further, the company does not have any committed
credit lines at its disposal, limiting its financial flexibility
and exposing it to significant refinancing risk. The company's
efforts in FY16-FY17 to lower debt via asset disposals and
extending the maturity of part of its existing debt has not led
to a sustained improvement in liquidity.
Challenging Operating Conditions: The profitability of Kotagala's
tea and rubber plantations has improved in the previous few
months with rebounding global prices, but Fitch does not believe
the improvement is sufficient to offset the sector's structural
decline stemming from continued supply-side pressure, such as
lower productivity and high labour costs. Fitch expects the
expansion of Kotagala's more profitable palm oil operations to
support cash flow, but Fitch does not expects a significant
contribution in the medium-term as its oil palm plantation are
still in an immature stage.
Marginal Recovery in Profitability: Fitch expects Kotagala's
annual EBITDA to improve to around LKR400 million in FY17 and
LKR600 million in FY18. Tea prices recovered to an average of
USD3.8/kg and rubber to USD2.3/kg in Q4FY17, from lows of
USD2.8/kg and USD1.4/kg, respectively, in Q4FY16. This is mainly
because demand from Russia and key Middle Eastern countries
recovered in line with higher global crude oil prices. Fitch
EBITDA forecasts for the next two years are based on the
assumptions that tea prices will average at USD3/kg and rubber
prices will average around USD2/kg. However, Fitch expects
continued increase in labour costs to partly offset these
benefits.
Weak Financial Profile: Fitch expects the company's leverage,
defined as lease-adjusted debt net of cash/operating EBITDAR, to
remain unsustainably high over the medium-term, at around 10x-12x
(end-2016: 14.6x), and EBITDAR/interest paid plus rents to remain
below 1x. Fitch believes local banks may continue to fund the
company's operations to comply with the regulatory requirement to
lend to the agricultural sector.
Pressure from Cambodian investment: The company may incur an
additional USD4.1 million (around LKR635 million) in debt if it
completes its acquisition in Cambodia, which was initiated in
2012. This debt will need to be funded through borrowings. The
project is not expected to yield significant cash flow in the
medium-term, which, together with the additional borrowings,
could further weaken the company's leverage position. However,
Kotagala believes it has the flexibility to defer the acquisition
or sell it to a third-party if required.
DERIVATION SUMMARY
The rating factors in Kotagala's weak liquidity, unsustainable
leverage and limited medium-term business prospects due to
inherent weaknesses in its tea and rubber plantation businesses.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Average price of tea at USD3/kg and average price of rubber at
USD2/kg in 2017 and 2018
- Annual EBITDA to average around LKR400 million in FY17 and
around LKR600 million in FY18
- Capex to average about 4% of sales between from FY17 to FY20,
mainly channelled for the development of palm oil plantations
and replanting of tea and rubber
- No dividend outflows from FY17 to FY20
RATING SENSITIVITIES
Developments that may, individually or collectively, lead to
positive rating action include:
- Significant improvement in the company's liquidity profile
Developments that may, individually or collectively, lead to
negative rating action include:
- If the company enters into a temporary negotiated waiver or
standstill agreement following a payment default on a large
financial obligation
LIQUIDITY
High Liquidity Risk: Kotagala had LKR764 million of unrestricted
cash at end-2016 to meet around LKR542 million of contracted debt
maturities due in the 12 months to end-2017. Fitch expects the
company to post negative free cash flow of around LKR500 million
in FY18, which may also need to be funded by debt. The company's
liquidity position may tighten considerably from FY18, when most
of its long-term debt starts to mature amid Fitch expectations of
negative free cash flow.
=============
V I E T N A M
=============
VIETNAMESE BANK: Fitch Affirms B+ LT IDR; Revises Outlook to Pos.
-----------------------------------------------------------------
Fitch Ratings has revised the Outlooks on the Long-Term Issuer
Default Ratings (IDRs) of three state-owned Vietnamese banks -
Vietnam Joint Stock Commercial Bank for Industry and Trade
(Vietinbank), Joint Stock Commercial Bank for Foreign Trade of
Vietnam (Vietcombank) and Vietnam Bank for Agriculture and Rural
Development (Agribank) - to Positive from Stable. At the same
time, the agency has affirmed the Long-Term IDRs on the banks at
'B+'.
The Outlooks have been revised following a revision in the
Vietnam sovereign's Outlook to Positive from Stable on May 18,
2017, which takes into account Vietnam's strong macroeconomic
performance and improvement in the country's external stability
indicators. The improvements are reflected in persistent current-
account surpluses, manageable debt-service costs and sustained
foreign direct investment inflows.
For more details on the Outlook revision on the sovereign, see
the rating action commentary Fitch Revises Outlook for Vietnam to
Positive; Affirms at BB- , dated May 18, 2017.
KEY RATING DRIVERS
VIABILITY RATINGS, IDRS, SUPPORT RATINGS AND SUPPORT RATING
FLOORS
The Outlook revision on the three banks' IDRs reflects Fitch's
view of improving sovereign ability to provide extraordinary
support, if needed.
The Long-Term IDRs of Agribank, Vietinbank and Vietcombank are
driven by Fitch's expectation that government support will be
forthcoming, if needed, in light of their high systemic
importance and the government's controlling stakes. They are
among the top four Vietnamese banks by assets and have strong
domestic franchises.
The banks' IDRs and Support Rating Floors are one notch lower
than Vietnam's sovereign rating (BB-/Positive) as Fitch believes
the large size of the banking industry relative to GDP and the
government's limited resources may hamper the timeliness of
support.
The 'b-' Viability Ratings of Vietcombank and Vietinbank reflect
their limited balance sheet buffers relative to the size of their
problematic assets, their weak financial performance and high
loan concentration risk in state-owned enterprises (SOEs). The
Viability Ratings also consider their solid domestic franchises
and their stable funding profiles.
Fitch does not assign a Viability Rating to wholly government-
owned Agribank. The bank's role in providing support to the
domestic economy has a high influence on its standalone profile
and makes it likely that Agribank will continue to benefit from
regulatory forbearance.
RATING SENSITIVITIES
IDRS, SUPPORT RATINGS AND SUPPORT RATING FLOORS OF AGRIBANK,
VIETINBANK, VIETCOMBANK
The Long-Term IDRs, Support Ratings and Support Rating Floors of
Agribank, Vietinbank and Vietcombank are sensitive to movements
in the sovereign's ratings, which are currently on a Positive
Outlook. An upgrade of the sovereign ratings would likely lift
the banks' support-driven ratings. The banks' ratings may also be
affected by any perceived change in the government's propensity
to support the banks.
VIABILITY RATINGS OF VIETINBANK, VIETCOMBANK
Fitch may take positive rating action on the banks' Viability
Ratings if structural issues, such as corporate governance, bad-
debt resolution and thin capitalisation, are more adequately
addressed, leading to greater transparency and, together with
sustained strong economic performance, to continued improvements
in the banks' overall credit profiles.
Viability Ratings may be pressured if excessive growth or an
increased loan concentration leads to significant impairment
risks and weakened balance sheets. Downward pressure for
Vietinbank may be higher given its low capital ratio and higher
SOE loan concentration risk.
The rating actions are:
Agribank
Long-Term IDR affirmed at 'B+'; Outlook revised to Positive from
Stable
Short-Term IDR affirmed at 'B'
Support Rating Floor affirmed at 'B+'
Support Rating affirmed at '4'
Vietinbank
Long-Term IDR affirmed at 'B+'; Outlook revised to Positive from
Stable
Short-Term IDR affirmed at 'B'
Viability Rating affirmed at 'b-'
Support Rating Floor affirmed at 'B+'
Support Rating affirmed at '4'
Vietcombank
Long-Term IDR affirmed at 'B+'; Outlook revised to Positive from
Stable
Short-Term IDR affirmed at 'B'
Viability Rating affirmed at 'b-'
Support Rating Floor affirmed at 'B+'
Support Rating affirmed at '4'
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Nina Novak at 202-362-8552.
*** End of Transmission ***