/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/170907.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, September 7, 2017, Vol. 20, No. 178 Headlines A U S T R A L I A AVIXIA PTY: First Creditors' Meeting Set for Sept. 12 BRUYNZEEL AUSTRALIA: First Creditors' Meeting Set for Sept. 14 BUB'S BABY: Falls Into Administration DIPLOMA GROUP: Di Latte Family Pursues Bid to Revive Company FINELINE HOME: First Creditors' Meeting Set for Sept. 14 FIRM GLASS: Second Creditors' Meeting Set for Sept. 13 INDIAN MEDIA: First Creditors' Meeting Set for Sept. 14 K. T. AUSTRALIA: First Creditors' Meeting Set for Sept. 12 LIF3 GLOBAL: First Creditors' Meeting Set for Sept. 13 MANNAGUM ENTERPRISES: Second Creditors' Meeting Set for Sept. 15 MES FAMILY: Second Creditors' Meeting Set for Sept. 13 QUINTIS LIMITED: Moody's Cuts CFR and Sr. Sec. Debt Rating to C RESARS PTY: First Creditors' Meeting Slated for Sept. 13 SABJAB TRADING: Second Creditors' Meeting Set for Sept. 12 SURFSTITCH GROUP: Gets First Proposal to Restructure, Relist TEN NETWORK: Second Creditors' Meeting Set for Sept. 12 TEN NETWORK: Employees, Creditors to be Paid in Full in CBS Deal C H I N A CHINA SCE: Proposed Share Issues No Impact on Moody's B1 CFR SUNAC CHINA: High Debt Leverage No Impact on Moody's B2 CFR ZHONGRONG XINDA: Fitch Publishes BB Long-Term IDR; Outlook Stable ZHONGRONG XINDA: S&P Assigns 'BB-' LT CCR, Outlook Stable H O N G K O N G BACH FINANCE: S&P Assigns 'B' CCR & Rates First-Lien Loans 'B' NOBLE GROUP: Default-Swap Verdict in Play as Test of ISDA System NOBLE GROUP: Expects to Sell Oil Business This Month I N D I A ABC TRANSFORMERS: CRISIL Reaffirms 'B' Rating on INR3.5MM Loan ADITYA MOTORS: CRISIL Reaffirms 'B' Rating on INR5.0MM Loan AHUJA AND ANAND: CARE Assigns 'D' Rating to INR12.48cr LT Loan AMRAPALI: NCLT Orders Insolvency Process Against Silicon City APPU HOTELS: CARE Lowers Rating on INR211.64cr LT Loan to 'D' BIRTHPLACE HEALTHCARE: CRISIL Reaffirms B Rating on INR10.4M Loan CHANDRASHEKARAIAH: CRISIL Reaffirms 'B' Rating on INR7MM Loan CHAUDHARY RICE: CARE Assigns 'B' Rating to INR8.40cr LT Loan CREATIVE CLOTHEX: CARE Assigns 'B' Rating to INR4.10cr LT Loan CREST PROMOTERS: CRISIL Reaffirms B+ Rating on INR95MM Term Loan D.R. THANGAMAALIGAI: CRISIL Reaffirms 'B' Rating on INR6MM Loan DHANPATI AGRO: CRISIL Reaffirms 'D' Rating on INR6.5MM Loan DHARTI COTTON: CRISIL Reaffirms 'D' Rating on INR5.5MM Loan DR. ANJOLI: CRISIL Reaffirms B- Rating on INR5MM LT Loan EPITOME PLAST-O-PACK: CRISIL Reaffirms B- Rating on INR6.25M Loan GAJANAN FERRO: CARE Assigns B+ Rating to INR14.75cr LT Loan GRAND MOTORS: CRISIL Reaffirms B+ Rating on INR23MM Cash Loan HELPAGE YOUTH: CRISIL Reaffirms B+ Rating on INR1MM LT Loan INDUS MOTORS: CRISIL Reaffirms 'B' Rating on INR5.0MM Loan ISHWAR GINNING: CARE Lowers Rating on INR12cr LT Loan to 'D' JAI MAA: CRISIL Reaffirms 'D' Rating on INR20MM Cash Loan JAINAM FAB: CARE Assigns B+ Rating to INR6.40cr LT Loan JAY PLAST: CRISIL Assigns B+ Rating to INR4MM Cash Loan JODHPUR HEALTH: CRISIL Cuts Rating on INR27.68MM Loan to B- KAVITA EXIM: CARE Assigns B+ Rating to INR12cr LT Loan KENZ INN: CRISIL Lowers Rating on INR150MM Term Loan to 'B' KESHAV ENTERPRISES: CRISIL Reaffirms 'D' Rating on INR14MM Loan NAACHIYARS: CRISIL Lowers Rating on INR6MM Long Term Loan to B PRAKASAM HEAVY: CRISIL Assigns 'B' Rating to INR5.0MM Loan R G SCIENTIFIC: CRISIL Reaffirms B+ Rating on INR10MM Loan RADHIKA JEWELS: CRISIL Lowers Rating on INR15MM Cash Loan to B RAVI TEJA: CARE Assigns B Rating to Issuer Not Cooperating RRB ENERGY: CARE Lowers Rating on INR95cr LT Loan to 'C' SAGAR BUSINESS: CRISIL Lowers Rating on INR18MM Cash Loan to B SANGAM RICE: CARE Assigns 'B' Rating to INR5.50cr LT Loan SATYAM GREEN: CRISIL Reaffirms 'D' Rating on INR6MM Term Loan SHREE SITA: CARE Assigns B+ Rating to INR6.0cr LT Loan SHRI PAHARIMATA: CRISIL Reaffirms B- Rating on INR5MM Cash Loan SOMA ISOLUX: CARE Lowers Rating on INR1,216.96cr LT Loan to D SWAGAT HOSPITALS: CRISIL Reaffirms B- Rating on INR25MM Term Loan TRIUMPH AUTO: CRISIL Reaffirms 'B' Rating on INR6.75MM Loan UMA KRAFTPAPER: CRISIL Reaffirms 'B' Rating on INR8.25MM Loan UNITED MACHINERY: CARE Reaffirms B+ Rating on INR3.0cr LT Loan V. G. SHIPBREAKERS: CRISIL Reaffirms 'D' Rating on INR8MM Loan VAMSADHARA GINNING: CRISIL Assigns 'B' Rating to INR7MM Loan VAMSADHARA RICE: CRISIL Assigns B+ Rating to INR5MM Cash Loan VINAYAGA IMPEX: CRISIL Reaffirms 'D' Rating on INR4.5MM Loan VIVA INFRAVENTURE: CRISIL Reaffirms B+ Rating on INR0.5MM Loan I N D O N E S I A STEEL PIPE: Fitch Publishes 'B' Long-Term IDR; Outlook Stable M A L A Y S I A PERISAI PETROLEUM: Gets Demand Notice Over Breach of Contract N E W Z E A L A N D IRIRIKI ISLAND: Temporary Stay on Insolvency Decision MTF SIERRA 2017: Fitch Rates NZD1.32MM Class F Notes 'B+' SOLID ENERGY: Final Milestone Achieved in Asset Sales P H I L I P P I N E S CARITAS HEALTH: Former President Claims PHP7-Billion Deficit S O U T H K O R E A HYOSUNG CORP: Slapped With KRW5BB Fine Over Illegal Accounting KUMHO TIRE: Parent Mull Asset Sale After Qingdao Deal Collapsed S R I L A N K A PAN ASIA: Fitch Rates Basel II-Compliant Sub. Debentures BB+(lka) - - - - - ================= A U S T R A L I A ================= AVIXIA PTY: First Creditors' Meeting Set for Sept. 12 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Avixia Pty. Ltd., trustee for Avixia Trust Trading As "Avixia Cleaning", will be held at the boardroom of Chifley Advisory, Level 2, 9 Phillip Street, in Parramatta, NSW, on Sept. 12, 2017, at 11:00 a.m. Gavin Moss and Henry Kwok of Chifley Advisory Pty Ltd were appointed as administrators of Avixia Pty on Aug. 31, 2017. BRUYNZEEL AUSTRALIA: First Creditors' Meeting Set for Sept. 14 -------------------------------------------------------------- A first meeting of the creditors in the proceedings of Bruynzeel Australia Pty Limited will be held at Suite 509, Ashington Court, 147 King Street, in Sydney, NSW, on Sept. 14, 2017, at 10:00 a.m. William James Hamilton of WJ Hamilton was appointed as administrator of Bruynzeel Australia on Sept. 5, 2017. BUB'S BABY: Falls Into Administration ------------------------------------- Sage Swinton, writing for Maitland Mercury, reports that preparing for a child is supposed to be an exciting time, but for some local families it has become a stressful wait after a Rutherford baby store has gone into administration. Bub's Baby Store, which has a shop at Rutherford, went into administration, according to Maitland Mercury. The report discloses the company's website states that customers with unused gift vouchers or credit notes, or those paying off lay-bys should register their details to Worrells, which is now managing the affairs, business and property of the company. Thornton father-to-be Chris Gagg has a car seat and a capsule on lay-by at the store, the report relays. When he heard the business had gone into administration, he tried to contact the company, the report notes. The report discloses that after he didn't receive a response, Mr. Gagg went into the store. The report relays that he was told his items could not be released at that time and to contact the administrator, but he could not get an answer on whether or not his lay-by would be honoured. And with just over a month until bub is due, the family has faced a nervous wait to find out if their items will be ready in time, if at all, the report notes. "It's a little bit frustrating," the report quoted Mr. Gagg as saying. "We're a bit in limbo." The report notes that Mr. Gagg said he felt lucky that he and his wife only had a few things they were waiting on, but knew of others who had thousands of dollars worth of items ordered. "We don't have too much compared to other people," he said, the report relays. "Credit to the staff they didn't have answers but were trying to be as helpful as possible. "I feel for the staff and people who have more at stake." Since going into the store, Mr. Gagg has also received a text message acknowledging the lay-by, and saying someone would be in contact, the report notes. Mr. Gagg said the financial loss was not a huge worry, he just wanted to know whether or not to buy the items elsewhere before the baby arrives, the report relays. "If it's going to take eight weeks, it will be too late," he said, the report notes. "We don't want to spend the first week after the baby is born running around trying to buy a car seat. But we don't want to be stuck with two." DIPLOMA GROUP: Di Latte Family Pursues Bid to Revive Company ------------------------------------------------------------ Peter Williams at The West Australian reports that the family behind the failed Diploma Group and its provisional liquidators are seeking to have the company excluded from a potential wind-up order to attempt a rescue plan. A Federal Court judge was set to rule Sept. 6 on whether the builder-developer which collapsed last year and 19 other Diploma entities will be placed into liquidation, the report says. According to the report, the court heard on Sept. 4 that provisional liquidators from Grant Thornton had applied for Diploma Group to be put back into administration, while recommending liquidation for its construction arms and other subsidiaries. Justice Neil McKerracher remarked that such a request from insolvency specialists was "very unusual". According to the report, the Australian Securities and Investments Commission is seeking a wind-up of all Diploma companies. The Di Latte family is seeking an adjournment in the case of Diploma Group. The West Australian relates that family representative Kevin Dundo told the court that liquidating the group would put at risk the plan to recapitalise the company and revive its listing on the Australian Securities Exchange. Mr. Dundo said the proposal had the support of secured creditors, would see a return of 100 cents in the dollar to former employees of the holding company and offer a better return for unsecured creditors, the report relays. The West Australian says the deed of company arrangement does not include subsidiaries Diploma Construction (WA), subject to the bulk of AUD60 million in claims by sub-contractors, suppliers and other creditors, and DGX Construction. While a revival of the Diploma Group entity could still take place from liquidation, Mr. Dundo said it would hand discretion over the listing to the Australian Securities Exchange. Paul Yovich, for ASIC, argued that the ASX should have such control, adding that the matter was not significant, the report says. According to the report, Mr. Yovich said the provisional liquidators had been unable to determine with any certainty the prospects for creditors from the DOCA. While members of the Di Latte family had been ruled out as directors, he said it was not known who would be joining the board, The West Australian relates. Mr. Yovich rejected a claim by Mr. Dundo that corporate governance allegations about the former directors had been put to rest, saying the provisional liquidators made no conclusions and recommended further investigation, the report adds. About Diploma Group Diploma Group Limited (ASX:DGX) -- http://www.diploma.com.au/-- is a construction and property development company. The Company is undertaking a portfolio of commercial, retail and residential projects. The Company's projects include Capri Coastal Apartments, Rockingham and QUEST East Perth. The Company's Capri Coastal Apartments, Rockingham is located within the Rockingham Beach Waterfront Village Precinct. The Company offers commercial construction and residential apartments, including multi-level residential, hotels, hospitality and tourism, commercial offices, retail, industrial offices, health and aged care, and sports and recreation. The Company offers a range of construction services, including design, construction project management, site management, construction management, construction supervision and contracting services. Its property development services include project identification, finance solutions, site acquisition and sales, marketing and property management services. Martin Jones and Andrew Smith of Ferrier Hodgson were appointed as Joint and Several Receivers and Managers to the assets and undertakings of Diploma Group Limited on December 21, 2016, by Swiss Re International SE, pursuant to the power contained in the General Security Agreement dated November 26, 2015. The Receivers and Managers were also appointed over the following wholly owned subsidiaries: * Diploma Construction (WA) Pty Ltd (ACN 113 950 100); and * DGX Construction Pty Ltd (ACN 147 094 335) Following the appointment, David Mark Hodgson, Matthew James Donnelley and Andrew Stewart Reed Hewitt of Grant Thornton were appointed as Voluntary Administrators to the Companies on December 22, 2016. FINELINE HOME: First Creditors' Meeting Set for Sept. 14 -------------------------------------------------------- A first meeting of the creditors in the proceedings of Fineline Home Products Pty Ltd will be held at the offices of BDO, Level 11, 1 Margaret St, in Sydney, NSW, on Sept. 14, 2017, at 10:00 a.m. Andrew Sallway & James White of BDO were appointed as administrators of Fineline Home on Sept. 4, 2017. FIRM GLASS: Second Creditors' Meeting Set for Sept. 13 ------------------------------------------------------ A second meeting of creditors in the proceedings of Firm Glass and Aluminium Pty. Ltd. has been set for Sept. 13, 2017, at 11:00 a.m., at the offices of Cor Cordis, One Wharf Lane, Level 20, 161 Sussex Street, in Sydney, NSW. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Sept. 12, 2017, at 4:00 p.m. Ozem Kassem and Andre Lakomy of Cor Cordis Chartered Accountants were appointed as administrators of Firm Glass on Aug. 9, 2017. INDIAN MEDIA: First Creditors' Meeting Set for Sept. 14 ------------------------------------------------------- A first meeting of the creditors in the proceedings of Indian Media Group Pty Ltd will be held at the Boardroom of Chifley Advisory, Level 2, 9 Phillip Street, in Parramatta, NSW, on Sept. 14, 2017, at 11:00 a.m. Gavin Moss and Trent McMillen of Chifley Advisory were appointed as administrators of Indian Media on Sept. 4, 2017. K. T. AUSTRALIA: First Creditors' Meeting Set for Sept. 12 ---------------------------------------------------------- A first meeting of the creditors in the proceedings of K. T. Australia Pty Ltd will be held at corner Muttaburra Road and Flinders Highway, in Hughenden, Queensland, on Sept. 12, 2017, at 9:30 a.m. Robert Whitton & Sean Wengel of William Buck were appointed as administrators of K. T. Australia on Aug. 31, 2017. LIF3 GLOBAL: First Creditors' Meeting Set for Sept. 13 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Lif3 Global Pty Ltd will be held at the offices of DCS Advisory, Level 1, 680 Murray Street, in West Perth, WA, on Sept. 13, 2017, at 10:00 a.m. Shaun Boyle -- shaun.boyle@dcsadvisory.com.au -- of DCS Advisory was appointed as administrator of Lif3 Global on Sept. 1, 2017. MANNAGUM ENTERPRISES: Second Creditors' Meeting Set for Sept. 15 ---------------------------------------------------------------- A second meeting of creditors in the proceedings of Mannagum Enterprises Pty Ltd has been set for Sept. 15, 2017, at 10:00 a.m., at the offices of Rodgers Reidy, Level 3, 326 Williams Street, in Melbourne, Victoria. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Sept. 14, 2017, at 4:00 p.m. Neil McLean of Rodgers Reidy was appointed as administrator of Mannagum Enterprises on Aug. 14, 2017. MES FAMILY: Second Creditors' Meeting Set for Sept. 13 ------------------------------------------------------ A second meeting of creditors in the proceedings of MES Family Investments Pty Ltd has been set for Sept. 13, 2017, at 11:00 a.m., at the offices of SV Partners, 1st Floor Corner, Sydney & Gordon Street, in Mackay, Queensland. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Sept. 12, 2017, at 4:00 p.m. David Michael Stimpson & Terrence John Rose of SV Partners were appointed as administrators of MES Family on Aug. 10, 2017. QUINTIS LIMITED: Moody's Cuts CFR and Sr. Sec. Debt Rating to C --------------------------------------------------------------- Moody's Investors Service has downgraded Quintis Limited's corporate family rating (CFR) and senior secured debt rating to C from Ca. The outlook is stable. RATINGS RATIONALE "The downgrade follows the company's announcement on 31 August 2017 that it has not made a bi-annual interest payment of USD10.9 million which was due on August 1, 2017, within a 30-day grace period," says Shawn Xiong, a Moody's Analyst. Although the company has reached a forbearance agreement with a significant majority of the noteholders Moody's views its inability to fulfill its obligation to make the bi-annual interest payment, under the terms of the Notes, as a default event. As part of the announcement, Quintis advised that it has executed a forbearance agreement with a significant majority of the noteholders to refrain from taking an enforcement action in relation to the default arising from the non-payment of the August 1, 2017 interest payment. The forbearance agreement will continue until March 1, 2018 if Quintis meets the conditions set out in the forbearance agreement, including agreeing to a recapitalization plan by 6 September. Otherwise it may be terminated earlier. During the forbearance period, interest continues to accrue on the notes, including interest on the instalment of interest that was due on August 1, 2017. Additionally, the noteholders have also agreed to forbear the provision of Quintis' March 2017 quarterly financial statements, subject to the same termination terms. Quintis' ratings will remain at C with a stable outlook until concrete details materialize in regards to the recapitalization plan and the exercise of an investor put option. It is unlikely that Quintis' ratings will be upgraded in the medium term. The company needs to recapitalize successfully and to demonstrate a consistent operating track record before any upgrade can be considered. The principal methodology used in these ratings was Global Paper and Forest Products Industry published in October 2013. RESARS PTY: First Creditors' Meeting Slated for Sept. 13 -------------------------------------------------------- A first meeting of the creditors in the proceedings of Resars Pty Ltd will be held at the Conference Room, Level 4, 16 St Georges Terrace, in Perth, WA, on Sept. 13, 2017, at 10:30 a.m. Cameron Shaw and Richard Albarran of Hall Chadwick were appointed as administrators of Resars Pty on Sept. 1, 2017. SABJAB TRADING: Second Creditors' Meeting Set for Sept. 12 ---------------------------------------------------------- A second meeting of creditors in the proceedings of Sabjab Trading Pty Limited has been set for Sept. 12, 2017, at 11:00 a.m., at the offices of Young Business RIT, Level 14, 9-13 Hunter Street, in Sydney. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Sept. 11, 2017, at 5:00 p.m. David Gregory Young of Young Business was appointed as administrator of Sabjab Trading on Aug. 11, 2017. SURFSTITCH GROUP: Gets First Proposal to Restructure, Relist ------------------------------------------------------------ Sue Mitchell at Australian Financial Review reports that barely a week after the collapse of SurfStitch Group, administrators have received a proposal to restructure and relist the company -- an outcome that would preserve some value for long-suffering shareholders. AFR relates that the confidential proposal was received on Sept. 6 before the first SurfStitch creditors meeting at the company's headquarters at Burleigh Heads on the Gold Coast. According to the report, administrator John Park, from FTI Consulting, said the proposal was received from a party who had previously been "involved" with SurfStitch. However, he refused to say if it had come from co-founder and former chief executive Justin Cameron. "It was submitted on a private and confidential basis at this stage," Mr. Park told journalists, AFR relays. "All I can say is I have received one [deed of company arrangement proposal] in a draft format today," he said. "It is a proposal to see . . . a relisting of the vehicle." Mr. Park said he expected to receive more restructuring proposals and it was "not a given" that shareholders would be wiped out, the report relays. Mr. Cameron resigned in March 2016 to purportedly pursue a private equity-backed privatisation proposal, which never eventuated, and has been keeping a watching brief on the business, AFR says. Mr. Cameron told The Australian Financial Review last November he might attempt to privatise the online retailer if the right opportunity arose. "I'm still a significant shareholder in the company," the report quotes Mr. Cameron as saying at the time. "Today I continue to maintain a watching brief on the business and opportunities that may present themselves." He could not be contacted on Sept. 5, the report notes. According to AFR, Crown Financial Group managing director Kim Sundell, who is SurfStitch's largest creditor after the collapse last year of a AUD20 million content deal, said he had been approached by two parties interested in restructuring SurfStitch. However, he did not believe the proposal received on Sept. 6 was from Mr. Cameron. "I'm 90 per cent sure it's not from him, I don't think he'd have the face to do something like that," Mr. Sundell told the AFR on Sept. 5. "We were asked if we would compromise our debt and to be shareholders in the post DOCA company," he said. "We'd consider it but I'd need to see something more." Other creditors of the holding company are Herbert Smith Freehills and SurfStitch chief executive Mike Sonand, who stepped in after Mr. Cameron's departure, AFR discloses. John Park, Quentin Olde and Joseph Hansell of FTI Consulting were appointed as administrators of Queensland-based surf and lifestyle retailer Surfstitch Group on Aug. 24, 2017. TEN NETWORK: Second Creditors' Meeting Set for Sept. 12 ------------------------------------------------------- A second meeting of creditors in the proceedings of: -- Ten Network Holdings Limited; -- The Ten Group Pty Limited; -- Network Ten Pty Limited; -- Network Ten (Sydney) Pty Limited; -- Network Ten (Brisbane) Pty Limited; -- Network Ten (Melbourne) Pty Limited; -- Network Ten (Perth) Pty Limited; -- Network Ten (Adelaide) Pty Limited; -- Caprice Pty Limited; -- Chartreuse Pty Limited; -- Television & Telecasters (Properties) Pty Limited; -- Ten Online Pty Limited; -- Ten Ventures Pty Limited; and -- Ten Employee Share Plans Pty Limited has been set for Sept. 12, 2017, at 11:00 a.m., at Sydney Harbour Marriott, 30 Pitt Street, in Sydney. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Sept. 10, 2017, at 5:00 p.m. Jennifer Anne Nettleton, Mark Korda and Jarrod Villani of KordaMentha were appointed as administrators of Ten Network and its subsidiaries on June 14, 2017. TEN NETWORK: Employees, Creditors to be Paid in Full in CBS Deal ---------------------------------------------------------------- Darren Davidson at The Australian reports that Ten Network's secured creditors and employees will be paid out in full under a plan by administrator KordaMentha to sell the broadcaster to US media heavyweight CBS. But TV production houses will only get paid out if they commit to staying with the network, KordaMentha's report to creditors said. Among creditors set to receive less than 100c in each dollar they are owed is the Twentieth Century Fox studios, operated by 21st Century Fox, the Australian relates. CBS hopes to work with Fox to "renegotiate" its estimated $200 million content agreement, the report said. According to The Australian, KordaMentha said that should these negotiations fail, Fox will receive a one-off payment of up to AUD3.4 million against claimed debts. Production houses include Endemol Shine Group, a 50-50 joint venture between 21st Century Fox and US private equity house Apollo Global Management, The Australian discloses. The eagerly awaited report was initially expected last week but delayed until Sept. 4. Detailing the state of Ten, it said investigations "so far had not identified any improper conduct" in the lead-up to the appointment of administrators in June. Ten was not insolvent until June 13, The Australian relates. The Australian says creditors to the broadcaster will now meet in Sydney on Sept. 12 to vote on the proposed deed of company arrangement. If approved, the deed will hand ownership to CBS and payments to creditors subject to court approval and a green light from the Foreign Investment Review Board. According to the administrators' report, CBS agreed to forgo any return from its unsecured claim and provide a further $205 million for Ten and its creditors, the Australian adds. The Australian notes that the creditors' meeting will be followed by a Supreme Court ruling to ratify the transfer of shares from existing holders to CBS. It is at this point that any challenge is most likely to occur. It is believed billionaire media mogul Bruce Gordon may challenge CBS's takeover bid. Mr. Gordon could launch a counter bid on his own when a creditors' meeting is held, The Australian says. He and fellow shareholder Lachlan Murdoch had already secured approval from the Australian Competition and Consumer Commission to launch a joint takeover of Ten, according to The Australian. About Network Ten Network Ten is a division of Ten Network Holdings, one of Australia's leading entertainment and news content companies, with free-to-air television and digital media assets. Ten Network Holdings includes three free-to-air television channels - TEN/TEN HD, ELEVEN and ONE - in Australia's five metropolitan markets of Sydney, Melbourne, Brisbane, Adelaide and Perth, plus the online catch-up and streaming service tenplay. As reported in the Troubled Company Reporter-Asia Pacific on June 15, 2017, KordaMentha Restructuring partners Mark Korda, Jenny Nettleton and Jarrod Villani have been appointed voluntary administrators to Network Ten. "Network Ten will continue to operate under its existing management and operating structures with KordaMentha oversight. Customers, employees and other stakeholders are assured that the administrators intend to keep the business running. Viewers can expect the same content they currently enjoy on Network Ten," KordaMentha said in a statement. The appointment will allow the voluntary administrators to explore options for the recapitalisation or sale of Network Ten. ========= C H I N A ========= CHINA SCE: Proposed Share Issues No Impact on Moody's B1 CFR ------------------------------------------------------------ Moody's Investors Service says that China SCE Property Holdings Limited's (B1 stable) proposed share issues, if completed, are credit positive, but will have no immediate impact on its B1 corporate family rating and B2 senior unsecured rating. The rating outlook remains stable. On September 1, 2017, China SCE announced a placing and subscription of shares which will raise net proceeds of around HKD1.44 billion. China SCE plans to use the proceeds from the share subscription for funding project developments and general working capital. "If the proposed share issues are completed, China SCE will have additional funding to support its growing property development business and will improve its debt leverage," says Chris Wong, a Moody's analyst. Moody's expects China SCE's revenue will grow 20%-25% over the next 12-18 months, supported by strong property contracted sales. Its contracted sales increased by 31% year-on-year to RMB17.7 billion in the first seven months of 2017, after growing 62% year-on-year to RMB23.5 billion in 2016. Such high grow in contracted sales will result in an increase in cash requirements for construction which could be partly met by the funds raised from the proposed share subscription. Strong revenue growth and new equity funding, if raised, will help the company to improve its moderately high debt leverage. Moody's expects China SCE's debt leverage - as measured by revenue/adjusted debt - will improve to around 60%-70% over the next 12-18 months from 58% for the 12 months to June 2017. Such a level would be comparable to its B1 peers. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in April 2015. Founded in 1996, China SCE Property Holdings Limited is a property developer focused on first and second-tier cities in the Yangtze River Delta region, the West Strait Economic Zone, the Bohai Rim Region, and the Pearl River Delta region. The company listed on the Hong Kong Stock Exchange in February 2010, and is 57.9% owned by its chairman, Mr. Wong Chiu Yeung. As of the end of June 2017, the company had a land bank of around 12.1 million square meters in terms of total saleable gross floor area. SUNAC CHINA: High Debt Leverage No Impact on Moody's B2 CFR ------------------------------------------------------------ Moody's Investors Service says that Sunac China Holdings Limited's increased debt leverage in 1H 2017 is already reflected in its negative rating outlook, and therefore has no immediate impact on its B2 corporate family rating, B3 senior unsecured rating or on the negative outlook. "Moody's expects Sunac will improve its debt leverage over the next 12-18 months as it will slow its land acquisitions," says Franco Leung, a Moody's Vice President and Senior Credit Officer. Sunac reported a material increase in reported debt to RMB181.3 billion at end-June 2017 from RMB112.8 billion at end-2016. But Moody's forecasts that Sunac's debt leverage - as measured by revenue to adjusted debt (including adjustments for its shares in joint ventures and associates) - will trend towards 40% over the next 12-18 months from around 31% in 2016. The improvement in Sunac's debt leverage will come from the recognition of its current strong contracted sales and reduced appetite for land replenishment. Sunac achieved a 94% year-on-year increase in contracted sales to RMB108.9 billion in 1H 2017, after robust 121% year-on-year growth to RMB151 billion for the full year 2016. These high levels of contracted sales should support robust revenue growth over the next 12 to 18 months. Sunac has also been active in its acquisitions, including its July 2017 acquisition of sizable property projects with a total saleable gross floor area of around 50 million square meters (sqm) from Dalian Wanda Commercial Properties Co., Ltd. (Baa3 negative). Excluding this most recent acquisition, its attributable land bank increased to 68.4 million sqm at end-June 2017 from 49.7 million sqm at end-2016. Sunac's existing land bank is sufficient to support the company's development for at least 5 years. Accordingly, it can slow down its land acquisitions and borrowings to improve its debt leverage. In addition, Sunac targets to improve its profitability. Sunac reported an increase in its gross profit margin to 19.6% in 1H 2017 from 13.3% in 1H 2016. Moody's expects Sunac's gross margin will further improve to 20%-22% over the next 12-18 months through the recognition of revenues from better quality projects. Consequently, Moody's expects Sunac's adjusted EBIT/interest will improve slightly to around 2.2x over the next 12-18 months from 2.0x in 2016. Such a level supports its B2 rating. The company's B2 corporate family rating remains supported by strong sales execution and liquidity, and despite its high debt leverage. Its cash balance increased to RMB92.4 billion at end- June 2017 from RMB69.8 billion at end-2016, while its cash/short- term debt stood at 133% at end-June 2017. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in April 2015. Listed on the Hong Kong Stock Exchange on October 7, 2010, Sunac China Holdings Limited is an integrated residential and commercial property developer, with projects in China's main economic regions such as the Beijing region, North China region, Shanghai region, Southwestern China region, Southeastern China region, Guangzhou-Shenzhen region, Central China region and Hainan region. At end-June 2017, its gross land bank totaled 99.5 million square meters, and its attributable land bank totaled approximately 68.4 million square meters. ZHONGRONG XINDA: Fitch Publishes BB Long-Term IDR; Outlook Stable ----------------------------------------------------------------- Fitch Ratings has published China-based diversified services company Zhongrong Xinda Group Co., Ltd.'s (Zhongrong Xinda) Long- Term Issuer Default Rating (IDR) of 'BB'. The Outlook is Stable. Zhongrong Xinda is one of China's largest coke processors and Shandong's largest logistics company. The company also expanded into the liquefied natural gas (LNG) refuelling station business in 2013, and acquired a Peruvian iron ore mine in 2016. Zhongrong Xinda's ratings are supported by its strong market position in the coking and logistics industries in China, firm capital discipline, and strong financial flexibility underpinned by substantial liquid financial assets. Its ratings are constrained by high leverage and regional concentration. KEY RATING DRIVERS Leading Coking Company: Zhongrong Xinda is one of China's top two coking companies, accounting for about 20% of Shandong Province's total production volume. Its large scale, deeper processing lines and long-term procurement contracts with both downstream and upstream producers provides cost advantages against peers and makes it less susceptive to fluctuations than its downstream steel industry. Gross profit margins in coking ranged between 14%-15%, in 2014-2016, while average annual steel prices fluctuated by ~20%-30%. Zhongrong Xinda's coking business accounted for 18% and 42% of its total revenue and gross profit in 2016, respectively. Logistics, Clean Energy Aids Diversification: Zhongrong Xinda is also China's ninth-largest logistics company and the largest in Shandong Province. The logistics business was originally intended to services its upstream and downstream customers, but has expanded into trading, supply-chain management and LNG-refuelling stations over the last several years, and provides stability to earnings. Logistics and clean energy accounted for 80% and 54% of total revenue and gross profit, respectively, in 2016. Fitch expects a focus on building out LNG stations, as this provides higher and more stable gross profit margins at around 21%-22%, compared with an overall gross margin of 6%-9%. Strong Financial Flexibility: Zhongrong Xinda's substantial liquid financial assets of CNY11 billion at end-2016 can provide liquidity and mitigate the risks from the external guarantees. Fitch includes 75% of the available-for-sale financial assets in the calculation of FFO adjusted net leverage. In addition, more than half of the company's inventories are held for its coal and coke trading business, and is therefore accounted for as readily marketable inventories. Fitch includes 50% of Zhongrong Xinda's inventory in FFO adjusted net leverage calculation. FFO adjusted net leverage including adjusted financial assets and readily marketable inventories was 5.1x in 2016. Capital Discipline: Management has stated that it will limit future capex to its annual earnings (2016 adjusted profit: CNY3.0 billion), which will result in shifting from negative free cash flow (FCF) to FCF neutral in the medium term. Capex will be driven mainly by investment in building new LNG stations, which Fitch estimates to be CNY900 million a year. Fitch therefore expects the company to start deleveraging beginning in 2017. External Guarantees Raises Leverage: Fitch does not expects the company to increase its external guarantees. FFO adjusted net leverage including adjusted financial assets and readily marketable inventories was 5.1x at end-2016 (end-2015: 3.9x), including external off-balance sheet debt of CNY5.6 billion that the company has guaranteed. However, Fitch believes the counter- party risks from the guaranteed debt are manageable as the borrowers are large, established companies operating within the mining and processing value chain, and the debt is guaranteed on a secured basis. Quality Iron Ore Mine: Zhongrong acquired 80% of the Hierro Pampa de Pongo (HPP) iron ore project in Peru in 2016. The project is located next to an existing operational iron ore mine with a very low cost base and well-built out infrastructure. Fitch does not expects Zhongrong Xinda to develop the iron ore project in the next 12-24 months, given the significant capex requirement. Fitch also expects the development of the mine will be funded via equity financing and project finance, with debt ringfenced from the company. Fitch has not factored in the capital expenditures or contributions from the Peru iron ore in Fitch financial forecasts as Fitch does not expects the company to develop the mine if the financing is not in place. DERIVATION SUMMARY Zhongrong is larger in terms of scale than Chinese companies rated 'BB'. It is comparable with its peers in terms of coverage and leverage metrics. FFO adjusted net leverage including adjusted financial assets and raw-materials inventory is comparable with that of China-based Tewoo Group Co., Ltd. (BBB- /Stable), US-based Harsco Corporation (BB/Stable) and Grupo KUO, S.A.B. de C.V. (BB/Stable) of Mexico. Zhongrong's FFO margin is also comparable with that of commodity trading companies, such as Tewoo. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: - Sales growth slows to 7%-8% in 2018-2019 from the expected sales growth of 24% in 2017. - EBITDA margins to narrow by about 20bp from 2016 to 2019 because the lower-margin logistics business will account for a larger share of revenue and coking coal prices are likely to decline. - Capex of CNY1.6 billion-1.7 billion in 2016-2019. - Fitch has not factored in capex or contributions from the Peru iron ore mine as management are exploring options form a clear development plan RATING SENSITIVITIES Developments that may, individually or collectively, lead to positive rating action include: - FFO adjusted net leverage including adjusted financial assets and readily marketable inventories, of 2.5x on a sustained basis. Fitch includes 75% of the available-for-sales financial assets in the calculation of the FFO adjusted net leverage - Successful expansion of the logistics business and LNG refuelling station businesses that lead to an improved business profile in terms of business diversity and less-cyclical earnings - Consistent FCF generation Developments that may, individually or collectively, lead to negative rating action include: - EBITDA margins decline to less than 5% on a sustained basis (2016: 6.2%) - FFO adjusted net leverage including adjusted financial assets and readily marketable inventories exceeding 3.5x on a sustained basis - FFO fixed-charge coverage below 3.0x on a sustained basis LIQUIDITY Adequate Liquidity: Zhongrong Xinda had CNY6.9 billion of unrestricted cash and CNY5.3 billion of undrawn credit facilities at end-2016, compared with short-term debt of CNY10.6 billion. ZHONGRONG XINDA: S&P Assigns 'BB-' LT CCR, Outlook Stable --------------------------------------------------------- S&P Global Ratings said it assigned its 'BB-' long-term corporate credit rating to China-based coke producer Zhongrong Xinda Group Co. Ltd. The outlook is stable. The rating on Zhongrong Xinda reflects S&P's view that the company will maintain its leading position in China's coking industry over the next 12 months. It also reflects Zhongrong Xinda's ability to maintain fairly stable margins through cycles as it extends the product mix through efficient coking technology and benefits from the sale of value-added byproducts. In addition, S&P expects the company's debt leverage to remain high in the coming 12-24 months, despite moderate improvement. Zhongrong Xinda's various product offerings in the coking value chain, its proximity to raw materials supply and end customers, its economies of scale, and stable EBITDA margin support its market position. The company has maintained a leading position in a highly fragmented market. The company had a market share of 20% of coke production in Shandong province in 2016. It ranks as one of the top two coke producers nationwide by coking capacity of around 9 million metric ton per year as of Dec. 31, 2016. Zhongrong Xinda has locational advantages. The company's operations are concentrated in Shandong province, from where it generates most of its revenue. Its three major production bases are close to Shandong's coal producers, such as Shandong Energy Group Co. Ltd. and Yanzhou Coal Mining Co. Ltd.. This gives the company cost advantages over competitors from other provinces that are far away from the coal-producing areas or those with lower coal procurement needs due to small scale. Most of the independent coking mills in China only serve steel mills operating in nearby areas due to high costs of transport. However, because the company's coking plants are adjacent to railways and a canal, it can serve both customers within Shandong and sell to some steel mills along the Yangtze River at relatively competitive freight costs. Zhongrong Xinda is, therefore, able to offer competitive coke prices and achieve higher margins than its local peers. Besides, the company also provides integrated services to its customers, including logistics services and supply chain management. This helps the company retain its existing customers. However, Zhongrong Xinda faces product concentration risk. Coke is the company's main product, which subjects it to volatility in coke prices. As an integrated coke producer, the company generated about 70% of its gross profit from coke, byproducts, and other value-added services along the product value chain, including logistics services in 2016. The rest was from retail liquefied natural gas (LNG) stations, trading, consulting, and warehouses. The Shandong provincial government has designated the company as the sole operator of 305 retail LNG stations in logistics parks in Shandong. The construction of 204 of these stations was completed by the end of 2016. We expect LNG stations may offer more stable margins and cash flows due to favorable government policies, but this business' contribution to the company's overall gross profit is small at present. S&P said, "We expect Zhongrong Xinda's EBITDA margin to remain stable at around 7%, as in the past decade. This is due to the company's ability to efficiently extract high-margin byproducts such as coal gas and crude benzene. The company's technological know-how of the raw material mix enabled it to increase the production of such high-margin byproducts to cover the loss incurred during the coke price slump. The company's flexibility to adapt its product mix to market conditions contributes to its stable margins in the coke segment. We also expect Zhongrong Xinda to maintain its utilization rate of coke ovens at more than 95%. Such a high level of utilization is essential to produce coke at a lower cost and efficiently extract the byproducts. Based on the above factors, we assess Zhongrong Xinda's business risk profile as fair. "We view Zhongrong Xinda's financial risk profile as aggressive. The company's debt-to-EBITDA ratio is 6.2x as of end-2016. However, we expect the ratio to improve to below 5.0x in the next 24 months. We anticipate that the company's debt level will be stable in the next two years. The company does not have aggressive capital outlays for large-scale capacity expansion or acquisitions and EBITDA will likely grow moderately with increasing earnings from the coking business and logistics services. We expect that Zhongrong Xinda will continue to generate positive free operating cash flows (FOCF) in the next two years as earnings from its operations continue to provide cash flows to fund working capital and capital expenditure." A new mine could generate strong cash flows and high margins for Zhongrong Xinda once it is in full operation. In early 2016, Zhongrong Xinda acquired mining rights for Pampa de Pongo, an iron ore mine in Peru at Chinese renminbi (RMB) 5.5 billion or US$809 million. The mine also contains ample gold, copper, and cobalt deposits. Construction has not commenced yet on this green field project. The total investment of the project will be US$1.98 billion. S&P said, "In our view, the mine has potential to be one of the world's most cost-competitive iron ore mines (in the first quartile globally). That said, we do not incorporate this project in our current base case due to uncertainty of the timing of this development. "We believe ky to maintaining the 'BB-' rating is the funding mix for this large-scale project. We expect the company's leverage to increase only modestly if the funding of the Peru project is not heavily dependent on debt. The company plans to sell its equity interest in this project to fund the project development. However, if the company can't secure sufficient capital through equity funding as planned, its leverage could be higher than we estimate. The project also faces execution risk once it commences construction. In our view, the key risk facing this project is potential local communities' opposition to mining projects, which is a typical risk for mining projects in Peru. That said, we believe Zhongrong Xinda has put in place a plan to mitigate this risk. In addition, the company hired senior management with relevant experience in developing overseas mines. "The stable outlook reflects our expectation that Zhongrong Xinda's leading market position in coke production and the company's expansion along the product value chain should continue to lift its earnings over the next 12 months. We anticipate the company's debt-to-EBITDA ratio to be slightly higher than 5.0x in 2017. However, we expect its leverage will improve in 2018 with increasing earnings from the coking and logistics services businesses and a stable debt level. The stable outlook is based on the assumption that the funding for the Peru iron ore mine won't pressure Zhongrong Xinda's credit metrics. We note that the company hasn't made its final investment decision on this large project or secured the funding for it." S&P may lower the rating if Zhongrong Xinda's debt-to-EBITDA ratio sustains above 5.0x. This could happen if: -- The company's operating cash flow weakens due to a deterioration in coke selling prices or sluggish demand from steel mills; -- An unplanned outage at its major production sites causes unexpected and significant loss; or -- It relies heavily on debt to fund large acquisitions or organic growth projects. For example, its leverage is likely to stay elevated if it uses a high proportion of debt to fund the Peru iron ore project. S&P said, "We could also lower the rating if Zhongrong Xinda's short-term debt continues to increase, its banking relationships deteriorate, or its access to the domestic bond market becomes restricted. We note that the company has large holdings of short- term investments in funds and financial assets, which it can liquidate if needed. However, the company's willingness and ability to liquidate these assets to support its credit metrics has not been tested yet. "Rating upside is less likely in the next 12 months. However, we may consider an upgrade if Zhongrong Xinda adopts and establishes a much more conservative financial management and develops a track record. We could raise our rating on the company if its FFO-to-debt ratio rises well above 20% and the debt-to-EBITDA ratio falls below 4.0x while it pursues growth opportunities. The ratios could improve if the company pays down its debt by monetizing its investments in financial assets or other associated entities, or it develops its mine in Peru, which generates strong cash flows for the group." ================ H O N G K O N G ================ BACH FINANCE: S&P Assigns 'B' CCR & Rates First-Lien Loans 'B' -------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term corporate credit rating to Bach Finance Ltd., the parent company of Nord Anglia Education Inc. The outlook is stable. S&P said, "At the same time, we assigned our 'B' long-term issue rating to Bach's proposed US$1,225 million euro-denominated first-lien loans. In addition, we assigned a '3' recovery rating to the first-lien loans to reflect our expectation of a meaningful (50%-70%; rounded estimate: 50%) recovery in our hypothetical default scenario. "As a result of the completion of Bach's acquisition of Nord Anglia, we are discontinuing all ratings under Nord Anglia, including the issue ratings on its guaranteed loans, notes, and revolving credit facility." Bach is the holding vehicle for a consortium led by Baring Private Equity Asia (BPEA) and Canada Pension Plan Investment Board (CPPIB). The ratings reflect Bach's good cost controls, high revenue growth, and steady cash flow, which should temper the risks from its high leverage. S&P said, "We expect Bach's debt-to-EBITDA ratio to rise to 11.0x-12.0x in fiscal 2017 (ended August 2017) from 7.7x in fiscal 2016, due to the buyout of Nord Anglia. However, Bach should be able to maintain its EBITDA interest coverage above 1.5x following the acquisition. Our estimate of debt and interest expenses include operating lease adjustments and the addition of preferred shares, which we view as hybrid capital with minimal equity content given the leveraged buyout nature of the transaction. "We believe Bach can continue to derive benefits from Nord Anglia's strong brand, given Nord Anglia's record of service and the solid academic performances of its student base. These attributes are a key driver for growth in tuition and student enrollment, even though the education industry is highly fragmented with intense competition. "We forecast that Bach's organic revenue (including greenfield projects) will grow at high single digits over the next 12-24 months. Organic growth is likely through continued rise in student enrollment, including at its first bilingual school in Shanghai that opened in September 2016. "In our opinion, the increase in tuition and student enrollment, along with good cost controls, is likely to help Bach's adjusted EBITDA margin, which should increase by about 1-2 percentage points (ppts) in the next 12-24 months. Our adjusted EBITDA margins exclude operating leases. If we include operating leases, fiscal 2017 EBITDA margin would likely decline by 1-2 ppts, given US$15 million-US$20 million of additional rent due to the sale and leaseback executed last year, and additional rent from a new campus in Houston, opened in September 2016." Bach remains under the control of its financial sponsor, BPEA, which has a majority representation on the company's board even though CPPIB has a larger shareholding. S&P said, "As a result, we expect Bach to continue its aggressive expansion plan. We forecast about US$180 million of acquisitions in fiscal 2017 and about US$200 million each year thereafter. In addition, we expect US$80 million-US$100 million of capital expenditure in fiscals 2018 and 2019, about half of which would be for the construction of new capacity. The continued heavy investment would likely weigh on the company's financial leverage over the next 12-24 months." The total size of the merger deal is about US$4.7 billion in equity and debt, of which US$1.5 billion of U.S. dollar and euro- denominated first-lien loans. S&P said, "The stable outlook reflects our view that Bach will maintain its good market position in the premium international school sector and continue to expand through organic growth and acquisitions over the next 12 months. We believe the company's strong growth momentum, good profitability, and high visibility on cash flows temper the risk of aggressive financial policy. We also expect the company's high leverage following the transaction to improve and the EBITDA interest coverage to stay above 1.5x over the next 12 months. "We could lower the rating if the financial sponsor owners adopt a more aggressive financial stance such that Bach's leverage does not improve from current levels or if the company's EBITDA interest coverage drops below 1.5x. We could also lower the rating if Bach's liquidity deteriorates significantly. This could occur as a result of more aggressive and cash-exhaustive acquisitions than we expect, although we consider such downside risk as limited. "We see a limited likelihood that an upside scenario may materialize over the next 12 months. We could raise the rating if Bach adopts a more prudent financial policy and maintains a debt- to-EBITDA ratio of less than 6.0x and EBITDA interest coverage of above 3.0x on a sustainable basis." NOBLE GROUP: Default-Swap Verdict in Play as Test of ISDA System ---------------------------------------------------------------- Lianting Tu at Bloomberg News reports that pressure is building on an International Swaps & Derivatives Association panel of investors and bankers to end Noble Group Ltd.'s credit-default swap impasse. ISDA's determinations committee met Sept. 6 to reconsider whether Noble triggered a credit event -- the precondition for a payout on CDS contracts -- when it arranged a 120-day extension to a loan facility in June, Bloomberg relates. Once Asia's largest commodity trader, Noble is now fighting for survival more than two years into a crisis marked by accounting criticisms, a plunge in its securities and credit-rating downgrades, Bloomberg notes. In an unprecedented decision on Aug. 9, the ISDA committee said it didn't have enough information to decide either way on the CDS, spurring a flurry of activity as holders of the contracts demanded payment directly from sellers. Then, the panel put a stop to that, suspending any bilateral payouts on Noble while it reassessed the credit event question, according to Bloomberg. Bloomberg relates that market watchers said the decision by the panel this time around has greater significance than the net $157 million of outstanding default swaps on Noble suggests. Following the financial crisis, market participants established the determinations committee system so CDS buyers and sellers would have greater certainty about credit events. "If the determinations committee still decides to not have enough information in the Wednesday [Sept. 6] meeting, it will shake investors' confidence in the DC's ability to make decisions," Bloomberg quotes Kingsley Ong, a partner in Hong Kong at law firm Eversheds Sutherland, who specializes in debt restructuring, as saying. "There is lots of pressure on the DC this week." According to Bloomberg, ISDA posted on its blog last week that it "acts as secretary to the DCs and administers the process" but it doesn't have a vote or make decisions on questions, after citing market confusion and frustration on the Noble deliberations. In at least four meetings since June 22 leading up to the dismissal in August, the DC was unable to make a decision on Noble CDS as it sought more information. On Aug. 30, the committee voted unanimously to halt the settlements on the contracts, Bloomberg says. "The CDS market has changed a lot since the global financial crisis in terms of definitions for credit events," Bloomberg quotes Sean Chang, head of Asian debt investment at Baring Asset Management (Asia) Ltd. in Hong Kong, as saying. "But in certain regions, they are still not very clear cut, which leads to confusion and disputes. The failure to make a rule on a high- profile case will certainly hurt confidence of CDS investors." JPMorgan Chase & Co. restarted the debate in August when it asked the committee to reconsider if a credit event has occurred with regard to Noble, Bloomberg states. Separately, BNP Paribas SA asked last month if a credit event notice would be valid without supporting documentation or evidence, and whether it's necessary for a buyer to provide them, Bloomberg recalls. The French bank asked the panel to resolve its questions "so that market stability and integrity and safe and efficient derivatives markets can be maintained." ISDA determinations committees each comprise of 10 sell-side and five buy-side voting firms, along with three consultative firms and central counterparty observer members, according to the its website, Bloomberg discloses. "Over the years every new modification to the CDS product has in part been an attempt to commoditize it," Bloomberg quotes Ray Wepener, an executive director at Haitong International Securities Group Ltd. in Hong Kong as saying. "Complications like this related to the Noble Group case don't help." Bloomberg relates that Noble's Chairman Paul Brough said on Sept. 5 it expects to find a buyer for its oil business by the end of September and get an extension on its covenant waivers beyond October, but conditions are still very difficult. Getting those things done would give the company room to settle a repayment plan with its banks and avoid default, Mr. Brough, as cited by Bloomberg, said. Outstanding CDS contracts related to Noble, or the gross notional amount including buys and sells, fell to $1.21 billion on July 28 from $1.65 billion at the start of the year, Bloomberg discloses citing latest ISDA data. Price volatility in settling CDS contracts "combined with uncertainty of the DC's determination will increase the risks for market players," Ong at Eversheds said, Bloomberg relays. 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 Aug. 17, 2017, Moody's Investors Service has downgraded Noble Group Limited's corporate family rating and senior unsecured bond ratings to Caa3 from Caa1, and the rating on its senior unsecured medium-term note (MTN) program to (P)Caa3 from (P)Caa1. The rating outlook remains negative. The TCR-AP reported on Aug. 17, 2017, that S&P Global Ratings lowered its long-term corporate credit rating on Noble Group Ltd. to 'CCC-' from 'CCC+'. The outlook is negative. S&P said, "At the same time, we lowered the long-term issue rating on Noble's outstanding senior unsecured notes to 'CC' from 'CCC'. "We downgraded Noble to reflect the heightened risk that the company will not be able to meet its debt obligations in the next six months. We believe Noble's cash on hand and the potential proceeds from the sale of Noble Americas Gas & Power Corp. (NAGP) will not be enough to cover the company's revolving credit facilities (RCF) if Noble is not able to turnaround, or if it breaches its financial covenants and fails to obtain a waiver from banks. "We estimate Noble has around US$700 million in unutilized committed facilities as of the end of the second quarter of 2017. However, the amount may not be enough to cover the RCF if the weak operating performance and working capital cash outflow persist in the third quarter. A default in any principal or interest payment may trigger a cross-default of other debt obligations." Noble made a loss in the second quarter of 2017 even if S&P exclude one-off write-downs. The company's net debt continued to increase during the period, after an increase in the first quarter from a recent low in the fourth quarter of 2016. Operating cash flow remained negative in the second quarter due to loss-making underlying operations and continued working capital cash outflow after excluding one-off write-downs in fair value gains in derivative instruments. Noble is also in the process of selling its global oil liquids business. Although the sale will likely reduce the debt balance and need for working capital, Noble's scale will also reduce significantly. In addition, the pricing and timing of the sale is still uncertain. NOBLE GROUP: Expects to Sell Oil Business This Month ----------------------------------------------------- The Financial Times reports that Noble Group said it expects to find a buyer for its global oil business this month, as it continues to shrink its operations in a bid to stave off defaulting on its debts. Speaking at a special general meeting in Singapore, where the Hong Kong-based trader is listed, chairman Paul Brough told investors the sale should be agreed by the end of September, the FT relates. "The events in Houston over the last week, I think, have made it a little difficult for some of our investors, but we're still sticking to that timetable," Mr. Brough was quoted in wire reports as saying, the FT relays. Noble's banks want to see progress on the oil business sale before agreeing to extend the trader any more credit, the FT relates citing sources. The trading house has around $2.6 billion in credit facilities and bonds coming due in the next year, with rating agencies warning of a risk of a default, the FT discloses. The credit facility necessary for the day-to-day running of its oil business has already been extended to October by its lenders, putting pressure on the company to complete its sale soon, the FT notes. Shareholders at the meeting approved a deal to sell Noble's gas and power operations to Mercuria for $261 million to help pay down debt, the FT says. 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 Aug. 17, 2017, Moody's Investors Service has downgraded Noble Group Limited's corporate family rating and senior unsecured bond ratings to Caa3 from Caa1, and the rating on its senior unsecured medium-term note (MTN) program to (P)Caa3 from (P)Caa1. The rating outlook remains negative. The TCR-AP reported on Aug. 17, 2017, that S&P Global Ratings lowered its long-term corporate credit rating on Noble Group Ltd. to 'CCC-' from 'CCC+'. The outlook is negative. S&P said, "At the same time, we lowered the long-term issue rating on Noble's outstanding senior unsecured notes to 'CC' from 'CCC'. "We downgraded Noble to reflect the heightened risk that the company will not be able to meet its debt obligations in the next six months. We believe Noble's cash on hand and the potential proceeds from the sale of Noble Americas Gas & Power Corp. (NAGP) will not be enough to cover the company's revolving credit facilities (RCF) if Noble is not able to turnaround, or if it breaches its financial covenants and fails to obtain a waiver from banks. "We estimate Noble has around US$700 million in unutilized committed facilities as of the end of the second quarter of 2017. However, the amount may not be enough to cover the RCF if the weak operating performance and working capital cash outflow persist in the third quarter. A default in any principal or interest payment may trigger a cross-default of other debt obligations." Noble made a loss in the second quarter of 2017 even if S&P exclude one-off write-downs. The company's net debt continued to increase during the period, after an increase in the first quarter from a recent low in the fourth quarter of 2016. Operating cash flow remained negative in the second quarter due to loss-making underlying operations and continued working capital cash outflow after excluding one-off write-downs in fair value gains in derivative instruments. Noble is also in the process of selling its global oil liquids business. Although the sale will likely reduce the debt balance and need for working capital, Noble's scale will also reduce significantly. In addition, the pricing and timing of the sale is still uncertain. ========= I N D I A ========= ABC TRANSFORMERS: CRISIL Reaffirms 'B' Rating on INR3.5MM Loan -------------------------------------------------------------- CRISIL has been consistently following up with ABC Transformers Private Limited (ATPL) for obtaining information through letters and emails dated May 24, 2017, and June 09, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2.5 CRISIL A4 (Issuer Not Cooperating; Rating Reaffirmed) Cash Credit 3.5 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) Proposed Fund- 0.5 CRISIL B/Stable (Issuer Not Based Bank Limits Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of ABC Transformers Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for ABC Transformers Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable/CRISIL A4'. Incorporated in 1993 and promoted by Mr. GK Bansal, Mr. NK Goyal, Mr. SR Gupta, Mr. KK Bansal, and Mr. OP Goyal (the last two joined the company later), ATPL manufactures and repairs power and distribution transformers. The company has two plants in Noida. ADITYA MOTORS: CRISIL Reaffirms 'B' Rating on INR5.0MM Loan ----------------------------------------------------------- CRISIL has been consistently following up with Aditya Motors (AM) for obtaining information through letters and emails dated May 25, 2017 and July 12, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 0.6 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) Inventory Funding 5.00 CRISIL B/Stable (Issuer Not Facility Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Aditya Motors. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Aditya Motors is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with 'CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable'. AM, set up by Mr. Ajay Singh Chattrasingh Chudsama and Mr. Harvijay Singh Chattrasingh Chudsama in 2015, is an authorised dealer of TML's passenger cars in Jamnagar with a 3S (showroom, spares, and services) facility. It is setting up a showroom in Jamnagar, which is expected to commence operations in April 2016. AHUJA AND ANAND: CARE Assigns 'D' Rating to INR12.48cr LT Loan -------------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Ahuja and Anand Buildwell Private Limited (AABPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12.48 CARE D Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of AABPL takes into consideration the ongoing delay in servicing of debt obligation. AABPL's ability to establish clear track of servicing of its debt obligations with improvement in liquidity position is the key rating sensitivity. Detailed description of the key rating drivers Key Rating Weaknesses Ongoing delay in debt servicing: As per the interaction with the banker, there have been delays in principal and interest repayment of term loan. Incorporated on August 20, 2008, Ahuja and Anand Buildwell Private Limited (AABPL) is a private limited company engaged into construction of residential and commercial buildings. Mr. Prem Bhutani and Mr. Anil Bhutani are the directors of the company. The entity had developed a commercial project 'World Square Mall' which was started in 2007 in Mohan Nagar, Ghaziabad and was completed in December 2013. Subsequently the commercial operations started in 2013 wherein it has leased the space to various brands. The total cost of the project was INR192.12 crore which was funded with a DE ratio of 0.43x. The mall building consists of 5 levels including 2 basements and 2 parking levels. Further, the mall includes stores of various brands including Auchan, Lifestyle, Haldiram, Reliance Footprint, Bata, Pizza Hut, etc. AMRAPALI: NCLT Orders Insolvency Process Against Silicon City ------------------------------------------------------------- The Times of India reports that the National Company Law Tribunal on Sept. 4 ordered the initiation of insolvency proceedings against fund starved Amrapali's Sillicon City on a plea from Bank of Baroda and appointed Rajesh Samson of Deloitte as the Insolvency Resolution Professional to take control of the entity controlled by Anil Sharma. Amrapali is the second major real estate company whose project in Noida is facing insolvency action after Jaypee Infratech, a case which is being heard by the Supreme Court, TOI discloses. A group of buyers in Sillicon City had opposed the insolvency proceedings and may move the Supreme Court, the report relates. According to TOI, the law requires the insolvency professional take charge of the management and then work with the lenders to either find a new owner or liquidate the assets. The process of resolution has to be concluded within 180 days, with a possible 90-day extension permitted. TOI says Bank of Baroda had initiated the insolvency process for an outstanding amount of INR56 crore, the report discloses. According to the report, the company -- which has not just delayed delivery but is unable to clear its dues with the Noida Authority too -- is facing a default of INR155 crore against banks. Besides BoB, Oriental Bank of Commerce (OBC) and Bank of Maharashtra (BoM) are the other lenders and did not give their consent to BoB to approach NCLT. The company has also defaulted to the Noida Authority and JP Morgan, the report adds. Noida Authority has dues of INR550 crore against the land cost and JP Morgan has an outstanding of INR150 crore. Noida Authority also opposed the initiation of insolvency resolution process, the report says. APPU HOTELS: CARE Lowers Rating on INR211.64cr LT Loan to 'D' ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Appu Hotels Limited (AHL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 211.64 CARE D Revised from CARE B+; Stable Long-term/Short Term Bank Facilities 9.00 CARE D/CARE D Revised from CARE B+; Stable/ CARE A4 Non-convertible Debenture issue 42.15 CARE D Reaffirmed Detailed Rationale & Key Rating Drivers The revision in the rating assigned to the bank facilities of AHL takes into account the instances of delays in servicing debt obligations. Detailed description of the key rating drivers Key Rating Weaknesses Instances of delays in debt servicing: Continuing losses during the period FY13-FY17 (refers to the period April 1 to March 31) along with cash flow mismatches has led to tight liquidity position for the company due to which there were instances of delays in servicing the debt obligations. Appu Hotels Limited (AHL) is a Chennai-based public limited company engaged in the hospitality business in the state of Tamil Nadu. AHL is part of the PGP Group of Companies which has diversified business interests in sugar, chemicals, finance, hospitality, and real estate etc. AHL is founded and promoted by Dr Palani G Periasamy, Chairman of the group. The group companies include Dharani Sugar and Chemicals Limited, Dharani Finance Limited, Ananthi Developers Limited, Dharani Developers Limited, Dharani Credit and Finance Limited among others. AHL owns two 5-star deluxe category hotels in the name of 'Le Royal Meridien' (LRM), situated in Chennai (240-rooms property) and 'Le Meridien' Coimbatore (254-room property) respectively. Both these properties are operated under the license issued by Starwood (M) International Inc., one of the leading and well recognised names in the hospitality industry with presence across the world. During FY17, AHL registered net loss of INR25 crore on a total income of INR90 crore. BIRTHPLACE HEALTHCARE: CRISIL Reaffirms B Rating on INR10.4M Loan ----------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long- term bank facilities of Birthplace Healthcare Private Limited (BHPL). The rating continues to reflect modest scale, geographical concentration in revenue, and exposure to project- related risks. The rating also factors in below-average financial risk profile, driven by stretched liquidity. These weaknesses are partially offset by promoters' extensive experience in the hospitality sector and fund support. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Overdraft 2.5 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1.1 CRISIL B/Stable (Reaffirmed) Term Loan 10.4 CRISIL B/Stable (Reaffirmed) Analytical Approach Unsecured loans of INR9.55 crore from promoters have been treated as neither debt nor equity for FY17 as these loans are expected to remain in business over the medium term. Key Rating Drivers & Detailed Description Strengths * Team of experienced doctors and healthy demand prospects: BHPL is expected to benefit from its team of experienced doctors, healthy demand prospects for the industry, and favourable location. The Birthplace hospital was set up to cater to the obstetrics and gynaecology segment. The hospital industry in India is grossly underpenetrated Weakness * Modest scale, and geographical concentration in revenue: BHPL has modest scale, with capacity of only 25 beds, which remains around 60% utilised. Although scale has improved over the previous fiscal, it remains modest, as reflected in top line of INR24.9 crore in fiscal FY17 Furthermore, geographic concentration restricts its target customer base. This renders it vulnerable to dynamics of a single market. * Exposure to project-related risks: The company is setting up another hospital of similar size in Hyderabad. The project is in early stages, and is exposed to implementation, funding, and offtake risks. Any delay in implementation of project or cost and time overruns will affect the financial risk profile. * Below-average financial risk profile because of stretched liquidity: The company has high repayments, against which accrual is expected to be tightly matched. Furthermore, gearing remains high at about 2.3 times. The gearing will likely weaken marginally because of capital expenditure planned for the medium term. Outlook: Stable CRISIL believes BHPL will continue to benefit over the medium term from its team of experienced doctors. The outlook may be revised to 'Positive' in case of substantial and sustained improvement in revenue and profitability margins, or better liquidity on the back of fund infusion by promoters. Conversely, the outlook may be revised to 'Negative' if a steep decline in profitability, or stretch in working capital cycle weakens financial risk profile. Promoted in 2011 by Mr. Tarun Siripurapu and his family, BHPL provides healthcare in the obstetrics and gynaecology segment, through its 25-bed hospital, The Birthplace. The hospital is located in Hyderabad, and commenced commercial operations in 2013. In fiscal 2017, profit after tax (PAT) was INR83 lakh on total sales of INR24.40 crore, as against PAT of INR130 lakh on total sales of INR14.94 crore in fiscal 2016. CHANDRASHEKARAIAH: CRISIL Reaffirms 'B' Rating on INR7MM Loan ------------------------------------------------------------- CRISIL has been consistently following up with Chandrashekaraiah for obtaining information through letters and emails dated March 6, 2017 and July 12, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3.5 CRISIL A4 (Issuer Not Cooperating; Rating Reaffirmed) Cash Credit 7.0 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Chandrashekaraiah. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Chandrashekaraiah is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with 'CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable/CRISIL A4'. Chandrashekaraiah is a proprietorship of Mr. Chandrashekaraiah that undertakes contracts to construct roads for Karnataka government agencies. The firm is an L1 contractor registered with Public Works Department, Karnataka. CHAUDHARY RICE: CARE Assigns 'B' Rating to INR8.40cr LT Loan ------------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of Chaudhary Rice Mills (CRM), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 8.40 CARE B; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of CRM is constrained by its small scale of operations with low profit margins, leveraged capital structure, weak debt coverage indicators and elongated operating cycle. The rating is further constrained by susceptibility to availability and fluctuation in raw material prices and monsoon dependent operations, fragmented nature of industry coupled with high level of government regulation and partnership nature of constitution. The rating, however, derives strength from experienced partners with long track record of operations. Going forward, the ability of the firm to increase its scale of operations while improving its overall solvency position and efficient management of working capital requirements would remain the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small scale of operations with low PAT margins: The firm's scale of operations has remained small marked by Total Operating Income (TOI) of INR 33.97 crore in FY17 (Provisional; refers to the period of April01 to March 31) and net-worth base of INR 1.46 crore as on March 31, 2017. The small scale of operations limits the firm's financial flexibility in times of stress and deprives it from scale benefits. The operating margins of the firm stood moderate as reflected by PBILDT margin of 6.48% in FY17. However, the PAT margin remained below unity during last three financial years on account of high depreciation and interest costs. Leveraged capital structure and weak debt coverage indicators: The capital structure of the firm is leveraged with overall gearing ratio of 10.08x as on March 31, 2017 (Provisional) (PY: 8.67x). Additionally, the debt coverage indicators also remained weak with the total debt to GCA at 21.65x for FY17 (PY: 19.49x) and interest coverage ratio at 1.45x in FY17 (PY: 1.41x). Elongated operating cycle: The operating cycle of the firm stood elongated at 139 days for FY17 mainly due to high inventory period. The average utilization of the working capital limits remained at ~95% for the last 12 months period ended July, 2017. Susceptibility to fluctuation in raw material prices and monsoon dependent operations: Agro-based industry is characterized by seasonality due to its dependence on raw materials whose availability is affected directly by the vagaries of nature. Adverse climatic conditions can affect their availability and leads to volatility in raw material prices. Fragmented nature of industry coupled with high level of government regulation: The commodity nature of the product makes the industry highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. Additionally, the raw material (paddy) prices are regulated by government to safeguard the interest of farmers, which in turn limits the bargaining power of the rice millers. Partnership nature of constitution: CRM's constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency and firm being dissolved upon the death/retirement/insolvency of partners. Key Rating Strengths Established track record of operations along with experienced partners: CRM was established in 1981 and is currently being managed by Mr. Anil Kumar and Mrs. Vijeta Rani having an industry experience of three and a half decades and a little more than two and a half decades respectively through their association with CRM only. Both the partners have adequate acumen about various aspects of business which is likely to benefit CRM in the long run. Chaudhary Rice Mills (CRM) was established in 1981 as a partnership firm and is currently being managed by Mr. Anil Kumar and Mrs. Vijeta Rani sharing profit and losses equally. The firm is engaged in processing of paddy at its manufacturing facility located in Fatehabad, Haryana with an installed capacity of 72,000 Tonnes per annum as on March 31, 2017. CREATIVE CLOTHEX: CARE Assigns 'B' Rating to INR4.10cr LT Loan -------------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Creative Clothex (CRCL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 4.10 CARE B; Stable Assigned Detailed Rationale and key rating drivers The ratings assigned to the bank facilities of CRCL are primarily constrained by the small scale of operations coupled with low net worth base, leveraged capital structure. The ratings are further constrained by constitution of the entity being a proprietorship firm, fragmented and competitive nature of textile industry. The ratings, however, draw comfort from experienced proprietor coupled with long track record of operations, moderate profitability margins and moderate operating cycle. Going forward; ability of the firm to profitably increase its scale of operations while improving the capital structure shall be the key rating sensitivities. Detailed description of the key rating drivers Key rating weakness Small scale of operations with low net worth base: The scale of operations has remained small marked by total operating income and gross cash accruals of INR19.00 crore and INR0.59 crore respectively during FY17 (based on provisional results; FY refer to April 1 to March 31). Further, the firm's capital base remained small at INR3.28 crore as on March 31, 2017. The small scale limits the firm's financial flexibility in times of stress and deprives it from scale benefits. The total operating income registered significant decline in FY17 from INR31.12 crore in FY16 owing lower orders received from existing customers. Leveraged capital structure: The company has relatively low net worth base as against its dependence on external borrowings. The overall gearing ratio stood at 2.22x respectively as on March 31, 2016. Though the same improved to 1.44x as on March 31, 2017 on account of repayment of term loans & unsecured loans coupled with retention of profits to reserves. Furthermore, improvement in overall gearing has also taken into account lower utilization of working capital borrowings as on balance sheet date. The working capital requirement of the firm largely met through working capital borrowings which resulted into 90% utilization of the working capital limits during the past 12 months ending July, 2017. Fortunes linked to textile industry: Indian textile industry which is the second largest employer after agriculture and account for 4% of the GDP is inherently cyclical in nature. Any adverse changes in the global economic outlook as well as demand-supply scenario in the domestic market directly impacts demand of the textile industry. Textile industry as a whole remains vulnerable to various factors such as fluctuations in prices of cotton, mobilization of adequate workforce and changes in government policies for overall development of the textile industry. Any significant changes in such factors will have direct impact on the business operations of the company. Fragmented and competitive nature of textile industry: The readymade garment industry in India is highly fragmented and dominated by a large number of independent and small scale unorganized players leading to high competition among the industry players. Smaller companies/firms in general are more vulnerable to intense competition due to their limited pricing flexibility, which constrains their profitability as compared with larger companies who have better efficiencies and pricing power considering their scale of operations. Furthermore, Low entry barriers and low investment requirement makes the industry highly lucrative and thus competitive. Key rating strengths Experienced proprietor and long track record of operations: CRCL is a proprietary business managed by Mrs. Geeta Singhal, graduate by profession who has been actively managing the firm since 1995. Moderate profitability margins: Profitability margins of the firm are directly associated with designing aspect of the order. The highly and complex design in nature normally fetch better margins. Profitability margins of the company have remained moderate over the last three years (FY15-FY17). PBILDT margin of the firm stood at 9.74% in FY17. PAT margin stood at 1.53% in FY17 as against 1.19% in FY16 owing to higher PBILDT margins coupled with lower interest which is mainly due to repayment of term loan and lower utilization of sanctioned working capital limits. Moderate operating cycle: The firm normally maintains inventory of raw material (knitted and woven fabric) for smooth production process along with finished goods to meet the urgent demand of its customers. The average inventory period stood at around three months in FY17. CRCL normally gives credit of one month to its customers, and receives credit period of around three weeks from the suppliers. Noida, Uttar Pradesh based Creative Clothex was established on July 14, 1995 by Mrs. Geeta Singhal. CRCL is engaged in manufacturing of readymade garments such as sportswear and casual wear for men and women. The firm procures the raw materials i.e. knitted and woven fabric and related accessories from Punjab, Mumbai and Delhi and import material like zipper, elastic, thread mainly from Taiwan, Japan, and Hong Kong which comprises of around 30% of total purchases. The firm sells product domestically to retail customers under their own brand name "Aurro". The firm sells 10% of the product through online channel partners viz Flipkart, Amazon, Paytm, Snapdeal etc. Moreover, the company also manufacture the garments under the brand name of third party labels for big retail chains. CREST PROMOTERS: CRISIL Reaffirms B+ Rating on INR95MM Term Loan ---------------------------------------------------------------- CRISIL has been consistently following up with Crest Promoters Private Limited (CPPL) for obtaining information through letters and emails dated February 15, 2017 and July 18, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Term Loan 5 CRISIL B+/Stable (Issuer Not Cooperating; Rating Reaffirmed) Term Loan 95 CRISIL B+/Stable (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Crest Promoters Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Crest Promoters Private Limited is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B+/Stable'. CPPL was incorporated by Mr. Ajay Kumar, Mr. Jagdeep Singh Gill, Mr. Pratap Singh Rathi and Mr. Dushyant Malik. The company develops residential real estate and currently is developing a residential project, Ace City, in Greater Noida West (Uttar Pradesh). D.R. THANGAMAALIGAI: CRISIL Reaffirms 'B' Rating on INR6MM Loan --------------------------------------------------------------- CRISIL has been consistently following up with D.R. Thangamaaligai (DRT) for obtaining information through letters and emails dated May 24, 2017, and June 9, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) Proposed Long Term 1 CRISIL B/Stable (Issuer Not Bank Loan Facility Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of D.R. Thangamaaligai. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for D.R. Thangamaaligai is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable'. DRT was set up in 2014 as a sole proprietorship firm by Mr. D Rajappa. The firm, based in Chennai (Tamil Nadu) is engaged in gold jewellery retailing. The daily operations of the firm are managed by Mr. D Rajappa. DHANPATI AGRO: CRISIL Reaffirms 'D' Rating on INR6.5MM Loan ----------------------------------------------------------- CRISIL has been consistently following up with Dhanpati Agro Udyog Private Limited (Dhanpati) for obtaining information through letters and emails dated May 24, 2017 and June 7, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6.5 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Term Loan 2.07 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Dhanpati Agro Udyog Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Dhanpati Agro Udyog Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D'. Dhanpati was established in 2010 as a private-limited company by Mr. Brahmanand Jaiswal and his sons, Mr. Saurabh Jaiswal and Mr. Subhash Jaiswal. The company processes majorly basmati and non- basmati rice at its plant at Gorakhpur, Uttar Pradesh. Dhanpati has total milling and sorting capacity of 10 tonne per hour. DHARTI COTTON: CRISIL Reaffirms 'D' Rating on INR5.5MM Loan ----------------------------------------------------------- CRISIL has been consistently following up with Dharti Cotton Industries (DCI) for obtaining information through letters and emails dated May 24, 2017 and June 07, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5.5 CRISIL D (Issuer Not Cooperating: Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Dharti Cotton Industries. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Dharti Cotton Industries is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D'. DCI is an Amreli, Gujarat based partnership firm, established in 2007. The company is engaged in cotton ginning and pressing operations. DR. ANJOLI: CRISIL Reaffirms B- Rating on INR5MM LT Loan -------------------------------------------------------- CRISIL has been consistently following up with Dr. Anjoli Health Care (DAHC) for obtaining information through letters and emails dated May 24, 2017 and June 9, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term 5 CRISIL B-/Stable (Issuer Not Bank Loan Facility Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Dr. Anjoli Health Care. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Dr. Anjoli Health Care is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B-/Stable'. DAHC was established in 2012 as a partnership concern by Dr. B. V. Reddy and his wife Mrs. Anjali Reddy. The firm plans to set up a unit to manufacture de-addiction medicines for tobacco, and alcohol addicts. EPITOME PLAST-O-PACK: CRISIL Reaffirms B- Rating on INR6.25M Loan ----------------------------------------------------------------- CRISIL has been consistently following up with Epitome Plast-O- Pack Private Limited (EPPL) for obtaining information through letters and emails dated May 24, 2017, and June 07 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3 CRISIL B-/Stable (Issuer Not Cooperating; Rating Reaffirmed) Letter of Credit 4.5 CRISIL A4 (Issuer Not Cooperating; Rating Reaffirmed) Proposed Long Term 6.25 CRISIL B-/Stable (Issuer Not Bank Loan Facility Cooperating; Rating Reaffirmed) Term Loan 3.25 CRISIL B-/Stable (Issuer Not Cooperating; Rating Reaffirmed) Working Capital Term Loan 3.00 CRISIL B-/Stable (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Epitome Plast-O-Pack Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Epitome Plast-O-Pack Private Limited is consistent with 'Scenario 2' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B- /Stable/CRISIL A4'. EPPL, incorporated in 2008, manufactures polyethylene terephthalate preforms and high density polyethylene bottles. It is based in Kolkata. GAJANAN FERRO: CARE Assigns B+ Rating to INR14.75cr LT Loan ----------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Gajanan Ferro Private Limited (GFPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 14.75 CARE B+; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of GFPL is constrained by its small scale of operation, susceptibility to volatility in raw material prices and finished products leading to erratic profitability margins, working capital intensive nature of business, sluggish growth in user industries and cyclicality in the industry and intense competition due to fragmented nature of the industry. The rating, however, derives strength from the experienced promoters and reputed clientele. The ability of the company to increase the scale of operations with improve profitability margins and manage working capital effectively will be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small scale of operations: GFPL has relatively small scale of operation over past three years as reflected by total operating income of INR46.83 crore in FY16. Operating income has declined considerably by 27.86% in FY16 over FY15 on account of decline in sales price during FY16 due to lower demand of ferro alloy products. Accordingly, PBILDT has also declined considerably to INR3.69 crore in FY16 over INR6.22 crore in FY15 keeping in line with the decline in total operating income. However, the company has achieved a total operating income of INR53 crore in FY17 (prov.). Susceptibility to volatility in raw material prices & finished products leading to erratic profitability margins: GFPL does not have its captive mine and also it does not have any long term tie up for supply of raw materials with any company. Since, the raw material is the major cost drivers (comprising around 58.59% of FY16 total operating income), prices of which are volatile in nature, moreover the company products silicon manganese and ferro Silicon is also exposed to price volatility. The profitability of the company is susceptible to fluctuations in raw material and finished goods prices exposing it to high price volatility risk. Such fluctuations in the raw material and finished products prices led to erratic profitability for the company during the past years. Working capital intensive nature of business: GFPL being a manufacturer of ferro alloys requires high level of working capital to maintain the required inventory levels. This apart, lower cash accruals and high operating cycle acts as a constraint on the liquidity position of the company, thereby forcing it to rely heavily on bank borrowings. Accordingly, the cash credit utilization remained high at about 85% during last 12 months period ended May, 2017. Sluggish growth in user industries and cyclicality in the industry: The fortune of companies like GFPL is totally dependent on the future of iron & steel industry which is heavily dependent on the automotive, engineering and infrastructure industries. 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 may lead to decline in demand of steel. Furthermore, all these industries are susceptible to economic scenarios and are cyclical in nature. Intense competition due to fragmented nature of industry: GFPL is engaged in the manufacturing of ferro alloys business, which is primarily dominated by large players and characterized by high fragmentation and competition due to the presence of numerous players in india owing to relatively low entry barriers. High competitive pressure limits the pricing flexibility of the industry participants which induces pressure on profitability. Key Rating Strengths Experienced Promoters: Mr. Jitendra Kumar Agarwal (aged, 49 years) having more than two decades of experience in the same line of industry, looks after the day to day operations of the company. He is supported by other director Mr. Sachin Poddar (aged, 40 years), having more than a decade of experience in similar line of business along with a team of experienced professionals. Reputed Clientele: GFPL is engaged in the manufacturing of ferro alloys business which is primarily used in steel business. The company has built a good relationship with Vishakhapatnam Steel Plant which accounts for a substantial portion of sales achieved by GFPL in the past couple of years. Gajanan Ferro Private Limited (GFPL) was incorporated in March, 2007 for manufacturing of Silicon Manganese and Ferro Silicon. However, the company commenced commercial operation from February, 2012. The company is promoted by Mr. Jitendra Kumar Agarwal and Mr. Sachin Poddar, having its registered office at Kolkata, West Bengal - 700012. Its manufacturing facility is located at Dhalbhumgarh, East Singhbhum, Jharkhand. It has a current installed capacity of 18000 MTPA. Mr. Jitendra Kumar Agarwal (aged, 49 years) having more than two decades of experience in the same line of industry, looks after the day to day operations of the company. He is supported by other director Mr. Sachin Poddar (aged, 40 years), having more than a decade of experience in similar line of business along with a team of experienced professionals. GRAND MOTORS: CRISIL Reaffirms B+ Rating on INR23MM Cash Loan ------------------------------------------------------------- CRISIL rating continues to reflect Grand Motors Sales and Services Private Limited (GMSPL) weak financial risk profile, large working capital requirements and susceptibility to cyclicality of auto industry. These weaknesses are partially offset by established position in the automobile dealership market in Kerala, backed by promoters' extensive experience and their funding support. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 23 CRISIL B+/Stable (Reaffirmed) Inventory Funding Facility 2 CRISIL B+/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weaknesses * Weak financial risk profile: Networth is estimated to be modest at INR10.51 crore as on March 31, 2017, due to low accretion to reserves. Muted operating margin and high dependence on external debt led to below-average debt protection metrics, reflected in interest coverage ratio of 1.14 times estimated for fiscal 2017. * Large working capital requirement: Gross current assets were high, estimated at 228 days as on March 31, 2017, driven by large receivables (161 days) and moderate inventory (73 days). This was primarily on account of high institutional sales towards the last quarter of the fiscal. The company has to provide credit of around 90 days to government agencies. * Susceptibility to economic uncertainty: The automobile industry remains vulnerable to economic cycles. Any uncertainty in the economy, or monetary tightening measures, for instance, a hike in interest rates, can have a huge impact on demand for vehicles and business of automobile dealers. Strength * Established market position and extensive experience of promoters: The three decade-long experience of the promoters in the automobile dealership market in Kerala, and the company's established regional market position, have helped revenue grow at a moderate pace, to INR53 crore estimated in fiscal 2017, and will continue to support the business risk profile. Promoters have also supported operations by extending unsecured loans of INR3.61 crore (estimated) as on March 31, 2017. Outlook: Stable CRISIL believes GMSPL will continue to benefit from its established market position in Kerala, backed by the extensive experience of its promoter. The outlook may be revised to 'Positive' if higher cash accrual strengthens the capital structure. The outlook may be revised to 'Negative' if revenue or profitability declines, resulting in lower cash accrual; or if large, debt-funded capital expenditure further weakens financial risk profile. GMSPL, based in Thiruvananthapuram, was incorporated in 2009, by Mr. V Ashok. It is an authorised dealer of VE Commercial Vehicles Ltd in Kerala. Prior to incorporating GMSPL, Mr. Ashok was dealing in Eicher vehicles, under entity Grand Motor Sales Corporation (GMSC) since 1979; this entity was wound up in 2009, when GMSSPL was incorporated. It has one showroom-cum-workshop and two workshops in Thiruvananthapuram, one showroom and one workshop in Kollam, and two showrooms and one workshop in Tiruvalla. HELPAGE YOUTH: CRISIL Reaffirms B+ Rating on INR1MM LT Loan ----------------------------------------------------------- CRISIL has been consistently following up with Helpage Youth Foundation (HYF) for obtaining information through letters and emails dated February 15, 2017 and July 18, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term 1 CRISIL B+/Stable (Issuer Bank Loan Facility Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale te repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Helpage Youth Foundation. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Helpage Youth Foundation is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB' category rating or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B+/Stable'. HYF is a not-for-profit society, set up in 2005. Mr. Himanshu Porwal, Mrs. Neelam Gupta and Mr. P K Gupta are the society's director, president and treasurer, respectively. HYF, based in Lucknow, Uttar Pradesh, runs schemes such as Payjal Scheme, National Child Labour Project (NCLP), National Digital Literacy Mission (NDLM), and Hot Cooked Food Scheme for the state and central governments in Lucknow and its vicinity. INDUS MOTORS: CRISIL Reaffirms 'B' Rating on INR5.0MM Loan ---------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Indus Motors Light Commercial Vehicles Private Limited (IMLCVPL) at 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 0.75 CRISIL B/Stable (Reaffirmed) Inventory Funding Facility 5.00 CRISIL B/Stable (Reaffirmed) Long Term Loan .27 CRISIL B/Stable (Reaffirmed) Overdraft 7.00 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility .98 CRISIL B/Stable (Reaffirmed) The ratings continue to reflect modest scale of operations and below-average financial risk profile because of weak capital structure. These weaknesses are partially offset by extensive experience of its promoters in the automobile dealership business and its established relationship with principal Ashok Leyland Ltd (ALL). Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: IMLCVPL operates on a modest scale, as indicated by its revenue of INR79.9 Cr during fiscal 2017, in the fragmented auto dealership segment with geographical concentration in the company's revenue profile. IMLCVPL operations are concentrated in Kerala, rendering the company susceptible to geographic concentration risk; any downturn in the local economy will impact auto sales, and in turn, auto dealers such as IMLCVPL. * Below-average financial risk profile: Networth is negative as on March 31, 2017 due to accumulated losses in the past resulting in weak capital structure. Low profitability and large short-term bank borrowing led to weak debt protection metrics, with interest coverage ratio of below 1 time in fiscal 2017. In the absence of equity infusion and low accretion to reserves, financial risk profile is expected to remain below average over the medium term. Strength * Extensive experience of promoters in auto dealership segment and established relationship with principal, ALL Indus Motors has an established presence in the auto dealership market in Kerala, supported by its 6-year relationship with ALL. Indus Motors is promoted by Mr. Ali Mubarak and Mr. Ali Muneer, who have diverse business interests. Promoters have also been supporting the business in the form on unsecured loans benefitting the overall business profile Outlook: Stable CRISIL believes IMLCVPL will continue to benefit over the medium term from its established position in the auto dealership in Kerala and promoters' extensive experience. The outlook may be revised to 'Positive' if financial risk profile improves significantly due to substantial cash accrual or equity infusion. The outlook may be revised to 'Negative' if financial risk profile, especially liquidity, weakens because of a sharp decline in cash accrual, subdued demand, or sizeable debt-funded capital expenditure. Set up in 2011 by Mr. Ali Mubarak and Mr. Ali Muneer, IMLCVPL is an authorised dealer of Ashok Leyland Ltd's light commercial vehicles in Kerala. In fiscal 2017, on provisional basis profit after tax (PAT) was INR1.2 crore on net revenue of INR79.9 crore, against Net loss of INR0.5 crore on net revenue of INR73.5 crore in fiscal 2016 ISHWAR GINNING: CARE Lowers Rating on INR12cr LT Loan to 'D' ------------------------------------------------------------ CARE Ratings revised the ratings on certain bank facilities of Ishwar Ginning Private Limited (IGPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 12.00 CARE D Revised from Facilities CARE B+ Detailed Rationale & Key Rating Drivers Ongoing delay in debt servicing: The revision in the rating assigned to the bank facilities of IGPL is primarily due to irregularity in servicing its debt obligations owing to weak liquidity position. Incorporated in 2015, Rajkot (Gujarat) based, Ishwar Ginning Private Limited (IGPL) is promoted by Mr Rameshbhai Gamdha and Mr Ashokbhai Gamdha with an objective of manufacturing of cotton bales and cotton seeds. Mr Rameshbhai Gamdha and Mr Ashokbhai Gamdha are also partners in Ishwar Oil Industries and Ishwar Oil Mill which are into manufacturing of cotton oil and cotton oil cake. JAI MAA: CRISIL Reaffirms 'D' Rating on INR20MM Cash Loan --------------------------------------------------------- CRISIL has been consistently following up with Jai Maa Jagdamba Flour Private Limited (JMJFPL) for obtaining information through letters and emails dated April 12, 2017, and May 04, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Jai Maa Jagdamba Flour Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Jai Maa Jagdamba Flour Private Limited is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D'. Set up as a proprietorship firm in 2003 by Mr. Krishna Murari Choudhary and reconstituted as a private limited company in 2004, JMJFPL processes wheat flour, maida, and suji at its mill in Dhanbad, Jharkhand, which has capacity of 300 tonne per day. JAINAM FAB: CARE Assigns B+ Rating to INR6.40cr LT Loan ------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Jainam Fab Private Limited (JFPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 6.40 CARE B+; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of JFPL is primarily constrained on account of its modest scale of operations with moderate profitability margins, moderate solvency and liquidity position and its presence in a highly fragmented and competitive textile industry. The rating is, further, constrained on account of project implantation risk associated with it and vulnerability of margins to fluctuation in raw material prices. The rating, however, derives strength from the experienced promoters with established marketing network and location advantage by virtue of being situated in textile cluster of Bhilwara, Rajasthan. The ability of the company to increase its scale of operations while maintaining/improving profitability along with efficient management of working capital and timely completion of the project would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weakness Modest scale of operations with moderate profitability margins The scale of operations of JFPL stood modest with low net worth base of INR2.18 crore as on March 31, 2017 which makes its operations highly susceptible to any business shock, thereby limiting its ability to absorb losses or financial exigencies. This also restricts its scale of operations, which remained at a low level with Total Operating Income (TOI) of INR13.68 crore as per provisional result of FY17. During FY17, TOI of the company has increased by 5.22% over FY16. During FY17, the profitability margins of the company stood moderate with PBILDT margin and PAT margin of 9.32% and 1.43% respectively in FY17. During FY17, PBILDT margin of the company has increased by 34 bps over FY16 owing to lower employee cost. With improvement in PBILDT margin, PAT margin of the company has improved by 35 bps during FY17 over FY16. During FY17, the GCA level of the company has also improved marginally and registered GCA of INR0.52 crore in FY17. Further, JFPL has achieved a turnover of INR3.00 crore in the Q1 of FY18. Moderate solvency position and liquidity position The capital structure of the company stood moderately leveraged with an overall gearing of 2.50 times as on March 31, 2017. The debt coverage indicators of the company stood moderate marked by total debt to GCA of 10.55 times as on March 31, 2017, deteriorated from 9.51 times as on March 31, 2016 owing to higher increase in debt level as against increase in GCA level. Interest coverage stood moderate at 1.89 times in FY17, improved from 1.85 times in FY16 mainly on account of higher increase in PBILDT as against increase in interest and finance cost. The liquidity position of the company stood moderate marked by 84% utilization of its working capital bank borrowings during last twelve months ended July 2017 and elongated operating cycle of 101 days in FY17. The operating cycle of the company stood elongated owing to higher inventory holding period. Due to it, the current ratio stood moderate at 1.30 times as on March 31, 2017, however, quick ratio stood below unity at 0.53 times as on March 31, 2017. Highly fragmented, competitive and seasonal industry with vulnerability of margins to fluctuation in raw material prices The Indian textile industry is highly fragmented in nature. The industry is characterized by a large number of small players due to the low entry barriers in the industry. The high degree of fragmentation also leads to stiff competition amongst the manufacturers. Smaller companies in general are more vulnerable to intense competition and have limited pricing flexibility, which constrains their profitability as well. Yarn is the main raw material used by JFPL to manufacture grey fabrics, finished fabrics. The price of key raw material has been volatile in nature and JFPL is exposed to the raw material price fluctuation risk due to high inventory holding period. Project implementation risk JFPL undertook a project for capacity expansion and has envisaged total project cost of INR4.20 crore towards the project to be funded through term loan of INR2.40 crore, share capital including premium of INR1.16 crore and remaining through unsecured loans from promoters and related parties. Due to it, the installed capacity of the company will increase by 50% as compared to the present capacity. Key Rating Strengths Experience promoters with established marketing network Mr. Paras Mal Bafna looks after overall functions of the company and has experience of around 4 decades in the industry. He is assisted by other directors. Mr. Archit Jain, Chartered Accountant, has experience of more than a decade in the industry and looks after production functions of the company. Mrs Pooja Bafna has an experience of more than a decade in the industry and looks after the marketing operations of the company whereas Mr Piyush Bafna (MBA) has an experience of 7 years and looks after sales & sampling functions of the company. Further, the directors are assisted by second tier management who helps in managing the day to day affairs of the company. Further, JFPL is also benefited from the established marketing network and has 11 agents in India out of which 4 are in Rajasthan, 5 are in Mumbai and 2 are in Bangalore. Location advantage by virtue of being situated in textile cluster of Bhilwara The main raw material of the company is yarn. The plant of the company is located at Bhilwara which is one of the largest textile clusters in India and majority of these industries are engaged in the manufacturing of cotton yarn accounting for nearly 40% of India's total cotton yarn production and nearly 50% of India's total polyester fabrics and suiting production. JFPL's presence in the textile manufacturing region results in benefit derived from cheap and easy availability of raw material, weaving as well as processing of grey fabrics at cheaper cost and low transportation and storage cost. Bhilwara (Rajasthan) based Jainam Fab Private Limited (JFPL) was incorporated in August 2009 by Mr. Paras Mal Bafna, Mr. Archit Jain, Mr. Piyush Bafna and Mrs. Pooja Bafna. JFPL is engaged in the business of manufacturing of grey Fabrics. JFPL uses synthetic yarn as raw material which is procured from traders located in Gujarat, Jammu Kashmir & Rajasthan for manufacturing of grey fabric and processing of finished fabrics gets done on job work basis from other process houses. The plant of the company has total installed capacity of 18.80 Lakh Meters Per Annum (LMPA) for manufacturing of grey fabrics and has utilized 86% of its installed capacity during FY17. The company is also engaged in the trading of grey and finished fabrics. It sells its product majorly in local market under brand name 'Jainam'. The company has total 26 looms out of which 10 are double sulzer looms as on March 2017. JAY PLAST: CRISIL Assigns B+ Rating to INR4MM Cash Loan ------------------------------------------------------- CRISIL has assigned 'CRISIL B+/Stable' rating to the long-term bank facilities of Jay Plast International (JPI). The rating reflects exposure to risks associated with completion of the on- going project and subsequent stabilization and ramp up in operations. These rating weaknesses are partially offset by extensive experience of the promoters. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 4 CRISIL B+/Stable Term Loan 3 CRISIL B+/Stable Key Rating Drivers & Detailed Description Weakness: * Risks associated with completion of the on-going project and subsequent stabilization and ramp up in operations: The firm is undergoing a capital expenditure of approximately INR4 crore towards setting up of its manufacturing unit with capacity of 275 tonnes per month. The firm is exposed to moderate project risk and risk associated with stabilization of operations. Strengths: * Extensive experience of the promoter: The two decade-long experience of the promoters in the packaging industry, and their keen grasp over local market dynamics, will continue to support the business risk profile. Outlook: Stable CRISIL believes JPI will continue to benefit from the extensive experience of its promoters over the medium term. The outlook may be revised to 'Positive' if earlier-than-expected stabilisation of plant operations, leads to higher than expected cash accruals. The outlook may be revised to 'Negative' if any delay in ramp-up of operations, along with low capacity utilisation, negatively impacts the cash flow. Incorporated in 2017, JPI is setting up manufacturing unit for HDPE, LDPE and PP woven bags. JODHPUR HEALTH: CRISIL Cuts Rating on INR27.68MM Loan to B- ----------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Jodhpur Health Care Private Limited (JHPL) to 'CRISIL B- /Stable' from 'CRISIL B/Stable', while reaffirming the short-term rating at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 0.2 CRISIL A4 (Reaffirmed) Overdraft 9.5 CRISIL B-/Stable (Downgraded from 'CRISIL B/Stable') Proposed Long Term 6.12 CRISIL B-/Stable (Downgraded Bank Loan Facility from 'CRISIL B/Stable') Term Loan 27.68 CRISIL B-/Stable (Downgraded from 'CRISIL B/Stable') The downgrade reflects weakened financial flexibility as a result of a decline in operating profitability to 15.50% in fiscal 2017 from 29.97% in fiscal 2016, primarily on account of increased revenue from government empanelment, which offers a lower margin. Consequently, cash accrual was subdued at around INR2.18 crore, insufficient to meet debt repayment obligation of INR7.18 crore, during the fiscal. The gap has been met through unsecured loans from promoters and increased dependence on the working capital limit, reflected in average bank limit utilisation of 88% over the six months through June 2017. Liquidity is likely to remain stretched over the near term as well, because cash accrual is expected at INR3.0-3.5 crore, vis-a-vis debt repayment obligation of INR6.06 crore, in fiscal 2018. However, liquidity is likely to be supported by promoter funding, which will remain a key rating sensitive factor over the medium term. Analytical Approach For arriving at the ratings, CRISIL has treated unsecured loans (INR15.82 crore as on March 31, 2017) extended by the promoters as neither debt nor equity, as the loans are interest-free and will remain in the business over the medium term. Key Rating Drivers & Detailed Description Weakness * Short track record and moderate scale of operations: The company commenced operations at its hospital in May 2014. The scale remains moderate, with 204 beds and estimated revenue of INR39.66 crore in fiscal 2017.The company is likely to remain exposed to significant competition on account of the initial phase of operations, and the scale of operations, though expected increase, will remain moderate over the medium term. * Geographic concentration in revenue: Operations are limited to Jodhpur, Rajasthan, rendering the hospital vulnerable to dynamics of a single market. The image-sensitive nature of the healthcare industry aggravates the geographic concentration risk. * Below-average financial risk profile: The total outside liabilities to tangible net worth ratio is high, estimated at 5.23 times on March 31, 2017, on account of sizeable term debt contracted to set up the hospital and negative accretion to reserves. The ratio is expected to improve with gradual repayment of the term loan and in the absence of major capital expenditure, but will remain high, over the medium term. Debt protection metrics are average: the interest coverage ratio was 1.55 times and the net cash accrual to total debt ratio 0.06 time, in fiscal 2017. Strengths * Extensive experience of the promoters in the healthcare segment, and benefits from a favourable location: The promoters have an experience of over three decades in the healthcare industry. Furthermore, the hospital is located in a densely populated area of Jodhpur, within a kilometre of the All India Institute of Medical Sciences, Jodhpur. Moreover, there are very few other speciality hospitals in the region. Outlook: Stable CRISIL believes JHPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if the financial risk profile, particularly liquidity, improves, driven by sizeable occupancy and profitability resulting in substantial cash accrual. The outlook may be revised to 'Negative' in case of significantly low ramp-up in operations, impacting the financial risk profile and debt- servicing ability. JHPL, incorporated in 2012, is promoted by Jodhpur-based Dr S L Agarwal, Mr. Shashikant Singhi, Mr. Navneet Agarwal, Ms Renu Singhi, Mr. M K M Shah, and Mr. Hari Singh Shekhawat. The company manages a 204-bed super-speciality hospital, Medipulse (neuro, cardiac, and orthopaedics), in Jodhpur. The hospital has 65 critical care beds, 8 modular operation theatres, a cardiac catheterisation laboratory, and offers radiology and imaging solutions, and pathology and emergency services. KAVITA EXIM: CARE Assigns B+ Rating to INR12cr LT Loan ------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of Kavita Exim Private Limited (KEPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12.00 CARE B+; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of KEPL is primarily constrained by its modest scale of operations, low profitability margins, leveraged capital structure and weak coverage indicators. The rating is further constrained by working capital intensive nature of operations, input price volatility risk posing threat to profitability and highly fragmented domestic industry with competition from other countries. The rating, however, draws comfort from experienced promoters and long track record of operations and favourable location of showroom. Going forward, the ability of the company to increase its scale of operations, improve the profitability margins, managing its working capital requirements while improving its capital structure shall be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operation The scale of operations has remained modest marked by a total operating income and gross cash accruals of INR61.46 crore and INR0.16 crore respectively during FY17 (FY refers to the period April 01 to March 31, based on provisional results). Further, the company's net worth base was relatively small at INR4.74 crore as on March 31, 2017. The small scale limits the company's financial flexibility in times of stress and deprives it from scale benefits. Low profitability margins, leveraged capital structure and weak coverage indicators The profitability margins of the company have remained on the lower side for the past three financial years i.e. FY14-FY16, owing to the trading nature of the business and intense market competition given the highly competitive nature of the industry. Interest cost has further restricted the net profitability of the firm. PBILDT and PAT margins stood at 3.12% and 0.19% respectively for FY17. The capital structure of the firm stood leveraged for the past three financial years mainly on account of high dependence on external borrowings to meet its working capital requirements coupled with low net worth base. Overall gearing ratios stood at 2.57x as on March 31, 2017 as against 3.13x as on March 13, 2016 mainly on account of repayment of unsecured loans coupled with lower utilization of working capital limits as on balance sheet date. Further, the debt coverage indicators stood weak due to low profitability. Interest coverage and total debt to GCA stood at 1.13x and 77.78x respectively for FY17 as against 1.13x and 88.48x respectively for FY16. Working capital intensive nature of operation The operations of the company stood working capital intensive in nature marked by an average operating cycle of 108 days for FY17. The company operates its business through 3 outlets located at Gandhinagar, Delhi. KEPL, Being a trader, it firm needs to maintain adequate inventories in form of traded goods by way of diverse product variety in accordance with fashion trends to meet immediate demand of customer . The company allows an average credit period of around 20-25 days to its customers. Further, its supplier allows a credit period of around a month. As majority of funds blocked in inventory the working capital requirements of the company are generally on the higher side resulting into almost fully utilization of the average working capital borrowings for the past 12 months ended June 2017. Highly fragmented nature of industry coupled with intense competition The Indian textiles industry, currently estimated at around US$ 108 billion, is expected to reach US$ 223 billion by 2021. The industry is the second largest employer after agriculture, providing employment to over 45 million people directly and 60 million people indirectly. The Indian Textile Industry contributes approximately 5 per cent to India's Gross Domestic Product (GDP), and 14 per cent to overall Index of Industrial Production (IIP). Key Rating Strengths Experienced promoters and long track record of operations Mr. Pankaj Jain has the major shareholding in the company and is actively involved in day-to-day operations of the business. Both the directors are graduates by qualification and have an experience of more than two and half decades in textile trading industry through their association with this entity and Kavita Overseas and Sonia Enterprises. The overall operations of the company are taken care by Mr.Ashu Jain and Mr. Pankaj Jain. Favorable location of showroom KEPL has its 3 outlets located in Gandhi Nagar, Delhi. Gandhi Nagar is a middle-income commercial-cum-residential area in East Delhi, which is Asia's biggest readymade garments/textile market. The showrooms are located in prime area which ensures the higher probability of footfall in its showroom, thereby, ensuring a good customer base for the company. Delhi based KEPL was incorporated by in October 2013 Mr. Ashu Jain and his family members. The company has succeeded erstwhile business operations of two proprietorship entities - Kavita Overseas and Sonia Enterprises, which operated for more than 2 decades. KEPL is engaged in trading of fabrics (mostly cotton based). Also, the company is engaged in plastic printing of clothes which is mainly done through job work. KEPL procures the fabrics from manufacturers located across India, predominantly from Mumbai. The company primarily caters to wholesalers located Delhi, Punjab, and Rajasthan. The company operates its business through its three showrooms, named "Kavita Exim" located Gandhi Nagar, Delhi. KENZ INN: CRISIL Lowers Rating on INR150MM Term Loan to 'B' ----------------------------------------------------------- CRISIL has been consistently following up with Kenz Inn Commercial Complex Limited (KICCL) for obtaining information through letters and emails dated May 24, 2017, and June 07, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Term Loan 150 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB-/Negative') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Kenz Inn Commercial Complex Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Kenz Inn Commercial Complex Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable'. KICCL was incorporated for undertaking a commercial and residential real estate project in Thrissur, Kerala. The company is constructing Phase 1 of the project, which involves a retail mall, multiplex, and office premises, at a cost of INR2.07 billion. KESHAV ENTERPRISES: CRISIL Reaffirms 'D' Rating on INR14MM Loan --------------------------------------------------------------- CRISIL has been consistently following up with Keshav Enterprises (KE) for obtaining information through letters and emails dated May 24, 2017 and June 7, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Letter of Credit 14 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Keshav Enterprises. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Keshav Enterprises is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D/CRISIL D'. KE was set up in 2006 as a proprietorship firm by Mr. Vikrant Prajapati. The firm is engaged in ship-breaking and trading of scrap metal. It started operations with trading of scrap metal procured from other ship-breakers; in 2012-13, it procured its first ship for breaking. NAACHIYARS: CRISIL Lowers Rating on INR6MM Long Term Loan to B -------------------------------------------------------------- CRISIL has been consistently following up with Naachiyars (NC) for obtaining information through letters and emails dated January 27, 2017, and March 6, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB-/Stable') Long Term Loan 6 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB-/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Naachiyars. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Naachiyars is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable'. Established as a partnership firm in 2015, Naachiyars (NC) is engaged in the retailing of readymade garments for men, women and children with one retail outlet in Madurai (Tamil Nadu). The firm started commercial operations in August 2015. The firm is promoted and managed by Mr. N Balasubramaniam. PRAKASAM HEAVY: CRISIL Assigns 'B' Rating to INR5.0MM Loan ---------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the bank loan facilities of Prakasam Heavy Engineering Private Limited (PHEPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 22.5 CRISIL A4 Overdraft 5.0 CRISIL B/Stable The ratings reflect a limited track record in rural electrification work and high dependence on Vishwanath Project Limited (VPL) for revenue. The ratings also factor in highly working capital intensive operations and weak liquidity because of significant bank limit utilisation. These weaknesses are partially offset by the experience of the promoters in electrical contract work, and a healthy order book, providing medium-term revenue visibility. Key Rating Drivers & Detailed Description Weaknesses * Working capital-intensive operations: Gross current assets were at 300 days, led by receivables of 287 days, as on March 31, 2017. The working capital requirement is partly funded through payables. Continued support from suppliers remains critical for efficient working capital management. * Limited track record of rural electrification work: The company has a track record of only 15 months in rural electrification, mainly as a sub-contractor for VPL. Strengths * Healthy order book in hand: The current order book of INR108.00 crore, to be executed by December 2018, provides medium-term revenue visibility. Outlook: Stable CRISIL believes PHEPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if revenue increases significantly, and profitability and capital structure remain healthy. The outlook may be revised to 'Negative' if low cash accrual, large, debt- funded capital expenditure, or a stretched working capital cycle weakens the financial risk profile. Established in February 2010, PHEPL is promoted by Mr. Anil Kumar and his family members. The company started operations as an electrode manufacturer but subsequently became an electrical contractor for carrying out projects for various state governments and local authorities. For fiscal 2017, provisional net profit was INR1.93 crore on net sales of INR141.32 crore; net profit was INR49 lakh on net sales of INR137.21 crore for fiscal 2016. R G SCIENTIFIC: CRISIL Reaffirms B+ Rating on INR10MM Loan ---------------------------------------------------------- CRISIL has reaffirmed its long-term rating on the bank facilities of R G Scientific Enterprises Private Limited (RGSL) at 'CRISIL B+/Stable', and has assigned short term rating at CRISIL A4. CRISIL had, on August 4, 2017, downgraded the rating at 'CRISIL B+/Stable' and assigned 'issuer not co-operating' as RGSL had not provided the requisite information. The company has now shared the requisite information, enabling CRISIL to assign ratings to its bank facilities. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 10 CRISIL B+/Stable (Reaffirmed; Removed from 'Issuer Not Cooperating') Overdraft 3 CRISIL A4 (Assigned) Overdraft 4.5 CRISIL B+/Stable (Reaffirmed; Removed from 'Issuer Not Cooperating') Term Loan 5.7 CRISIL B+/Stable (Reaffirmed; Removed from 'Issuer Not Cooperating') Working Capital 1.8 CRISIL B+/Stable (Reaffirmed; Term Loan Removed from 'Issuer Not Cooperating') The rating continues to reflect exposure to intense competition in the healthcare industry and decline in networth constraining the financial flexibility. These weaknesses are partially offset by healthy market position in the super specialty urology segment and average financial risk profile because of moderate total outside liabilities to tangible networth ratio. Key Rating Drivers & Detailed Description Weakness * Decline in networth and constrained financial flexibility: During fiscal 2017 on account of net losses of INR5.7 crore the networth declined to INR50.0 crore as on March 31, 2017 constraining the financial flexibility, reflected in increased reliance on working capital limits. * Exposure to intense competition in the healthcare industry: RGSL faces intense competition from other super specialty treatment hospitals in the industry. Additionally, since the company specialises only in few areas, competition from multi- specialty hospitals further reduces the pricing flexibility and growth potential. Strengths * Healthy market position in the super specialty urology segment: RGSL is a leading chain of super specialty hospitals for urology and laparoscopy in India. It has a chain of facilities spread across India, with current combined capacity of over 500 beds and strong team of qualified medical professionals. * Average financial risk profile: The financial risk profile is supported by moderate total outside liabilities to tangible networth ratio of 1.61 times as on March 31, 2017, however it has increased over the historical levels. The debt protections metrics have deteriorated to interest coverage ratio of 1.3 times and net cash accrual to total debt ratio of 0.07 time for fiscal 2017. Outlook: Stable CRISIL believes RGSL will maintain its business risk profile supported by its established market position in the urology segment. The outlook may be revised to 'Positive' in case of substantial and sustained increase in revenue and profitability margins led to more-than-expected net cash accrual, strengthening the financial risk profile, particularly liquidity, over the medium term. Conversely, the outlook may be revised to 'Negative' if revenue or margin declines or if larger-than-expected, debt- funded capital expenditure weakens the financial risk profile. Established in 1986 by Dr Bhimsen Bansal, RGSL runs 15 super- specialty centres (RG Stone Urology & Laproscopy Hospitals) in lithotripsy, endo-urology, and laser treatment for urological problems. RADHIKA JEWELS: CRISIL Lowers Rating on INR15MM Cash Loan to B -------------------------------------------------------------- CRISIL has been consistently following up with Radhika Jewels (RJ) for obtaining information through letters and emails dated January 20, 2017, and February 10, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 15 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB-/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Radhika Jewels. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Radhika Jewels is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable'. RJ was established in 2007 by Mr. Hiren Patadia and his family members. The firm manufactures and retails diamond, gold, and silver jewellery. It has a jewellery mall in Vadodara. RAVI TEJA: CARE Assigns B Rating to Issuer Not Cooperating ---------------------------------------------------------- CARE has been seeking information from Ravi Teja Textiles to monitor the rating(s) vide e-mail communications dated May 24, 2017, May 31, 2017, June 5, 2017 and numerous phone calls. However, despite CARE's repeated requests, the firm has not provided the requisite information for monitoring the ratings. In the absence of minimum information required for the purpose of rating, CARE is unable to express opinion on the rating. In line with the extant SEBI guidelines CARE's rating on Ravi Teja Textiles bank facilities will now be denoted as CARE B; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the rating(s). Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 4.82 CARE B; ISSUER NOT COOPERATING Detailed description of the key rating drivers At the time of last rating in May 26, 2016 the following were the rating strengths and weaknessess: Key Rating weakness Stressed financial risk profile The overall gearing of the firm, although improved from 5.02x as on March 31, 2014 to 4.56x as on March 31, 2015 on account of accretion of profits to reserves, remained stressed. High dependency on leveraged capital and deterioration in cash accrual levels has led to deterioration of already stressed debt coverage indicators, total debt to GCA and interest coverage. Total debt to GCA has deteriorated from 11.34x during FY14 to 13.96 during FY15 while interest coverage ratio declined from 2.09x during FY14 to 1.71x during FY15. The working capital cycle of the firm has been stressed during the review period on account of high inventory period. The firm being a cloth and textile showroom, it has to maintain specific level of inventory at any given point of time during the year resulting in stressed inventory period. Also, the additional showroom added in Piduguralla has increased the inventory further from 148 days during FY14 to 178 days during FY15. The collection period pertain to credit sales made to known customers and relatives. Relatively small scale of operations RTT was established in 1990 and has track record of more than two decades. However, the scale of operations remains relatively small with total operating income at INR12.60 crore during FY15. Furthermore, the low net worth base of INR0.80 crore as on March 31, 2015 restricts the firm's flexibility in the time of distress. Fragmented nature of Industry and intense competition among numerous unorganized players Retail cloth and textile industry is predominantly unorganized with the presence of many small participants. The industry is characterized by low entry barriers due to minimal capital requirements resulting in proliferation of large number of small players, spread across the country. Need to extend discounts to counter the competitors have put downward pressure on already stressed margins of the firms operating in the industry which derive their revenue through trading activity. Constitution of the entity as a proprietorship firm Constitution as a proprietorship firm has the inherent risk of possibility of withdrawal of the proprietors' capital at the time of personal contingency which can adversely affect its capital structure. This was reflected in the balance sheet as on March 31, 2015 when the capital to the tune of INR0.03 crore was withdrawn to meet personal contingency. Further, proprietorship firms have restricted access to external borrowings as credit worthiness of the partners would be key factors affecting credit decision for the lenders. Key Rating strengths Experienced proprietor with established track record of the firm RTT was established in 1990 by Mr. D. Sarveswara Rao who has more than four decades of experience in retail cloth trading industry. The firm has established track of more than two decades in the industry and over the course of business, the proprietor has established healthy relationship with key suppliers and customers facilitating the smooth functioning of business. Healthy growth in total operating income albeit declining profitability margins The total operating income of the firm has increased from INR 8.46 crore during FY14 to INR 12.60 crore during FY15 registering Y-o-Y growth of 49% on account of increased spending of people on clothes. The profitability margins of the firm have been fluctuating and remained low during the review period (FY13-FY15) on account of trading nature of operations. Furthermore, the fortunes of the firm are tied up to level of disposable income with public. The PBILDT margin of the firm deteriorated from 7.37% during FY14 to 5.64% during FY15 on account of increase in the employee cost at the back of additional showroom in Piduguralla, A.P. Furthermore, PAT margin also deteriorated from 1.49% during FY14 to 1.06% during FY15 on account of lower PBILDT margin coupled with increased interest cost. The firm has achieved the sales of about INR15.00 crore with PAT of about INR 0.17 crore during FY16 (Provisional). Ravi Teja Textiles (RTT) was established as a proprietorship concern by Mr. D. Sarveswara Rao in the year 1990. The firm is engaged in the trading of sarees and ladies dress materials. The firm has two showrooms, one located in Ongole while the other located in Piduguralla, Andhra Pradesh. While the showroom in Ongole has been operating since 1990, the new showroom in Piduguralla was started during the end of FY14. RRB ENERGY: CARE Lowers Rating on INR95cr LT Loan to 'C' -------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of RRB Energy Limited, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term bank Facilities-Fund Based 95.00 CARE C; Stable Revised from CARE D Long term/Short Term bank facilities- Non-fund based 40.00 CARE C; Stable / CARE A4 Detailed Rationale & Key Rating Drivers The revision in the ratings of RRB Energy Limited takes into account improvement in the debt servicing track record of the company. The ratings continue to be constrained by RRBEL's weak financial profile. However, the ratings weakness is partially offset by the promoters' experience and moderate order book. Going forward, RRBEL's ability to increase profitability with scaling up of operations and effectively managing its working capital would be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Weak financial risk profile The company has been grappling with many issues for the past few years which have impacted its financial position. Owing to the weak financial risk profile, and unavailability of the working capital funding, RREBL scale of operations were continuously declining with loss of INR 29.03 cr during FY16 and loss of INR 43.17 cr during FY17, resulting in erosion of net-worth and tight liquidity position. Key Rating strengths Improvement in debt servicing track record post revival in order book In FY17, the company received few large orders with customer advance of INR 39 cr which is being used to improve its liquidity position and payoff the outstanding dues to its bankers. The company has received two large orders of INR 325 cr and INR 747 cr to be executed in FY18 and FY19. During Q1FY18, the company has already executed orders valued at INR 40 cr. Experienced promoters with established track record RRBEL was incorporated in 1987, as a JV between Vestas Wind Systems A/S, Denmark (VWS) and Mr Rakesh Bakshi. Mr Bakshi has an experience of more than 30 years in the similar industry with titles such as "Green Maharaja" being awarded to him for his exemplary work in the field of renewable energy. He was also honoured with "Padma Shri" in 1991 by the government of India. He has actively involved in the promotion of renewable energy technology. The company has been involved in providing infrastructure services to the projects and also take care of the O&M part. There are three models under which they provide the services namely, Turnkey (takes care of overall project), Equipment supply and Equipment supply with erection and commissioning. Incorporated in 1987, RRB Energy Limited (RRBEL, formerly Vestas RRB India Limited) engaged in the business of manufacture, erection and commissioning of Wind Electric Generators (WEGs) and also provides after-sales services and maintenance services for WEGs. It currently manufactures WEGs with capacity of 225KW, 500KW and 600 KW. The company is ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certified and has production plants in Tamil Nadu, Maharashtra, Karnataka, Gujarat and Rajasthan. It also has a government approved R&D facility which develops higher MW capacity turbines. The company has received few orders namely of Binny Ltd. (for INR 325 cr) and Enviromax Pellets (for INR 747 cr) for which they have received customer advances of INR 39 cr. as on March 31, 2017. SAGAR BUSINESS: CRISIL Lowers Rating on INR18MM Cash Loan to B -------------------------------------------------------------- CRISIL has been consistently following up with Sagar Business Private Limited (SBPL) for obtaining information through letters and emails dated May 24, 2017 and June 07, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 18 CRISIL B/Stable (Issuer Not Cooperating; Downgraded from 'CRISIL BB-/Stable') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Sagar Business Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Sagar Business Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B rating category or lower. Based on the last available information, CRISIL has downgraded the rating to 'CRISIL B/Stable'. SBPL was set up in 1983, as a private limited company by Mr.Sunil Kishorepuria and family. It trades in iron and steel product in Odisha. The company is an authorised exclusive project distributor for TSL in Odisha for its Tiscon brand of thermomechanically treated bars. In 2011-12 (refers to financial year, April 1 to March 31), the company was appointed as exclusive business development partner for Structura (the hollow steel section product of TSL). The company was also appointed as a Channel partner of Tata Wiron (Tata Global Wires Division) and as the Channel Partner of Philips India Ltd and offers lighting solutions to its customers. SANGAM RICE: CARE Assigns 'B' Rating to INR5.50cr LT Loan --------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Sangam Rice Private Limited (SRP), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 5.50 CARE B; Stable Assigned Short-term Bank Facilities 11.00 CARE A4 Assigned Detailed Rationale & Key Rating Drivers The ratings assigned to the bank facilities of SRP are constrained by its small and fluctuating scale of operations with low profitability margins, leveraged capital structure, weak debt coverage indicators and elongated operating cycle. The ratings are further constrained by susceptibility to fluctuation in raw material prices and the company's presence in fragmented nature of industry coupled with high level of government regulation. The ratings, however, derive strength from experienced management along with established track record of entity and location advantages. Going forward, the ability of the company to scale up its operations while improving its profitability margin and solvency position would remain its key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small and fluctuating scale of operations with low profitability margins The company's scale of operations has remained small marked by total operating income (TOI) of INR 45.86 crore in FY17 (refers to the period April 1 to March 31) and tangible net worth of INR1.60 crore as on March 31, 2017. The small scale limits the company's financial flexibility in times of stress and deprives it from scale benefits. Furthermore, SRP witnessed fluctuating scale of operations in FY15-FY17 period. The total operating income of SRP had declined from INR31.71 crore to INR31.71 crore in FY16, mainly on account of lower quantity sold owing to lesser demand received from customers. The PBILDT margin and PAT margin of the company stood low at 4.57% and 0.01%, respectively, in FY17. High gearing and weak debt coverage indicators SRP has leveraged capital structure with overall gearing ratio of 12.77x as on March 31, 2017, mainly on account of company's high reliance on bank borrowings to fund working capital requirements. Additionally, total debt to GCA stood weak at 109.23x for FY17 and the same has deteriorated from 19.81x for FY16 due to increase in debt level of the company coupled with decline in gross cash accruals of the company. The interest coverage ratio of SRP stood weak at 1.23x for FY17. Elongated operating cycle: The average operating cycle of the company elongated at 144 days for FY17 (125 days for FY16). Owing to the seasonality of paddy harvest, entities engaged in the rice processing industry have to accumulate substantial amount of raw material inventory thereby elongating inventory period. The company offers a credit period of upto 15 days to its customers. However, the company receives a credit period of upto one month from its suppliers. Susceptibility to fluctuation in raw material prices and monsoon dependent operations: Agro-based industry is characterized by its seasonality, as it is dependent on the availability of raw materials, which further varies with different harvesting periods. The price of rice moves in tandem with the prices of paddy. Any sudden spurt in the raw material prices may not be passed on to customers completely owing to company's presence in highly competitive industry. Fragmented nature of industry coupled with high level of government regulation: The commodity nature of the product makes the industry highly fragmented with numerous players operating in the unorganized sector with very less product differentiation. Furthermore, the raw material (paddy) prices are regulated by government to safeguard the interest of farmers, which in turn limits the bargaining power of the rice millers. Key Rating Strengths Experience directors and established track record of entity: The company is currently being managed by Mr Sanjiv Kumar. Mr Sanjiv Kumar has an experience of nearly two decades through his association with SRP and other regional entity, namely, Love Kush Foods Private Limited which is engaged in similar business. This has aided the company in having established relationship with customers and suppliers. Location advantages: SRP is mainly engaged in processing of paddy and milling of rice. The main raw material (Paddy) is majorly procured directly from local grain markets located in Punjab. The company's processing facility is situated at Patran, Patiala, Punjab, which is one of the largest producers of paddy in India. Its presence in the region gives additional advantage over the competitors in terms of easy availability of the raw material as well as favorable pricing terms. Sangam Rice Private Limited (SRP) was incorporated in 2007 as a Private Limited company and is currently being managed by Mr Sanjiv Kumar and Mrs Shubh Lata as its directors. The company is engaged in the processing of paddy and milling of rice at its manufacturing facility located at Patran, Punjab, with an installed capacity of 280000 quintal of paddy per annum as on March 31, 2017. The company is also engaged in the trading of guar seed and rice. SATYAM GREEN: CRISIL Reaffirms 'D' Rating on INR6MM Term Loan ------------------------------------------------------------- CRISIL has been consistently following up with Satyam Green Energy (SGE) for obtaining information through letters and emails dated May 24, 2017 and Jun 9, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 6 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Satyam Green Energy. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Satyam Green Energy is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D'. SGE, a proprietorship firm, was promoted by Mr. Sanjay Joshi for setting up a solar power project of 1.1-megawatt in Solapur, Maharashtra. SHREE SITA: CARE Assigns B+ Rating to INR6.0cr LT Loan ------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of Shree Sita Ispat and Power Private Limited (SSIPPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 6.00 CARE B+; Stable Assigned Detailed Rationale and key rating drivers The rating assigned to the bank facilities of SSIPPL is constrained by its small scale of operations with low profit margins, volatility in raw material prices, working capital intensive nature of business, moderate capital structure with moderate debt coverage indicators and intensely competitive industry with sluggish growth in end user industries and cyclical industry. The rating, however, derives strength from the experienced promoters with long track record of operations. The ability to increase its scale of operations with improvement in profit margins and effective management of working capital will be the key ratings sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Small scale of operations with low profit margins: The scale of operations of the company remained small marked by total operating income of INR29.92 crore (Rs.38.58 crore in FY15) with a PAT of INR0.25 crore (Rs.0.66 crore in FY15) in FY16. Furthermore, the total capital employed also remained low at INR19.33 crore as on March 31, 2016. The company has booked revenue of INR34.00 crore in FY17 as maintained by the management.Furthermore, the profit margins of the company remained low marked by PBILDT margin of 6.35% and PAT margin of 0.84% in FY16. Volatility in raw material prices: SSIPPL does not have backward integration for its basic raw-materials (iron ore and coal) and it procures the same from open market at spot prices. Since the raw-material is the major cost driver and the prices of which are volatile in nature, the profitability of the company is susceptible to fluctuation in raw-material prices. Working capital intensive nature of business: SSIPPL is into manufacturing of iron and steel products. SSIPPL has to maintain a large quantity of raw material inventory to mitigate the raw material price fluctuations risk and smooth running of its production process. Accordingly the average inventory period of the company remained on around two month during last three years. Further, the company allows credit of about four months to its clients which also resulted into working capital intensive nature of its operations. However, it receives credit of about a month from suppliers due to its long presence in the industry, mitigated the working capital intensity to a certain extent. Accordingly, the average fund based bank limit utilization remained on the higher side at about 80%during last twelve months ending on July 31, 2017. Moderate capital structure with moderate debt coverage indicators: The capital structure of the company remained moderate marked by debt equity and overall gearing ratios of 0.70x and 1.04x respectively as on March 31, 2016. The debt coverage indicators of the company also remained moderate marked by interest coverage of 2.99x and total debt to CGA of 10.86x in FY16. Intensely competitive industry with sluggish growth in end user industries and cyclical industry: SSIPPL is engaged in the manufacturing of iron and steel products which is primarily dominated by large players and characterized by high fragmentation and competition due to the presence of numerous players in India owing to relatively low entry barriers. High competitive pressure limits the pricing flexibility of the industry participants which induces pressure on profitability. The fortunes of companies like SSIPPL from the iron & steel industry are heavily dependent on the automotive, engineering and infrastructure industries. 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 may lead to decline in demand of steel& alloys. Furthermore, all these industries are susceptible to economic scenarios and are cyclical in nature. Key Rating Strengths Experienced promoters with long track record of operations: SSIPPL is into manufacturing of sponge iron since 2004 and thus has more than a decade of track record of operations. Being in the same line of business since long period, the promoters have built up established relationship with its clients and the company is deriving benefits out of this. Mr. Manoj Agrawal (aged 42 years), has around 15 years of experience in steel industry, looks after the day to day operations of the company. He is supported by other director Mr. Sanjay Agarwal (aged, 37 years) who also has over a decade of experience in this line of business along with a team of experienced professional. SSIPPL was incorporated in April 2004 and was taken over in January 2008 by the Agarwal family of Raipur Chhattisgarh. The company is currently managed by the two directors Mr. Sanjay Agrawal and Manoj Agarwal. The company has been engaged in manufacturing of sponge iron at its plant located at Raipur, Chhattisgarh with aggregate installed capacity of 30000 MTPA. SHRI PAHARIMATA: CRISIL Reaffirms B- Rating on INR5MM Cash Loan --------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facilities of Shri Paharimata Cold Storage Private Limited (SPCSPL) at 'CRISIL B-/Stable'. The rating continues to reflect a weak financial risk profile because of a small networth and high gearing, and susceptibility to regulatory changes and to intense competition in the cold storage industry in West Bengal. These weaknesses are partially offset by the extensive industry experience of the promoters. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL B-/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 0.7 CRISIL B-/Stable (Reaffirmed) Rupee Term Loan 1.9 CRISIL B-/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: A small networth and high gearing of INR1.9 crore and 6.25 times, respectively, as on March 31, 2017 (Rs 1.8 crore and 6.39 times, respectively, as on March 31, 2016), constrain the financial risk profile. Muted accretion to reserves should keep the networth small, though gearing may improve with gradual repayment of term debt. * Susceptibility to regulatory changes and to intense competition in the cold storage industry in West Bengal: The potato cold storage industry in West Bengal is regulated by the West Bengal Cold Storage Association. Rental rates are fixed by the state's department of agricultural marketing. The fixed rental limits players' ability to earn profit based on their strengths and geographical advantages. Furthermore, the industry is highly fragmented, with the largest player having a market share of less than 0.5%. This further limits bargaining power, and forces players to offer discounts to ensure healthy utilisation of capacity. Strengths * Extensive industry experience of the promoters: The promoters have an experience of a decade in trading in potato and in the cold storage industry. The presence in the potato storage segment enables healthy utilisation of storage capacity. Storage facilities are provided to 300 farmers and traders and the capacity has been entirely utilised during the past three potato seasons. Outlook: Stable CRISIL believes SPCSPL will continue to benefit from the extensive industry experience of its promoters. The outlook may be revised to 'Positive' if the company efficiently manages farmer credit financing, and significantly scales up operations and improves profitability, leading to better liquidity. The outlook may be revised to 'Negative' in case of pressure on liquidity because of delays in repayment by farmers, decline in cash accrual, or large, debt-funded capital expenditure. SPCSPL, incorporated in 1972, is owned by the West Bengal-based Dandapat family, and its operations are managed by Mr. Anathbandhu Ghosh. The company provides cold storage services to potato farmers and traders. SOMA ISOLUX: CARE Lowers Rating on INR1,216.96cr LT Loan to D ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Soma Isolux Kishangarh - Beawar Tollway P Ltd (SKITL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 1,216.96 CARE D Revised Facilities from CARE BB- Detailed Rationale & Key Rating Drivers The revision in the ratings of SKITL takes into account the delay in repayment of its debt obligations during Q2FY18 (refers to the period July 1 to September 30). The delays were largely attributable to lower vehicular growth than anticipated vis-a-vis high debt servicing. Going forward, the company's ability to service its debt obligations in a timely manner with improvement in vehicular traffic and average daily toll collection shall be the key rating sensitivities. Detailed description of the key rating drivers Key Rating Weaknesses Delays in debt servicing: The company has delayed in repayment of interest in July 2017 on account of cash flow mismatch due to lower toll collection against relatively high debt obligations. On account of lower toll collection and delay in receipt of claim from the authority, the liquidity position of the company remained stretched. Exposure to O&M risk, traffic fluctuations: The O&M with respect to the routine maintenance and the periodic maintenance shall be carried out by the JV of Roadis (owned by Canadian Pension Fund Managers - Public Sector Pension Investment Board (PSPIB)) and Soma Enterprise Ltd (SEL). Since the project highway comprises commercial vehicles (both light and heavy commercial vehicles) in majority, the O&M assumes utmost importance. In absence of any provisions for appropriation of funds towards the major maintenance, the operational cash flows of that particular year may remain stressed. The company thus remains exposed to increase in operations and maintenance expenses. Further any deterioration in vehicular growth may adversely impact company's revenue and profitability which may further constrain company's liquidity. Key Rating Strengths Long track record of promoters: Both the JV partners Roadis and SEL have considerable experience in developing road projects. Roadis is a company with significant experience in highway concessions and is owned by one of the largest Canadian Pension Fund Managers - PSPIB. It was established by the Canadian Parliament under the Public Sector Investment Promotion Board Act to invest the employer and employee net contributions received since April 2000 from the pension plans of the Canadian Federal Public Service. It currently develops and operates a significant portfolio of projects with 1610 km of highway under concession. SEL has significant experience in diverse sectors like Power, Railways, Irrigation, Tunneling, and Urban Infrastructure apart from Highway (BOT) projects which is the core activity of the company. Some of the major projects of SEL include construction of a new four lane Nellore by-pass on NH 5, four-lane elevated highway on the Bangalore-Hosur Section of NH-7, four-laning of Pimpalgaon-Dhule Section of NH-3, four-laning of divided carriageway on NH-7 at Adilabad, and construction of new four lane 19 km elevated highway from Chennai Port to Maduravoyal section of NH-4. SIKTL is a special purpose vehicle (SPV) joint venture promoted by Roadis (owned by Canadian Pension Fund Managers - PSPIB) and Soma Enterprise Ltd (SEL). The SPV was formed to undertake the development and operation of a road project awarded by National Highway Authority of India (NHAI- The Authority). The project was awarded to SIKTL based on its highest bid towards revenue sharing of 2% (after 151 days from COD) with a 1% increase in this revenue share every year to the authority. SKITL received provisional completion certificate (PCC) in April 2015 and the project highway's commercial operations commenced from April 28, 2015 for six laning of Kishangarh-Ajmer-Beawar section of NH-8 (from existing two lane) in the State of Rajasthan on DBFOT (toll) basis. SWAGAT HOSPITALS: CRISIL Reaffirms B- Rating on INR25MM Term Loan ----------------------------------------------------------------- CRISIL has reaffirmed its rating on the long-term bank facility of Swagat Hospitals Private Limited (SHPL) at 'CRISIL B-/Stable'. The rating reflects SHPL's weak financial risk profile marked by high gearing and subdued debt protection metrics, stretched liquidity due to the stabilisation phase and sub-optimum occupancy at its new unit on account of initial year of operations. These rating weaknesses are partially offset by the extensive experience of SHPL's promoters in the healthcare sector. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 25 CRISIL B-/Stable (Reaffirmed) Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: The weak financial risk profile of the Company is marked by continued decline in net worth on account of huge losses incurred in fiscal 2016 and fiscal 2017. The capital structure of SHPL is highly leveraged with a gearing of around 7.81 times as on March 31, 2016, which is estimated to deteriorate further in fiscal 2017. The debt protection metrics too are expected to remain subdued on account of substantial interest outgo on the term loan. * Stretch in liquidity: SHPL is expected to generate cash accruals of INR0.61 Crore in fiscal 2017 which would be inadequate against the repayment obligations of INR0.8 Crore. The net cash accruals is expected to increase to around INR1.50-3.0 Crore over the medium term backed by increase in operating profitability. Strengths * Extensive experience of promoters in the healthcare sector: SHPL is promoted by Dr. Subhash Khanna, a highly qualified and reputed surgeon having an experience of over three decades in the healthcare sector. The extensive experience of the promoter and his team is expected to benefit SHPL over the medium term by supporting its business risk profile in terms of attracting more patients from all over Guwahati and neighboring districts. Outlook: Stable CRISIL believes SHPL will continue to benefit over the medium term from the extensive industry experience of promoters. The outlook may be revised to 'Positive' if there is a substantial and sustained increase in the scale and cash accruals, most likely driven by higher than-expected occupancy levels, both at SSSSI and SESRI leading to better accruals and improved liquidity. Conversely, the outlook may be revised to if decrease in occupancy or profitability, or stretch in working capital management, constrains the financial risk profile particularly liquidity. SHPL, based in Guwahati was set up in 1999 by Dr. Subhash Khanna. The company has set up a 60-bed hospital, Swagat Endolaproscopic Surgical Research Institute (SESRI), in Shantipur, Guwahati and a 100-bed super speciality hospital, Swagat Super Speciality Surggical Institute (SSSSI), in Maligaon. TRIUMPH AUTO: CRISIL Reaffirms 'B' Rating on INR6.75MM Loan ----------------------------------------------------------- CRISIL has been consistently following up with Triumph Auto Parts Distributors Private Limited (TADPL) for obtaining information through letters and emails dated May 24, 2017 and June 9, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Electronic Dealer 6.75 CRISIL B/Stable (Issuer Not Financing Scheme Cooperating; Rating (e-DFS) Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Triumph Auto Parts Distributors Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Triumph Auto Parts Distributors Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable'. Incorporated in 2004, TADPL is an authorised distributor of spare parts of TML's commercial vehicles (buses, trucks, and Tata Ace) in Northern Haryana. TADPL is promoted by Mr. Manu Gupta and Mr. Naresh Gupta. UMA KRAFTPAPER: CRISIL Reaffirms 'B' Rating on INR8.25MM Loan ------------------------------------------------------------- CRISIL has been consistently following up with UMA Kraftpaper Private Limited (UKPPL) for obtaining information through letters and emails dated May 25, 2017, and July 12, 2017, among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 1.75 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) Term Loan 8.25 CRISIL B/Stable (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of UMA Kraftpaper Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for UMA Kraftpaper Private Limited is consistent with 'Scenario 3' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BBB rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL B/Stable'. Incorporated in 2013, UKPPL is promoted by Mahendrakumar Patel and family. UKPPL has set-up a plant for manufacturing of kraft paper at Palanpur, Gujarat, with processing capacity of 30,000 tonne per annum. The promoters have two decades of experience in the paper industry. UNITED MACHINERY: CARE Reaffirms B+ Rating on INR3.0cr LT Loan -------------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of United Machinery & Appliances (UMA), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 3.00 CARE B+; Stable Suspension revoked and reaffirmed Short term Bank Facilities 2.00 CARE A4 Suspension revoked and reaffirmed Detailed Rationale & Key Rating Drivers The ratings assigned to the bank facilities of UMA continue to be constrained by its partnership nature of constitution, small scale of operation, working capital intensive nature of business, volatility in raw material and finished goods prices and highly competitive & fragmented nature of industry. The ratings, however, continue to draw comfort from long & established track record and vast experience of partners in manufacturing DG sets, moderate order book position & impressive client profile and powered by leading brand of engines "Perkins & Greaves". Going forward, the ability of the firm to increase its scale of operation and improve profitability margins and ability to manage working capital effectively would be the key rating consideration. Detailed description of the key rating drivers Key Rating Weaknesses Partnership nature of constitution: UMA, being a partnership firm, is exposed to inherent risk of the partner's capital being withdrawn at time of personal contingency and firm being dissolved upon the death/retirement/insolvency of the partners. Moreover, partnership firms have restricted access to external borrowing as credit worthiness of partners would be the key factors affecting credit decision for the lenders. Small scale of operation: The scale of operations remained small as compared to its peers with a PAT of INR0.13 crore on total operating income of INR15.40 crore during FY17 (prov.). The profit margin of the firm remained moderate marked by operating margin of 12.65% and PAT margin of 0.83% in FY17 (prov.). Furthermore, the total capital employed was also low at INR8.48 crore as on Mar.31, 2017 (Prov.). The small size restricts the financial flexibility of the firm in times of stress and it suffers on account of economies of scale. Working capital intensive nature of business: UMA's business is working capital intensive in nature as reflected by high average collection period and high average inventory period. The inventory period remained high at around 119 days during FY17 (Prov.). Further the firm maintains adequate level of raw material inventory to mitigate the fluctuation in raw material prices for executing the orders in hand and finished goods for meeting the urgent demand. Furthermore, the average collection period of the firm also remained high due to its low bargaining power owing to its small size. Accordingly, the working capital limit utilization remained high at around 95% during last twelve months ending July 31, 2017. Volatility in raw material and finished goods prices: The finished goods as well as raw material prices for manufacturing DG sets are highly volatile in nature. Since the raw material (i.e. iron & steel products, copper, brass, aluminium, engines and other alternative components, etc.) cost is the major cost driver and any southward movement of finished goods price with no decline in raw material price is likely to impact the profitability margin. Highly competitive & fragmented nature of industry: The industry is riddled with high competition due to presence of several domestic and international players. Intense competition from both domestic and international players is having a negative impact on the profitability of the firm. Further, the tender concept employed by public sector organization to source the materials, the firm has to bid aggressively in order to ward away competition and win contracts. Key Rating Strengths Long & established track record and vast experience of partners in manufacturing DG sets: Commenced operation in 1958, the firm has a long track record of more than five decades in manufacturing DG sets. The firm is headed by Shri Pradip Bose (aged 60 years) and Shri Arijit Bose (aged 32 years), partners, having an experience of around 37 years and 12 years respectively in the business of manufacturing DG sets. Both of them together look after the overall day-to-day activities of the firm, with active support from team of experienced professional. Powered by leading brand of engines "Perkins & Greaves": UMA's DG sets are available in the range from 10 KVA to 2500 KVA and are powered by reputed and established engine brand "Perkins & Greaves". For over 80 years Perkins has remained a leader in its product range through advanced designs and manufacturing of highly reliable Diesel engines. The continuous development study has culminated in Perkins offering the most advanced & comprehensive range of efficient Diesel & Gas engines. Perkins has its manufacturing plants in the UK, US, Brazil, China and India, together producing up to 800,000 engines a year. United Machinery & Appliances (UMA) was set up as a partnership firm in 1958 by Bose family of Kolkata, West Bengal with the objective of starting a business in manufacturing of Diesel Generator (DG) Set. The firm started with the dealership of DG sets in Kolkata to cater to the customer in electrical power segment. With time, UMA had expanded its business and started its own factory for manufacturing of DG sets. The firm is currently engaged in manufacturing of diesel generating set and also some spare parts related to DG sets. UMA Product portfolio includes diesel generating set, industrial engine & spares, casting enclosures for DG sets, trailer, controller, spares, sound grip, etc. This apart the firm also carried out some electrical project of erection, installation and commissioning of DG sets. The manufacturing facility of the firm is located in Village Sanjua, Bakrahat, West Bengal and is equipped with installed capacity of 600 DG sets per annum. The facility is ISO: 9001:2000 & 14001:2004 certified from Bureau Veritas. The firm exports about 8-10% of its manufactured product to overseas market in Bangladesh. V. G. SHIPBREAKERS: CRISIL Reaffirms 'D' Rating on INR8MM Loan -------------------------------------------------------------- CRISIL has been consistently following up with V. G. Shipbreakers Private Limited (VGS) for obtaining information through letters and emails dated May 24, 2017 and June 7, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Letter of Credit 8 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of V. G. Shipbreakers Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for V. G. Shipbreakers Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D/CRISIL D'. VGS, incorporated in 2006, is primarily engaged in ship breaking and steel trading businesses. The company is owned and managed by the Prajapati family based in Mumbai, Maharashtra. VAMSADHARA GINNING: CRISIL Assigns 'B' Rating to INR7MM Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term bank facilities of Vamsadhara Ginning and Pressing Industries (VGPI). The rating reflects its early stage of operations, exposure to intense competition in the cotton ginning industry, susceptibility to volatility in cotton prices. These weaknesses are partially offset by the extensive industry experience of the partners. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term Bank Loan Facility 5 CRISIL B/Stable Cash Credit 5 CRISIL B/Stable Proposed Cash Credit Limit 7 CRISIL B/Stable Key Rating Drivers & Detailed Description Weakness * Early stage of operations and intense competition: VGPI started its operations only in February 2017. Accrual will be lower during plant stabilisation period. Furthermore, the scale is expected to be limited owing to intense competition. * Susceptibility to volatility in cotton prices: Profitability will remain susceptible to government's regulation in pricing of cotton, and its intervention when cotton prices go below minimum supply price. Strengths * Partner's extensive experience: Partner's experience of around a decade in the ginning industry has resulted in established relationships with a wide clientele and farmers. Outlook: Stable CRISIL believes VGPI will continue to benefit over the medium term from the partner's extensive experience. The outlook may be revised to 'Positive' if revenue and profitability increase substantially, strengthening the financial risk profile, or in case of significant capital infusion, improving the capital structure. Conversely, the outlook may be revised to 'Negative' if aggressive, debt-funded capital expenditure, or delay in stabilisation of operations or capital withdrawals by partners leading to deterioration in the financial risk profile. Established in 2017, VGPI gins cotton. The firm, located in Guntur (Andhra Pradesh), commenced commercial operation in February 2017 and is managed by Mr. Sontineni Venkateswara Rao. VAMSADHARA RICE: CRISIL Assigns B+ Rating to INR5MM Cash Loan ------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the long- term bank facilities of Vamsadhara Rice Industries (VRI). The rating reflects its small scale, working capital-intensive operations, and below-average financial risk profile. These weaknesses are partially offset by the extensive experience of partners and longstanding relationships with customers. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL B+/Stable Proposed Long Term Bank Loan Facility 2 CRISIL B+/Stable Key Rating Drivers & Detailed Description Weaknesses: * Small scale of operations: Estimated revenue of around INR24.32 crores in fiscal 2017, reflects the small scale of operations, which constrains profitability. * Large working capital requirement: Gross current assets were estimated at 135 days as on March 31, 2017, because of large inventory requirement, keeping operations working capital intensive. Strength: * Partners' extensive experience: The two decade-long experience of the partners in the rice milling industry, and their established relationship with a wide clientele, will continue to support the business risk profile. Outlook: Stable CRISIL believes VRI will benefit over the medium term from the extensive experience of partners. The outlook may be revised to 'Positive' if significant improvement in capital structure, revenue, and operating margin strengthens the financial risk profile. Conversely, the outlook may be revised to 'Negative' if profitability weakens due to intense competition, or if working capital management deteriorates. Set up in 2006, VRI mills paddy to rice. Operations are managed by Mr. Sontineni Venkateswara Rao. VINAYAGA IMPEX: CRISIL Reaffirms 'D' Rating on INR4.5MM Loan ------------------------------------------------------------ CRISIL has been consistently following up with Vinayaga Impex Private Limited (VIPL) for obtaining information through letters and emails dated May 24, 2017 and June 7, 2017 among others, apart from telephonic communication. However, the issuer has remained non cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 3.4 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Export Bill Rediscounting 4.5 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Inland/Import Letter of Credit 0.25 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Overdraft 2.50 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Packing Credit 2.50 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Proposed Long Term Bank Loan Facility 1.39 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) Term Loan .46 CRISIL D (Issuer Not Cooperating; Rating Reaffirmed) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of Vinayaga Impex Private Limited. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes that the information available for Vinayaga Impex Private Limited is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL B' rating category or lower. Based on the last available information, CRISIL has reaffirmed the rating at 'CRISIL D/CRISIL D'. Started in 2003, VIPL is a Delhi-based company that manufactures garments and fabrics. It is managed by Mr. B M Arora, Mr. Arjun Dev, and Mr. Pradeep Nanda. Its manufacturing unti is based in Ludhiana (Punjab). VIVA INFRAVENTURE: CRISIL Reaffirms B+ Rating on INR0.5MM Loan -------------------------------------------------------------- CRISIL has reaffirmed its ratings on the bank facilities of Viva Infraventure Private Limited (VIPL) at 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 4.5 CRISIL A4 (Reaffirmed) Overdraft 0.5 CRISIL B+/Stable (Reaffirmed) The ratings reflect the company's modest scale of operations and weak financial risk profile because of a high total outside liabilities to adjusted networth ratio (TOLANW) and a low current ratio owing to large unrelated investments in real estate assets. These weaknesses are partially offset by the promoters' extensive experience in the construction industry and moderate order book position. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: VIPL's operations have remained modest with expected revenue of INR34 crore in fiscal 2017. The modest scale of operations restricts the company's ability to bid for large projects since the track record of execution of large projects is one of the criteria for bidding for such projects * High TOLANW: VIPL has a weak capital structure with estimated TOLANW of above 4.5 times as on March 31, 2017. The ratio is high as owing to reliance on high creditors to fund working capital requirements as well non-operational investment in real estate assets. * Low current ratio: Viva had low current ratio of below 1 time over the four fiscals through 2017 owing to high creditors which have been used to meet WC requirements as well non-operational investment in real estate assets. Strengths * Promoters' extensive experience in the construction industry: The partners have experience of more than a decade in the construction industry. Due to the promoters' extensive experience, Viva has developed good relations with its suppliers. * Moderate order book position: Viva has an order book of around INR32 crore as on Aug - 2017 which ensures moderate revenue visibility over the medium term. Outlook: Stable CRISIL believes VIPL will benefit over the medium term from the promoters' extensive industry experience and its moderate order book position. The outlook may be revised to 'Positive' if there is substantial improvement in financial risk profile, especially leverage. Conversely, the outlook may be revised to 'Negative' if there is further deterioration in the financial risk profile owing to an increase in outside liabilities due to a stretch in the working capital cycle or an increase in investments in real estate assets. VIPL was incorporated in 2010 and the company started operations as a road construction contractor in January 2013. Its registered office is in Lucknow and does road construction projects for Public Works Department in nearby regions, including Kanpur, Lalitpur, and Etawah. The company also does work for Noida Authority in the Noida region. ================= I N D O N E S I A ================= STEEL PIPE: Fitch Publishes 'B' Long-Term IDR; Outlook Stable ------------------------------------------------------------- Fitch Ratings has published Indonesia-based PT Steel Pipe Industry of Indonesia Tbk's (Spindo) Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B'. The Outlook Is Stable. The agency has also assigned an expected rating of 'B(EXP)' with a Recovery Rating of 'RR4', to the company's proposed US dollar senior unsecured notes. The notes will be issued by Spindo B.V., Spindo's wholly owned subsidiary, and guaranteed by Spindo and its operating subsidiaries. The proceeds from the proposed notes will mainly be used to repay the company's secured working- capital loans. The final rating is subject to the receipt of final documentation conforming to information already received. Spindo is Indonesia's leading steel pipe manufacturer, with around 35% share of the country's welded pipes market. The ratings reflect Spindo's small scale and lack of vertical integration compared with other steel product manufacturers globally. Spindo's leverage, measured in terms of net adjusted debt to EBITDAR ratio, is also relatively high at 4.9x as of end- 2016. However, Fitch expects the company to deleverage to a level consistent with the rating within the next 12 months based on increasing EBITDA, moderate capex and a shorter working capital cycle. The company's rating also factors in its robust market position, product and customer diversity as well as Fitch expectation of healthy demand growth for steel in the country. KEY RATING DRIVERS Strong Domestic Position; Small Globally: Spindo's scale allows it to manufacture a wide range of products with better cost efficiency than domestic competitors. However, the company is small compared with global peers. Spindo's economies of scale in manufacturing expenses partly offset its lack of vertical integration and control over prices of its raw materials, mainly steel coils. Indonesian regulations also provide some measure of protection against pressure from imports. Domestic manufacturers receive priority for government projects and there are minimum local-content requirements for sectors such as oil and gas and power, which support demand for locally produced steel pipes. Company Expects to Reduce Inventory: Significant investment in working capital contributed to high leverage in 2016. Spindo's inventory days increased to around 350 in 2016 based on Fitch's calculations, from around 270 in 2015, as the company built up inventory in anticipation of higher demand. The company plans to lower its inventories, partly by relying more on domestic suppliers for smaller order sizes and shorter delivery times compared with imports. A shorter working capital cycle, if achieved, should improve Spindo's operating cash flow and leverage profile. Customer and Supplier Diversification: Spindo supplies over 10 different product types to customers in various industries, such as infrastructure, real estate, utilities, oil and gas, automotive and furniture. Demand from infrastructure, utilities and real estate accounts for around 50% of revenue. Spindo has long-standing relationships with key customers such as PT Pertamina (Persero) (BBB-/Positive), PT Perusahaan Gas Negara Tbk (BBB-/Positive), Yamaha and Chevron, but there is limited concentration risk as its top 10 customers made up less than 30% of revenue in 2016. This diversification helps to offset demand weakness in specific segments and lowers revenue volatility. The company has installed capacity of over 600 kilotonnes/year across four locations in Java, Indonesia. Spindo sources its raw material from various suppliers, with imports contributing more than 70% of needs. The company has not engaged in any long-term supply contracts. Spindo's exposure to raw material price volatility is also mitigated by its flexibility in choosing suppliers based on prices offered. Demand Weakness Unlikely to Persist: Spindo's sales volumes fell 3% in 2016 and were down 22% yoy in 1H17, hit by a steep decline in sales to the oil and gas sector and tepid demand from other sectors, such as infrastructure and utilities. Fitch's base case oil-price assumptions factor in a modest recovery in oil prices over the next few years and Fitch expects a gradual increase in Spindo's sales volume to the sector. Demand from other sectors such as infrastructure, construction, automotive and furniture should also improve in line with Fitch's forecast of accelerating GDP growth, which will boost Spindo's sales volumes from 2H17. Fitch believes that a sustained increase in the government's infrastructure budget, supported by an improvement in tax collections, should result in faster project execution rates. Urban housing growth, with a corresponding increase in furniture sales, is likely to be another driver of demand growth for the company. Spindo is also targeting four-wheeler manufacturers to supplement its strong base in the two-wheeler segment. Capex to Moderate: Spindo incurred relatively high capex of around IDR350 billion on average each year over 2013-16 Fitch's calculations show. This drove its high leverage during the period. The company increased capacity by starting a new facility in East Java in 2014 and by upgrading its existing machinery. The company has shelved plans to invest in new capacity geared towards the oil and gas sector (in Gresik) and Fitch expects it to mainly incur maintenance-related capex of around IDR80 billion annually over the next three years as it has significant unutilised capacity. Spindo also plans to incur some capex to build eight warehouses in the next five years to increase direct sales to customers. Deleveraging Likely: Fitch estimates that Spindo's leverage will moderate to around 4x by 2018. Fitch estimates is based on EBITDA growth driven by increasing revenue and better capacity utilisation, the absence of further significant investments in capacity expansion and a shortening of Spindo's working capital cycle. DERIVATION SUMMARY Integrated steel producers under Fitch's coverage enjoy a better business profile than Spindo, on account of larger scale, more product diversity and a higher degree of vertical integration. As a result, they are rated higher in general, with most of them in the 'BB' category. Within Indonesia, Spindo's rating can be compared with that of PT Pan Brothers Tbk (B/Positive). Pan Brothers' rating is underpinned by its position as Indonesia's largest publicly listed garment manufacturer by capacity and its established relationships with global apparel brands. However, these strengths are balanced by high working capital requirements. These operating characteristics for Pan Brothers, in addition to its estimated leverage for 2017, are similar to that of Spindo. However, Fitch expects faster deleveraging for Pan Brothers, resulting in a Positive Outlook. KEY ASSUMPTIONS Fitch's key assumptions within Fitch ratings case for the issuer include: - Total sales volume to decline by 5% in 2017 due to weak 1H, and grow thereafter by 7% annually over 2018-19 (2015: 20%, 2016: -3%). - EBITDA/tonne margin of around USD130 in 2017 and 2018 (2015: USD137, 2016: USD124) - Annual capex of around IDR110 billion over 2017-19. - Net working capital days of 360 for 2017, reducing to 290 by 2019 The recovery analysis assumes that Spindo would be considered a going concern in bankruptcy and that the company would be reorganised rather than liquidated. Fitch has assumed a 10% administration claim. Going-Concern Approach - The going-concern EBITDA for Spindo is equal to Fitch averages of estimated EBITDA over 2017-18 to reflect mid-cycle conditions. An average mid-cycle enterprise value (EV) multiple of 5.0x for the steel sector is used to calculate a post-reorganisation EV of IDR3.2 trillion. - Fitch has assumed fully drawn working capital facilities of USD110 million. These working capital facilities, likely to be secured, have priority over senior unsecured debt. Fitch estimates that Spindo has the ability to assume senior unsecured debt, including the proposed notes, of up to around USD340 million, for a recovery of over 30% for the proposed note holders, which corresponds to a Recovery Rating of at least 'RR4'. However, if secured working capital debt is meaningfully higher than assumed, recoveries for the proposed notes could be impacted, which would result in a recovery rating lower than 'RR4'. In that case, the proposed bond would be rated lower than the issuer's IDR. - Fitch has rated the senior unsecured bonds 'B/RR4' because, under Fitch Country-Specific Treatment of Recovery Ratings criteria, Indonesia is classified under the Group D countries in terms of creditor friendliness, and the instrument ratings of issuers with assets located in this group of countries are subject to a soft cap at the issuer's IDR. RATING SENSITIVITIES Developments that may, individually or collectively, lead to positive rating action include: - Adjusted net debt/EBITDAR at below 3.5x on a sustained basis - Better inventory management leading to shorter inventory days of around 210 days Developments that may, individually or collectively, lead to negative rating action include: - Adjusted net debt/EBITDAR above 4.5x on a sustained basis - A further lengthening of the working capital cycle - Conversion margin below USD100/tonne on a sustained basis LIQUIDITY Satisfactory Liquidity: Over 85% of Spindo's debt of IDR2.8 trillion at 30 June 2017 was secured short-term bank loans primarily for working capital needs. In total, debt maturing within one year amounted to IDR2.5 trillion, including around IDR80 billion of repayments due for long-term debt. Spindo's cash and cash equivalents of IDR41 billion fall short of this amount, but Fitch expects the company to be able to repay most of its short-term debt using proceeds from the proposed bond issue. Even if the proposed bond issue does not proceed, Fitch believes Spindo's short-term bank loans are likely to be rolled over given their secured nature as well as Spindo's operating profile and good banking relationships. =============== M A L A Y S I A =============== PERISAI PETROLEUM: Gets Demand Notice Over Breach of Contract ------------------------------------------------------------- Sulhi Azman at theedgemarkets.com reports that Perisai Petroleum Teknologi Bhd said three clients are claiming MYR13.68 million in losses and damages from its wholly-owned unit, Perisai Drilling Sdn Bhd (PD), for an alleged breach of contractual obligation. The three clients are Konsortium Pelabuhan Kemaman Sdn Bhd (KPK), Pangkalan Bekalan Kemaman Sdn Bhd (PBK) and EPIC Mushtari Engineering Sdn Bhd, theedgemarkets.com says. According to theedgemarkets.com, Perisai in a filing with Bursa Malaysia said PD has been given a week to pay the amount, failing which the claimants plan to commence legal proceeding against the company. Seeking a legal advice on the demand, Perisai -- a financially distressed energy services firm with Practice Note 17 (PN17) status -- said it has also notified its insurer of the sum demanded, theedgemarkets.com relates. Quoting the letter of demand, Perisai said the case trailed back to the offer made by EPIC. EPIC had on Aug. 1, 2016 -- via a letter of offer -- agreed to provide PD with related berthing facilities, which will enable the latter to house its Perisai Pacific 101 rig, theedgemarkets.com recalls. The report says PD had agreed to undertake full responsibility for the rig berthing, use and keep the said area and shall indemnify all damages caused. "The notice (of demand) alleges that as a result of PD's failure to moor the rig on Sept 5, 2016, the rig broke free of the moorings, drifted off and came into contact with a mobile offshore unit, namely Naga 4 and subsequently, the rig continued drifting and collided with Berth 6 and 7 respectively, which are owned by PBK," Perisai, as cited by theedgemarkets.com, said. "The notice further alleges that as a result of the collision, the finger jetty, Berth 6 and 7 and quay wall/wharf of PBK were damaged. On Sept. 6, 2016, KPK made arrangements for tug boats to be mobilised and sent to the East Wharf to retrieve the rig, which was subsequently secured to the West Wharf by employees of KPK," the PN17 energy firm added. As a result, Perisai said the three clients have alleged that PD has breached the contractual obligation - which was stipulated under EPIC's letter of offer - by failing to moor the rig, the report says. About Perisai Petroleum Perisai Petroleum Teknologi Bhd. (KLSE:PERISAI) -- http://www.perisai.biz/-- is a Malaysia-based investment holding company engaged in the provision of management, administrative and financial support services to its subsidiaries. The Company operates in three segments: Drilling Units, which is engaged in the operations and maintenance service and the provision of offshore assets, which are primarily for oil and gas offshore drilling; Production units, which is engaged in the operations and maintenance service and the provision of offshore assets, which are primarily for oil and gas production, and Marine Vessels, which is engaged in the provision of vessels, barges and equipment on vessel charter services. Its subsidiaries include Alpha Perisai Sdn. Bhd., which is engaged in the provision of administrative support services; Perisai Offshore Sdn. Bhd., which is engaged in the provision of oil and gas services in upstream oil sector, and Perisai production Holdings Sdn. Bhd., which is an investment holding company, among others. As reported in the Troubled Company Reporter-Asia Pacific on Oct. 14, 2016, The Star Online said Perisai Petroleum Teknologi Bhd has been classified as a Practice Note 17 (PN17) company after its unit Perisai Capital (L) Inc defaulted on SGD125 million debt notes due on Oct. 3. The Star related that the upstream oil and gas provider said in a statement to Bursa Malaysia that it therefore must regularize its financial position within 12 months and implement the regularization plan within the timeframe stipulated by either the Securities Commission or Bursa Malaysia Securities Bhd. ==================== N E W Z E A L A N D ==================== IRIRIKI ISLAND: Temporary Stay on Insolvency Decision ------------------------------------------------------ Radio New Zealand reports that a judge in Vanuatu has ordered a temporary stay on a decision to liquidate the company which owns a prominent resort. Iririki Island Holdings, the owners of the prominent resort that sits on an island in Port Vila Harbour, was last week declared insolvent by the Supreme Court, Radio NZ relates. According to the report, Justice Geoghegan said he was confident the company was unable to pay its debts, after a construction company said it was owned more than US$1 million. But the Daily Post reported that Iririki Island Holdings planned to appeal against the rulings, and the temporary halt was ordered pending that appeal, Radio NZ says. MTF SIERRA 2017: Fitch Rates NZD1.32MM Class F Notes 'B+' --------------------------------------------------------- Fitch Ratings has assigned expected ratings to MTF Sierra Trust 2017's automotive-backed floating-rate notes. The issuance consists of notes backed by automotive loan receivables originated by Motor Trade Finance Ltd (MTF). The ratings are: NZD194.04 million Class A notes: 'AAA(EXP)sf'; Outlook Stable NZD7.33 million Class B notes: 'AA(EXP)sf'; Outlook Stable NZD6.42 million Class C notes: 'A(EXP)sf'; Outlook Stable NZD2.93 million Class D notes: 'BBB(EXP)sf'; Outlook Stable NZD2.75 million Class E notes: 'BB(EXP)sf'; Outlook Stable NZD1.32 million Class F notes: 'B+(EXP)sf'; Outlook Stable NZD5.21 million Seller notes: 'NR(EXP)sf' The notes will be issued by Trustees Executors Limited in its capacity as trustee of MTF Sierra Trust 2017. At the cut-off date 18 July 2017, the total collateral pool consisted of 18,503 receivables, totalling NZD217.8m, with an average obligor exposure of NZD12,603. The loan receivables, originated by MTF, are amortising principal and interest loans for both new and used vehicles (92.1% and 7.9% respectively), with a portfolio weighted-average seasoning and remaining term of 4.7 and 36.9 months respectively. KEY RATING DRIVERS Asset Performance: Historical net losses have been minimal due to the alignment of interests between MTF and the originating parties via a back-to-back loan agreement. Yield Support Mechanism: The weighted-average (WA) yield generated by the cash balance held in the designated account and the receivables pool must remain above 8% during the revolving period. This calculation is weighted by the remaining term of the contracts to ensure the yield is maintained as the pool amortises. Fitch's cash flow analysis tested that excess yield was available under all stressed scenarios tested. Granular Pool Quality: Wide-ranging parameters manage portfolio concentrations. These include, but are not limited to, controls on high-risk loans, contract size, geographic distribution, single-dealer and franchisee concentration, maximum obligor exposure and restrictions on non-standard motor vehicles. Stop-Origination Triggers: The revolving period can expose noteholders to additional risks with respect to a longer time horizon or degradation in portfolio asset quality. The revolving period is limited to two years after closing, unless stop- origination triggers are met. These include, but are not limited to, the aforementioned pool parameters and yield support levels, as well as performance-based arrears, loss and charge-off stop- origination triggers. Excess Spread: Once 30+ day arrears, averaged over the previous three-month period, exceed 3.5%, half of the available excess will be allocated to the excess spread account. If a stop- origination event subsists, all the available excess will be allocated to the excess spread account. EXPECTED RATING SENSITIVITIES Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than Fitch's base case and is likely to result in a decline in credit enhancement (CE) and remaining loss-coverage levels available to the notes. Decreased CE may make certain note ratings susceptible to negative rating action, depending on the extent of the coverage decline. Hence, Fitch conducts sensitivity analysis by stressing a transaction's initial base-case assumptions. Fitch evaluated the sensitivity of the ratings on MTF Sierra Trust 2017 to increased defaults and decreased recovery rates. This analysis determined that collectively, the ratings of class A, B and C notes were susceptible to downgrades under 25% and the E and F notes under 50% increases in defaults. Only the Class D notes were susceptible to downgrade at the stress test of a 10% increase in defaults. Recovery scenarios, whereby the model assumed recovery rates are decreased, showed that only the class D notes were sensitive to a 10% decrease in recoveries, and class C notes sensitive to the severe stress of a 50% decrease in recoveries. All other rated notes were not sensitive to any change in recovery assumptions (10%, 25% and 50% decrease). The ratings of the class C and D notes were sensitive to the combined stress scenario of a 10% increase in defaults and a 10% decrease in recoveries. The Class A, B, E and F notes were sensitive to the moderate stress of a 25% increase in defaults and 25% decrease in recoveries. SOLID ENERGY: Final Milestone Achieved in Asset Sales ----------------------------------------------------- The finalisation of the sale of the Stockton export coal operation and the two Waikato mines, Rotowaro and Maramarua to BT Mining completes Solid Energy's asset sale process and effectively clears the path to the wind up of the company. Solid Energy Chair Andy Coupe said that with this last milestone now achieved the company is on track to complete remaining operational and administrative activities by December 2017 prior to the company going into solvent liquidation by March 2018. "The asset sales process has been a complex but successful one, both in terms of the return achieved for creditors and in securing and preserving jobs for our employees, which was an explicit goal of the company throughout the process" said Mr. Coupe. The asset sales process commenced in late 2015. Chief Executive Tony King said "For the people working at Solid Energy there has been a lengthy period of uncertainty as to when or if operations would be sold or closed. It is immensely gratifying that in many instances all staff employed at an operation have been retained by the new owners, and while at other operations some have been made redundant, most have since been re-employed. The economic, com-munity and social impact in the regional locations where Solid Energy operated mines has been very positive as a result." Mr King noted that the fact the company has achieved targets across the full range of financial, produc-tion, safety, environmental and asset sales in its last financial year is a testament to the professionalism, focus and commitment of everyone from the coalface to the corporate office. Once all sale proceeds are collected and final costs for the period to solvent liquidation are taken into account it is expected that participant creditors should see a return of approximately 60 cents in the dol-lar compared to the estimated 20 cents that creditors would have received if the company had gone into liquidation in September 2015. Asset Sales Process Solid Energy entered Voluntary Administration in August 2015 after the directors concluded that the company had no realistic prospect of refinancing significant debt. Under the Deed of Company Arrangement agreed with creditors in September 2015 the directors are responsible for running an orderly sell down process to sell the assets of the company. All land, mines and other assets were offered for sale either as a whole or in parts, presenting an opportunity for those assets that are economically viable to continue trading under new ownership; delivering the best outcome for creditors and staff. The company has placed significant focus through the asset sales programme on securing the path forward for the assets and facilitating employment opportunities for staff. Asset Sales Progress In October 2016 Solid Energy announced that sale and purchase agreements had been signed for the Stockton export coal operation; the two Waikato mines, Rotowaro and Maramarua; New Vale and Ohai coal mines in Southland, and Strongman, Liverpool and the Reefton mines on the West Coast. Settlement for the Ohai and New Vale mines was reached in April with all of the mines' employees and operations transferring to the new owner Greenbriar. Settlement was also reached in April with Birchfield Coal Mines for the purchase of the Strongman mine, the Island Block project, the Mt Davy/Liverpool permit, and the Reefton coal distribution centre. During August the sale of the remaining Reefton assets, comprising the Reddale and Burkes Creek min-ing operations with the associated coal washery and plant and equipment was completed with Moore Mining. On August 31 BT Mining, a joint venture of Bathurst Resources and Talleys Energy Limited, settled for the purchase of the Stockton export coal operation and the two Waikato mines Rotowaro and Marama-rua. Spring Creek is the only mine in Solid Energy's asset sales portfolio that has not sold and the closure of the mine is currently underway. Pike River Mine and East Mine were not included in asset sales programme. About Solid Energy Solid Energy New Zealand Ltd is New Zealand's largest coal mining company and an investor in research and commercialisation of sustainable forms of energy that use coal, coal seam gas, biomass, biodiesel and solar. Solid Energy's core mining business includes hard coking coal, primarily for export to steel mills throughout Asia, and thermal coal for the Huntly power station and other domestic customers in the steel, dairy and cement industries. As reported in the Troubled Company Reporter-Asia Pacific on Aug. 13, 2015, the Board of Solid Energy New Zealand Limited (SENZ) has placed the company and all associated companies into voluntary administration, a process which allows the company to continue trading while creditors consider the best way forward. KordaMentha partners, Brendon Gibson and Grant Graham have been appointed Administrators. Creditors of the Solid Energy Group on September 17 approved a Deed of Company Arrangement (DOCA) with the Group. ===================== P H I L I P P I N E S ===================== CARITAS HEALTH: Former President Claims PHP7-Billion Deficit ------------------------------------------------------------ Daxim L. Lucas at the Philippine Daily Inquirer reports that Caritas Health Shield -- reportedly the biggest health maintenance organization (HMO) and preneed firm "hybrid" in the Philippines -- has been asked by the Insurance Commission to raise fresh capital amid allegations by former managers that the firm has a deficiency of as much as PHP7 billion in its actuarial reserves. At the same time, however, the insurance regulator has downplayed the issues facing the company, whose 600,000 policyholders nationwide rely on it for their healthcare needs, calling it an "intracorporate dispute" between Caritas' current management and the camp of its former president, Teodoro Jumamil, the Inquirer relates. According to the Inquirer, Mr. Jumamil was removed by Caritas' board in December 2016 after the lawyer and San Beda law professor got into a dispute with the firm's other shareholders about its finances. The Inquirer relates that Mr. Jumamil, who became president of the firm in 2015, said he was "surprised" by the financial condition of the firm when he assumed office, noting that, although sales were robust, Caritas' products were, from a financial standpoint, poorly designed from the outset. "The products were too good to be true," he told the Inquirer, noting that its flagship "gold plan" offered policy holders health care coverage for 10 years and, on top of that, would grant these clients a rebate of up to 70 percent of their payments at the end of the policy. "There was no way this could be sustained, so the first thing I did when I became president was to stop the sale of this product," he said. Another former Caritas official interviewed by the Inquirer - its then-comptroller Mary Jenelle Palma - said she, too, had found anomalies in Caritas' financial records, including overpriced purchases and deals with previously blacklisted contractors and service providers as well as a PHP7-billion deficit in its actuarial reserves as of 2016. She said she brought these issues up with the firm's board several times, but was ignored and eventually reassigned to another position, which forced her to resign, according to the report. Both Mr. Jumamil and Ms. Palma claimed that, due to the alleged deficit in the firm's actuarial reserves, the benefits that Caritas was paying out to existing policy holders was being sourced from the payments of its new clients. "It has become like a Ponzi scheme," said Palma, who has also sued Caritas for "constructive dismissal" earlier this year, the Inquirer relays. "The ones who are lucky are the clients who got in early," she added. The Inquirer says Mr. Jumamil, his wife (who is also a former Caritas official) and Ms. Palma have all written insurance regulators multiple times warning about the financial condition of the firm and asking that action be taken against the current management. Insurance Commission chief Dennis Funa told the Inquirer that Jumamil has also filed a petition for conservatorship with regulators, asking that the assets of Caritas be frozen to prevent their dissipation by the current management. The petition is pending and Caritas has been asked to reply to the petition. The Inquirer interviewed Caritas president Ronnie Collado, who stressed that the company was financially healthy and able to meet all its obligations as they come due. He attributed payment delays being experienced by clients, business partners and other stakeholders to red tape, saying some billers would submit incomplete requirements, thus delaying the processing of their payments. Both Funa and Collado pointed out that Jumamil has since joined another HMO and, as such, is eager to see Caritas in financial dire straights, the Inquirer relays. "That's not true," Mr. Jumamil said, who pointed out that he remained a shareholder in Caritas who has much to lose financially if the company collapses, the Inquirer relays. "What I've been warning them about is the health of the company. We should not be fooling our clients this way." ==================== S O U T H K O R E A ==================== HYOSUNG CORP: Slapped With KRW5BB Fine Over Illegal Accounting -------------------------------------------------------------- Yonhap News Agency reports that South Korea's financial regulator said Sept. 6 it fined Hyosung Corp., a chemical and textile flagship of Hyosung Group, KRW5 billion (US$4.4 million) for illegal accounting. Yonhap relates that the Financial Services Commission (FSC) said Hyosung intentionally reduced net losses and debt between 2013 and 2016. Hyosung is also accused of reporting wrong information in its four stock filings between 2013 and 2016, according to the FSC, Yonhap relays. Samil PwC, an accounting firm that audited Hyosung's accounting books, has been slapped with a KRW1.2 billion fine for not carrying out a proper audit, the report adds. Hyosung Group engages in textile, industrial materials, chemical, heavy industry, construction, trading and financial businesses. KUMHO TIRE: Parent Mull Asset Sale After Qingdao Deal Collapsed --------------------------------------------------------------- Yonhap News Agengy reports that the chief of Kumho Asiana Group said on Sept. 6 the airline-to-construction conglomerate will consider asset sales in China to help turn around its tiremaking affiliate after the deal to sell it collapsed. In March, China's Qingdao Doublestar signed a 955 billion-won (US$844 million) contract with the creditors led by the state-run Korea Development Bank (KDB) to buy a 42.01-percent stake in South Korea's No. 2 tiremaker, the report notes. The deal fell through on Sept. 4 when the creditors rejected Doublestar's demand to cut the purchase price, citing deteriorating earnings, Yonhap discloses. Doublestar demanded the creditors cut the price by 16 percent to KRW800 billion, the KDB said, Yonhap relays. Yonhap says the creditors called on Kumho Asiana to immediately come up with a self-rescue plan for the tire unit. "We are reviewing a variety of options, including the sale of (Kumho Tire's) assets in China, to put the financially troubled tire unit back on track," Kumho Asiana Chairman Park Sam-koo told reporters in the lobby of group headquarters in Seoul, according to a company spokesman, Yonhap reports. Kumho Tire was placed under a creditor-led workout program in 2009 after its parent company was hit by a liquidity problem following its takeover of Daewoo Engineering and Construction Co. At that time, Kumho Asiana Group Chairman Park Sam-koo was given a priority option to buy back the tiremaker should the creditors of Kumho Tire decide to sell the company, according to Yonhap News Agency. The creditors signed a deal in April to sell their combined 42.01% stake in the tiremaker to Doublestar for KRW955 billion (US$831 million), added Yonhap. ================ S R I L A N K A ================ PAN ASIA: Fitch Rates Basel II-Compliant Sub. Debentures BB+(lka) ----------------------------------------------------------------- Fitch Ratings has assigned Pan Asia Banking Corporation PLC's (PABC, BBB-(lka)/Stable) outstanding Sri Lanka rupee-denominated Basel II-compliant subordinated debentures a National Long-Term Rating at 'BB+(lka)'. The debentures mature in 2019 and amount to LKR3 billion. KEY RATING DRIVERS The outstanding subordinated debentures are rated one notch below PABC's National Long-Term Rating to reflect their subordination to senior unsecured creditors. PABC's National Long-Term Rating of 'BBB-(lka)' reflects declining capitalisation following its rapid growth in the past. The bank raised LKR2.1 billion in March 2017 via a rights issue to increase its minimum regulatory capital in order to meet the LKR7.5 billion target which was due on January 1, 2017. PABC is required to increase this further to LKR10 billion by January 1, 2018. Fitch believes that the bank's earnings retention alone is not likely to be sufficient to achieve the capital standards, despite improved profitability. RATING SENSITIVITIES The rating on the outstanding debentures will move in tandem with PABC's National Long-Term Rating. An upgrade of PABC's rating is contingent upon the bank achieving a sustained and significant improvement in capitalisation, alongside a moderation in risk appetite. PABC's rating would be downgraded if loss-absorption buffers deteriorate further, either through aggressive loan-book growth or a greater share of unprovided NPLs. A full list of PABC's ratings are: National Long-Term Rating: 'BBB-(lka)'; Outlook Stable Sri Lanka rupee-denominated senior unsecured debentures: 'BBB- (lka)' The following outstanding Basel II-compliant subordinated debentures are rated 'BB+(lka)': - LKR1.91 billion 9.75% listed subordinated debentures due 2019 - LKR1.09 billion 9.523% listed subordinated debentures due 2019 ********* 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. 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 ***