/raid1/www/Hosts/bankrupt/TCRAP_Public/170622.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, June 22, 2017, Vol. 20, No. 123
Headlines
A U S T R A L I A
AUSTRADIA PTY: Axes 18 Jobs at Topshop Australia Head Office
BMQ DENTAL: First Creditors' Meeting Set for June 29
DICK SMITH: Shareholders Launch Class Action vs. Insurers
ICONIC ENTERTAINMENT: First Creditors' Meeting Set for June 28
REDZED TRUST 2015-1: S&P Raises Rating on Cl. F Notes to B+
ROYALE ADELAIDE: Second Creditors' Meeting Set for June 27
SOCIAL CREATIVE: Second Creditors' Meeting Set for June 27
SYDNEY PROJECT: First Creditors' Meeting Set for June 28
XIANG RONG: First Creditors' Meeting Set for June 28
C H I N A
JIANGSU HANRUI: Fitch Affirms BB+ Long-Term IDR; Outlook Stable
REWARD SCIENCE: Fitch Lowers IDR to B; Outlook Stable
SHANDONG RUYI: Moody's Rates Proposed USD Sr. Unsec. Notes (P)B3
H O N G K O N G
NOBLE GROUP: Defers Bond Coupon Payment Due June 26
NOBLE GROUP: Loan Extension No Impact on Moody's Caa1 CFR
ROAD KING: Moody's Rates Proposed USD Senior Perpetual Notes B1
I N D I A
AVADH COTEX: ICRA Reaffirms B+ Rating on INR15cr LT Loan
AVADH COTTON: ICRA Reaffirms 'B' Rating on INR4.50cr Loan
CORNERVIEW CONSTRUCTIONS: ICRA Cuts Rating on INR110cr Loan to D
G.R.K. THEATRES: CARE Assigns B+ Rating to INR10cr LT Loan
HARIKISHAN TEJMAL: CARE Reaffirms B+/A4 Rating on INR22cr Loan
JAI AMBEY: CARE Reaffirms B+ Rating on INR12cr Long Term Loan
K.C. PRINTING: CARE Reaffirms B+ Rating on INR7cr LT Loan
MADHAV OIL: ICRA Withdraws B+ Rating on INR9.25cr Cash Loan
MANJU SHREE: ICRA Reaffirms B+ Rating on INR7.21cr Loan
MONNET ISPAT: Lenders Begin Insolvency Process
NEW VARDHMAN: ICRA Reaffirms B Rating on INR19.82cr Term Loan
OMKAMAL STEEL: CARE Assigns 'B+' Rating to INR4.65cr LT Loan
OPTIONS LAWNS: CARE Assigns B+ Rating to INR7.85cr LT Loan
PATEL COTTON: CARE Assigns B Rating to INR14.13cr LT Loan
PMT MACHINES: CARE Assigns 'D' Rating to INR428.27cr LT Loan
R.R. ENERGY: CARE Assigns 'B' Rating to INR66cr LT Loan
SAMARTTHA TRIMURTI: CARE Assigns B+ Rating to INR15cr LT Loan
SHAKUMBHRI PULP: ICRA Reaffirms B+ Rating on INR6.10cr Loan
SHREE RAMANJANEYA: CARE Assigns B+ Rating to INR14.91cr LT Loan
SILVERTONES SPECIALITY: ICRA Reaffirms B+ Rating on INR20cr Loan
SLN CNC: ICRA Reaffirms B+ Rating on INR4.50cr Cash Loan
SONATA FINANCE: ICRA Cuts Rating on INR3.19cr Sec. to B+(SO)
STERLING BIOTECH: CARE Assigns 'D' Rating to INR3,768cr Loan
STERLING BIOTECH LTD: CARE Assigns D Rating to INR1,434.92cr Loan
STERLING OIL: CARE Assigns 'D' Rating to INR299.72cr LT Loan
STERLING PORT: CARE Assigns 'D' Rating to INR244.35cr Loan
SUMMA REAL: ICRA Reaffirms B+ Rating on INR12.50cr Term Loan
VARIETY LUMBERS: ICRA Reaffirms B+ Rating on INR2cr Cash Loan
VIJAY LATEX: ICRA Withdraws 'D' Rating on INR11.93cr Loan
J A P A N
TAKATA CORP: Bankruptcy Means Air Bag Victims Get Less Money
TOSHIBA: Chooses Gov't-Led Group as Preferred Bidder for Unit
N E W Z E A L A N D
DC ROSS: Scott Technology Buys Firm Out of Receivership
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A U S T R A L I A
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AUSTRADIA PTY: Axes 18 Jobs at Topshop Australia Head Office
------------------------------------------------------------
Emma Koehn and Dominic Powell at SmartCompany report that there
have been 18 redundancies at the head office of Topshop
Australia, with administrators Ferrier Hodgson continuing to work
with the UK owner of the Topshop brand to "resize" the business
after it collapsed into voluntary administration in May.
When administrators were called in, the Australian franchise of
the Topshop and Topman brands had six standalone stores and 17
concessions inside the outlets of department store Myer, which
owns a 20% stake in the franchise, SmartCompany relates.
"The administrators are continuing discussions with Arcadia
Group, with a focus on right sizing the Topshop Topman Australian
business. Some restructuring has already commenced, which has
unfortunately resulted in 18 head office redundancies," a
spokesperson for the administrators confirmed to SmartCompany on
June 21.
Austradia Pty Ltd (trading as 'Topshop/Topman'), one of
Australia's best known fast fashion retailers, was placed into
voluntary administration on May 24.
Ferrier Hodgson partners James Stewart, Jim Sarantinos, and Ryan
Eagle were appointed voluntary administrators by the company's
board of directors.
Topshop and Topman are the foundational brands of Arcadia Group
Ltd, a British multinational fashion retailer. The separately
owned and operated Australian franchise, Topshop/Topman, opened
locally in 2011.
BMQ DENTAL: First Creditors' Meeting Set for June 29
----------------------------------------------------
A first meeting of the creditors in the proceedings of BMQ Dental
Pty Ltd will be held at the offices of Pilot Partners, Level 10
1 Eagle Street, in Brisbane, Queensland, on June 29, 2017, at
10:00 a.m.
Nigel Markey and Ann Fordyce of Pilot Partners were appointed as
administrators of BMQ Dental on June 19, 2017.
DICK SMITH: Shareholders Launch Class Action vs. Insurers
---------------------------------------------------------
Frank Chung at news.com.au reports that the insurers of the
former directors of Dick Smith could be hit with a hefty bill
from disgruntled shareholders if a class-action lawsuit gets the
go-ahead and proves successful.
Just under 1,000 former shareholders, who individually lost
anywhere from AUD500 to nearly AUD2 million when the company went
under in January 2016, have signed up for the class action
initiated by Bannister Law and underwritten by international
litigation funder Vannin Capital, according to news.com.au.
Kris Pierce, who runs a small horticulture business in Coffs
Harbour, lost about AUD8,000 in Dick Smith shares, the report
discloses. news.com.au relates that Mr. Pierce said he's only a
casual investor but does his due diligence and studies the
markets before making a share purchase.
"I wanted to support an Australian company," the report quotes
Mr. Pierce as saying. "It just seemed like a strong, solid retail
company - there was no detail to say otherwise."
The report relates that Mr. Pierce said despite the share price
dips, nothing in the company's financials suggested it was
the beginning of the end. "For things to go so bad, so quickly
after a positive financial report, something was clearly wrong.
There were certainly no external factors that explain that rapid
collapse."
According to news.com.au, Bannister Law has applied for leave
with the Supreme Court of NSW to file the class action, with a
hearing scheduled for later this month. The law firm requires the
court's permission as the company in liquidation.
The report says the claim alleges Dick Smith breached its
continuous disclosure obligations under the Corporations Act. It
is alleged that during 2015, the company made decisions about
what stock to purchase primarily based on the rebates that could
be obtained from suppliers, rather than what customers wanted to
buy.
This led to an increase in bad stock that could not be sold and
an increase in debt. In November 2015, the company was forced to
announce a AUD60 million writedown of bad stock, leading to a
share price rout.
news.com.au adds that the suit alleged Dick Smith was aware of
the accumulation of bad stock earlier in 2015 and failed to
advise the market, in breach of its legal obligations. It is also
alleged that the accounting treatment of the rebates - reporting
them under profit before the stock to which they were attached
had been sold - was not in accordance with Australian Accounting
Standards.
The shareholders allege the effect of the accounting treatment
was to artificially inflate Dick Smith's profits as reported in
its 2015 financial statements, in contravention of the
Corporations Act, the report relates. They allege the share price
was inflated as a result of the breaches, leading to loss and
damage.
Bannister Law's Diane Chapman was also critical of the company's
decision to pay a dividend in late 2015, news.com.au notes. "The
most horrible thing is [these shareholders] actually lost money
in the period between August 2015 when the annual report came
out, and January 2016 when the company went into receivership,"
news.com.au quotes Ms. Chapman as saying.
"Because the share price was going down, they thought it was a
bargain. The company was such a good brand, and it did pay a
dividend, which would indicate to more sophisticated investors
that the company was in good health.
"In October, when they had their consultants do the stock audit,
they did have to announce at the time there would be a writedown
of inventory. We're going to allege they had to have had some
knowledge [of the situation], and to pay a dividend in those
circumstances was really not the best indication for the market."
With the company in liquidation, Ms. Chapman said any money from
a successful outcome would come from the insurance companies of
the directors and officers, news.com.au relays.
"We're actually suing the company via the directors' and
officers' insurance policies," she said. "The directors and
officers have insurance policies which cover them for negligent
acts. We believe that the information that was provided to the
market and the way the rebates fell within the company reporting
is sufficient to bring a claim."
Earlier this year, receivers Ferrier Hodgson took separate action
in the NSW Supreme Court against eight former Dick Smith
executives and directors - former chief executive Nick Abboud,
chief financial officer Michael Potts, and directors Bill Wavish,
Phil Cave, Rob Murray, Jamie Tomlinson, Robert Ishak and Lorna
Raine, news.com.au recounts.
news.com.au says the executives and directors have been accused
of breaching their duty to exercise reasonable care ahead of the
company's financial collapse.
But the law firm representing Mr. Murray, Mr. Tomlinson,
Ms. Raine and Mr. Ishak said in a statement that the four non-
executive directors would vigorously defend the receivers'
allegations that they failed to put in place adequate systems to
manage supplier rebates and inventory, the report relates.
It is understood the other executives and directors will also
defend the matter, news.com.au notes.
About Dick Smith
Dick Smith Holdings Limited Ltd (ASX:DSH) --
http://dicksmithholdings.com.au/-- was a retailer of consumer
electronics products. The Company sold a range of products
across four categories: office, mobility, entertainment, and
other products and services. The Company had two segments: Dick
Smith Australia and Dick Smith New Zealand. The Company connected
with its customers through four physical store formats, catering
for three distinct consumer demographics: Dick Smith, MOVE, David
Jones Electronics Powered by Dick Smith and MOVE by Dick Smith
Sydney International Airport. The Company's store network
consisted of approximately 393 stores across Australia and
New Zealand, which include approximately 351 Dick Smith stores,
approximately 10 MOVE stores, approximately four MOVE by Dick
Smith stores and approximately 28 David Jones Electronics Powered
by Dick Smith stores.
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 6, 2016, Dick Smith Holdings Ltd was placed in receivership
on Jan. 5 following the appointment of Voluntary Administrators.
Ferrier Hodgson partners James Stewart, Jim Sarantinos and
Ryan Eagle were appointed Receivers and Managers over DSH and
a number of associated entities. The appointment was made by a
syndicate of lenders which hold security over the group.
The TCR-AP, citing Otago Daily Times, reported on July 26, 2016,
that the creditors of Dick Smith have voted in favor of
liquidation. According to the report, administrator
McGrathNicol will take over as liquidator of 10 companies within
the Dick Smith group following the vote by creditors at a meeting
in Sydney on July 25. ODT related that McGrathNicol will continue
to focus on the exact reasons for Dick Smith's collapse, and who
is to blame.
ICONIC ENTERTAINMENT: First Creditors' Meeting Set for June 28
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of Iconic
Entertainment Pty Ltd will be held at Level 5, 123 Pitt Street,
in Sydney, NSW, on June 28, 2017, at 10:30 a.m.
David Iannuzzi and Vincent Pirina of Veritas Advisory were
appointed as administrators of Iconic Entertainment on June 17,
2017.
REDZED TRUST 2015-1: S&P Raises Rating on Cl. F Notes to B+
-----------------------------------------------------------
S&P Global Ratings raised its ratings on five classes of notes
issued by Perpetual Trustee Co. Ltd. as trustee of RedZed Trust
in respect of Series 2015-1. At the same time, S&P affirmed its
ratings on the senior notes.
The rating actions reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, which consists of loans to nonconforming
borrowers originated by RedZed Lending Solutions Pty Ltd.
As of April 30, 2017, the pool has a current weighted-
average loan-to-value ratio of 71% and weighted-average
seasoning of 3.3 years. Interest-only loans make up 36.7%
of the pool balance, with most loans reverting to fully
amortizing by 2019. S&P's view is that the interest-only
feature can create payment shock when the payments revert
to fully amortizing during the remaining term of the loan.
-- Asset performance has been stable since inception and
cumulative net losses have been minimal, at about A$54,000
of the original pool balance. As of April 30, 2017, 6.8%
of the asset pool is in arrears, with 1.6% in arrears by
more than 90 days. S&P has assumed that loans in arrears
for more than 90 days have defaulted, in line with its
"Australian RMBS Rating Methodology And Assumptions"
criteria, published Sept. 1, 2011.
-- Due to the sequential payment structure for the majority of
the transaction's life to date, significant credit support
has built up to each class of notes. The amount of credit
support provided to each class of notes exceeds the minimum
amount S&P assess as being commensurate with each
respective rating level and is thereby currently sufficient
to withstand the stresses commensurate with the ratings.
-- S&P's rating analysis on the arising risk of borrower
concentration as the pool continues to amortize. S&P views
that the lower rated notes are more susceptible to tail-end
risk and back-end losses; however, S&P expects that credit
support available to rated notes will continue to build due
to the transaction's structural features, whereby the class
G notes do not receive any principal until all rated notes
are fully repaid. The availability of a retention amount
built from excess spread up to the call date, which is
applied to reduce the balance outstanding of the most
subordinated rated note at that time and serves to create
overcollateralization in the transaction. Approximately
A$2.6 million of overcollateralization has been created to
the date of this review. S&P's expectation that the
various mechanisms to support liquidity within the
transaction, including a liquidity facility equal to 2.5%
of outstanding balance of the notes, and principal draws
are sufficient under S&P's stress assumptions to ensure
timely payment of interest. Also the buildup of yield
enhancement that is available as liquidity support to the
senior expenses, class A1, and class A2 notes.
RATINGS RAISED
Class Ratings To Ratings From
B AAA (sf) AA (sf)
C AA (sf) A (sf)
D A (sf) BBB (sf)
E BB+ (sf) BB (sf)
F B+ (sf) B (sf)
RATINGS AFFIRMED
Class Rating
A-1 AAA (sf)
A-2 AAA (sf)
ROYALE ADELAIDE: Second Creditors' Meeting Set for June 27
----------------------------------------------------------
A second meeting of creditors in the proceedings of The Royale
Adelaide Club Pty Ltd has been set for June 27, 2017, at
10:30 a.m., at the offices of DuncanPowell, Level 4, 70 Pirie
Street, in Adelaide, South Australia.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 26, 2017, at 4:00 p.m.
Peter James Lanthois, Andrew George and Ashbrook Langshaw of
DuncanPowell were appointed as administrators of The Royale
Adelaide on June 15, 2017.
SOCIAL CREATIVE: Second Creditors' Meeting Set for June 27
----------------------------------------------------------
A second meeting of creditors in the proceedings of The Social
Creative Pty Ltd has been set for June 27, 2017, at 9:30 a.m., at
the offices of DuncanPowell, Level 4, 70 Pirie Street, in
Adelaide, South Australia.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 26, 2017, at 4:00 p.m.
Peter James Lanthois, Andrew George and Ashbrook Langshaw of
DuncanPowell were appointed as administrators of The Social
Creative on June 15, 2017.
SYDNEY PROJECT: First Creditors' Meeting Set for June 28
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Sydney
Project Group Pty Ltd and S.E.T. Services Pty Ltd will be held at
Conference Room 4, Radisson Blu Plaza Sydney, 27 O'Connell
Street, in Sydney, NSW, on June 28, 2017, at 11:30 a.m.
Michael Hogan & Christian Sprowles of Hogan Sprowles were
appointed as administrators of Sydney Project on June 16, 2017.
XIANG RONG: First Creditors' Meeting Set for June 28
----------------------------------------------------
A first meeting of the creditors in the proceedings of Xiang Rong
(Australia) Investment Group Pty Ltd will be held at the offices
of Hall Chadwick, Level 40, 2 Park Street, in Sydney, NSW, on
June 28, 2017, at 11:00 a.m.
Steven Gladman of Hall Chadwick was appointed as administrator of
Xiang Rong on June 19, 2017.
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C H I N A
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JIANGSU HANRUI: Fitch Affirms BB+ Long-Term IDR; Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Jiangsu HanRui Investment Holding
Co.,Ltd.'s Long-Term Foreign- and Local-Currency Issuer Default
Ratings (IDR) at 'BB +'. The Outlook is Stable.
Fitch has also affirmed the 'BB+' long-term foreign-currency
ratings on the USD490 million 4.9% senior unsecured notes due
2019 issued by Hanrui Overseas Investment Co., Ltd.
The notes are unconditionally and irrevocably guaranteed by
Hanrui International Investment Company Limited (HII), HanRui's
wholly owned subsidiary. Under the keepwell structure, HanRui
undertakes to ensure HII has sufficient assets and liquidity to
meet its obligations.
KEY RATING DRIVERS
Linked to Zhenjiang Municipality: HanRui's ratings are credit-
linked with those of Zhenjiang municipality in Jiangsu province.
The link reflects strong oversight and supervision of HanRui by
the Zhenjiang government and the company's strategic importance
as the flagship local government funding vehicle (LGFV) platform
for public-sector construction in Zhenjiang New Area, a national-
level economic and technological development zone. Hence, HanRui
is classified as a public-sector entity under Fitch's criteria.
Zhenjiang's Creditworthiness: Zhenjiang's economy is backed by a
traditionally strong secondary industry and the expanding
tertiary industry has also become an important driver as part of
the municipality's economic transformation. Zhenjiang maintained
strong gross regional product (GRP) growth of 9.3% in 2016,
outperforming both Jiangsu and the national average. Zhenjiang
has a favourable socio-economic profile, despite its smaller
economy, with population inflow and GRP per capita that ranked
fifth among Jiangsu's 13 municipalities. These strengths mitigate
the city's moderately high continent liabilities arising from its
state-owned entities.
Legal Status 'Mid-Range': HanRui is registered as a wholly state-
owned limited liability company under Chinese company law and is
under the direct supervision of Zhenjiang State-Owned Assets
Supervision and Administration Commission (SASAC). Zhenjiang
SASAC has full control over HanRui and HanRui's daily operations
are supervised by the administrative committee of Zhenjiang New
Area on behalf of Zhenjiang SASAC. The government has no plan to
dilute its shareholding in HanRui.
Control 'Stronger': HanRui's financing plan and debt level are
closely monitored by the municipality. HanRui reports its budget
performance on a regular basis and its board members, except for
employee representatives, are all appointed by Zhenjiang
municipality.
Strategic Importance 'Stronger': HanRui is Zhenjiang's flagship
urban development LGFV and helps fund infrastructure and social
housing construction within the Zhenjiang New Area. Zhenjiang New
Area and HanRui play an important role in driving the
transformation of Zhenjiang's economy, which would suffer
significant consequences from a default. Hence, this attribute
has been given more weight for the rating.
Integration 'Stronger': HanRui has received consistent government
financial support, including subsidies and capital injections.
Annual subsidies have averaged 148% of the company's net profit
over the previous three years, demonstrating the government's
commitment in maintaining HanRui as a going concern. Fitch
expects continued government support to partly fund HanRui's
capital expenditure and debt servicing, considering its high
strategic importance.
Weak Standalone Profile: HanRui's financial profile is borne by
large capital expenditure, negative free cash flow and high
leverage. Its weak standalone credit metrics are not likely to
see any significant improvement in the near term. Fitch expects
ongoing government financial support to mitigate this risk,
despite HanRui's infrastructure developments in Zhenjiang New
Area.
RATING SENSITIVITIES
A stronger or more explicit support commitment from Zhenjiang
municipality may trigger positive rating action on HanRui.
Significant changes to HanRui's strategic importance, a diluted
municipal shareholding or reduced explicit and implicit
municipality support could lead to a wider rating gap between
HanRui and Zhenjiang.
An upgrade of Fitch's internal credit view of Zhenjiang may
trigger positive rating action on HanRui. A weaker fiscal
performance or higher municipality indebtedness could lead to a
lowering of Fitch's internal assessment of Zhenjiang's
creditworthiness and thus trigger negative rating action on
HanRui.
REWARD SCIENCE: Fitch Lowers IDR to B; Outlook Stable
-----------------------------------------------------
Fitch Ratings has downgraded Reward Science and Technology
Industry Group Co., Ltd.'s (Reward Group) Long-Term Foreign-
Currency Issuer Default Rating (IDR) to 'B' from 'B+'. The
Outlook is Stable. Fitch has also downgraded the Chinese consumer
and dairy product producer's senior unsecured rating to 'B' from
'B+' with Recovery Rating of 'RR4'.
The downgrade reflects Reward Group's volatile operating
performance, higher-than-expected FFO-adjusted net leverage of
2.3x at end-2016 and lower-than-expected EBITDA margin of 14.8%
in 2016. Both financial metrics reached levels at which Fitch
would consider negative rating action, and Fitch does not expect
substantial improvement in the next two years. The higher
leverage was mainly due to weaker margin in daily consumer
products, higher selling and administrative costs, and greater
working capital outflow caused by larger receivables in 2016.
KEY RATING DRIVERS
Recent Performance Volatile: The unpredictable performance of
Reward Group's earnings is one of its key credit weaknesses. In
2016, the company posted strong revenue growth of 36.2%, but
EBITDA margin dropped to 14.8% from 19.9% in 2015, mainly due to
higher advertising costs, a larger share of sales from low-margin
OEM daily consumer products, and product discounts offered in the
year.
The company's quarterly financial performance has been volatile,
affected by factors such as advertising, seasonal promotion
campaigns and timing of sales. Reward Group's revenue rose by
around 60% yoy but it posted an EBIT loss in 4Q16, compared with
a 25.4% EBIT margin in 3Q16. EBIT turned positive in 1Q17, with
EBIT margin of 17.4%.
Weak Market Position, Execution Risks: Fitch views the
significant variation in quarterly performance as a reflection of
Reward Group's small market share and limited capacity in
handling external market changes. Reward Group only has low
single-digit market shares in its respective business segments.
There is also limited product differentiation, and most of Reward
Group's products face fierce competition from both local and
overseas brands. Reward Group's new-business initiatives have
limited synergy with existing businesses, and execution risk is
high due to the company's short track record in these areas.
Rising Gross Debt: Reward Group has started to tap the domestic
bond market in an effort to adjust its debt tenors. At end-2016,
Reward had outstanding domestic bonds of CNY5.0 billion, and
total debt of CNY6.1 billion. Total debt increased to CNY7.9
billion by end-March 2017. Fitch expects the cash interest burden
to rise in line with higher gross debt, which is likely to hurt
Reward Group's FFO margin and reduce the company's fixed-charge
coverage.
Financial Profile Supports Ratings: Reward's balance sheet
remains healthy despite the recent rise in gross debt, which
mitigates its weaker business profile. Fitch expects FFO-adjusted
net leverage to remain below 3.0x (end-2016: 2.3x) in the next
few years and for FFO fixed-charge coverage to remain above 2.5x
(end-2016: 9.8x). Liquidity is also sufficient - the company's
cash and cash equivalents and unutilised credit facilities at the
end of 2016 were more than enough to cover the CNY2.2 billion of
debt maturing within one year.
Shareholding Concentration, Limited Transparency: Reward Group is
a privately owned company that discloses fewer financial details
than listed companies and is not audited by one of the Big Four
accounting firms. Reward Group's founder Mr. Hu Keqin and his
family own over 96% of company's shares. The concentrated
shareholding results in limited board oversight, with two
independent board members only appointed in 2016. Fitch views of
the company's shareholding and transparency has not changed since
Fitch previous assessment and these factors will remain
constraints on the ratings unless the shareholding structure or
financial disclosures significantly improve.
DERIVATION SUMMARY
Reward Group is outranked by its 'BB-' and 'B+' rated peers based
on revenue and EBITDA. These peers include PT Japfa Comfeed
Indonesia Tbk (Japfa, BB-/Stable), Agri Business Holding Miratorg
LLC (Miratorg, B+/Stable) and Avon Products, Inc (Avon,
B+/Negative). Reward Group's financial metrics are also of weaker
quality than those of these higher-rated peers, because its
metrics are more volatile intra-year.
Reward has similar revenue and EBITDA to 'B' rated peers, such as
Yasar Holding A.S. (Yasar, B/Stable) and Premier Foods Plc
(Premier Foods, B/Negative). Despite Reward's better coverage and
leverage ratios, it is rated at the same level as these companies
because of its weaker business profile. Reward Group's rating is
constrained to the 'B' category due to its shareholder
concentration, lower transparency and limited earnings
visibility.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
- Revenue to grow 15% in 2017 and 3% in 2018.
- Around 15% EBITDA margin in 2017-2018
- Capital expenditure will remain at CNY450 million annually for
the next two years.
- Panrosa US acquisition completed in 2017
- No common dividends
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- EBITDA margin sustained above 15%
- FFO fixed-charge coverage sustained above 4x
- FFO-adjusted net leverage sustained below 2x
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- FFO-adjusted net leverage sustained above 3.5x
- FFO fixed charge coverage sustained below 2.5x
- EBITDA margin sustained below 12%
- Failure to provide regular accounting disclosures
LIQUIDITY
Adequate Liquidity: Reward Group had CNY4.76 billion of cash and
equivalents at end-2016. According to the company's management,
its unutilised credit facilities from local banks remained at
CNY500 million at end-2016. These would be adequate to cover the
outstanding short-term debt of CNY2.16 billion at end-2016.
Limited Funding Channels: Reward Group is a non-listed company
and has relatively limited funding channels. It plans to list
some of its onshore subsidiaries, but this is likely to take a
while, given the unfavourable environment for A-share IPOs now.
It relies mainly on bank loans and domestic bonds for financing.
Reward Group's main banking relationships are with Industrial and
Commercial Bank of China, Agricultural Bank of China, Bank of
Beijing, Huaxia Bank and Pudong Development Bank.
FULL LIST OF RATING ACTIONS
Reward Science and Technology Industry Group Co., Ltd.
-- Foreign Currency Long Term IDR downgraded to 'B' from 'B+';
Outlook Stable
-- Senior unsecured rating downgraded to 'B' from 'B+', Recovery
Rating of 'RR4'
Issued by Reward International Investment Co. Ltd with guarantee
from Reward Group
-- USD200 million 7.25% senior notes due 2020 downgraded to 'B'
from 'B+', Recovery Rating of 'RR4'
SHANDONG RUYI: Moody's Rates Proposed USD Sr. Unsec. Notes (P)B3
----------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)B3 rating
to the proposed USD senior unsecured notes to be issued by Prime
Bloom Holdings Limited - a wholly owned subsidiary of Shandong
Ruyi Technology Group Co., Ltd. (Ruyi, B2 stable) - and supported
by unconditional and irrevocable guarantees from Ruyi and its
wholly owned subsidiary, Forever Winner International Development
Limited (unrated).
The rating outlook is stable.
The provisional status of the rating on the notes will be removed
once Ruyi has completed the notes issuance upon satisfactory
terms and conditions, and obtained proper registrations of the
guarantees with the State Administration of Foreign Exchange in
China (China, Government of, A1 stable).
The proceeds from the proposed notes will be used for refinancing
existing indebtedness, as well as for Ruyi's working capital
needs.
RATINGS RATIONALE
"The proposed notes will improve Ruyi's liquidity position and
debt maturity profile," says Chenyi Lu, a Moody's Vice President
and Senior Credit Officer.
"The proposed notes will have no impact on Ruyi's rating, given
the small increase in Ruyi's debt level and no change to the
company's debt deleveraging through growth in earnings," adds Lu
who is the Lead Analyst for Ruyi.
The proposed notes will improve Ruyi's weak liquidity position.
At end-2016, the company's cash - including pledged deposits - of
RMB8.6 billion was low relative to its RMB9.1 billion of debt
maturing over the next 12 months, and short-term bills payable of
RMB5.5 billion.
But the proposed notes will add new debt to the company, because
the proceeds will not be used entirely for debt refinancing.
The company's debt leverage -- as measured by adjusted
debt/EBITDA -- will increase slightly to 7.9x from the 7.7x that
Moody's forecasted for end-2017.
Moody's expects that Ruyi's revenue will grow about 16% in 2017
and 5% in 2018. Such growth will be supported by: (1) newly added
production capacity in the yarn and fabrics business; and (2) the
fact that SMCP Group's (B1 stable) business will grow through
international expansion outside France, especially in Asia.
Moreover, during 2017-2018, Moody's expects that Ruyi's adjusted
EBITDA margin will improve to 12.0%-12.5% from 10.1% in 2016, due
to cost control measures and SMCP's better profit margins, which
will increase its contributions to Ruyi's EBITDA.
Consequently, Moody's continues to expect that Ruyi will
deleverage from the high of an adjusted debt/EBITDA of 9.3x at
end-2016 to around 7.4x by end-2018.
Ruyi's B2 corporate family rating reflects its established track
record in operating an integrated textile manufacturing business
- with a global sales network - and its ability to enhance
profitability through downstream expansion into the manufacture
and retail sale of apparel.
On the other hand, Ruyi's rating is constrained by its strong
appetite for acquisitions, non-textile business investments, high
financial risk from debt-funded growth, and weak liquidity
position.
The rating of the proposed notes has been notched down from
Ruyi's corporate family rating of B2, because the investors of
the notes will be exposed to the subordination risk arising from
the high levels of priority debt at Ruyi's operating
subsidiaries, which was equivalent to 20% of the company's total
assets at end-2016.
The stable outlook on the proposed USD senior unsecured notes
reflects Moody's expectation that Ruyi will: (1) maintain growth
in its revenues and profits in its textile and apparel
businesses; (2) continue deleveraging; and (3) be able to
refinance its short-term debt.
Upward rating pressure is limited in the near term, because the
company's debt leverage is high for Ruyi's B2 corporate family
rating.
However, Ruyi could face upgrade rating pressure, if it: (1)
shows a track record of disciplined acquisitions and investments;
and (2) improves its liquidity management and debt leverage.
Indicators of upgrade rating pressure include cash/short-term
debt of 1.0x and adjusted debt/EBITDA below 4.5x-5.0x on a
sustained basis.
On the other hand, the rating could face downward pressure if:
(1) the company takes on further debt-funded expansion or
acquisitions, such that its credit metrics remain weak. In
particular, if its adjusted debt/EBITDA exceeds 7.5x-8.0x on a
sustained basis; or (2) its liquidity position deteriorates.
The principal methodology used in this rating was Retail Industry
published in October 2015.
Established in 2001, Shandong Ruyi Technology Group Co., Ltd. is
a vertically integrated textile company that engages in textile
manufacturing, trading, the manufacturing and retailing of
apparel, and cotton and wool production.
The company has two listed subsidiaries, namely, the Shenzhen
Stock Exchange-listed Shandong Jining Ruyi Woolen Textile Co.
Ltd. (unrated), and Tokyo Stock Exchange-listed Renown
Incorporated (unrated).
================
H O N G K O N G
================
NOBLE GROUP: Defers Bond Coupon Payment Due June 26
---------------------------------------------------
Reuters reports that Noble Group Ltd on June 20 confirmed it had
extended a key debt deadline and was in "constructive" talks with
potential investors, but the crisis-hit trader also pushed back
payment of the coupon on a closely watched bond.
The decision to defer payment of the coupon on its US$400 million
perpetual securities, due June 26, worried investors, who said
the failure to pay US$12 million sent a negative signal and
suggested lenders may have asked the group to defer payment where
possible, Reuters says.
"While non payment of the perpetual bond coupon will not trigger
a default event, it is a further hit to the company's reputation.
This is hurting investor confidence," said one Hong Kong-based
analyst, who declined to be named, Reuters relays.
Reuters relates that Noble - which has sold billions of dollars
in assets over the past two years - from its US energy unit to
its agribusiness, also said it could sell more and cut costs
further to boost liquidity.
The remaining assets and investments on its books are smaller -
from vessels used by its logistics business to stakes in
Australian and Indonesian coal miners, Reuters notes.
At its height, Hong Kong-based Noble was Asia's largest commodity
trader, a powerhouse in coal and oil to rival larger European
players like Glencore.
Questions over its accounting and the sharp downturn in commodity
markets since 2012, however, have left the company struggling to
meet its debt obligations, forcing it to dramatically reduce the
scale of its operations, says Reuters.
It has been buffeted by a collapsing share price, credit
downgrades, management upheavals and a series of writedowns and
asset sales. Its shares were trading on June 20 at SGD0.465 -
down from a 2011 peak of around SGD17, Reuters discloses.
According to Reuters, Noble said on June 20 its revolving credit
facility would be extended by 120 days from June 20, confirming
reports last week.
A person familiar with the matter told Reuters on June 16 that
Noble had extended the US$2 billion credit line, but was told to
find a strategic investor.
Reuters relates that Noble said it was also continuing talks with
its bankers in relation to a revolving credit facility due
May 2018. Its bankers, based in Europe, the United States and
Asia, have hired legal and financial advisers, Noble said.
Noble has a bond worth about US$379 million due in March and a
US$1.1 billion loan due in May 2018, 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 it believed 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: Loan Extension No Impact on Moody's Caa1 CFR
---------------------------------------------------------
Moody's Investors Service said that Noble Group Limited's
extension of the maturity on the senior secured borrowing base
revolving credit facility -- which is borrowed by its subsidiary
Noble Americas Corp -- for 120 days from June 20, 2017, will have
no immediate impact on its Caa1 corporate family rating or the
negative rating outlook.
"Although the extension of the maturity on the secured credit
facility temporarily alleviates the significant pressure on
Noble's liquidity, Moody's expects the company's liquidity risk
to remain elevated given its large debt maturities over the next
12 months," says Gloria Tsuen, Moody's Vice President and Senior
Analyst.
"Moody's also expects its cash flow to remain weak over the next
12 months, given its deteriorating operating performance and
working capital constraints," adds Tsuen.
Noble had around $600 million outstanding in loans under the
secured credit facility as of end-1Q 2017. In addition, it has
$378 million in senior notes due in March 2018 and $1.1 billion
in bank debt due in May 2018.
The combined $2.1 billion in debt due over the next 12 months
cannot be covered by Noble's liquidity headroom -- including
readily available cash and unutilized committed facilities --
which would be around $1.2 billion based on 1Q 2017 financials
and following the company's repayment of a term loan and the
maturity of another revolving credit facility in May 2017.
Noble remains in talks with potential investors concerning the
sale of an interest in itself, its subsidiaries, or parts of its
business. It is also seeking to further reduce overhead expenses.
The company also said it deferred coupon payment of $12 million
on its $400 million perpetual securities due on June 26, 2017,
which in Moody's view indicates its tight liquidity situation.
Moody's does not expect the company will return to profitability
this year, and expects for EBITDA to be at depressed levels, thus
driving debt leverage -- as measured by net debt/EBITDA -- to be
above 10x.
The principal methodology used in these ratings was Trading
Companies published in June 2016.
Noble Group Limited is the largest global physical commodities
supply chain manager in Asia by revenue. Its diversified
activities across the supply chain include the sourcing, storage,
processing, transportation, and distribution of over 20 commodity
products.
Founder and Chairman Emeritus, Mr. Richard Elman, holds an
approximate 18% stake in the company. China Investment
Corporation - the Chinese sovereign wealth fund - owns about 10%.
ROAD KING: Moody's Rates Proposed USD Senior Perpetual Notes B1
---------------------------------------------------------------
Moody's Investors Services has assigned a B1 senior unsecured
debt rating to the proposed USD senior perpetual capital
securities to be issued by RKI Overseas Finance 2017 (A) Limited
and guaranteed by Road King Infrastructure Limited (B1 stable)
and some of its subsidiaries.
The rating outlook is stable.
Road King plans to use the proceeds from the proposed USD senior
perpetual securities primarily for general corporate purposes.
RATINGS RATIONALE
"Although the proposed USD senior perpetual securities will
increase Road King's debt level in 2017, Moody's expects that its
debt leverage -- as measured by revenue/adjusted debt - will
remain appropriate for its B1 rating over the next 12-18 months,
because of the increased level of revenue recognition," says
Anthony Lee, a Moody's Analyst and the Lead Analyst for Road
King.
Road King's acceleration in debt growth is within Moody's
expectation, because the company needs to fund higher levels of
land acquisitions and construction costs to support its growing
scale. In addition, it has to address the funding needs of its
development projects in Hong Kong, which have a longer cash
collection cycle than those of its projects in China.
At the same time, Moody's also expects Road King to recognize
better revenue and profit over the next 12-18 months, based on
the strong 69% year-on-year growth in contracted sales to RMB17.6
billion in 2016, and the higher average selling prices it
recorded in 2016.
As a result, Moody's expects that Road King's adjusted
revenue/debt and EBIT interest coverage will register around 70%
and 3.0x-3.5x over the next 12-18 months, respectively, compared
to the strong 83% and 4.1x in 2016. Such levels will continue to
support its B1 rating level.
Moody's views the proposed perpetual securities as pure debt
instruments and accordingly does not apply any equity treatment
to these securities.
The B1 rating for the perpetual securities reflects the following
factors:
(1) The perpetual securities will be irrevocably and
unconditionally guaranteed by Road King, which implies that the
rating on the perpetual securities is closely linked to Road
King's rating; and
(2) The securities will at all times rank pari passu with all
other present and future unsecured and unsubordinated obligations
of Road King.
However, the rating on the perpetual securities could be lowered
- relative to the company's senior unsecured rating - if debt
with deferral features becomes a substantial portion of its
capital structure, or if Moody's expects that the company will
defer many payments in advance of default.
Road King's B1 corporate family rating reflects its track record
in property development and cautious approach to land
acquisitions and financial management. As a result, the company
has maintained adequate liquidity throughout the cycles.
The rating also takes into account the stable cash flow from the
company's toll road investments, stable debt leverage and
financial metrics that are well positioned among the company's
B1-rated Chinese property development peers.
On the other hand, the rating is constrained by the company's
small scale and the geographic concentration of its land bank, as
well as volatility in its contracted sales.
The outlook on Road King's corporate family rating is stable,
reflecting Moody's expectation that Road King will maintain its
prudent financial management while growing its property
development and toll road businesses; thereby preserving stable
credit metrics and an adequate liquidity position.
Upward rating pressure could emerge, if Road King: (1) grows in
scale without sacrificing its profit margins; (2) grows its toll
road dividends and improves its interest coverage from net
recurring income above 0.6x on a sustained basis; (3) maintains
stable credit metrics, with a homebuilding EBIT/interest above
3.0x and revenue/debt of 80% or above; and (4) holds adequate
liquidity, with cash/short-term debt above 1.0x on a sustained
basis.
On the other hand, Road King's rating could face downward
pressure if: (1) its liquidity position deteriorates because of
weaker sales, aggressive land acquisitions or delays in its
refinancing plans; or (2) the operating performance of the
company's property segment deteriorates, such that its gross
margin declines below 20% on a sustained basis.
Credit metrics indicative of downward rating pressure include a
homebuilding EBIT/interest below 2.5x or revenue/debt below 65%
on a sustained basis.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Listed in Hong Kong, Road King Infrastructure Limited had a
property development portfolio with a land bank of seven million
square meters at December 31, 2016 across Beijing, Shanghai,
Tianjin, Henan, Hebei, Shandong, Jiangsu, Zhejiang, Hunan,
Guangdong and Hong Kong.
The company also invests in toll road projects, mainly comprising
five major expressways across four provinces in China: Anhui,
Hebei, Hunan and Shanxi.
=========
I N D I A
=========
AVADH COTEX: ICRA Reaffirms B+ Rating on INR15cr LT Loan
--------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating assigned to the
INR15.00-crore fund-based limits of Avadh Cotex Private Limited
at [ICRA]B+. The outlook on the long-term rating is 'Stable'.
ICRA has also reaffirmed the short-term rating assigned to the
INR1.50-crore short-term, fund based limits of ACPL. Furthermore,
ICRA has reaffirmed the rating of ICRA]B+(Stable)/A4 for the
INR0.45-crore unallocated limits of ACPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund-
based Limits 15.00 [ICRA]B+(Stable); Reaffirmed
Short-term Fund-
based Limits 1.50 [ICRA]A4; Reaffirmed
Unallocated Limit 0.45 [ICRA]B+(Stable)/[ICRA]A4;
Reaffirmed
Rationale
The ratings reaffirmation continue to factor in the weak
financial profile of ACPL, characterised by thin profitability
margins, stretched capital structure and moderate coverage
indicators. The ratings also takes into account the commoditised
nature of the company's products and vulnerability of
profitability to adverse movements in cotton prices, which are
subject to seasonality and crop harvest. The company's operations
are also exposed to regulations governing the industry such as
restrictions on cotton exports and minimum support price (MSP).
Furthermore, the ratings are also constrained by the highly
fragmented nature of the industry, due to a large number of
ginners, which coupled with low-entry barriers, lead to stiff
competition that pressurise pricing and margins.
The ratings, however, continue to derive comfort from the long
experience of the promoters in the cotton ginning industry and
the proximity of the company's manufacturing unit to raw material
sources, easing procurement.
Key rating drivers
Credit strengths
* Extensive experience of the promoters in the cotton industry
* Locational advantage by virtue of proximity to raw materials
Credit weaknesses
* Weak financial profile characterised by thin profitability
margins, stretched capital structure and moderate coverage
indicators
* Limited value addition in cotton ginning business and
commoditised nature of products
* Highly fragmented industry structure due to the presence
of large number of manufacturers and traders; low-entry
barriers result in high competition
* Operations exposed to regulatory restrictions on cotton
export and MSP
Description of key rating drivers:
ACPL curtailed production of cotton bales during the declining
pricing scenario in FY2016, owing to which the capacity
utilisation for cotton bales reduced significantly to ~33% in
FY2016 compared to 47% in FY2015. However, with market conditions
improving due to correction in cotton prices, the capacity
utilisation of ACPL's cotton bales improved marginally to ~36% in
FY2017. ACPL has traded higher quantity of cotton seeds in FY2017
owing to which the proportion of cotton seed to total sales has
increased to ~36% in FY2017 compared to ~19% in FY2016 and ~10%
in FY2015. The cotton ginning industry is a highly fragmented and
competitive as there are many organised and unorganised players
because of low-entry barriers. Additionally, Gujarat attracts
more companies as it is a favorable location for cotton
procurement, further intensifying the competition for ACPL.
Moreover, the value addition in the ginning process is low, which
coupled with strong competition and commoditised nature of the
product, limits the ability of the company to achieve high
margins.
ACPL's operating income fell by ~3% to INR115.23 crore in FY2016
from INR118.52 crore in FY2015 on account of dip in sales volume
and realisation of cotton bales. However, with increased trading
activity of cotton seed along with improved average sales
realisation of cotton seed, ACPL has reported ~3% growth in its
operating income in FY2017 (Provisional) to INR118.81 crore. The
profitability generally remains low in the cotton ginning
business because of the highly fragmented and competitive nature
of the cotton ginning industry. Consequently, the operating
margin remained low at 1.24% in FY2017 as against 1.34% in
FY2016. The OPM remained suppressed in FY2007 due to bad debt
incurred to the tune of INR0.99 crore. In line with low operating
margin and high financial charges, the net margin also remained
low at 0.07% in FY2016 and 0.18% in FY2017. On account of the low
profitability, the return indicators also remained weak with ROCE
at 6.77% and RONW at 4.71% in FY2017. The capital structure
continues to remain leveraged though it witnessed marginal
improvement as reflected in the gearing of 3.34 times as on March
31, 2017, as compared to 3.83 times as on March 31, 2016. The
coverage indicators remained modest with OPBDITA/I&F at 1.34
times and NCA/Debt at 2% for FY2017.
Going forward, the company is expected to register moderate
revenue growth in FY2018, given the expectation of tight cotton
availability and firmer cotton prices in the near term. In ICRA's
view, the ability of the company to manage the impact of raw
material price fluctuations on its profitability in a highly
competitive business environment and improve its capital
structure by managing working capital requirements will remain
the key rating sensitivities.
Incorporated in February 2006, Avadh Cotex Private Limited (ACPL)
is involved in ginning and pressing of raw cotton for the
production of cotton bales and cottonseeds. ACPL's manufacturing
facility is located at Shapar in Rajkot District of Gujarat, and
is currently equipped with 26 ginning machines and a pressing
machine with aproduction capacity of 240 cotton bales per day
(24-hour operations). The promoters, Mr. Bharat Bhalala and Mr.
Sanjay Bhalala, have an extensive experience in the cotton
industry.
For the year FY2017, as per provisional financials, the company
reported an operating income of INR118.81 crore and profit after
tax of INR0.21 crore.
AVADH COTTON: ICRA Reaffirms 'B' Rating on INR4.50cr Loan
---------------------------------------------------------
ICRA Ratings has reaffirmed its long-term rating assigned to the
INR4.50 crore cash credit cum ODBD facility and the INR1.43 crore
term loan facility of Avadh Cotton Industries at [ICRA]B. The
outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit cum ODBD 4.50 [ICRA]B (Stable); Reaffirmed
Fund-based-Term
Loan 1.43 [ICRA]B (Stable); Reaffirmed
Rationale
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with ACI, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings and had
also sent repeated reminders to the company for payment of
surveillance fee that became overdue, but despite repeated
requests by ICRA, the company's management has remained non-
cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B (Stable) ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Key rating drivers
Credit strengths
* Manufacturing unit favourably located in cotton producing
belt of Gujarat, provides regular and easy access to raw
materials
Credit weaknesses
* Modest scale of operations with limited track record
* Financial profile characterised by modest profitability
and high gearing level due to recently incurred debt fund
capex and reliance on external working borrowings during
the cotton season
* Highly competitive and fragmented nature of cotton ginning
industry with limited value addition, which restricts pricing
flexibility
* Profitability vulnerable to adverse movement in agricultural
produce prices
* Being a partnership firm, any substantial withdrawals from
capital account would impact the net-worth and thereby the
gearing levels
Description of Key Rating Drivers:
ACI gins and presses raw cotton to produce cotton bales and
cottonseeds at its plant at Moti Banugar in Jamnagar (Gujarat),
which has an installed production capacity of 225 cotton bales
per day (24 hours' operation). Its manufacturing facility is
equipped with 24 ginning and a pressing machine. The firm
commenced operations from December 2014. The cotton ginning
industry is highly fragmented with numerous players operating in
Gujarat, leading to high competition in the field. The industry
is also exposed to regulatory risks with the Government imposing
minimum support price (MSP) on the purchase of raw cotton during
over-supply in the market and restricting export of cotton bales
to support the domestic cotton textile industry.
Avadh Cotton Industries was established in January 2014 as a
partnership firm by Mr. Rohitbhai Sitapara and five other
partners. The firm is engaged in the ginning and pressing of raw
cotton. In December 2014, the firm commenced ginning operations.
The operations of the firm are managed by Mr. Shaileshbhai
Chikani, Mr. Rashikbhai Vaishnav and Mr. Rohitbhai Sitapara. The
manufacturing plant of the firm is at Moti Banugar in the
Jamnagar district of Gujarat. It is equipped with 24 ginning
machines and a pressing machine with an installed production
capacity of 225 cotton bales per day (24 hours' operation).
CORNERVIEW CONSTRUCTIONS: ICRA Cuts Rating on INR110cr Loan to D
----------------------------------------------------------------
ICRA Ratings has revised the long-term rating to [ICRA]D from
[ICRA]BB- for the INR110.00 crore non-convertible debentures of
Cornerview Constructions & Developers Pvt. Ltd.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Non 110.00 [ICRA]D; revised from
Convertible [ICRA]BB-(Stable)
Debentures
Rationale
The revision in rating factors in the past instances of delays in
servicing interest payments by the company owing to stretched
liquidity. Low bookings and weak advance inflows owing to
slowdown in the real estate industry adversely impact the
company's cash flows, thereby delaying the interest payments on
unlisted non-convertible debentures.
Key rating drivers
Credit strengths
* Support of a strong parent, Acme Group, with an experience
of over four decades in real estate development
Credit weaknesses
* Delays in interest servicing on account of stretched liquidity
Position
* Slowdown in real estate industry resulting in low booking and
advance inflows
* Delay in project execution
Description of key rating drivers:
CCDPL is part of the Acme Group of Companies, promoted by the
Mumbai-based Doshi family. The Group is currently undertaking
eight different projects (including Acme Ozone being the major
one) with a total saleable area of 47.23 lakh sq. ft. The project
is located near Manpada, Off Ghodbunder Road, Thane. It is
situated in proximity to Ghodbunder Road, located ~0.4 km off the
main road as well as the proximity to Eastern Express highway (~3
km) provides it with ease of accessibility and connectivity.
While, the project completion was scheduled in March 2020, the
completion of MMRDA building has been delayed by more than nine
months, while the scheduled completion date of other towers has
been revised by three to nine months. The budgeted cost of the
project is estimated to be INR1,562.24 crore (revised from
INR1,355 crore) and the company incurred a total cost of 57% till
September 2016. Taking into consideration the units identified by
the investor in three buildings (Dandelia, Alpinia and Herbilia),
the project is relatively in early stages of execution. The
project's market risk remains high as around 95% of the area in
identified units remains unsold.
Incorporated in FY2014, CCDPL is a closely held private limited
company. It is part of the Acme Group of companies (Acme),
promoted by the Mumbai-based Doshi family. The group is primarily
engaged in real estate development and caters to the residential,
commercial and retail space in Mumbai through various group
companies. The group has many on-going projects across
residential and commercial spaces in Mumbai. A major project
being Acme Ozone, which is a residential project being developed
by Ascent Construction Private Limited. CCDPL has acquired 96
units in the project, funded through Non-convertible Debentures
(NCDs) of INR70.00 crore. The units would, thereafter, be sold by
CCDPL. The sales proceeds thus generated would be utilised as
exit options for investors. CCDPL has no other on-going projects.
G.R.K. THEATRES: CARE Assigns B+ Rating to INR10cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of G.R.K.
Theatres Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3.77 CARE B+; Stable Assigned
Long-term Bank
Facilities 10 CARE B+; Stable Assigned
Short-term Bank
Facilities 6.23 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of G.R.K. Theatres
Private Limited is constrained by highly leveraged capital
structure, modest scale of operations and profit margins. The
ratings, however, derive strength from the long experience of the
promoter in the line of business and the diversification of
business lines.
Ability of the company to improve its profit margins, effectively
manage its working capital requirements and improvement its
capital structure are key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
-- Vast experience of promoters in the industry: The promoters
have over 34 years of experience in the film and retail
entertainment business. Mr. Dorairaj who has almost 2 decades of
experience manages the 3 theatres namely Krishnalaya, Balaji and
Mariyappan theatres in Cuddalore, Pondicherry and Neyveli
respectively. Apart from entertainment business the promoters
also have presence in auto dealership and restaurant business.
-- Diversified business activities albeit with modest scale of
operations: G.R.K. reported a total revenue of INR33.54 crore in
FY16 with a healthy growth of around 72% from INR19.51 crore in
FY15.The auto dealership business contributed 69% of the total
sales in FY16.
Key Rating Weaknesses
-- Highly Leveraged Capital structure: The company's financial
risk profile is marked by small net worth, high leverage
indicators and modest debt protection metrics. The company
reported debt equity ratio and overall gearing at 3.88x and 7.91x
as on March 31, 2016 as compared to 2.32x and 7.25x respectively
for the previous year. TDGCA reported high at 26.42 for FY16
which was 20.29 for FY15. The interest coverage ratio also went
down from 1.64x in FY15 to 0.79x in FY16.
-- Cyclical nature of Auto industry: The auto industry is
inherently vulnerable to the economic cycles and is highly
sensitive to interest rates and fuel prices. Increase in the
interest rate would increase the cost of vehicle impacting the
purchase decision of an individual. Some other factors that
influence the buying pattern are the monsoon and the festive
season. In India 70% of the population lives in rural areas which
highly influence the demand and supply mechanism of the country
and results in price volatility.
G.R.K Theatres Private Limited was established by Mr.
Radhakrishnan in the year 1983. The company was predominantly
operating in entertainment business but post 2012 company decided
to diversify its business by entering into Auto dealership and
construction of commercial complex. GRK gets its biggest share of
revenues from Auto Dealership business with two showrooms in
Pondicherry and one in Cuddalore. GRK primarily sells 3 models of
TATA including TATA 'Aria, Storme and Sumo through these
showrooms. Since 2002, the day to day operations are managed by
Mr. Dorairaj, son of Mr. Radhakrishnan.
HARIKISHAN TEJMAL: CARE Reaffirms B+/A4 Rating on INR22cr Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Harikishan Tejmal & Company (HKTC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 22.00 CARE B+; Stable/
term Bank CARE A4 Reaffirmed
Facilities
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of Harikishan Tejmal
& Company (HKTC) continue to remain constrained on account of its
fluctuating Total Operating Income (TOI) during last three
financial years ended FY16 (refers to the period April 1 to
March 31) and its financial profile marked by thin profitability
margins on account of trading nature of business, weak solvency
position and debt coverage indicators and working capital
intensive nature of operations.
The ratings further, remain constrained on account of
susceptibility of the firm's profitability margins to fluctuation
in the prices of commodities due to seasonality associated, its
presence in the highly fragmented and government regulated
agro industry and its constitution as a partnership concern.
The ratings, however, continue to favorably take into account the
long standing experience of the partners in the industry
with its established track record of operations and strategic
location of the firm with close proximity to suppliers.
HKTC's ability to increase its scale of operations with
improvement in profitability margins and capital structure as
well as efficient working capital management shall be the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
-- Fluctuating scale of operations with thin profitability: The
scale of operations of HKTC as indicated by TOI has shown
fluctuating trend during the last three financial years ended
FY16. TOI declined in FY15 vis-a-vis FY14, although the same grew
by around 14% and stood at INR107.54 crore in FY16, on the back
of increase in revenue generated from trading of wheat, paddy and
urad.
Furthermore, the profitability of the company continued to remain
thin owing to trading nature of the business. During FY16, the
PBILDT margin of the firm declined by around 10 bps owing to
higher cost of traded goods along with other operating expenses.
In line with decline in PBILDT margin, PAT margin of the firm
also declined by around 3 bps in FY16.
-- Weak solvency position and working capital intensive nature
of operations: Its capital structure deteriorated and continued
to remain highly leveraged with an overall gearing of 9.03 times
as on March 31, 2016, mainly on account of higher total debt
level following infusion of unsecured loan by the promoters along
with higher utilization of working capital bank borrowings as on
balance sheet date. Furthermore, due to lower profitability and
higher debt, debt coverage indicators of the firm also remained
weak.
Moreover, the firm's business is working capital intensive in
nature with net working capital forming around 97% of total
capital employed as on March 31, 2016, along with moderate
liquidity ratios and moderate working capital cycle of 50
days in FY16.
-- Seasonality associated with agro commodities and presence in
highly fragmented and government regulated industry with
constitution as a partnership concern: The industry is
characterized by high fragmentation and competition along with
high degree of government control both in procurement and sales
of agriculture commodities. Furthermore, prices of commodities
have exhibited fluctuation and are dependent on demand and supply
conditions prevailing in the market with strong linkage to the
global market. Moreover, HKTC's constitution as a partnership
firm restricts its overall financial flexibility.
Key Rating Strengths
-- Long standing experience of the partners with established
track record of operations and location advantage: Mr. Rajesh
Kumar Nyati, the key partner, has an extensive experience in the
trading of commodities of more than three decades and looks after
the overall management of the firm. Furthermore, HKTC is engaged
in the trading of agriculture commodities mainly wheat, soyabean,
urad, rice, sarso, paddy, maize and dhania, which are easily
available in the areas in Rajasthan in proximity to its location
results in benefit derived from easy availability of commodities
with lower transportation cost.
Bundi-based (Rajasthan) HKTC was formed as a partnership concern
by its key promoter, Mr. Tejmal Nyati along with his family
members in 2006. Subsequently, there was change in the
partnership deep and currently, HKTC is currently owned and
managed by Mr. Rajesh Kumar Nyati along with his wife Ms Prerna
Nyati with profit & loss sharing ratio of 67:33 respectively.
HKTC since inception has been engaged in the business of trading
of different agriculture commodities including wheat, soyabean,
sarso, paddy, rice, urad, maize and dhania. Furthermore, it is
also engaged in grading of wheat. The firm procures the
agriculture commodities from local mandis and thereafter supplies
to various processing and end user manufacturing units as well as
traders in Rajasthan, Gujarat and Maharashtra. Moreover, HKTC
also supplies wheat under its own brand name of 'Kisan King'.
During FY16 (Aud.) (refers to the period April 1 to March 31),
HKTC reported a total operating income of INR107.54 crore
(FY15: INR94.14 crore) with a PAT of INR0.03 crore (FY15: INR0.05
crore). Furthermore, as per FY17 provisional results, the firm
has reported net sales of INR67.71 crore.
JAI AMBEY: CARE Reaffirms B+ Rating on INR12cr Long Term Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Jai Ambey Wire EX-IM Private Ltd (JAWEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12 CARE B+; Stable Reaffirmed
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of Jai Ambey Wire EX-
IM Private Ltd (JAWEPL) continues to be constrained by its short
track record and small scale of operations with low profit
margins, working capital intensive nature of operations, moderate
capital structure with moderately weak debt coverage indicators
and intense competition due to low entry barriers. The rating,
however, derives strength from its experienced promoters.
The ability of JAWEPL to increase its scale of operations with
improvement in profit margins and effective management of
working capital will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
-- Short track record and small scale of operations with low
profit margins: The scale of operations of JAWEPL remained small
marked by total operating income of INR59.87 crore with a PAT of
INR0.17 crore in FY17 (provisional). Furthermore, the profit
margins remained low marked by the PBILDT margin of 1.69% and PAT
margin of 0.28% in FY17.
-- Working capital intensive nature of operations: The operation
of JAWEPL is working capital intensive. The company allows credit
of around a month to its customers whereas it receives credit of
around a week from its suppliers. Furthermore, the company
maintains stock of traded goods for timely supply of its clients
demand. Accordingly, the average utilization of fund based limit
was around 76% during last twelve months ended in May 2017.
-- Moderate capital structure with moderately weak debt coverage
indicators: The capital structure of the company improved as on
March 31, 2017 and remained moderate at 1.75x as on March 31,
2017. The debt protection metrics of the company remained
moderately weak marked by high Total debt to GCA and moderate
interest coverage ratio of 1.20x and total debt to GCA of 41.09x
in FY17.
-- Intense competition due to low entry barriers: JAWEPL is into
trading of iron and steel products which is highly fragmented and
competitive in nature due to low entry barriers. Furthermore, all
the entities trading the same products with a little product
differentiation resulting into price driven sales. Intense
competition restricts the pricing flexibility of the company in
the bulk customer segment.
Key Rating Strengths
-- Experienced promoters: JAWEPL is managed by Mr. Arbind Kumar
Dubey (Director) who is having about three decades of experience
in iron and steel industry through its associate concern Jai
Ambey Wire Private Ltd. He is further assisted by other
directors: Mr. Prashant Kumar Dubey and Ms Nisha Dubey who are
also having about a decade of experience in this line of
business. The company is deriving benefits from the wide
experience of the promoters.
JAWEPL was incorporated in February 2014 by Dubey family of
Raipur, Chhattisgarh. Since its inception, JAWEPL has been
engaged in trading of iron and steel products like mild steel
round, TMT bars, hard bright (HB) wires, galvanized iron (GI)
wires etc.
During FY17 (Provisional; refers to the period April 1 to
March 31), JAWEPL reported PAT of INR0.17 crore (Rs.0.12 crore
in FY16) on total operating income of INR59.87 crore (Rs.46.69
crore in FY16).
K.C. PRINTING: CARE Reaffirms B+ Rating on INR7cr LT Loan
---------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
K.C. Printing (KCPA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7 CARE B+; Stable Reaffirmed
Short-term Bank
Facilities 3 CARE A4 Reaffirmed
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of K.C. Printing
(KCPA), continue to remain constrained by small scale of
operations coupled with low net worth base, leveraged capital
structure and elongated collection period. The ratings are
further constrained by its presence in a highly competitive
industry and constitution of the entity as a proprietorship firm.
The ratings, however, continue to draw comfort from KCPA'S long
track record of operations, experience of the proprietor in the
printing industry along with moderate profitability margins.
Going forward; ability of the firm to profitably increase its
scale of operations while improving its capital structure shall
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
-- Small scale of operations coupled with low net worth base:
For the period FY14-FY16 (refers to the period April 01 to March
31), KCPA's total operating income grew from INR11.05 crore in
FY14 to INR20.17 crore in FY16 reflecting a compounded annual
growth rate (CAGR) of 35.10%. Though, the scale of operations has
been growing on y-o-y basis, it continues to remain small as
marked by total operating income of INR20.17 crores and net worth
of INR2.80 crore. Small scale limits the firm's financial
flexibility in times of stress and deprives it from scale
benefits.
-- Leveraged capital structure: The capital structure of the
firm improved; however, it continued to remain leveraged marked
by overall gearing of 2.89x as on March 31, 2016 as against 3.83x
as on March 31, 2015 due to low capital base and high dependence
on working capital borrowing. The improvement in the capital
structure was on account of accretion of profits to proprietor's
capital.
Constitution of the entity being a proprietorship firm K.C.
Printing & Allied Works (KCPA) constitution as a proprietorship
firm has the inherent risk of possibility of withdrawal of the
proprietor's capital at the time of personal contingency and firm
being dissolved upon the death/retirement/insolvency of
proprietor. Moreover, proprietorship firms have restricted access
to external borrowing as credit worthiness of partners would be
the key factors affecting credit decision for the lenders.
-- Competitive nature of industry: KCPA faces direct
competition from various organized and unorganized players in the
market. There are number of small and regional players who are
located in and around area and catering to the same market which
has limited the bargaining power of the firm and has exerted
pressure on its margins.
The firm provides gets the order through the tender-based system.
The firm is exposed to the risk associated with the tender-based
business, which is characterized by intense competition. The
growth of the business depends on its ability to successfully bid
for the tenders and emerge as the lowest bidder. Furthermore, any
changes in the Government policy or Government spending on
projects are likely to affect the revenues of the firm.
-- Moderate profitability margins: Margins of the firm have
witnessed an erratic trend during last three years FY14-FY16
owing to tender driven nature of business which pose huge
competition and pressure on the profit margins of the firm. In
FY16 PBILDT margin of the firm improved at 8.28% as against 7.34%
in FY15 as the firm was able to fetch contracts with better
profitability. The PAT margin of the firm also improved in FY16
over previous financial year on account of improvement registered
in PBILDT margin and extraordinary income.
-- Elongated collection period: The collection period stood
elongated at 164 days in FY16. KCPA customers base normally
comprises of government boards and universities and on account of
procedural delays, there is normally delay in realization
resulting into high average collection period in FY16. The firm
procures the raw material only which is based on delivery
schedules and receives credit up to 90 days from its suppliers.
-- Long track record of operations coupled with experienced
proprietor: KCPA, was established in 1979 as a proprietorship
firm, by Mr. Kali Charan Agrawal. However, the business is
currently managed by Ms Mahima Agrawal who has an experience of
more than two decades in this printing business through her
association with KCPA.
Mathura-based (Uttar Pradesh) KCPA, was established in 1979 as
proprietorship firm by Mr. Kali Charan Agrawal. The firm
is currently being managed by Ms Mahima Agrawal. KCPA is engaged
in printing of books such as text books, printed answer sheets,
mark sheets, degrees and other printed education material for
various state education board and universities in Uttar Pradesh,
Rajasthan, Madhya Pradesh, Himachal Pradesh, Chattisgarh, Bihar
and Haryana. The firm procures the raw material (paper, ink,
chemical) from local traders and distributors. It gets order
through tendering and bidding process.
During FY16 (refers to the period April 01 to March 31), KCAP has
achieved a total operating income (TOI) of INR20.17 crore with
PAT of INR1.19 crore as against TOI of INR19.95 crore with PAT of
INR0.50 crore during FY15. Furthermore, the firm has achieved
total operating income of INR21.00 crore in FY17 (refers to the
period April 1 to March 31; based on provisional results).
MADHAV OIL: ICRA Withdraws B+ Rating on INR9.25cr Cash Loan
-----------------------------------------------------------
ICRA Ratings has withdrawn the long-term rating of [ICRA]B+
outstanding on the INR1.22-crore term loan facility and the
INR9.25-crore cash credit facility of Madhav Oil Industries.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Term Loan 1.22 [ICRA]B+; Withdrawn
Fund-based Cash Credit 9.25 [ICRA]B+; Withdrawn
Rationale
The long-term rating assigned to Madhav Oil Industries has been
withdrawn at the request of the firm based on the no objection
certificate provided by its banker.
Key rating drivers: Not applicable
Madhav Oil Industries is a partnership firm established in 2010,
which is engaged in the business of crushing and de-linting
cottonseeds. Four partners -- Mr. Saurinbhai Parikh, Mr.
Daksheshbhai Patel, Mr. Bhaveshbhai Patel and Mr. Ashishbhai
Trivedi -- manage the operations of the firm. Its manufacturing
facility is located at Kundal in Kadi (Gujarat). It has 16
expellers, six delinting machines, and a mini pressing machine
with an installed production capacity for 2,800 MTPA of
cottonseed oil, 22,000 MTPA of cottonseed oil cake and 1,900 MTPA
of linter cotton. However, in FY2016, the firm stopped its
delinting operations and went ahead with its crushing operations
alone. MOI has a group company, as Pashupati Cotton Industries
(PCI) (rated [ICRA]B (Stable)/A4), which was established as a
partnership firm in 1999. PCI is currently engaged in ginning and
pressing of raw cotton and trading of cottonseed related
products. The entire sales of MOI are routed through its group
concern, PCI.
MANJU SHREE: ICRA Reaffirms B+ Rating on INR7.21cr Loan
-------------------------------------------------------
ICRA Ratings has reaffirmed its long-term rating at [ICRA]B+ on
the INR7.21-crore fund-based bank facilities and INR1.66-crore
unallocated facilities of Manju Shree Syntex Pvt Ltd. The outlook
on the long term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based limits 7.21 [ICRA]B+ (Stable); Reaffirmed
Unallocated 1.66 [ICRA]B+ (Stable); Reaffirmed
Rationale
The rating continues to factor in the extensive experience of
MSPL's promoters in the textile industry coupled with the
favourable location of the company's weaving facilities lending
easy accessibility to raw materials and processing houses.
However, the rating is constrained by the decline in MSPL's
revenue in FY2016. As part of its process and in accordance with
its rating agreement with MSPL, ICRA had sent repeated reminders
to the society for information and payment of surveillance fee
that became overdue; however despite multiple requests; the
society's management has remained non-cooperative. ICRA's Rating
Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA] B+ (Stable) ISSUER
NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance.
Incorporated in 2005 as a private limited company, MSSPL is
engaged in the manufacturing of grey and finished fabric for
suiting at its unit in Bhilwara for direct sales under its brand
name "Spectrum" and "Da Vinchi" as well as on job-work basis for
its clients. The company started its operations in 2007 by
installing 20 Dornier looms. Thereafter, in 2009, the company
installed 8 Sulzer double width looms while another 21 Sulzer
looms (16 double width and 5 single width) were added in February
2012. In April 2013, the company sold its 20 Dornier looms and at
present it is operating 29 Sulzer looms (5-single width and 24-
double width).
MSPL reported a net profit of INR0.05 crore on operating income
of INR18.70 crore in FY2016, as against a net profit of INR0.05
crore on operating income of INR19.07 crore in the previous year.
MONNET ISPAT: Lenders Begin Insolvency Process
----------------------------------------------
The India Express reports that with banks planning to take up
debt-laden Monnet Ispat & Energy for corporate insolvency
resolution process (CIRP) under the Insolvency and Bankruptcy
Code, 2016, the company's shares surged on the bourses.
The stock closed higher by 16.94 per cent to INR35.20 on the BSE
on June 20, the report discloses. Among other companies, which
are facing bankruptcy action, Bhushan Steel rose by 8.91 per cent
and Amtek Auto by 9.17 per cent.
According to Indian Express, lenders are likely to explore the
process of resolution of the company's non-performing assets
(NPAs) through various options. Once the case is referred to the
National Company Law Tribunal under the Insolvency and Bankruptcy
Code, an interim insolvency professional is appointed and will
take control of the assets and form a creditors committee, the
report says. The committee will appoint a resolution professional
to oversee the process and could change management of the debtor.
Indian Express says the committee also has to come up with a
resolution plan (approved by 75% majority of the creditors) or
decide to liquidate the assets. If the resolution plan is not
accepted by the NCLT or no plan is formed within 180 days (it can
be extended by 90 days), the company would go into liquidation.
Monnet which has a debt of over INR12,000 crore posted a loss of
INR1,733 crore and a revenue of INR1,375 crore in fiscal March
2017, Indian Express discloses. For the March quarter, the loss
was at INR459 crore and revenue INR384 crore. While the promoter
holding in the company is 25.27 per cent, banks hold a sizeable
stake, Indian Express says.
According to the report, a bank official said all the 12 cases
identified by the RBI will be taken up by the lenders in the
coming days following the regulator's directive. The Internal
Advisory Committee (IAC) of the RBI recommended for IBC reference
12 accounts with fund and non-fund based outstanding amounts in
excess of INR5,000 crore, with 60 per cent or more (Rs 3000 crore
or more) classified as non-performing by banks as on March 31,
2016.
The India Express meanwhile reports that in Delhi, steel minister
Chaudhary Birender Singh ruled out any possibility of public
sector Steel Authority of India Ltd (SAIL) taking over Monnet
Ispat. When asked about SAIL's plans to take over Monnet Ispat,
the minister said "why should we (SAIL) take it". Talking to
reporters on the sidelines of an event on June 20, Singh,
however, said that steps are being taken to resolve the stress in
the sector, the report relates.
In March, an official had said that the government was examining
the possibility of SAIL undertaking 'operation and maintenance'
of ailing Monnet Ispat till the lenders find a buyer for the
company, the report recalls. "We (steel sector) are now about 28
per cent of the stressed debt but for last about 6-8 months,
there is smooth repayment . . . If the new methodology is to be
applied for six top defaulters then let us see what it comes
out," the steel minister, as cited by the Indian Express, said on
June 20.
IDBI Bank has already started insolvency resolution process
against Lanco Infratech Ltd on June 20 following a directive from
the RBI, the report states. Steel companies account for 50% of 12
large corporate defaulters identified by the Internal Advisory
Committee of the RBI for insolvency proceedings, the report
discloses.
Monnet Ispat & Energy Limited engages in the production and sale
of sponge iron, structural steel, and ferro alloys. The company
also engages in the generation and sale of power; and provides
consultancy services in the fields of exploration, exploitation,
and beneficiation coal and other minerals.
NEW VARDHMAN: ICRA Reaffirms B Rating on INR19.82cr Term Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B on
the INR34.82-crore fund-based bank facilities of New Vardhman
Vitrified Private Limited (NVVPL). The outlook on the long-term
rating is 'Stable'. ICRA has also reaffirmed the short-term
rating of [ICRA] A4 to the INR6.75 crore non-fund based
facilities of NVVPL. The non-fund based facilities also include
INR37.00 crore Foreign Letter of Credit (sub-limit of term loan)
and INR5.00 crore Letter of Credit (sub-limit of cash credit).
Further, ICRA has also reaffirmed the long-term rating of [ICRA]B
and short-term rating of [ICRA]A4 to the INR43.18 crore
unallocated limits of NVVPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 15.00 [ICRA]B (Stable); Reaffirmed
Fund-based-Term
Loan 19.82 [ICRA]B (Stable); Reaffirmed
Non Fund-based-
Bank Guarantee 6.75 [ICRA]A4; Reaffirmed
Non Fund-based-
Foreign Letter of
Credit (37.00) [ICRA]A4; Reaffirmed
Non Fund-based-
Letter of Credit (5.00) [ICRA]A4; Reaffirmed
Unallocated 43.18 [ICRA]B (Stable)/A4;
Reaffirmed
Rationale
The ratings reaffirmation continues to take into account NVVPL's
weak financial risk profile characterized by moderate
profitability, weak return indicators and leveraged capital
structure. The ratings also factors in the weak financial profile
of the parent company (Nitco Limited), as is evident from its
declining turnover and significant losses from operations, which
has adversely impacted its capital structure and liquidity
position. This would also impact the sales volumes of NVVPL, with
significant sales (~98% in FY2016) being made to Nitco. The
ratings are further constrained by the vulnerability of NVVPL's
profitability to fluctuation in input prices; however, the same
is significantly mitigated under the supply agreement with Nitco.
ICRA also take into account the vulnerability of profitability
and cash flows to cyclicality inherent in the real estate
industry, which is the main consuming sector and intense
competition in ceramic industry due to presence of numerous tile
manufacturers.
The ratings, however, draws comfort from the experience of
NVVPL's promoters in the ceramic industry by virtue of their
association with various tile manufacturing entities and
logistical advantages enjoyed by the company from its location in
India's ceramic hub, with easy access to quality raw material.
The company is also benefitted from the supply contract and its
association with Nitco in terms of savings in marketing and
distribution overheads as well its established brand name.
ICRA expects NVVPL's revenues to improve at a moderate pace,
going forward; although the same would remain contingent upon
healthy off-take by Nitco Limited. Its profitability would
continue to remain vulnerable to fluctuations in prices of raw
material and natural gas. In ICRA's opinion, the company's
ability to scale up its operations while improving profitability
and thereby improve debt coverage indicators, manage working
capital requirement efficiently and ensuring timely debt
repayments would remain important from a credit perspective.
Key rating drivers
Credit strengths
* Extensive experience of promoters in the ceramic industry
* Majority of sales to Nitco leads to savings in marketing
and distribution overheads
* Favourable location of the unit in Morbi (Gujarat), India's
ceramic hub, with easy access to quality raw materials
Credit weaknesses
* Weak financial risk profile characterised by moderate
profitability, weak return indicators and leveraged
capital structure
* Weak financial profile of Nitco Limited likely to impact
the supply arrangement and subsequently business risk
profile of the company
* Vulnerability of profitability and cash flows to cyclicality
inherent in the real estate industry, which is the main
consuming sector
* Intense competition due to presence of numerous organized
and unorganised players in the tiles industry
* Profitability remain exposed to availability and prices of
raw material and gas (a major source of fuel for tile
manufacturers); however the same is significantly mitigated
under the supply contract with Nitco Limited
Description of key rating drivers:
NVVPL manufactures vitrified floor tiles, digital ceramic wall
tiles and glazed vitrified tiles, with its promoters having rich
experience in the ceramic industry. NVVPL is a subsidiary of
Nitco Limited and the majority sales of the company (~98% in
FY2016) are made to Nitco, thereby leading to significant savings
in terms of marketing and distribution overheads. The company
benefits from the 'Nitco' brand as well as the established
distribution network of Nitco (one of the leading players in the
organised segment of tiles industry with an established franchise
and distribution network). High customer concentration remains a
major concern with lower off-take by Nitco following the
continuous decline in its turnover in the recent past. However,
from FY2017 onwards, the company has started diversifying its
customer base with the addition of few new customers, which would
mitigate the risk to some extent.
The company witnessed a marginal de-growth of ~2% in its
operating income from INR170.54 crore in FY2015 to INR167.58
crore in FY2016 on the backdrop of dip in sales realisations. The
operating income further declined to ~Rs. 131 crore on account of
decline in sales realisations as well as volumes due to lower
off-take by Nitco. The profitability of the company remains
moderate and is vulnerable to the cyclicality inherent in the
real estate industry as well as to the fluctuations in prices of
key raw materials and natural gas. NVVPL is also exposed to
intense competition in the ceramic industry due to the presence
of numerous organized and unorganized players in the tiles
industry. However, the company is benefited in terms of easy
availability of quality raw material by virtue of its location in
Morbi (Gujarat), India's ceramic hub.
Incorporated in July 2011, New Vardhman Vitrified Private Limited
manufactures vitrified floor tiles, digital ceramic wall tiles
and glazed vitrified tiles (GVT). NVVPL's manufacturing facility
is located at Morbi (Gujarat), having the annual installed
capacity to produce 43.20 lakhs square metre (sq. mtr.) vitrified
floor tiles, 28.80 lakhs sq. mtr. ceramic wall tiles and 18.00
lakhs sq. mtr. glazed vitrified tiles.
The company was initially promoted by Mr. Vitenkumar H Kavar and
Rajesh J Likhiya, along with other members; however, in March
2012, Nitco Limited (Nitco) acquired 51% of the shareholding in
the company and hence NVVPL became a subsidiary of NITCO Limited.
OMKAMAL STEEL: CARE Assigns 'B+' Rating to INR4.65cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Omkamal Steel Private Limited (OKSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 4.65 CARE B+; Stable Assigned
Detailed Rationale& Key Rating Drivers
The rating assigned to the bank facility of Omkamal Steel Private
Limited (OKSPL) is constrained by relatively small scale of
operation with low profitability margin, susceptibility to raw
material price volatility, highly competitive and fragmented
industry, it's leveraged capital structure and cyclical nature of
iron and steel industry. The rating, however, derives strength
from experience of the promoter and strategic location of plant.
Going forward, the ability of the company to increase its scale
of operations with improvement in profitability margins and
effective management of working capital will be the key rating
sensitivities.
Key Rating Weaknesses
-- Relatively small scale of operation with low profitability
margin OKSPL's level of operation remained relatively small with
a PAT of INR0.06 crore on total income of INR57.31 crore in FY16:
The small size acts as a hindrance to achieve economies of scale
for the company. This apart, the PBILDT margin and PAT margin of
the company was 1.88% and 0.10% respectively, in FY16. As on
January 31, 2017, the company has achieved a turnover of INR50.00
crore.
-- Highly competitive & fragmented industry: The spectrum of
the steel industry in which the company operates is highly
fragmented and competitive marked by the presence of numerous
players in India owing to relatively low entry barriers. Hence,
the players in the industry do not have pricing power and are
exposed to competition induced pressures on profitability.
-- Susceptibility to raw material price volatility: OKSPL does
not have its own captive mine and neither does it have any long-
term tie-up for supply of raw materials with any company. Since,
raw material is the major cost driver for the company, any
unfavourable downward movement of finished goods price, with no
decline in raw material price result in adverse performance of
the company.
OKSPL does not have any backward integration for its raw
materials and procures the same from outside, exposing the
company to price volatility risk.
-- Cyclical nature of the iron & steel industry: The steel
industry is cyclical in nature. Steel consumption and, in turn,
production mainly depends upon the economic activities in the
country. Construction and infrastructure sectors drive the
consumption of steel. Slowdown in these sectors leads to decline
in demand for steel.
-- Leveraged capital structure: OKSPL's capital structure is
adverse marked by high overall gearing ratios as on last three
account closing dates. However, long term debt equity ratio
remained comfortable as on March 31, 2016. Overall gearing ratio
has improved marginally from 3.18x as on March 31, 2015 to 2.22x
as on March 31, 2016 on account of lower utilisation of working
capital limits and accretion of profits to reserve.
Experienced promoters with long track record of operation
OKSPL is managed by Mr. Mahesh Bansal (Promoter and CEO), having
close to two decades of experience in the steel industry.
Further, the company started its operation since 2010 and
accordingly has a moderate track record of operation.
OKSPL's plant is located at Bhilai, Chhattisgarh which is in the
vicinity of steel manufacturing companies of Chhattisgarh; from
where OKSPL procures its raw materials. The proximity to the raw
material sources reduces the transportation cost to the company.
OmKamal Steel Private Limited (OKSPL), incorporated in August
2010, was set up to carry on manufacturing of HB Wire, MS Wire,
Binding Wire, G.I Wire, Barbed Wire, Stay wire etc. The
manufacturing facility is located 16-G, Heavy Industrial Area,
Hathkhoj, Bhilai, Durg, Chhattisgarh. The commercial operation
started from October 2010 with an installed capacity of around
29,200 MTPA. The day to day affairs of the company are looked
after by Mr. Mahesh Bansal, with adequate support from other
directors and a team of experienced personnel.
OPTIONS LAWNS: CARE Assigns B+ Rating to INR7.85cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Options Lawns Private Limited (OLPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.85 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Options Lawns is
constrained by the risk emanating from debt-funded project
undertaken with financial closure pending, presence in the highly
fragmented industry with intense competition and seasonality of
business. The above weaknesses are partially offset by extensive
experience of the promoters in diverse sectors for more than a
decade and strategic location of the upcoming resort. The ability
of the company to execute the project in a timely manner without
any cost overruns and successfully commence operations while
achieving envisaged level of occupancy and profitability is a key
rating sensitivity.
Detailed Rationale & Key Rating Drivers
Key Rating Strengths
-- Experienced promoters: OLPL is promoted by Mr. Rajneesh Verma
in the strength of Director. Mr. Rajneesh Verma has an experience
of 15 years in infrastructure segment through Rajneesh Verma
Builders and Contractors (RVBC). The promoter also operates a
restaurant by the name of "Options Lawns" in Jabalpur which is
operational since 2002. Being in the industry for over one and a
half decades has helped the promoter in gaining adequate acumen
about diverse industries and is expected to benefit in the smooth
operations of the OLPL.
-- Strategic location of the resort: The resort is located in
Bhedaghat road in Madhya Paradesh, which is promoted by Madhya
Pradesh Tourism. Located on the outskirts of Jabalpur, the area
is a popular tourist spot and is famous for marble rock mountains
on the banks of Narmada river. The Dhuadhar water fall is another
tourist attraction in the area along with the Chausath Yogini
Temple. Hence, the resort is likely to benefit from the tourist
attractions located in the vicinity.
Key Rating Weaknesses
-- Project execution risk: The company is executing the project
for setting up a resort with a total cost of INR10.56 crore. It
faces risk of timely completion and stabilization of operations
as envisaged in light of pending financial closure for the
project.
-- Presence in the highly fragmented industry with intense
competition: The company operates in a highly competitive
hospitality industry of Bhedaghat. The Bedaghat area is a famous
tourist destination with many small players comprising of hotels,
resorts and recreational centers operating in the area. Thus,
OLPL faces high competition from the established players in the
Bedaghat area.
-- Seasonality of business: Revenue of the company is season in
nature as tourist inflow tends to increase in summer season
and holiday season making operations seasonal in nature.
Furthermore, there is high dependence on the tourism industry
in Madhya Pradesh and in Bhedhaghat area.
Jabalpur-based (Madhya Pradesh) Options Lawns Private Limited
(OLPL) was incorporated in April 1, 2016, by Mr. Rajneesh Verma,
having an experience of around 15 years in diverse businesses
such as hospitality and infrastructure. The company is promoted
by Riqueza Capital Investments Limited along with Mr. Rajneesh
Verma and Ms Sakshi Verma. Riqueza Capital Investments Limited
(RCIL) is a Hong Kong-based leading financial/business consulting
firm having a strong global presence in Singapore, India, UK,
Dubai and Mauritius directly or indirectly through its network
partners & associates.
OLPL is proposed to operate in an area of 70000 sq ft on
Bedhaghat road, Jabalpur, and have facilities, namely, 3 banquet
halls, 1 garden restaurant, pub, camping site, spa and wellness
centre, etc, along with stay facility. The resort is proposed to
have 52 rooms for stay purpose. Total cost of the project is
INR10.56 crore which will be funded with a DER of 2.78x. The
facility is expected to commence operations in April 2018.
PATEL COTTON: CARE Assigns B Rating to INR14.13cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Patel
Cotton Industries (PCI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.13 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Patel is
constrained on account of its leveraged capital structure on back
of small partner's capital base, moderate debt coverage
indicators, thin profitability margins and working capital
intensive operations. The rating is further constrained by its
presence in a fragmented and cyclical cotton industry along with
susceptibility of business to changes in Government policies.
The weaknesses are partially off-set by, experienced partners and
strategic location of its manufacturing facilities in the
cotton producing cluster.
Increases in scale of operations along with improvement in
operating efficiency are the key rating sensitivities. PCI's
ability to pass on the volatility associated with cotton prices
to its customers and efficient management of working capital
requirements are also crucial from a credit perspective.
Detailed description of the key rating driver
Key Rating Weaknesses
-- High leverage and moderate debt coverage indictors: The firm
had leveraged capital structure as marked by high overall gearing
of 2.82 times as on March 31, 2017. The capital structure is
leveraged due to small partner's capital base and working capital
intensive nature of operations. Furthermore, it had weak debt
coverage indicators on account of thin profitability.
-- Working capital intensive nature of operations: The
operations of PCI are working capital intensive as the firm
purchases most of its raw material i.e. raw cotton in cash while
it extends credit period of 20 days to its customers and keeps
inventory of 20-30 days of raw materials. The liquidity
indicators of PCI were modest marked by high utilization of
working capital limits to fund its working capital requirements.
-- Susceptibility of profitability to volatile cotton prices and
presence in the highly fragmented and competitive industry:
PCI's profitability margins are susceptible to volatility
associated with cotton prices. PCI operates in a highly
fragmented and unorganized market of the textile industry marked
by a large number of small sized players. The industry is
characterized by low entry barrier due to minimal capital
requirement and easy access to customers and supplier.
Key Rating Strengths
-- Experienced promoters: The partners of PCI have over two
decades of experience in cotton ginning and pressing, which has
helped it in terms of raw material procurement, ease of managing
day-to-day operations and marketing. Strategically located
manufacturing unit: PCI's presence in the cotton producing region
has geographical advantage in terms of lower logistics
expenditure (both on the transportation and storage) & ready
availability of raw materials.
Rajkot based, PCI was formed in 1997 as a partnership firm.
Currently, there are four partners in the firm. Mr. Rajnikant
Ghodasara is the key managing partner and looks after the overall
management of the firm. PCI is involved in the business of cotton
ginning & pressing. As on March 31, 2017, PCI had an installed
capacity of manufacturing 16,500 metric tone per annum (MTPA).
As per audited financials of FY16 (refers to the period April 1
to March 31), PCI reported total operating income (TOI) of
INR188.01 crore with profit after tax (PAT) of INR0.22 crore.
Based on provisional financials of FY17, PCI reported TOI of
INR140.41 crore with PAT of INR0.40 crore.
PMT MACHINES: CARE Assigns 'D' Rating to INR428.27cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of PMT
Machines Ltd (PMT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 428.27 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The ratings reflect on-going delays in servicing of interest and
default in repayment of debt obligation by the company on account
of its weakened liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Due to the weakened liquidity position, there are on-going delays
in servicing of interest and default in repayment of debt
obligation by the company.
PMT Machines Ltd (PMT) was incorporated on September 8, 1961 as
Traub India Pvt. Ltd, promoted by TRAUB, a leading German Machine
Tool Company with a major shareholding of 70%, along with Mr. D.
L. Shah. In 1979, TRAUB divested its entire stake in favor of Mr.
D. L. Shah. Later on in September 1989, it became deemed public
limited company and was renamed as PMT Machines Ltd. Subsequently
in 1994, Mr. D. L. Shah sold the company to the Sandesara group
and in 2003-04 the name was change to PMT Machines Ltd. It is one
of the oldest and leading machine tools producers in India. It
specializes in production of metal-working machine tools.
Sterling Biotech Ltd (SBL; rated 'CARE D/CARE D') is the flagship
and a listed company of the Vadodara based Sandesara group. It is
mainly engaged in the manufacturing of pharmaceutical grade
gelatin which has wide range of applications such as capsules,
tablets, etc. It is one of the leading manufacturers of
pharmaceutical grade gelatin in India with good presence in
U.S.A. which is the largest market for Pharmaceuticals. It also
manufactures Di-calcium Phosphate (DCP, a byproduct of gelatine)
and Co-enzyme Q10 (CoQ10). The group has over 27 years of
industrial experience and has diversified interests ranging from
Pharmaceuticals, Healthcare, Oil & Gas, Engineering
Infrastructure, etc. The other companies of the Sandesara group
are Sterling Oil Resources Ltd (rated 'CARE D'), Sterling SEZ &
Infrastructure Ltd (rated 'CARE D'), Sterling Port Ltd (rated
'CARE D'), etc.
During FY16 (9 months ended March), PMT reported a loss of INR78
crore on an operating income of INR55 crore vis-Ö-vis
FY15 (12 months ended June), wherein it reported loss of INR58
crore on an operating income of INR98 crore.
R.R. ENERGY: CARE Assigns 'B' Rating to INR66cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of R.R.
Energy Limited (RREL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 66.00 CARE B; Stable Assigned
Short-term Bank
Facilities 18.10 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of R.R. Energy are
constrained by its small scale of operations, exposure to
vagaries of nature on account of usage of agro-based raw
material, volatile raw material prices, significant exposure in
other loss making companies, working capital intensive nature of
operations, weak financial performance during FY14-FY16 (refers
to the period April 1 to March 31) and weak debt protection
metrics. The ratings however, derive strength from its
experienced promoters, adequate raw material availability, power
purchase agreement (PPA) with Chhattisgarh State Power
Distribution Company Limited (CSPDCL), moderate capital structure
and improvement in financial performance and debt protection
metrics in FY17 (Provisional).
The ability of the company to efficiently operate the power
plant, sell power at remunerative tariff, improve the
profitability and efficient management of working capital with no
further debt funded capex plan are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations: RREL's scale of operations remained
small over the past years. Small scale of operations restricts
the financial flexibility of the company in times of stress and
it suffers on account of economies of scale. Exposure to vagaries
of nature, due to agro-based raw material: Rice husk is the
primary raw material for the plant and availability of the same
is dependent on the rice production for that year. Rice
cultivation is highly dependent on the timing of arrival of
monsoon and mount of rainfall. Therefore, market price for rice
husk is very volatile and dependent on weather conditions.
Significant exposure in other loss making companies: RREL had
significant exposure in the form of investments and loans
(forming about 71% of its net worth as on March 31, 2017
(Provisional) in its associate companies having weak credit
profile.
Working capital intensive nature of operations: RREL's operations
are working capital intensive as a large part of its
working capital remained blocked in its inventories which mainly
include rice husk and slow moving stock of fly ash bricks
and ferro alloys.
Weak financial performance during FY14-FY16 along with weak debt
protection metrics: The financial performance of the company
remained weak over the past three years due to continuous decline
in its ferro alloys sales and absence of any PPA till March,
2016. The debt protection metrics of the company also remained
weak over the past years (FY14-FY16) due to its weak financial
performance.
Key Rating Strengths
Experienced promoters: The promoters of RREL are well established
and experienced in their respective line of business in the state
of Chhattisgarh. Presently, Mr. Aman Agrawal, (son of Mr.
Ramavtar Agrawal) looks after the day to day affairs of the
company with support from other directors.
Adequate raw material availability: RREL procures locally
available rice husk generated from rice mills, a bio-mass
resource, as the main fuel for generating electricity. There is
abundant supply of rice husk in the Raigarh and surrounding
areas. The coal required for running the power plant is generally
of lower calorific value which is procured locally.
Power Purchase Agreement with CSPDCL: The company has executed a
long term PPA with CSPDCL for 20 years (from March 2016).
Existence of long term PPA indicates revenue visibility for the
company.
Moderate capital structure: The capital structure of the company
remained moderate as on the past three account closing dates.
Though, debt equity ratio and the overall gearing ratio improved
from 1.02x and 1.30x respectively as on March 31, 2014 to 0.83x
and 1.27x as on March 31, 2016, it remained moderate. In FY16,
the promoters has infused equity and subordinated unsecured loans
aggregating to INR2.65 crore to support the business operations.
The debt equity ratio and the overall gearing ratio further
improved to 0.75x and 1.16x respectively as on March 31, 2017
(Provisional) due to accretion of profit to net worth and
repayment of term loans.
Improvement in financial performance and debt protection metrics
in FY17 (Provisional): In FY17 (Provisional), the total operating
income of the company increased by about 74% driven by increased
revenue from the power segment and the company also earned a
PBILDT margin of 26.34% in FY17 (Provisional). Further in FY17
(Provisional), RREL has also posted net profit and earned a GCA
of INR9.63 crore. The interest coverage ratio which remained
below unity in FY15 and FY16 improved to 1.85x in FY17
(Provisional). Total debt/GCA also remained moderate at 8x as on
March 31 2017(Provisional).
RREL, was incorporated in April, 2004 by Raigarh-based
(Chhattisgarh) Mr. Amar Agrawal, Mr. Ashok Agrawal, Mr. Rajendra
Kumar Agrawal, Mr. Ramavtar Agrawal and Mr. S C Singhal. RREL is
engaged in generation of bio mass power with a 15MW plant and
manufacturing of ferro alloy (mainly Ferro and Silicon Manganese)
with an installed capacity of 30,000 MTPA in Raigarh. The company
started its operation in 2007 with its bio mass power plant.
Further in September 2010, the company also installed a fly ash
brick manufacturing plant with a capacity of 100,000 bricks per
day to utilize the fly ash generated from power plant. The ferro
alloy plant commenced operation from July, 2013. However
currently, both the bricks and ferro alloys plants are not
operational. Currently, RREL has a power purchase agreement (PPA)
with CSPDCL for 20 years (from March' 2016) for sale of 13MW
power. As per the audited results for FY16, RREL reported a net
loss of INR30.77 crore on a total operating income of INR44.90
crore as against net loss of INR9.35 crore on a total operating
income of INR98.60 crore in FY15. Based on provisional results
for FY17, RREL reported total operating income of INR77.02 crore
and a PAT of INR0.38 crore.
Status of non-cooperation with previous CRA: CRISIL conducted the
review on the basis of best available information and classified
R.R.Energy Ltd. as "Issue not cooperating" vide its press release
dated June 13, 2017.
SAMARTTHA TRIMURTI: CARE Assigns B+ Rating to INR15cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Samarttha Trimurti Properties (STP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 15 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Samarttha Trimurti
Properties (STP) is constrained on account of the project
execution risk with pending financial disclosure and high
dependence on customer advances and low booking status. The
rating further takes into account cyclical nature of industry and
presence in a highly competitive environment.
The rating, however, continues to derive strength from experience
of the promoter in real estate development in Pimpri-Chinchwad,
receipt of approvals and clearances for the project and strategic
location of the project.
The ability of the firm to complete the project as per the
schedule within envisaged cost, thereby enabling timely inflow
of the receivables and sell the inventory as estimated rates are
the key rating sensitivities.
Detailed Rationale & Key Rating Drivers
Key Rating Strengths
Experienced promoter group in real estate development in Pune:
STP is a part of Samarth Group which is one of the established
real estate groups of Pune. The group has been engaged in real
estate business since, past fifteen years and has completed
around fifteen residential and commercial projects with an area
of 18.73 lsf. Also, the group currently has nine on-going
projects in Pune with total saleable area of 12.40 lsf.
Receipt of approvals and clearances for the project: STP has
received all the necessary clearances and approvals for the
project related to land acquisition and construction. The
requisite sanction plan of the buildings of the said project has
been approved by the Pimpri Chinchwad Municipal Collectorate.
Commencement certificate from the Pimpri Chinchwad Municipal
Corporation has been received. Furthermore, the said land has
also been converted to non-agriculture use and environmental
clearance for the project has also been obtained. Strategic
location of the project: STP is currently developing a project
namely 41 Estara at Punawale, Pune which is very well connected
to Mumbai Pune Highway. The project is residential project with
modern amenities targeting customers from the middle class and
business class. In addition, the project is situated in area with
easy access to basic civic amenities such as schools, hospitals,
colleges, malls, situated close by and has close by and has close
proximity to Hinjewadi IT park and Pune Mumbai Expressway.
Key Rating Weaknesses
Project execution risk and funding risk: The total cost of the
project is INR45.08 crore which is to be funded with a DE ratio
of 1.25x. The project is expected to be completed by May 2021. As
on May 31, 2017, the firm has incurred 8.07% of the total project
cost (funded through promoter's contribution). However, the
financial closure for the project has not been achieved
increasing the risk of execution. The ability of the entity to
complete the project as per schedule within the envisaged cost
and achieve the project sales at the assumed price will be
critical from credit perspective.
Cyclical nature of the real estate industry: The firm is exposed
to the cyclicality associated with the real estate sector which
has direct linkage with the general macroeconomic scenario,
interest rates and level of disposable income available with
individuals. In case of real estate companies, the profitability
is highly dependent on property markets. A high interest rate
scenario could discourage the consumers from borrowing to finance
the real estate purchases and may depress the real estate market.
Established in the year 2012, Samartha Trimurti Properties (STP)
is the special purpose vehicle of Samartha Group (SG). SG is one
of the reputed real estate group in Pune. The group has completed
15 projects in the last 15 years, with a total saleable area of
1737500 sq. feet.STP was established with a view to execute the
real estate project namely "41 Estara" in Punawale, Pune. The
firm shall be offering 1 and 2 BHK flats in the said project. The
total number of flats offered in the project is 216. The project
comprises of 5 buildings and 16 row houses of which two buildings
and 16 row houses have been constructed as Phase I of the
project. The total saleable area of Phase I consists of 1.2 lsf.
Phase I has been fully sold. Under the phase II of the project
the firm is developing three buildings C, D & E with a total area
of 278632 sq. feet. The project will be officially launched in
the month of July 2017 and is expected to be completed by May
2021. The total cost of the project is INR45.08 crore to be
funded by promoter's contribution of INR12 crore, term loan from
bank of INR15 crore and customer advances of INR18.08 crore. The
firm has not sold any flats yet under Phase II. The two buildings
namely Building C and Building E are residential apartments
comprising of 14 floors with 8 flats per floor with a total
saleable area of 194000 sq. feet.
SHAKUMBHRI PULP: ICRA Reaffirms B+ Rating on INR6.10cr Loan
-----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ and
short-term rating of [ICRA]A4 on the INR8.10-crore bank
facilities of Shakumbhri Pulp & Paper Mills Limited (SPPML). The
outlook on the long-term rating is stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term fund
based 6.10 [ICRA]B+ (Stable); Reaffirmed
Short-term non
fund based 2.00 [ICRA]A4; Reaffirmed
Rationale
As part of its process and in accordance with its rating
agreement with SPPML, ICRA has been trying to seek information
from the company so as to undertake a surveillance of the
ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. ICRA's Rating Committee
has taken a rating view based on best available information. In
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, the company's rating is now denoted as:
"[ICRA]B+ (Stable)/[ICRA]A4; ISSUER NOT COOPERATING". The
lenders, investors and other market participants may exercise
appropriate caution while using this rating, given that it is
based on limited or no updated information on the company's
performance since the time it was last rated.
SPPML was incorporated in 1986 and is engaged in the
manufacturing of kraft paper at Muzzaffarnagar, Uttar Pradesh.
Presently, SPPML has an installed capacity of 10,000 Metric
Tonnes Per Annum (MTPA); it manufactures kraft paper of 16 burst
factor with 80-120 grams per square meter (GSM). The present
promoters of the company acquired control of SPPML in 2009 from
its erstwhile promoters. Presently, the overall management of the
company is with Mr. Arjun Agarwal and family who are also
managing the affairs of another paper manufacturing company. The
company is undertaking capex in FY16, to expand its capacity to
13,200 MTPA and produce higher quality paper.
In FY2015, the company reported a profit after tax (PAT) of
INR0.14 crore on an operating income (OI) of INR19.38 crore, as
against a PAT of INR0.10 crore on an OI of INR19.76 crore in the
previous year.
SHREE RAMANJANEYA: CARE Assigns B+ Rating to INR14.91cr LT Loan
---------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Shree
Ramanjaneya Hotels Private Limited (SRHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 14.91 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Shree Ramanjaneya
Hotels Private Limited (SRHPL) is constrained by nascent stage &
small scale of operations albeit healthy growth over last 3 years
ended FY17 (prov.) (refers to the period April 1 to March 31),
highly leveraged capital structure, weak debt coverage indicators
and presence in competitive, seasonal & cyclical hospitality
industry.
The rating, however, derives strength from long track record of
Fidalgo Group's (FG) operations coupled with established hotel
brand presence, highly experienced and resourceful promoters with
over four decades of experience and demonstrated financial
support, healthy profit margins and comfortable operating cycle.
The ability of SRHPL to increase its scale of operations and
maintain profit margins, along with improving capital structure
and liquidity position with efficient working capital management
is the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Strengths
-- Long track record of Fidalgo Group coupled with established
brand presence: SRHPL belongs to FG, which also operates another
company named Maberest Hotels Private Limited (MHPL). MHPL
operates a 4-star hotel in Panjim, Goa, since 2002. All the
hotels operated by FG are run under its own brand "Fidalgo" which
has got a renowned local presence in Panjim and Pune.
-- Highly experienced promoters with over four decades of
experience in hotel industry: The overall operations of SRHPL are
looked after by Mr. Jayant Shetty with his brother Mr. Ganesh
Shetty and brother-in-law Mr. Harish Shetty, who possess a
cumulative experience of over a decade in the field of
hospitality business. Further the promoters have supported the
operations of the company by infusion of funds.
-- Healthy profit margins albeit operating losses in the past
and moderate liquidity: The PBILDT margin of SRHPL stood healthy
at 29.63% in FY17. However, the company posted operating losses
over the past owing to higher expenses towards lease rentals for
Hyderabad hotel, coupled with nascent stage of operations.
The operations of SRHPL are less working capital intensive in
nature with minimal funds blocked in inventory and debtors.
The inventory holding stood low in the range of 10-15 days owing
to low level of food & beverages inventory requirement
on account of daily consumption and ready availability of the
same, whereas the collection period also stood low in the
range of 4-12 days owing to a low credit period of over 15 days
extended to the corporate customers. On the other hand, an
adequate credit period of over 40-50 days is extended by the food
& beverages suppliers to the company.
Key Rating Weaknesses
-- Nascent stage & small scale of operations albeit healthy
growth over last 3 years: SRHPL's operations are nascent in stage
with only 5 years of operations and FY13 being the first full
year of operations. Given this, the scale of operations stood
small with small tangible net-worth base. However, the same has
grown at a healthy rate of 30.51% CAGR over FY14-FY17 owing to
steady increase in occupancy levels and ARR over the same period,
coupled with commencement of commercial operations of Pune hotel
in FY17.
-- Highly leveraged capital structure and weak debt coverage
indicators: The capital structure of SRHPL stood highly
leveraged, given the high reliance on unsecured loans coupled
with small tangible net-worth base owing to losses incurred in
the past. However, comfort can be derived from the fact that
69.77% of the total debt outstanding as on March 31, 2017,
comprised interest-free unsecured loans from the promoters.
SRHPL's debt coverage indicators stood weak, given the high
reliance on debt coupled with healthy profitability.
-- Presence in competitive, seasonal & cyclical industry: SRHPL
operates in a competitive hospitality industry wherein a
large number of players operate hotels all over the cities,
thereby intensifying the competition for the company.
Moreover, the hotel operations are also prone to seasonality &
cyclicality, thereby leading to fluctuations in occupancy
rates.
Incorporated in 2011 by Mr. Jayant Shetty, Mr. Ganesh Shetty, Mr.
Harish Shetty and Mrs Pratibha Shetty, SRHPL is engaged in
providing hospitality services under its own brand Fidalgo,
whereas it operates a 69-room, 3-star hotel in Pune, Maharashtra.
Until FY16, the company operated only one 94-room, 3-star hotel
in Hyderabad, Telangana, which was obtained by the company on a
20-year lease agreement, whereas the Pune hotel (set up of a
total project cost of INR43 crore) became operational in July
2016. Thereafter, the company wounded up the operations of the
Hyderabad hotel with effect from October 2016. The ARR of Pune
hotel is INR2,500, whereas ~85% occupancy was achieved by it over
July 2016 - March 2017.
During FY17 (prov.), the total operating income of the company
stood at INR8.05 crore (vis-a-vis INR5.31 crore in FY16),
whereas the PAT during the same year stood at INR0.12 crore
(vis-a-vis a net loss of INR2.01 crore in FY16).
SILVERTONES SPECIALITY: ICRA Reaffirms B+ Rating on INR20cr Loan
----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ and
short-term rating of [ICRA]A4 on the INR32.00-crore bank
facilities of Silvertones Speciality Textiles Private Limited
(SSTPL). The outlook on the long-term rating is stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term fund
Based 20.00 [ICRA]B+ (Stable); Reaffirmed
Long-term/Short- 12.00 [ICRA]B+ (Stable)/[ICRA]A4;
term non fund based Reaffirmed
Rationale
As part of its process and in accordance with its rating
agreement with SSTPL, ICRA has been trying to seek information
from the company so as to undertake a surveillance of the
ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. ICRA's Rating Committee
has taken a rating view based on best available information. In
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, the company's rating is now denoted as:
"[ICRA]B+ (Stable)/[ICRA]A4; ISSUER NOT COOPERATING". The
lenders, investors and other market participants may exercise
appropriate caution while using this rating, given that it is
based on limited or no updated information on the company's
performance since the time it was last rated.
Incorporated in 2005, SSTPL is engaged in manufacturing PVC
leather (rexine) and flock fabric. The company has two
manufacturing units - Mehatpur (Himachal Pradesh) and Dharuhera
(Haryana). As on March 31, 2016 the company had an installed
capacity of 20,000 Metric Tonnes Per Annum (MTPA) for
manufacturing PVC leather and flock fabric.
In FY2015, the company reported a profit after tax (PAT) of
INR0.24 crore on an operating income (OI) of INR94.09 crore, as
against a PAT of INR0.43 crore on an OI of INR82.61 crore in the
previous year.
On provisional basis, SSTPL registered an OI of INR102.76 crore
and PAT of INR0.52 crore in FY2016.
SLN CNC: ICRA Reaffirms B+ Rating on INR4.50cr Cash Loan
--------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ to
the INR4.50-crore fund-based limits and INR1.16-crore term loan
of SLN CNC Tech Private Limited (SCTPL). ICRA has also reaffirmed
the short-term rating of [ICRA]A4 to the INR1.00-crore fund-based
limits, INR0.75-crore non-fund based limits and [ICRA]B+/[ICRA]A4
rating for INR2.59-crore unallocated limits of the company. The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash
Credit 4.50 [ICRA]B+(Stable) Reaffirmed
Fund-based Term
Loan 1.16 [ICRA]B+(Stable) Reaffirmed
Fund-based Packing
Credit 1.00 [ICRA]A4 Reaffirmed
Non-fund Based 0.75 [ICRA]A4 Reaffirmed
Unallocated FB/ NFB 2.59 [ICRA]B+(Stable)/A4
Reaffirmed
The rating action is based on the best available information
FY2015 audited numbers, H1FY2016 provisional numbers and other
information. As part of its process and in accordance with its
rating agreement with SCTPL, ICRA has been seeking information
from the company so as to assess the ratings. However, the
company's management has remained non-cooperative despite
repeated requests by ICRA. In the absence of requisite
information, ICRA's Rating Committee has taken a rating view
based on the best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as "[ICRA]B+(Stable)/[ICRA]A4
ISSUER NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Established in 2008, SCTPL is involved in the manufacturing of
precision at its CNC machining facility. Based out of Bangalore,
Karnataka, the company is promoted by Mr. M V Ashok and Mr. M L
Gowda and specialises in manufacturing aluminium, stainless
steel, titanium, nimonic, inconel and cobalt alloy products. The
company caters to clients in the aviation, automotive, space,
defence, power generation and telecommunication sectors.
SONATA FINANCE: ICRA Cuts Rating on INR3.19cr Sec. to B+(SO)
------------------------------------------------------------
ICRA Ratings has reaffirmed/downgraded the ratings for PTCs under
2 micro loan securitization transactions originated by Sonata
Finance Private Limited (Sonata), as:
1. Mithras IFMR Capital 2015*
Amount
after
Initial May 17
Amount Payout
Facilities (INR cr) (INR cr) Rating Action
---------- -------- -------- -------------
PTC Series A2 2.89 1.85 [ICRA]A-(SO) Reaffirmed
PTC Series A3 3.19 3.19 [ICRA]B+(SO) Downgraded
from [ICRA]BB+(SO)
2. Cimber IFMR Capital 2016
Amount
after
Initial May 17
Amount Payout
Facilities (INR cr) (INR cr) Rating Action
---------- -------- -------- -------------
PTC Series A1 17.08 5.81 [ICRA]A-(SO) Reaffirmed
PTC Series A2 1.55 1.55 [ICRA]BBB-(SO)
Downgraded from
[ICRA]BBB(SO)
* PTC Series A1 of Mithras IFMR Capital 2015 has been withdrawn
in May 2017 as the payouts to the investors have been made and no
further payment is due to the investors.
Rationale
Both the pools comprise of receivables from micro loan contracts.
The receivables have been assigned to the respective trusts at
par and each trust has issued PTCs backed by the same. The rating
action is driven by weaker than expected collection performance
and high delinquencies witnessed in these pools post
demonetisation.
Key rating drivers
Credit Strengths
* High to moderate amortization of senior PTCs resulting in
high Cash Collateral (CC) cover available for the balance
PTC payouts, especially for the senior PTC tranche;
Credit Weaknesses
* High delinquency level in the pools, primarily driven by
the demonetization event
* The pools have a notable share of contracts from some of
the regions where the asset quality remains weak post
demonetization
Description of key rating drivers highlighted above:
The performance of the pools was healthy till October 2016, with
cumulative collection efficiency in the range of 99% - 100% for
both of these pools. However, post the unexpected demonitisation
event, the monthly collection efficiency levels declined to
around 70-81% in the months between November 2016 and April 2017.
Both the pools have notable share of contracts from regions where
the asset quality has been weak post demonetization.
Though the collections have been weak in the recent months, the
senior PTCs (PTC Series A2 in Mithras and PTC Series A1 in
Cimber) have amortised significantly resulting in sizeable build
up in credit enhancement for the remaining payouts.
In both the transactions, only the interest amount is promised on
a monthly basis (with principal amount promised to the PTC
investors only on the final maturity date). ICRA will continue to
monitor closely the performance of these transactions. Any
further rating action will be based on the performance of the
pools and the availability of credit enhancement relative to
ICRA's expectations.
Analytical approach:
The rating actions are based on the performance of the pools till
April 2017 (collection month), the present delinquency profile of
the pool contracts, geographical spread of the pool contracts,
performance expected over the balance pool tenure, and the credit
enhancement available in these transactions.
Sonata Finance Private Limited (Sonata) is an NBFC-MFI that was
incorporated in 1995 and registered as non-deposit taking NBFC in
2001. The company's microfinance operations were started in 2006
by Mr. Anup Kumar Singh who is the Managing Director of the
company at present and had acquired Sonata in 2005 along with
other promoter group. Sonata primarily caters to the rural
population, though it has some borrowers in semi-urban and urban
areas. Sonata offers credit to economically backward women
engaged in income generation activities like processing and
manufacturing, service and animal husbandry. Its key product is
the income generating group loan for which it replicates Grameen
Bank model of lending.
As on December 31, 2016, Sonata had operations through 355
branches across 8 states of India. Uttar Pradesh formed the
largest share with ~ 55% and the other states in which Sonata had
presence were Madhya Pradesh, Uttarakhand, Haryana, Bihar,
Rajasthan, Punjab and Maharashtra with a total managed
portfolio of INR1,131 crore as on December 31, 2016. The
portfolio as on April 30, 2017 was INR981.2 crore.
Sonata reported profit after tax (PAT) of INR10.59 crore8 during
FY2017 on a total managed asset base of INR1,589.24 crore8 as on
March 31, 2017 as against PAT of INR27.20 crore during FY2016 on
a total managed asset base of INR1,384.03 crore as on March 31,
2016.
STERLING BIOTECH: CARE Assigns 'D' Rating to INR3,768cr Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Sterling Biotech Limited (SBL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3,768.00 CARE D Assigned
Short-term Bank
Facilities 69.68 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The ratings reflect on-going delays in servicing of interest and
default in repayment of debt obligation by the company on account
of its weakened liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Due to the weakened liquidity position, there are on-going delays
in servicing of interest and default in repayment of debt
obligation by the company.
Sterling Biotech Limited (SBL), promoted by Mr. Nitin Sandesara
(Managing Director), is the flagship and a listed company of the
Vadodara based Sandesara group. SBL is mainly engaged in the
manufacturing of pharmaceutical grade gelatin which has wide
range of applications such as capsules, tablets, etc. It is one
of the leading manufacturers of pharmaceutical grade gelatin in
India with good presence in U.S.A. which is the largest market
for Pharmaceuticals. It also manufactures Di-calcium Phosphate
(DCP, a by-product of gelatine) and Co-enzyme Q10 (CoQ10). DCP is
mainly used by poultry feed manufacturers while CoQ10 is used as
a dietary supplement used to boost human memory and immunity.
SBL's manufacturing facility is located at Vadodara, Gujarat. The
group has over 27 years of industrial experience and has
diversified interests ranging from Pharmaceuticals, Healthcare,
Oil & Gas, Engineering Infrastructure, etc. The other companies
of the Sandesara group are Sterling Port Ltd (rated 'CARE D'),
Sterling Oil Resources Ltd (rated 'CARE D'), Sterling SEZ &
Infrastructure Ltd (rated 'CARE D'), PMT Machines Ltd (rated
'CARE D'), etc.
During FY17 (12 months ended March), SBL reported a loss of
INR412 crore on an operating income of INR404 crore vis-Ö-vis
FY16 (15 months ended March), where-in it reported loss of INR450
crore on an operating income of INR568 crore.
STERLING BIOTECH LTD: CARE Assigns D Rating to INR1,434.92cr Loan
-----------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Sterling Biotech Ltd, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 1434.92 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The ratings reflect on-going delays in servicing of interest and
default in repayment of debt obligation by the company on account
of its weakened liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Due to the weakened liquidity position, there are on-going delays
in servicing of interest and default in repayment of debt
obligation by the company.
Sterling SEZ & Infrastructure Ltd (SSIL, erstwhile Sterling SEZ
Private Limited), formerly known as M/s Sterling Erection and
Infrastructure Private Limited (SEIPL), is a Special Purpose
Vehicle (SPV) promoted by Sandesara group through Sterling
Biotech Ltd. SSIL was incorporated on June 22, 2006 for the
development of a multi-product SEZ in the Jambusar Taluka,
Bharuch District of Gujarat. The SEZ was aimed at providing
world-class industrial, commercial, residential and social
infrastructure facilities along with utilities, on an integrated
basis to potential users of the SEZ.
Sterling Biotech Ltd (SBL; rated 'CARE D/CARE D') is the flagship
company of the Vadodara based Sandesara group. SBL, a listed
company, is mainly engaged in the manufacturing of pharmaceutical
grade gelatin which has wide range of applications such as
capsules, tablets, etc. It is one of the leading manufacturers of
pharmaceutical grade gelatin in India with good presence in
U.S.A. which is the largest market for Pharmaceuticals. It also
manufactures Di-calcium Phosphate (DCP, a by-product of gelatine)
and Co-enzyme Q10 (CoQ10). The group has over 27 years of
industrial experience and has diversified interests ranging from
Pharmaceuticals, Healthcare, Oil & Gas, Engineering
Infrastructure, etc. The other companies of the Sandesara group
are Sterling Port Ltd (rated 'CARE D'), Sterling Oil Resources
Ltd (rated 'CARE D'), PMT Machines Ltd (rated 'CARE D'), etc.
STERLING OIL: CARE Assigns 'D' Rating to INR299.72cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Sterling Oil Resources Limited (SORL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 299.72 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The ratings reflect on-going delays in servicing of interest and
default in repayment of debt obligation by the company on
account of its weakened liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Due to the weakened liquidity position, there are on-going delays
in servicing of interest and default in repayment of debt
obligation by the company.
Sterling Oil Resources Limited (SORL), incorporated in March
2007, a Sandesara Group company, was incorporated in India for
undertaking oil exploration and production activities in oil
prolific areas across the globe. SORL through its 100%
subsidiaries in Mauritius and British Virgin Island (BVI) holds
90% stake in Sterling Oil Exploration & Energy Production Company
Limited (SEEPCO, the operator of the oil block; rated 'CARE D'),
a company incorporated in Nigeria to acquire and operate Oil
Exploration and Production businesses in Nigeria. Sterling
Biotech Limited (SBL; rated 'CARE D/CARE D') is the flagship
company of the Vadodara based Sandesara group. SBL, a listed
company, is mainly engaged in the manufacturing of pharmaceutical
grade gelatin which has wide range of applications such as
capsules, tablets, etc. It is one of the leading manufacturers of
pharmaceutical grade gelatin in India with good presence in
U.S.A. which is the largest market for Pharmaceuticals. It also
manufactures Di-calcium Phosphate (DCP, a by-product of gelatine)
and Co-enzyme Q10 (CoQ10). The group has over 27 years of
industrial experience and has diversified interests ranging from
Pharmaceuticals, Healthcare, Oil & Gas, Engineering
Infrastructure, etc. The other companies of the Sandesara group
are Sterling Port Ltd (rated 'CARE D'), Sterling SEZ &
Infrastructure Ltd (rated 'CARE D'), PMT Machines Ltd (rated
'CARE D'), etc.
During FY16, SORL reported PAT of INR0.68 crore on an operating
income of INR61.68 crore, vis-Ö-vis FY15, where-in it reported
PAT of INR4.76 crore on an operating income of INR404.36 crore.
STERLING PORT: CARE Assigns 'D' Rating to INR244.35cr Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Sterling Port Ltd (SPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 244.35 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The ratings reflect on-going delays in servicing of interest and
default in repayment of debt obligation by the company on
account of its weakened liquidity position.
Detailed description of the key rating drivers
Key Rating Weaknesses
Due to the weakened liquidity position there are on-going delays
in servicing of interest and default in repayment of debt
obligation by the company.
Sterling Port Ltd (SPL) was incorporated on September 29, 2006,
as a Special Purpose Vehicle in the name of Sterling Port Private
Limited (SPPL) to develop an all-weather direct-berthing port for
handling dry bulk, liquid bulk and container cargoes. The company
received a Letter of Intent on January 03, 2009, from Gujarat
Maritime Board (GMB) and concessional agreement was signed
between them for developing of a greenfield port at Dahej,
Gujarat. Subsequently, in March 2009, the name of the company was
changed to SPL. The project is promoted by Sterling Biotech Ltd
(SBL; rated 'CARE D / CARE D'), which is the flagship company of
the Vadodara based Sandesara group. SBL, a listed company, is
mainly engaged in the manufacturing of pharmaceutical grade
gelatin which has wide range of applications such as capsules,
tablets, etc. It is one of the leading manufacturers of
pharmaceutical grade gelatin in India with good presence in
U.S.A. which is the largest market for Pharmaceuticals. It also
manufactures Di-calcium Phosphate (DCP, a by-product of gelatine)
and Co-enzyme Q10 (CoQ10). The group has over 27 years of
industrial experience and has diversified interests ranging from
Pharmaceuticals, Healthcare, Oil & Gas, Engineering
Infrastructure, etc. The other companies of the Sandesara group
are Sterling Oil Resources Ltd (rated 'CARE D'), Sterling SEZ &
Infrastructure Ltd (rated 'CARE D'), PMT Machines Ltd (rated
'CARE D'), etc.
SUMMA REAL: ICRA Reaffirms B+ Rating on INR12.50cr Term Loan
------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+
assigned to the INR15.00-crore term loans, INR4.00-crore cash
credit facilities of Summa Real Media Private Limited. SRMPL's
letter of credit facility of INR15 crore is a sub limit of the
term loan facility, for which also ICRA has reaffirmed an
[ICRA]B+ rating. ICRA has also reaffirmed a short term rating of
[ICRA]A4 for the INR2 crore non fund based limits of SRMPL. The
outlook on the long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan-I 2.50 [ICRA]B+ (Stable) Reaffirmed
Term Loan-II 12.50 [ICRA]B+ (Stable) Reaffirmed
Letter of Credit (15.00) [ICRA]B+ (Stable) Reaffirmed
Cash Credit 4.00 [ICRA]B+ (Stable) Reaffirmed
Bank Guarantee 2.00 [ICRA]A4 Reaffirmed
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with SRMPL, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings and also
had sent repeated reminders to the company for payment of
surveillance fee that became overdue, but despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the entity's
rating is now denoted as: "[ICRA]B+ (Stable)/[ICRA]A4 ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the entity's performance since the time it was
last rated.
SRMPL was incorporated in January 2010 and is promoted by Dr.
Manojranjan Nayak. SRMPL is engaged in the business of printing
and distribution of an Odiya language daily newspaper, by the
name of 'Prameya'. The operations commenced in May, 2011, with
full fledged commercial operations being in place from 2013
onwards.
VARIETY LUMBERS: ICRA Reaffirms B+ Rating on INR2cr Cash Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating at [ICRA]B+
assigned to the INR2.00-crore fund based facility of Variety
Lumbers Private Limited (VLPL). ICRA has also reaffirmed the
short-term rating at [ICRA]A4 assigned to the INR20.00-crore non
fund based facility of VLPL. The outlook on the long-term rating
is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 2.00 [ICRA]B+ (stable); Reaffirmed
Import Letter of
Credit cum Buyer's
Credit 20.00 [ICRA]A4; Reaffirmed
Rationale
The reaffirmation of ratings continues to remain constrained
relatively small scale of operations and volatility in operating
income coupled with weak financial risk profile marked by low
operating profitability, aggressive capital structure and weak
debt coverage indicators. The ratings also take into account the
highly fragmented and competitive timber industry, susceptibility
of VLPL's margins to fluctuation in timber prices and adverse
movements in foreign exchange, given the high dependence on
imports in absence of formal hedging policy. The ratings,
however, continues to positively consider the extensive
experience of the promoters in the timber industry, their
established relations with the overseas suppliers and the plant's
proximity to Kandla port which results in ease of logistical
advantage.
Going forward, the company's ability to grow its scale of
operations, improve its operating margins in a sustainable manner
and maintain comfortable liquidity position will remain the key
rating sensitivity.
Key rating drivers
Credit strengths
* Long experience of promoters in the timber industry with
established relations with overseas suppliers
* Proximity to Kandla port results in ease of logistics and
procurement of imported timber
Credit weaknesses
* Weak financial risk profile marked by low profitability
indicators, aggressive capital structure and weak coverage
indicators
* Relatively small scale of operations; operating income (OI)
remained range-bound over last four fiscal
* Profitability remains vulnerable to currency fluctuations
due to import oriented nature of operations and absence of
formal hedging policy
* Highly fragmented nature of industry with intense competition
from number of organised and unorganised players coupled with
little product differentiation restricting pricing flexibility
and thereby profit margins
Description of key rating drivers:
The promoters of the company have over two decades of experience
in the timber industry. The company deals in radiate pinewood
which is majorly imported from New Zealand. High dependence on
imports in absence of formal hedging policy exposes the company's
profitability to foreign exchange fluctuation risk. The scale of
operations remained small with stagnant revenues for FY2015 and
FY2016; however, the operating income registered ~14% growth from
INR32.33 crore in FY2016 to INR36.99 crore in FY2017 following
increase in demand from the existing customers, which majorly
belongs to packaging industry. The operating profitability
remained low and further moderated from 5.65% in FY2016 to 4.25%
in FY2017 owing to increase in employee expenses. The capital
structure of the company continues to remain aggressive with
gearing at 2.26 times as on March 31, 2017 as against 2.11 times
as on March 31, 2016 owing to higher reliance of external debt
coupled with modest net-worth base. High debt coupled with low
profitability has kept the coverage indicators weak. The company
benefits in terms of ease of logistics and procurement of
imported timber due to close proximity of Gandhidham (Gujarat)
with the Kandla port. However, the same has attracted numerous
timber players in Gandhidham region resulting into intense
competition which restricts the company's pricing flexibility.
Incorporated in 2002, Variety Lumbers Private Limited processes
and trades timber logs and also manufactures wooden pallets. VLPL
deals in radiate pine logs which are majorly imported from New
Zealand and Singapore. The plant is located at Gandhidham in
Gujarat which is close to Kandla port. The company is promoted by
the Dubey family with key promoters being Mr. Swami Nath Dubey
and his son Mr. Jay Kumar Dubey. The promoters have more than 25
years of experience in timber business.
VIJAY LATEX: ICRA Withdraws 'D' Rating on INR11.93cr Loan
---------------------------------------------------------
ICRA Ratings has withdrawn the rating of [ICRA]D assigned to the
INR20.00 crore bank facilities of Vijay Latex Products Private
Limited in accordance with ICRA's policy on withdrawal and
suspension and as desired by the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 11.93 [ICRA]D withdrawn
Non-fund based Limits 3.00 [ICRA]D withdrawn
Unallocated amount 5.07 [ICRA]D withdrawn
Rationale: The rating is withdrawn as desired by the company.
Incorporated in 1992 by Mr. Jitendra Salot, Vijay Technologies
(I) Private Limited (VTIPL) was dormant till FY 2007 and
commenced commercial operations from FY 2009 as a manufacturer of
rubber gloves. VTIPL then acquired its parent company which was
engaged in the same line of business effective from April 2010.
The company then changed its name to Vijay Latex Products Private
Limited in June, 2013. The company has its factory located in
Umbergaon, Gujarat and has its head office in Andheri, Mumbai.
Its group company - Vijay Sabre Safety Private Limited is engaged
in manufacture and trading of fire and safety equipments (rated
[ICRA]C and [ICRA]A4 by ICRA).
=========
J A P A N
=========
TAKATA CORP: Bankruptcy Means Air Bag Victims Get Less Money
------------------------------------------------------------
Tom Krisher at The Associated Press reports that a bankruptcy
filing by Takata Corp will leave little money for dozens of
people who sued the company over deaths and injuries caused by
its exploding air bag inflators, according to outside legal
experts and lawyers suing the company.
Takata and its U.S. operations are likely to seek bankruptcy
protection by the end of June in a deal that would sell its
assets to competitor Key Safety Systems Inc., a person briefed on
the talks said, AP relates. The person didn't want to be
identified because discussions are in progress.
According to the report, the price Key will pay is unknown, but
much of it likely will go toward paying a $1 billion U.S.
criminal settlement. Most of the settlement money will go to
automakers as restitution for recall costs.
AP relates that Key is expected to buy Takata's assets "free and
clear" of past liabilities, and lawyers said there won't be
enough money to give victims what they would have received if
they were suing a healthy company.
So far, the faulty inflators have killed 11 people in the U.S.
and 16 worldwide. Over 180 people have been injured, AP says. The
problem touched off the biggest recall in U.S. automotive
history, involving 19 automakers, 42 million vehicles and up to
69 million inflators. About 100 million inflators have been
recalled worldwide.
Some victims have serious facial injuries from metal shrapnel and
would win large verdicts if Takata were financially strong,
lawyers said, the AP relates. Kevin Dean, a South Carolina
lawyer who has 25 cases pending against Takata, said one of his
clients, a 26-year-old man, will never be able to smile due to
nerve damage.
"It destroys people's faces. It's just a horrible injury," said
Kent Emison, a Missouri, lawyer whose firm is considering a
lawsuit against Takata and others on behalf of a woman whose
trachea was punctured by shrapnel, the AP relays.
The news agency notes that Takata's troubles stem from use of the
explosive chemical ammonium nitrate in the inflators to deploy
air bags in a crash. The chemical can deteriorate when exposed to
hot and humid air and burn too fast, blowing apart a metal
canister and spewing out metal fragments.
In February, Takata pleaded guilty to fraud and agreed to the $1
billion settlement, the report recalls. Lawyers acknowledged in
court that the company would have to be sold to fund the
settlement. According to the report, automakers would get
$850 million in restitution for recall costs and a $25 million
fine would be paid to the government. Takata already has paid
$125 million into a fund for victims, the report discloses.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts. The
Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
In May 1995, a voluntary recall in the U.S. affecting 8 million
predominantly Japanese built vehicles made from 1986 to 1991 with
seat belts manufactured by the Takata was conducted.
Large recalls of vehicles due to faulty Takata-made airbags began
in 2013.
Takata is presently facing massive costs of recalling 100 million
defective airbag inflators worldwide and lawsuits tied to at
least 16 deaths and numerous injuries.
As of May 19, 2015, Takata has already recalled 40 million
vehicles across 12 vehicle brands for defective airbags.
In November 2015, Takata was fined $200 million by U.S. federal
regulators for mishandling the way it recalled its air bag
inflators. The fine is the largest civil penalty in NHTSA
history.
TOSHIBA: Chooses Gov't-Led Group as Preferred Bidder for Unit
-------------------------------------------------------------
Japan Today reports that Toshiba Corp has chosen a U.S.-Japan
consortium as the preferred bidder in the sale of its lucrative
memory chip business. The troubled Japanese electronics giant has
had deep recent losses and has been selling pieces of its
operations to ensure its survival.
According to Japan Today, Toshiba said on June 21 the board of
directors selected the consortium of Innovation Network Corp of
Japan, Bain Capital Private Equity and the Development Bank of
Japan as the preferred bidder in the sale of Toshiba Memory Corp.
The report says the company's U.S. Westinghouse nuclear
operations have racked up massive red ink. Reactors it has been
building are still unfinished, partly because of beefed up safety
regulations following the 2011 Fukushima nuclear disaster.
Westinghouse Electric Co filed for bankruptcy protection in
March.
Toshiba's attempt to gain cash from the chip operations sale has
not gone smoothly, the report relates.
Western Digital of the U.S., which has acquired some SanDisk chip
operations, including a joint venture with Toshiba in Japan,
reiterated its opposition to such a move, Japan Today says. It
said in a statement that Toshiba "has no right" to transfer the
joint venture without its consent.
It said it filed a request for arbitration last week. Japan Today
relates that Toshiba has accused Western Digital of interfering
with its sales efforts. Such sales can be sensitive because they
involve the transfer of technology.
Others had also expressed interest, including Hon Hai of Taiwan,
also known as Foxconn, a major supplier to Apple, which has
acquired Japanese electronics company Sharp Corp, Japan Today
says.
According to Japan Today, Toshiba wants to reach an agreement
with the consortium and clear legal and other procedures before
its June 28 general shareholders' meeting.
The Innovation Network Corp of Japan is made up of 26 big-name
Japanese corporate investors, including Sony Corp, Canon Inc,
Toyota Motor Corp and Sumitomo Mitsui Banking Corp, the report
discloses. Bain Capital Private Equity, based in Boston, is one
of the world's leading investment firms. The Development Bank of
Japan is backed by the government of Japan.
Japan Today notes that Toshiba's earnings reports have failed to
get endorsements from its auditors, given the company's
precarious finances over the U.S. projects. The reports are being
given as projections, not results - a 950 billion yen ($8.6
billion) loss for the fiscal year ended March.
In 2015, Toshiba acknowledged that it had been systematically
falsifying its books since 2008, as managers tried to meet overly
ambitious targets. An outside investigation found profits had
been inflated and expenses hidden across the board.
Some experts said Toshiba still needs to deal with accountability
and governance issues, Japan Today adds.
"Toshiba appears plagued by a legacy of opaqueness. Without a
complete overhaul of its organization, Toshiba will have a very
difficult road to recovery of its reputation and trust, essential
ingredients to its existence," Japan Today quotes Shuri Fukunaga,
chief executive of Burson-Marsteller Japan, a communications
consultancy firm that helps companies in crises, as saying.
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
June 19, 2017, S&P Global Ratings said it has kept its 'CCC-'
long-term and 'C' short-term ratings on Japan-based capital goods
and diversified electronics company Toshiba Corp. on CreditWatch
with negative implications. 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 a 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 and when S&P lowered the long-term
ratings in March 2017.
The ratings remain on CreditWatch, reflecting S&P's view that
creditor banks' support for Toshiba together with the company's
liquidity levels warrant continued close monitoring because its
plan to sell its memory business has yet to materialize and
additional losses or financial burdens might still arise in
connection with its U.S. nuclear power business. S&P continues
to hold the view that without unanticipated, significantly
favorable changes in Toshiba's circumstances, the company might
become unable to fulfill its financial obligations in a timely
manner or might undertake a debt restructuring S&P classifies as
distressed in the next six months.
====================
N E W Z E A L A N D
====================
DC ROSS: Scott Technology Buys Firm Out of Receivership
-------------------------------------------------------
The New Zealand Herald reports that Scott Technology has bought
Dunedin engineering firm DC Ross out of receivership and,
separately, plans to expand its existing facilities in the Otago
city.
According to the report, the industrial robotics firm expects to
pay less than NZ$500,000 for the assets of DC Ross, which was
tipped into receivership last September. Scott Technology intends
to keep a number of the company's 12 staff and continue to
service the engineering firm's customers, the report says.
"DC Ross operates a small engineering business known for
producing high-quality fine blanking press parts," the report
quotes chairman Stuart McLauchlan and managing director Chris
Hopkins as saying in a statement. "The main assets are metal
blanking presses and metal tool-making machinery, similar to what
Scott currently uses, along with the knowledge and skills of the
engineering team."
At the same time, Dunedin-based Scott Technology is in the final
stages of planning to extend its facilities, which it anticipates
will double the available floor space and which it says is
supported by the firm's plans to grow, the report relates. The DC
Ross deal was separate but complementary to the expansion plans,
it said.
Last month, DC Ross's receiver Malcolm Hollis of PwC said in his
second report on the administration that he hadn't received any
bids for the business and had liquidators appointed by Fletcher
Steel, which was owed about NZ$610,000 as a third ranking secured
creditor, the Herald recalls.
The engineering firm's first secured creditor was Bank of New
Zealand owed NZ$4.3 million, followed by Baird McConnon's Aorangi
Laboratories with NZ$13.8 million of outstanding debt, the Herald
discloses.
After the failed sales process, Mr. Hollis said he had received
interest from a potential buyer and was in negotiations, the
Herald adds.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and
Peter A. Chapman, Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***