/raid1/www/Hosts/bankrupt/TCRAP_Public/171004.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
Wednesday, October 4, 2017, Vol. 20, No. 197
Headlines
A U S T R A L I A
DRAGON EYE: Second Creditors' Meeting Set for Oct. 6
MESOBLAST LIMITED: Directors Participated in Entitlement Offer
RBH Holdings: Second Creditors' Meeting Set for Oct. 10
REDMOND DRILLING: First Creditors' Meeting Set for Oct. 11
C H I N A
AOXING PHARMACEUTICAL: Cancels $50 Million Securities Offering
CBAK ENERGY: Five Directors Elected at Annual Meeting
CHINA AUTOMATION: S&P Lowers Senior Unsecured Debt Rating to CCC-
CHINA COMMERCIAL: Will Get $982,000 From Private Placement
WANDA PROPERTIES: Moody's Cuts Senior Unsecured Ratings to Ba1
GEELY AUTOMOBILE: Moody's Raises CFR to Ba1, Outlook Stable
GEMDALE ASIA: S&P Hikes Rating on RMB2BB Unsec. Notes to 'BB-'
HUAYI GROUP: S&P Alters Outlook to Stable & Affirms 'BB+' CCR
KWG PROPERTY: Fitch Rates US$250MM Sr. Notes Due 2022 'BB-'
OCEANWIDE HOLDINGS: S&P Lowers Guaranteed Debt Rating to 'CCC+'
SINOPACIFIC SHIPBUILDING: Unit Holds First Creditors' Meeting
YANLORD LAND: S&P Lowers US$450MM Unsec. Debt Rating to 'B+'
I N D I A
B.R. ELASTICS: CRISIL Reaffirms 'B' Rating on INR13.75MM Loan
CAPITAL HEIGHTS: CRISIL Assigns B+ Rating to INR10MM Term Loan
CONCORD DRUGS: CRISIL Reaffirms B- Rating on INR5MM Cash Loan
FASHION IMPEX: CRISIL Reaffirms 'B' Rating on INR6MM Term Loan
HINDUSTAN FLUOROCARBONS: CRISIL Reaffirms C on INR5.97MM Loan
JINNAH SHAJAHAN: CRISIL Raises Rating on INR5MM Cash Loan to B+
KUMUD RICE: CRISIL Assigns B+ Rating to INR8MM Cash Loan
LAILA SUGARS: CRISIL Reaffirms 'B' Rating on INR130MM Cash Loan
MAGNA HOMES: CRISIL Assigns 'B' Rating to INR30MM Term Loan
MILLENNIUM AUTOMATION: CRISIL Reaffirms B+ on INR44.4MM Term Loan
MADHAVA HYTECH: CRISIL Lowers Rating on INR10MM Bank Loan to D
MANOJ JAISWAL: CRISIL Reaffirms 'B' Rating on INR3MM LT Loan
METAGUARD ENGINEERS: CRISIL Reaffirms B+ Rating on INR14MM Loan
MOREISH FOODS: CRISIL Raises Rating on INR10MM Cash Loan to B+
NAHALCHAND LALOOCHAND: CRISIL Reaffirms B+ Rating on INR20MM Loan
NATIONAL GLASS: CRISIL Assigns B+ Rating to INR3MM Cash Loan
P K OVERSEAS: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
PRADHVI MULTITRADE: CRISIL Assigns 'D' Rating to INR10MM Loan
PREM TEXTILES: CRISIL Reaffirms B+ Rating on INR7MM Loan
QUAIL CV 2016: Ind-Ra Affirms B+ Issuer Rating on Series A3 PTCs
RAGHUVAR INDIA: CRISIL Reaffirms B+ Rating on INR30.75MM Loan
SARVAJNIK SHIKSHONNYAN: CRISIL Reaffirms B+ Rating on INR1MM Loan
SHRI RAMSWAROOP: Ind-Ra Hikes Ratings on Bank Facilities to BB-
SRI KRISHNA: CRISIL Reaffirms B- Rating on INR15MM Cash Loan
SRI DURGASHREE: CRISIL Reaffirms B Rating on INR4.75MM Loan
SURABI JEWELLERSS: CRISIL Assigns B+ Rating to INR.70MM LT Loan
SURFACE PREPARATION: CRISIL Reaffirms B Rating on INR5MM Loan
TANVIRKUMAR & CO: CRISIL Hikes INR11.2MM LT Loan Rating to 'B'
TATA STEEL: Fitch Keeps BB IDR on RWE Amid thyssenkrupp JV
TATA STEEL: S&P Affirms 'BB-' CCR Amid Thyssenkrupp Merger
THRIMATHY CONTRACTING: CRISIL Reaffirms B+ Rating on INR13MM Loan
VASUMATHY TRADERS: CRISIL Assigns 'B' Rating to INR5MM Loan
ZIMIDARA PESTICIDES: CRISIL Reaffirms B+ Rating on INR10MM Loan
* INDIA: 46 Insolvency Cases Filed at Chennai Bench of NCLT
J A P A N
TAKATA CORP: Seeks to Pay $200K Retainer Fee to Special Master
N E W Z E A L A N D
123 MART: Owes NZ$330K to Bank of New Zealand, Liquidators Say
S I N G A P O R E
TT INTERNATIONAL: Big Box Mall Placed Into Receivership
T H A I L A N D
CTH PLC: Shareholder Files Complaint With DSI Over Shutdown
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A U S T R A L I A
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DRAGON EYE: Second Creditors' Meeting Set for Oct. 6
----------------------------------------------------
A second meeting of creditors in the proceedings of Dragon Eye
Properties Limited has been set for Oct. 6, 2017, at 2:40 p.m.,
at Level 35, EY Building, 200 George Street, in Sydney.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Oct. 5, 2017, at 3:00 p.m.
Brett Lord and Duncan Clubb of EY were appointed as
administrators of Dragon Eye on July 20, 2017.
MESOBLAST LIMITED: Directors Participated in Entitlement Offer
--------------------------------------------------------------
Charlie Harrison, secretary of Mesoblast Limited, delivered to
the Securities and Exchange Commission a notice disclosing the
names of directors who participated in Mesoblast's recently
completed accelerated entitlement offer. Each of Brian Jamieson,
William Burns, Donal O'Dwyer and Michael Spooner acquired
ordinary shares of the Company on Sept. 18, 2017, as follows:
Number of Securities
Ordinary Shares Held After
Director Acquired Change
-------- --------- ----------
Brian Jamieson 20,000 645,000
(150,000 shares held
directly; and
495,000 shares held
indirectly)
William Burns 2,330 30,330 shares and
80,000 options
Donal O'Dwyer 17,500 255,912 options
(255,912 options held
directly; and Nil
options held
indirectly); and
893,230 ordinary shares
held as follows:
(555,912 shares held
directly; and 337,318
shares held indirectly)
Michael Spooner 10,000 1,069,000 ordinary
shares held as follows:
1,060,000 ordinary
shares held directly;
and 9,000 ordinary
shares held by Michael
Spooner family trust
A Change of Director's Interest Notice for Silviu Itescu, who
participated in the accelerated institutional component of the
entitlement offer, was released to the market on Sept. 6, 2017.
A full-text copy of the regulatory filing is available at:
https://is.gd/Syv4gS
About Mesoblast
Australia-based Mesoblast Limited (ASX:MSB; Nasdaq:MESO) is a
global developer of innovative cell-based medicines. The Company
has leveraged its proprietary technology platform, which is based
on specialized cells known as mesenchymal lineage adult stem
cells, to establish a broad portfolio of late-stage product
candidates. Mesoblast's allogeneic, 'off-the-shelf' cell product
candidates target advanced stages of diseases with high, unmet
medical needs including cardiovascular conditions, orthopedic
disorders, immunologic and inflammatory disorders and
oncologic/hematologic conditions.
Mesoblast Limited reported a net loss before income tax of
US$90.21 million for the year ended June 30, 2017, compared to a
net loss before income tax of US$90.82 million for the year ended
June 30, 2016.
As of June 30, 2017, Mesoblast had US$655.7 million in total
assets, US$138.9 million in total liabilities and US$516.8
million in total equity.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" opinion on the consolidated financial statements for the
year ended June 30, 2017, noting that Company has suffered
recurring losses from operations that raise substantial doubt
about its ability to continue as a going concern.
RBH Holdings: Second Creditors' Meeting Set for Oct. 10
-------------------------------------------------------
A second meeting of creditors in the proceedings of RBH Holdings
(Aust) Pty Ltd, RBH (Bistro) Pty Ltd, RBH (Night Club) Pty Ltd,
and RBH (Accomodation) Pty Ltd has been set for Oct. 10, 2017, at
2:00 p.m., at the offices of Pitcher Partners, Level 19, 15
William Street, in Melbourne.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Oct. 9, 2017, at 4:00 p.m.
Gess Michele Rambaldi of Pitcher Partners was appointed as
administrator of RBH Holdings on Sept. 4, 2017.
REDMOND DRILLING: First Creditors' Meeting Set for Oct. 11
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Redmond
Drilling Pty Ltd will be held at 463 Scarborough Beach Road, in
Osborne Park, West Australia, on Oct. 11, 2017, at 10:30 a.m.
Simon Roger Coad of Ticcidew Insolvency was appointed as
administrator of Redmond Drilling on Sept. 29, 2017.
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C H I N A
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AOXING PHARMACEUTICAL: Cancels $50 Million Securities Offering
--------------------------------------------------------------
Aoxing Pharmaceutical Company, Inc. filed a post-effective
amendment No. 1 to its registration statement on Form S-3 to
terminate the offering of common stock, preferred stock, warrants
and debt securities with a total value of up to $50,000,000
previously registered under the Registration Statement. As of
Sept. 26, 2017, 2,352,941 shares of common stock and 1,905,883
common stock purchase warrants have been sold under the
Registration Statement for an aggregate purchase price of
$3,000,000. No other Securities have been sold under the
Registration Statement.
About Aoxing
Foster City, California-based Aoxing Pharmaceutical Company,
Inc., has one operating subsidiary, Hebei Aoxing Pharmaceutical
Co., Inc., which is organized under the laws of the People's
Republic of China. Since 2002, Hebei Aoxing has been engaged in
developing narcotics and pain management products. In 2008 Hebei
Aoxing supplemented its product lines by acquiring Shijiazhuang
Lerentang Pharmaceutical Company, Ltd., a specialty
pharmaceutical company focusing on herbal pain related
therapeutics. The Company owns 95% of the equity in Hebei
Aoxing.
Aoxing reported net income of $2.24 million for the year ended
June 30, 2016, compared to net income of $5.81 million for the
year ended June 30, 2015.
As of March 31, 2017, Aoxing had $62.46 million in total assets,
$44.38 million in total liabilities and $18.08 million in total
equity.
BDO China Shu Lun Pan Certified Public Accountants LLP, in
Shanghai, People's Republic of China, issued a "going concern"
qualification on the consolidated financial statements for the
year ended June 30, 2016, citing that the Company accumulated a
large deficit and a working capital deficit that raise
substantial doubt about its ability to continue as a going
concern.
CBAK ENERGY: Five Directors Elected at Annual Meeting
-----------------------------------------------------
China BAK Battery, Inc., now known as Cbak Energy Technology,
Inc., held its 2017 annual meeting of stockholders on Sept. 22,
2017, at which the stockholders:
(a) elected Yunfei Li, Simon J. Xue, Martha C. Agee, Jianjun
He
and Guosheng Wang to the Board of Directors of the Company
to serve until the 2018 annual meeting of stockholders;
(b) ratified the selection of Centurion ZD CPA Limited as the
Company's independent registered accounting firm for the
fiscal year ending Dec. 31, 2017;
(c) approved the compensation of the Company's Named Executive
Officers as disclosed in the proxy statement for the
Annual
Meeting; and
(d) approved, on an advisory years "Every Three Years" as the
frequency of future advisory votes on executive
compensation.
Consistent with the recommendation of the Board of Directors and
the vote of stockholders, the Company will continue to hold
future advisory votes on named executive compensation every three
years.
About CBAK Energy
Dalian, China-based CBAK Energy Technology, Inc., formerly China
BAK Battery, Inc., incorporated on Oct. 4, 1999, is a holding
company. The Company and its subsidiaries are principally
engaged in the manufacture, commercialization and distribution of
a range of standard and customized lithium ion (Li-ion)
rechargeable batteries for use in an array of applications. The
Company's products are sold to packing plants operated by third
parties primarily for use in mobile phones and other electronic
devices. The Company conducts its manufacturing activities in
China.
China Bank is the first China-based lithium battery company
listed in the U.S., in January 2005 (NASDAQ: CBAK).
The Company's subsidiaries include China BAK Asia Holdings
Limited (BAK Asia), Dalian BAK Trading Co., Ltd. (Dalian BAK
Trading), and Dalian BAK Power Battery Co., Ltd. (Dalian BAK
Power). Dalian BAK Trading focuses on the wholesale of lithium
batteries and lithium batteries' materials, import and export
business, and related technology consulting services. Dalian BAK
Power focuses on the development and manufacture of high-power
lithium batteries.
China BAK reported a net loss of US$12.65 million for the year
ended Sept. 30, 2016, following net profit of $15.87 million for
the year ended Sept. 30, 2015.
The Company's balance sheet at June 30, 2017, showed US$103.97
million in total assets, US$86.68 million in total liabilities
and US$17.29 million in total shareholders' equity.
Centurion ZD CPA Limited, in Hong Kong, China, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Sept. 30, 2016, stating that the Company has a
working capital deficiency, accumulated deficit from recurring
net losses and significant short-term debt obligations maturing
in less than one year as of Sept. 30, 2016. All these factors
raise substantial doubt about its ability to continue as a going
concern, according to Centurion.
CHINA AUTOMATION: S&P Lowers Senior Unsecured Debt Rating to CCC-
-----------------------------------------------------------------
S&P Global Ratings said that it has reviewed its senior unsecured
issue-level ratings for China Automation Group Ltd. that were
labeled as "under criteria observation" (UCO) after publishing
its revised issue ratings criteria, "Reflecting Subordination
Risk In Corporate Issue Ratings" on Sept. 21, 2017. With its
criteria review complete, S&P is removing the UCO designation
from these ratings and are lowering its issue rating on China
Automation Group's guaranteed US$30 million senior unsecured debt
to 'CCC-' from 'CCC'. The notes were issued by Tri-Control
Automation Co. Ltd.
S&P said, "The rating actions stem solely from the application of
our revised issue rating criteria and do not reflect any change
in our assessment of the corporate credit ratings for issuers of
the affected debt issues."
S&P's rating action takes into consideration China Automation
Group's capital structure, which consists of roughly Chinese
RMB740 million of secured debt and RMB200 million of unsecured
debt as of end-2016. S&P has therefore arrived at the following
analytical conclusions:
-- The US$30 million of senior unsecured debt issued by Tri-
Control Automation is rated 'CCC-', one notch lower than the
corporate credit rating on the guarantor China Automation
Group, reflecting the identified relatively high structural
subordination risk.
CHINA COMMERCIAL: Will Get $982,000 From Private Placement
----------------------------------------------------------
China Commercial Credit, Inc., entered into a securities purchase
agreement with certain accredited and sophisticated investors in
connection with a private placement offering of 552,486 shares of
common stock, par value $0.001 per share, of the Company, for
gross proceeds to the Company of $1 million. The purchase price
per share of the Offering is $1.81. In connection with the
purchase of the Shares, the Purchasers will receive a warrant to
purchase up to the number of shares of the Company's common stock
equal to 193,370 of the shares of common stock purchased by the
Purchasers pursuant to the SPA. The Warrant has an exercise
price of $2.26 per share and is exercisable on the date of
issuance and expire five years form the date of issuance. The
Offering closed on Sept. 29, 2017.
The Shares issued in the Offering are exempt from the
registration requirements of the Securities Act of 1933, as
amended, pursuant to Section 4(a)(2) of the Securities Act and/or
Regulation D promulgated thereunder.
The net proceeds to the Company from the Offering will be
approximately $982,000. The net proceeds of will be used by the
Company for general corporate purposes, payment of the
transactional expenses related to the acquisition of all of the
outstanding issued shares of Sorghum Investment Holdings Limited
from certain shareholders of Sorghum; and payment related to the
settlement of securities class action and derivative action
previously disclosed in the SEC filings.
Pursuant to the terms of the SPA, each Purchaser agrees until the
earlier occurrence of (i) the Company executing definitive
binding documents for a Qualified Transaction and the Qualified
Transaction having been closed, or (ii) the first anniversary of
the date of the SPA, the Purchaser will not, directly or
indirectly, issue, sell, offer or agree to sell, grant any option
for the sale of, pledge, enter into any swap, derivative
transaction or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership
of any shares of Common Stock acquired and beneficially owned by
the Investor (whether any such transaction is to be settled by
delivery of common shares, other securities, cash or other
consideration) or otherwise dispose (or publicly announce the
Investor's intention to do any of the foregoing) of, directly or
indirectly, any such Shares, subject to certain exception. A
"Qualified Transaction" means any transaction which results in
the Company completing (i) public or private offering with an
aggregated gross proceeds of $20,000,000; (ii) merger with or
acquisition by an entity with a market value or enterprise value
higher than that of the Company as of December 31, 2016; or (iii)
any merger with, or sale of assets to a company that results in
such entity owning more than 50% of the Company's capital stock
or owning more than 50% of the Company's assets as of Dec. 31,
2016.
The SPA also contains customary representation and warranties of
the Company and the Purchasers.
About China Commercial Credit
Founded in 2008, China Commercial Credit --
http://www.chinacommercialcredit.com/-- provides business loans
and loan guarantee services to small-to-medium enterprises,
farmers and individuals in China's Jiangsu Province. Due to
recent legislation and banking reform in China, these SMEs,
farmers and individuals -- which historically had been excluded
from borrowing funds from State-owned and commercial banks -- are
now able to borrow money at competitive rates from microfinance
lenders.
China Commercial's independent accounting firm Marcum Bernstein &
Pinchuk LLP, in Shanghai, China, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2016, citing that the Company has accumulated
deficit that raises substantial doubt about its ability to
continue as a going concern.
The Company had an accumulated deficit of US$76.25 million as of
June 30, 2017. As of June 30, 2017, the Company had cash and
cash equivalents of US$1.907 million and total short-term
borrowings of nil. Caused by the limited funds, the management
assessed that the Company was not able to keep the size of
lending business within one year from the filing of June 30,
2017, Form 10-Q.
China Commercial reported a net loss of US$1.98 million on
US$1.29 million of total interest and fee income for the year
ended Dec. 31, 2016, compared with a net loss of US$61.26 million
on US$2.98 million of total interest income for the year ended
Dec. 31, 2015. As of June 30, 2017, China Commercial had US$6.75
million in total assets, US$7.23 million in total liabilities and
a total shareholders' deficit of $480,945.
WANDA PROPERTIES: Moody's Cuts Senior Unsecured Ratings to Ba1
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of Dalian
Wanda Commercial Properties Co., Ltd. (DWCP) and Wanda Commercial
Properties (HK) Co. Limited (Wanda HK).
The affected ratings are:
* DWCP's issuer rating of Baa3 has been downgraded to Ba1 and
withdrawn, and the company has been assigned a Ba1 corporate
family rating;
* Wanda HK's corporate family rating has been downgraded to Ba3
from Ba1;
* The senior unsecured ratings for the bonds issued by Wanda
Properties Overseas Limited and Wanda Properties International
Co. Limited have been downgraded to Ba3 from Ba1. Both
companies
are wholly owned subsidiaries of Wanda HK.
The rated bonds are guaranteed by Wanda HK and supported by deeds
of equity interest purchase undertaking and keepwell deeds
between DWCP, Wanda HK and the bond trustee.
The issuers of the rated bonds have maintained - in interest
reserve accounts - the equivalent of two periods of interest
payments on the bonds.
The outlooks on all ratings are negative.
RATINGS RATIONALE
"The downgrade of DWCP's rating to Ba1 reflects Moody's concerns
over the company's weakened liquidity position - due to
inadequate offshore cash to meet the potential repayment of its
offshore bank loans of around $1.7 billion - arising from
potential non-compliance of certain maintenance requirements
related to the company's existing borrowing obligations," says
Kaven Tsang, a Moody's Vice President and Senior Credit Officer.
While the company had around RMB137.7 billion of cash as of end-
June 2017 - an amount that can fully cover the potential
repayment - most of the funds is situated onshore.
Moody's notes that DWCP does not currently have sufficient
offshore cash to cover any prepayments in the event that offshore
lenders ask for early repayment of loans.
This heightened repayment risk reflects that the company has not
proactively managed its offshore liquidity position, against the
backdrop of a tighter control of cross border fund transfers out
of the country.
Such weak liquidity and treasury management - in particular, the
mismatch in offshore cash resources to offshore debt payment
obligations - no longer supports its investment grade profile.
Nevertheless, Moody's expects that the proceeds from the
company's pending asset sales to Sunac China Holdings Limited (B2
negative) and Guangzhou R&F Properties Co., Ltd. (Ba3 negative)
and the company's sizable recurring rental income from its large
and diversified portfolio of investment properties can support
part of its ongoing funding needs and buffer debt repayment risks
to some extent.
DWCP's Ba1 corporate family rating also reflects its established
brand name, leading market position, track record of developing
commercial properties in China, and the likely improvement in its
financial metrics, after the completion of asset sales. However,
the company's business and execution risks will rise, as it
accelerates the implementation of its new business model by
increasing its bulk sales of retail malls.
The negative outlook on DWCP's rating incorporates Moody's
concerns over the business execution risk associated with the
company's changing business model and its ability to timely
arrange funding to service its offshore debt prepayments.
An upgrade of DWCP's Ba1 corporate family rating is unlikely in
the near term, given the negative rating outlook.
Nevertheless, the rating outlook could return to stable if DWCP:
(1) meets or cancels the aforesaid maintenance requirements of
its debt obligations; (2) has sufficient liquidity to manage its
offshore debt repayment; (3) meets its business plans for both
its traditional property development business and its bulk sales
of malls, as well as achieves growth in rental and management fee
income.
Downward rating pressure could emerge, if the company fails to
timely arrange funding to service its prepayment needs, which in
turn results in an increase in liquidity and repayment risks.
The rating will also be downgraded if: (1) its contracted sales
performance or growth in rental and management fee income is
weaker than Moody's expects; (2) the company incurs a more-than-
expected amount of debt, due to land acquisitions and slow
contracted sales or collections of the proceeds from its bulk
sales of malls; or (3) its credit metrics deteriorate on a
sustained basis. An indication of deterioration includes
EBIT/interest coverage falling below 2.5x and rental and
management fee income/interest below 80%.
Additionally, any evidence of a material leakage of funds from
DWCP, or a notable deterioration in the company's corporate
governance and transparency could pressure its rating.
Moody's downgraded Wanda HK's corporate family rating and the
senior unsecured bond ratings of its guaranteed bonds to Ba3 from
Ba1, due to its weakened liquidity and increased refinancing
risk, as well as a weakening in DWCP's ability to provide support
to Wanda HK. The Ba3 ratings factor in two notches of parental
support, based on Moody's assessment that Wanda HK will likely
receive support from DWCP in times of need.
Moody's expectation of support from DWCP to Wanda HK is based on:
(1) Wanda HK remaining 100% owned by DWCP and the parent
exercising management control over Wanda HK; (2) Wanda HK
continuing to demonstrate its position as the primary platform
for DWCP's offshore funding and international expansion; and (3)
DWCP showing a track record of extending support to Wanda HK's
offshore financing, through deeds of equity interest purchase
undertaking and keepwell deeds for its bonds, and guarantees to
its bank loans.
Wanda HK's standalone credit profile continues to reflect its
weak credit metrics, short history, and roles as the group's core
platform for offshore funding and overseas investments.
The negative outlook on Wanda HK's corporate family rating
primarily reflects the negative outlook on DWCP's corporate
family rating, given the close linkage between the two companies
in terms of credit quality and ratings.
Upward pressure on Wanda HK's corporate family rating is limited
in the near term, given the negative outlook.
Nevertheless, the outlook could change to stable if: (1) DWCP's
rating outlook is revised to stable; and (2) Wanda HK
successfully executes its business plan and maintains its
strategic and economic importance to DWCP.
A downgrade of DWCP's rating will result in a downgrade of Wanda
HK's rating and the rating on Wanda HK's guaranteed bonds.
Furthermore, Wanda HK's rating could come under downgrade
pressure if its standalone credit profile deteriorates. Such a
situation would include: (1) a failure to complete its overseas
projects over the next 3-5 years; and (2) weaker-than-expected
revenues and operating cash flow. Any evidence of a reduction in
the level of ownership held by DWCP, or in the strategic and
economic importance of the company to DWCP could also prove
negative for Wanda HK's rating.
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in April 2015.
Dalian Wanda Commercial Properties Co., Ltd. (DWCP) develops,
operates and sells integrated properties in China, including
shopping malls, offices, houses and hotels.
Wanda Commercial Properties (HK) Co. Limited is the core offshore
funding and investment platform for DWCP. It is also a wholly
owned subsidiary of DWCP. Its main assets include a 65% equity
interest in Hong Kong-listed Wanda Hotel Development Company
Limited, as well as investments in five overseas property and
hotel projects in the UK, Australia and the US.
GEELY AUTOMOBILE: Moody's Raises CFR to Ba1, Outlook Stable
-----------------------------------------------------------
Moody's Investors Service has upgraded Geely Automobile Holdings
Limited's corporate family and senior unsecured ratings to Ba1
from Ba2.
The ratings outlook is stable.
This rating action concludes the ratings review initiated on
July 12, 2017.
RATINGS RATIONALE
"The upgrade reflects Geely's strengthening of its business
profile in terms of gains in market share and improvements in
profitability, and its track record of consistent low debt
leverage and strong liquidity positions, as evidenced from its
latest business updates," says Gerwin Ho, a Moody's Vice
President and Senior Analyst.
Based on 88% year-on-year growth in units sold between January
and August 2017 - which outpaced the 5% growth registered by
China's auto industry over the same period - Geely's market share
expanded further, and it ranked as the largest privately owned
and the seventh largest auto maker by unit sales in China during
this period.
Moody's expects that Geely's market share will continue to expand
in 2018, with unit sales growing about 31% year-on-year off a
unit sales base of over one million, versus about 52% in 2017,
and which would be faster than Moody's expectation of 3% year-on-
year for the industry as a whole in China.
Moody's expects Geely's new Lynk & Co joint venture -- which was
announced in July and will begin sales in 4Q 2017 -- and its
vehicle models will help the company grow vehicle sales and
improve its product breadth and strength in terms of price points
and geography.
Lynk & Co is a new vehicle brand that is positioned as a higher-
end offering -- in comparison to Geely's current products -- and
is designed to compete with foreign automakers in China and
overseas.
Its vehicles are based on the Compact Modular Architecture (CMA)
vehicle platform developed by its parent Zhejiang Geely Holding
Group Company Limited's research center, China-Euro Vehicle
Technology AB, in collaboration with Volvo Car Corporation (VCC),
a subsidiary of Volvo Car AB (Ba2 stable).
Geely will own 50% of the registered capital of the joint
venture, while VCC and Zhejiang Geely will own 30% and 20%
respectively.
Geely's partnership with VCC mitigates the associated operational
risks of the joint venture, given the latter's experience in
making, selling and servicing automobiles globally.
Moody's analysis of Geely's financial metrics will account for
the 50%-owned Lynk & Co joint venture on a consolidated basis to
reflect Geely's control of it in terms of board representation,
appointment of the chairman, and nominations for senior
management.
Moody's forecasts Geely's profitability, in terms of EBITA
margin, will remain stable at about 7.7% in the next 12-18 months
versus the same level in 2016 -- despite its investment in
starting up the Lynk & Co joint venture -- reflecting product mix
improvements and greater operating leverage as the company's
revenue scale grows.
"Geely's track record of prudent financial management also
supports its ratings upgrade," adds Ho.
Geely's debt leverage remained low over the 12 months to June 30,
2017, as represented by debt/EBITDA of 0.3x. The result was a
further improvement from 0.5x at end-2016.
Moody's expects the company's debt leverage to remain low at
around 0.4x in the next 12-18 months.
Geely's liquidity position is solid. At end-June 2017, it
reported net cash holdings - excluding pledged cash - totaled
RMB18.8 billion and will be used to fund its RMB3.8 billion
capital contribution to establish the Lynk & Co joint venture in
4Q 2017. The company has maintained a net cash position since
end-2012.
Geely's Ba1 corporate family rating reflects Moody's expectations
that the company will achieve robust unit sales growth in 2017,
given its gain in market share and the fact that it operates in
China's (A1 stable) large and rapidly growing passenger vehicle
market.
The company's Ba1 corporate family rating also takes into
consideration the continued operational support it receives from
its parent Zhejiang Geely, which owned 45.9% of Geely at end-June
2017, including model incubations and passenger vehicle
manufacturing licenses. It also takes into consideration the
parent's track record of not imposing excessive shareholder
distributions and corporate activities that would significantly
impact Geely's credit profile.
Moreover, the company's sustained level of low debt leverage, as
measured by debt/EBITDA, supports its Ba1 rating.
On the other hand, Geely's rating is constrained by strong
competition in China's auto market. Its narrow albeit expanding
product range represents an additional rating constraint.
The stable rating outlook reflects Moody's expectation that Geely
will achieve sales growth and improve its product breadth. It
will also maintain its discipline in financial management, as
seen by low debt levels and a strong liquidity position.
Upgrade pressure on the ratings could emerge if Geely: (1)
improves its overall market share through the successful sales of
new models; (2) expands its product breadth and enhances its
geographic diversity to a level comparable to that of its global
peers; (3) maintains a prudent financial policy that includes low
debt leverage and a solid liquidity profile on a sustained basis
against the backdrop of its parent company's corporate
activities.
Downgrade pressure could emerge for Geely if: (1) it does not
grow its scale and gain market share; (2) its profitability
declines, such that its EBITA margins drop below 6.5% on a
sustained basis; (3) its debt leverage increases, as measured by
debt/EBITDA exceeding 2.0x on a sustained basis; or (4) its
liquidity profile deteriorates, as indicated by cash/short-term
debt below 1.5x.
The principal methodology used in these ratings was Automobile
Manufacturer Industry published in June 2017.
Geely Automobile Holdings Limited is one of the largest privately
owned, local brand automakers in China. It develops, makes and
sells passenger vehicles that are sold in China and overseas. Its
chairman and founder, Mr. Li Shufu, and his family held a 46.2%
stake in the company at end-June 2017. The company is
incorporated in the Cayman Islands and listed on the Hong Kong
Stock Exchange.
GEMDALE ASIA: S&P Hikes Rating on RMB2BB Unsec. Notes to 'BB-'
--------------------------------------------------------------
S&P Global Ratings said that it has reviewed its senior unsecured
issue-level ratings for Gemdale (Asia) Holding Ltd. that were
labeled as "under criteria observation" (UCO) after publishing
its revised issue ratings criteria, "Reflecting Subordination
Risk In Corporate Issue Ratings" on Sept. 21, 2017. With its
criteria review complete, S&P is removing the UCO designation and
is raising the issue rating on the RMB2 billion senior unsecured
notes issued by Gemdale (Asia) to 'BB-' from 'B+'. Famous
Commercial Ltd. (BB-/Stable/--), a wholly owned and highly
strategic subsidiary of Gemdale Corp., guarantees the notes.
S&P said, "This rating action stems solely from the application
of our revised issue rating criteria and does not reflect any
change in our assessment of the corporate credit ratings for
issuers of the affected debt issues."
S&P's rating action takes into consideration the capital
structure as of end-2016 of Famous Commercial which consists of
RMB473 million of secured debt and RMB1,645 million of unsecured
debt. S&P therefore arrived at the following analytical
conclusions:
-- The RMB2 billion senior unsecured notes issued by Gemdale
(Asia) and guaranteed by Famous Commercial is rated 'BB-',
the same as the corporate credit rating on Famous Commercial,
because S&P has identified no sources of significant
subordination.
HUAYI GROUP: S&P Alters Outlook to Stable & Affirms 'BB+' CCR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on Huayi Group (Hong Kong)
Ltd. (Huayi HK) to stable from negative. S&P also affirmed its
'BB+' long-term corporate credit rating on Huayi HK and our 'BB+'
long-term issue rating on the senior unsecured notes guaranteed
by Huayi HK, an offshore financing and trading arm of Shanghai
Huayi (Group) Co. Ltd.
S&P said, "We affirmed the rating on Huayi HK and revised the
outlook to stable from negative after taking the same rating
action earlier today on parent Shanghai Huayi (Group) Co.
(Shanghai Huayi: BBB-/Stable/--). We believe Shanghai Huayi's
improved financial leverage will sustain in the coming one to two
years as a result of a sustained recovery in the chemicals
industry.
"In our view, Huayi HK remains a highly strategic subsidiary of
Shanghai Huayi as its parent's only overseas financing and
investing platform, as well as an offshore integrated trading
arm. Huayi HK and its parent are strategically, financially, and
operationally integrated and share the same name and reputation
risks. We believe Huayi HK will receive timely and sufficient
support from Shanghai Huayi if needed. The rating on Huayi HK is
therefore one notch below our rating on Shanghai Huayi.
"We equalize the rating on the senior unsecured notes that Huayi
HK guarantees to the issuer credit rating as we do not expect the
company to incur any priority debt in the next one to two years.
"The stable outlook on Huayi HK reflects that on its parent. We
anticipate Shanghai Huayi's debt-to-EBITDA ratio will stay
comfortably at 4x-5x in the coming 12-24 months, and that its
EBITDA interest coverage will stay above 2x over the same period
because of improving industry conditions.
"We may lower the rating on Huayi HK if Shanghai Huayi's
financial leverage increases beyond our expectation due to the
parent's worsened profitability, or higher-than-expected capital
expenditure, which makes EBITDA interest coverage consistently
lower than 2x. That could happen if the chemicals industry again
faces overcapacity, fierce competition, and sustained high raw
material costs.
"We could also downgrade the company if we lower our assessment
on the creditworthiness of the Shanghai municipal government, or
we believe the Shanghai Huayi's link to the Shanghai municipal
government has weakened, or we believe the importance of Huayi HK
to the group has weakened.
"We could upgrade Huayi HK if Shanghai Huayi realizes material
improvements in its performance or further reduces its financial
leverage such that the debt-to-EBITDA ratio falls to below 3x.
The attainment of such ratios would require a sustainable
improvement in industry conditions or a material growth in
Shanghai Huayi's sales of high value-added fine chemicals such
that the company can significantly enhance its EBITDA margin. We
think it is a rather remote scenario in the next 12-24 months
given the parent company still has capacity-expansion plans that
require debt financing, and the recovery of the chemicals
industry could be hindered if GDP growth slows in China.
"We could also upgrade Shanghai Huayi, and thus Huayi HK, if we
believe the likelihood of extraordinary government support will
strengthen."
KWG PROPERTY: Fitch Rates US$250MM Sr. Notes Due 2022 'BB-'
-----------------------------------------------------------
Fitch Ratings has assigned KWG Property Holding Limited's (BB-
/Stable) US$250 million 5.20% senior notes due 2022 a final
rating of 'BB-'.
The notes are rated at the same level as KWG's senior unsecured
rating because they constitute its direct and senior unsecured
obligations. The assignment of the final rating follows the
receipt of documents conforming to information already received.
The final rating is in line with the expected rating assigned on
September 17, 2017.
China-based KWG's ratings are supported by its established
homebuilding operations in Guangzhou, strong brand recognition in
higher-tier cities across China, consistently high margin, strong
liquidity and healthy maturity profile. KWG's ratings are
constrained by the small scale of its development and investment
property business, as well as the higher leverage after its land
purchases in 2016.
KEY RATING DRIVERS
Established in Guangzhou, Diverse Coverage: KWG's land bank is
diversified across China's Greater Bay Area - which includes
Guangzhou, Foshan and Hong Kong - as well as eastern and northern
China. In 2016, the company ranked among the top 10 homebuilders
by sales in Guangzhou, the capital of China's southern Guangdong
province. KWG had 11.85 million sq m of attributable land at end-
June 2017 that was spread across 18 cities in Mainland China and
Hong Kong. The land bank had average land cost of CNY4,515/sq m
at end-2016 and is sufficient for four to five years of
development. KWG has a prudent approach when entering new
cities - it conducts due diligence for around three years before
entering, usually with one or two projects in partnership with
reputable local developers.
Strong Brand Name: KWG has established strong brand recognition
in its core cities by focusing on first-time buyers and
upgraders, and appeals to these segments by engaging
international architects and designers, and setting high building
standards. KWG's January-July 2017 pre-sales rose 29% yoy to
CNY16.9 billion after a 10% yoy increase in 2016 to CNY22.3
billion. Guangzhou, Beijing and Shanghai accounted for 45% of
KWG's pre-sales in both 2016 and 1H17.
High Margin through Cycles: KWG's EBITDA margin has remained at
30%-35% through different business cycles and is one of the
highest among Chinese homebuilders. The company has made
protecting the margin one of its key business objectives. To this
end, KWG strives to maintain higher-than-average selling prices
through its consistent, high-quality products. Its experienced
project teams also ensure strong execution capability and strict
cost controls.
Moreover, KWG has low unit land cost of 20%-25% of its average
selling price due to its strong foothold in Guangzhou, where land
prices have not increased as much as in other Tier 1 cities over
the years. KWG's EBITDA margin was 31%-32% in 2016, and we expect
the margin to be maintained at 30%-35% in the next two years.
Leverage Improvement Temporary: KWG's leverage on an attributable
basis - as measured by net debt/adjusted net inventories -
improved to around 28% by December 2016 from 39% in December
2015. Leverage is below the 35% level at which Fitch may consider
taking positive rating action. However, Fitch expects leverage to
stabilise at 30%-40% for the next two years as KWG's leverage is
correlated with its contracted sales growth rate and its land-
bank replenishment strategy.
JVs with Leading Industry Peers: As a result of KWG's prudent
expansion strategy, it has a long record of partnership with
leading industry peers, including Sun Hung Kai Properties Limited
(A/Stable), Hongkong Land Holdings Limited (A/Stable), Shimao
Property Holdings Limited (BBB-/Stable), China Vanke Co., Ltd.
(BBB+/Stable), China Resources Land Ltd (BBB+/Stable) and
Guangzhou R&F Properties Co. Ltd. (BB/RWN). These partnerships
helped KWG achieve lower financing costs for its projects, reduce
competition in land bidding and improve operational efficiency.
JV presales made up 47% and 32% of KWG's total attributable
presales in 2016 and 1H17, respectively.
JV cash flows are well-managed, and investments in new JV
projects are mainly funded by excess cash from mature JVs.
Leverage is also lower at the JV level because land premiums are
usually funded at the holding company level and KWG pays
construction costs only after cash is collected from presales.
DERIVATION SUMMARY
KWG is well positioned among its peers with 'BB-' ratings.
KWG's contracted sales of CNY20 billion-25 billion are comparable
to Logan Property Holdings Company Limited's (BB-/Stable) around
CNY28.7 billion, Yuzhou Properties Company Limited's (BB-/Stable)
around CNY23 billion and China Aoyuan Property Group Limited's
(BB-/Stable) around CNY26 billion. However, KWG's EBITDA margin
of over 35% is one of the best within the 'BB-' peer group and is
better than that of 'BB' rated companies such as Guangzhou R&F
and Sunac China Holdings Limited (BB-/RWN). This is offset by
KWG's slower churn of around 0.5x-0.7x, compared with above 1.5x
for CIFI Holdings (Group) Co. Ltd. (BB/Stable) and Future Land
Development Holdings Limited (BB-/Positive), both of which have
lower EBITDA margins of around 25% and 19%, respectively.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
- EBITDA margin (excluding capitalised interest) to slowly trend
down from 35% to 32% for 2017-2019
- Land replenishment rate at 0.8x contracted sales GFA
(attributable), assuming KWG maintains a land bank at about
five years of development activity
- Land acquisition cost (attributable) at 40%-45% of sales
proceeds from 2017
- Leverage to improve, but remain at about 40%-45% for 2017-2019
RATING SENSITIVITIES
Developments that may individually or collectively, lead to
positive rating action include:
- EBITDA margin sustained above 30%;
- Net debt/adjusted inventory sustained below 35%;
- Attributable contracted sales sustained above CNY30 billion
(2016: CNY22 billion)
Developments that may individually or collectively, lead to
negative rating action include:
- EBITDA margin sustained below 25%;
- Net debt/adjusted inventory sustained above 45%
LIQUIDITY
Sufficient Liquidity: KWG has well-established diversified
funding channels, and strong relationships with most foreign,
Hong Kong and Chinese banks. KWG has strong access to both
domestic and offshore bond markets, and was among the first few
companies to issue panda bonds.
At end-June 2017, KWG had available cash of CNY30.6 billion
including restricted cash, which was enough to cover the
repayment of its short-term borrowing (CNY2.3 billion) and
outstanding land premium. Fitch expects the group to maintain
sufficient liquidity to fund development costs, land premium
payments and debt obligations during 2017-2018 due to its
diversified funding channels, healthy maturity profile and
flexible land acquisition strategy.
OCEANWIDE HOLDINGS: S&P Lowers Guaranteed Debt Rating to 'CCC+'
---------------------------------------------------------------
S&P Global Ratings said that it has reviewed its guaranteed
senior unsecured issue-level ratings for Oceanwide Holdings Co.
Ltd. that were labeled as "under criteria observation" (UCO)
after publishing its revised issue ratings criteria, "Reflecting
Subordination Risk In Corporate Issue Ratings" on Sept. 21, 2017.
With S&P's criteria review complete, it is removing the UCO
designation from these ratings and is lowering its issue ratings
on Oceanwide Holdings' guaranteed senior unsecured debt to 'CCC+'
from 'B-'.
S&P said, "This rating action stems solely from the application
of our revised issue rating criteria and does not reflect any
change in our assessment of the corporate credit rating on
Oceanwide Holdings.
"Our rating action takes into consideration Oceanwide Holdings'
capital structure, which consists of Chinese renminbi (RMB) 61.8
billion of secured debt and RMB53.5 billion of unsecured debt
issued as of June 30, 2017."
The 'CCC+' rating on the senior unsecured debt that Oceanwide
Holdings guarantees is one notch below the corporate credit
rating on the company. This is because secured debt comprises
more than 50% of the company's total consolidated debt. Including
unsecured debt at the subsidiary level, priority debt accounts
for around 70% of Oceanwide Holdings' total consolidated debt.
Therefore, the unsecured debt guaranteed by Oceanwide Holdings is
inherently disadvantaged because the secured lenders and
subsidiary lenders have priority over the unsecured lenders at
the holding company level.
SINOPACIFIC SHIPBUILDING: Unit Holds First Creditors' Meeting
-------------------------------------------------------------
Seatrade Maritime reports that bankrupt Yangzhou Dayang
Shipbuilding, a subsidiary of Sinopacific Shipbuilding Group, has
held its first creditors' meeting on Sept. 23, more than two
months after the yard went under receivership.
According to the report, more than 700 people attended the
meeting, including creditors and their representatives,
management and staff of the shipyard, the legal and audit team,
and the bankruptcy administrators.
In July, Dayang Shipbuilding applied to the local court to
restructure its debts with the court approving its case and
appointing an official assignee to administer the bankruptcy
affairs, Seatrade recalls.
The privately-owned shipyard has since ceased all operations but
struggled to pay up the salaries owed to the yard workers,
Seatrade says.
Dayang Shipbuilding was once well-known for its inhouse
proprietary design series, namely the Crown58 59,000-dwt
supramax, Crown65 63,500-dwt ultramax, Crown121 121,000-dwt mini-
capesize, and Crown MHI82 82,000-dwt bulk carrier jointly
designed by Sinopacific and Japan's Mitsubishi Heavy Industries
(MHI).
Apart from Dayang Shipbuilding, Sinopacific also shut down its
Shanghai ship design department early last year, the report
notes.
Sinopacific's two other subsidiaries, Sinopacific Offshore &
Engineering (SOE) and Zhejiang Shipyard, have also declared
bankrupt and are undergoing restructuring, Seatrade discloses.
YANLORD LAND: S&P Lowers US$450MM Unsec. Debt Rating to 'B+'
------------------------------------------------------------
S&P Global Ratings said that it has reviewed its senior unsecured
issue-level ratings for Yanlord Land (HK) Co. Ltd. that were
labeled as "under criteria observation" (UCO) after publishing
its revised issue ratings criteria, "Reflecting Subordination
Risk In Corporate Issue Ratings" on Sept. 21, 2017. With its
criteria review completed, S&P is removing the UCO designation
from these ratings and is lowering its issue rating on Yanlord
Land (HK) Co. Ltd.'s US$450 million senior unsecured notes to
'B+' from 'BB-'. The notes are guaranteed by Yanlord Land Group
Ltd. (BB-/
Positive/--).
S&P said, "This rating action stems solely from the application
of our revised issue rating criteria and does not reflect any
change in our assessment of the corporate credit ratings for
issuers of the affected debt issues.
"Our rating action takes into consideration the capital structure
of Yanlord Land Group as of Dec. 31, 2016. The capital structure
consists of Chinese renminbi (RMB) 11,079 million of secured debt
and RMB13,002 million unsecured debt (of which RMB1,415 million
is debt guarantee to third parties) that Yanlord Land Group
issued and RMB11,505 million of unsecured debt (of which RMB919
million is debt guarantee by the subsidiaries of Yanlord Land
Group to third parties) issued by its operating subsidiary."
S&P has therefore arrived at the following analytical conclusion:
The US$450 million of senior unsecured debt issued by Yanlord
Land (HK) and guaranteed by Yanlord Land Group is rated 'B+', a
notch below the corporate credit rating of Yanlord Land Group,
reflecting significant subordination of this senior unsecured
debt relative to other debt in Yanlord Land Group's consolidated
capital structure.
=========
I N D I A
=========
B.R. ELASTICS: CRISIL Reaffirms 'B' Rating on INR13.75MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with B. R.
Elastics India Private Limited (BREPL) for obtaining information
through letters and emails dated July 17, 2017, and August 14,
2017, among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 13.75 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 1.20 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 B. R. Elastics India 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 B. R. Elastics India Private
Limited is consistent with 'Scenario 1' 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'.
BREPL was set up as a proprietorship firm in 2000 and
reconstituted as a private limited company in 2008. The company,
based in Tirupur, manufactures varied types of elastic, including
woven elastic, woven jacquard elastic, plain knitted elastic,
fancy frill elastic, and lycra elastic.
CAPITAL HEIGHTS: CRISIL Assigns B+ Rating to INR10MM Term Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Capital Heights (CH).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 10 CRISIL B+/Stable
The rating reflects the extensive experience of CH's partners in
real estate development. These rating strengths are partially
offset by the firm's susceptibility to risks and cyclicality
inherent in the Indian real estate industry, and its exposure to
implementation risks related to its planned new real estate
projects.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility to risks and cyclicality inherent in the Indian
real estate industry: CH's business risk profile is susceptible
to slowdown in the Indian real estate market and geographical
concentration in revenue profile. The real estate sector in India
is cyclical and is marked by volatile prices, opaque
transactions, and a highly fragmented market structure.
* Exposure to implementation risks: CH has received moderate
booking rates for its on-going projects which is 26% as on date.
Given the moderate rate of booking and given that currently there
is only a single ongoing project, the same exposes CH to
implementation risks.
Strengths
* Extensive experience of CH's partners in real estate
development: CH benefits from the prior experience of its
partners in real estate development. The partners have about a
decade of experience in the real estate sector and have completed
2 other residential projects previously. These projects have been
completely sold and have been executed without any significant
cost or time overruns.
Outlook: Stable
CRISIL believes that CH will continue to benefit over the medium
term from its promoter's extensive industry experience. The
outlook may be revised to 'Positive' if the company generates
substantial cash flow from operations, resulting from speedy
execution of its project and improved receipt of customer
advances. Conversely, the outlook may be revised to 'Negative' if
CH's cash flow from operations is significantly low, either
because of subdued response to its project or low customer
advances or delay in completion of its ongoing projects, leading
to deterioration in financial risk profile, particularly
liquidity.
Capital Heights (CH) was set up in 2017 by Dehradun (Uttarakhand)
based Mr. Rais Ahmad, Mr. Ikram Mohammad, Mr. Shahjed Ali and Mr.
Tahir Hassan. CH is currently undertaking real estate development
'Capital Heights', a residential project with 147 apartments in
Dehradun.
CONCORD DRUGS: CRISIL Reaffirms B- Rating on INR5MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Concord
Drugs Limited (CDL) for obtaining information through letters and
emails dated Feb 14, 2017 and July 12, 2017 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.0 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Letter of Credit .5 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 8.5 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Working Capital 2.5 CRISIL B-/Stable (Issuer Not
Demand Loan 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 CDL. This restricts CRISIL's
ability to take a forward looking view on the credit quality of
the entity. CDL is consistent with 'Scenario 2' 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/CRISIL A4'.
CDL, based in Hyderabad and incorporated in 1995, manufactures
bulk drugs and active pharmaceutical intermediates. Its
operations are managed by promoter-director Mr. S Nagi Reddy.
FASHION IMPEX: CRISIL Reaffirms 'B' Rating on INR6MM Term Loan
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Fashion
Impex - Rajasthan (FI) for obtaining information through letters
and emails dated August 21, 2017 and September 12, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Packing Credit 2.5 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Post Shipment Credit 2.5 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 6.0 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 Fashion Impex - Rajasthan.
This restricts CRISIL's ability to take a forward Fashion Impex -
Rajasthan is consistent with 'Scenario 1' 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'.
FI is a Jaipur-based proprietorship firm, established and
promoted by Mr. Anupam Sethia in 2011. The firm manufactures and
exports readymade garments for women.
HINDUSTAN FLUOROCARBONS: CRISIL Reaffirms C on INR5.97MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Hindustan Fluorocarbons Limited (HFL) at 'CRISIL C/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.50 CRISIL A4 (Reaffirmed)
Cash Credit 5.15 CRISIL C (Reaffirmed)
Letter of Credit 0.38 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5.97 CRISIL C (Reaffirmed)
The ratings continue to reflect the delays by HFL in repayment of
debt that is unrated by CRISIL. The delays are on account of its
weak liquidity.
The ratings also continue to reflect HFL's modest scale of
operations in a competitive industry and its weak financial risk
profile marked by weak capital structure, negative net worth and
weak debt protection metrics. These rating weaknesses are
partially offset by the benefits that the company derives from
its promoters' extensive experience in the chemical manufacturing
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest Scale of operations in a competitive industry: The
company's scale of operations is modest with net sales of INR34
crore in 2016-17. CRISIL believes that the Company will benefit
from its established customer base, which will help HFL in
ramping up its scale of operations. However, Scale of operation
is expected to remain moderate over the medium term.
* Weak financial risk profile, marked by weak capital structure
and debt protection metrics: Financial profile remained weak
with negative net worth of INR71 crore as on March 31, 2017 which
resulted in to negative capital structure of 0.8 times in 2016-
17. Hence, the firm's debt protection metrics were also negative
in 2016-17.
Strength
* Extensive industry experience of promoters: HFL's promoters
have been in the business of speciality chemicals for more than
30 years. The extensive industry experience of the promoters
helps the company in anticipating price trends and calibrating
their purchasing and stocking decisions and establishing healthy
business relations with various customers and suppliers.
HFL is a Hyderabad-based company manufacturing poly tetra fluoro
ethylene (PTFE), an engineering plastic in India. HFL was
incorporated in 1983 as a subsidiary of Hindustan Organic
Chemicals Limited (HOCL).
During fiscal 2017, the company reported a negative profit after
tax (PAT) of INR4.89 Crores on operating income of INR34 Crores
against negative PAT of Rs11.11 Crores on operating income of
INR35.48 Crores in the previous fiscal.
JINNAH SHAJAHAN: CRISIL Raises Rating on INR5MM Cash Loan to B+
---------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Jinnah Shajahan Exports (JSE) to 'CRISIL B+/Stable'
from 'CRISIL B/Stable', while reaffirming its short-term rating
at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Foreign Demand
Bill Purchase 2 CRISIL A4 (Reaffirmed)
The rating upgrade reflects improvement in JSE's business
profile, marked by significant improvement in revenue in spite of
drop in operating margin, leading to better-than-expected cash
accrual in fiscal 2017. The firm is estimated to report revenue
of INR55 crores with an operating margin of 2.2% in fiscal 2017
as against INR30 crores and 2.7%, respectively in fiscal 2016.
Cash accrual improved to INR0.4 crore from INR0.2 crore in the
said period. The improved operating performance led to
improvement in the interest cover to 1.7 times for fiscal 2017 as
against 1.4 times in the previous fiscal.
The ratings also reflect JSE's modest scale of operations in the
intensely competitive cashew industry and the average financial
risk profile. These weaknesses are partially offset by the
extensive experience of the proprietor and established
relationships with customers.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensely competitive cashew
trading industry: Business risk profile remains constrained on
account of modest scale of operations'despite growth in revenue
to INR55 crore in fiscal 2017. Furthermore, limited
differentiation in the technology utilised for processing cashew
nuts leads to intense competition in both the organised and
unorganised segments.
* Average financial risk profile: Financial risk profile is
average, owing to high gearing of 4.8 times as on March 31, 2017.
The gearing factors the unsecured loans from the promoters as
part of total debt. Interest cover was moderate at 1.7 times for
fiscal 2017.
Strength
* Extensive experience of the proprietor: JSE benefits from the
proprietor's two decade-long experience in the industry and
established relationships with customers, resulting in steady
order flow. Promoter's established relations with suppliers also
results in timely supply of quality raw materials.
Outlook: Stable
CRISIL believes JSE will continue to benefit from the extensive
experience of its proprietor. The outlook may be revised to
'Positive' if increase in revenue and profitability leads to high
cash accrual and strengthens financial risk profile. The outlook
may be revised to 'Negative' if low revenue or profitability, or
stretch in working capital cycle or large, debt-funded capital
expenditure weakens financial risk profile, particularly
liquidity.
Established in 1995, Kerala-based JSE processes and exports
cashew kernels. The operations are managed by Ms Zeenath
Alikunju.
KUMUD RICE: CRISIL Assigns B+ Rating to INR8MM Cash Loan
--------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Kumud Rice and Dal Mill (KRDM).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable
The rating reflects the working capital-intensive nature and
modest scale of operations. These weaknesses are partially offset
by the extensive experience of the partners in the rice industry
coupled with average financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Gross current assets
were high at 171 and 118 days at the end of fiscals 2016 and
2017, respectively, mainly due to large inventory and stretched
receivables. However, management intends to reduce debtors, which
will help in improving working capital requirement over the
medium term. Further, the bank limit has been utilised at an
average of 95-98% over the past 6-8 months. Also, an ad hoc limit
is occasionally made available by the bank; this is regularised
in a timely manner. However, unsecured loans from, and equity
infusion by, the partners are likely to support liquidity over
the medium term.
* Modest scale of operations: Operating income was modest at
INR35.26 crore for fiscal 2017, but is expected to improve over
the medium term supported by the extensive industry experience of
the partners. YTD revenues were INR35 crore for the period of 5
months ended August 2017 and is expected at INR60-65 crore for
fiscal 2018.
Strength
* Extensive industry experience of the partners: The partners
have an experience of more than two decades in the rice industry.
This has resulted in a strong relationship suppliers and
customers, and will help to improve the business risk profile
over the medium term.
* Average financial risk profile: Financial risk profile is
average marked by comfortable debt protection indicators. The
interest coverage ratio was marked at 1.45 times as on Mar 31,
2017 and is expected to increase to more than 2 times on the back
of increasing revenues and stable margins. Also, despite serving
term loan obligations, the gearing was moderate at 1.9 times as
on Mar 31, 2017 and is expected to reduce over the medium term.
Outlook: Stable
CRISIL believes KRDM will continue to benefit from the extensive
industry experience of its partners. The outlook may be revised
to 'Positive' in case of substantial improvement in the financial
risk profile, driven by higher-than-expected growth in revenue
leading to better cash accrual, along with efficient working
capital management. The outlook may be revised to 'Negative' in
case of lower-than-anticipated cash accrual, larger-than-expected
working capital requirement, or substantial debt-funded capital
expenditure, leading to deterioration in liquidity.
KRDM is a partnership firm established in 1994, and is currently
managed by three partners: Mr. Sanjeev Kumar Gupta, Mr. Tushar
Gupta, and Mr. Triloknath Gupta. The firm operates three plants
in Hardoi, Uttar Pradesh.
LAILA SUGARS: CRISIL Reaffirms 'B' Rating on INR130MM Cash Loan
---------------------------------------------------------------
CRISIL has reaffirmed its rating on the bank facilities of
Laila Sugars Private Limited (LSPL) at 'CRISIL B/Stable.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 130 CRISIL B/Stable (Reaffirmed)
Long Term Loan 13.5 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 26.5 CRISIL B/Stable (Reaffirmed)
Rating continues to reflect LSPL's working capital intensive
operations and below-average financial risk profile, marked by
subdued debt protection metrics and stretched liquidity albeit
supported by moderate net worth and gearing and expected
continuous fund support from promoters in the form of unsecured
loans. The rating also factors in the company's exposure to risks
related to the adverse impact of changes in government
regulations, and to cyclical demand in the sugar industry. These
rating weaknesses are partially offset by LSPL's moderate
business risk profile supported by the promoter's extensive
experience in the sugar industry.
Key Rating Drivers & Detailed Description
Strengths
* Working capital intensive operations: LSPL's operations are
working capital intensive as reflected in high GCA estimated at
around 430 days as on March 31 2017. GCA have been on a higher
level over the past three years, through Fiscal 2016, on account
of high inventory position of the company, 608 days as on
March 31 2016. Inventory reduced significantly to 325 days as on
March 31 2017 due to increase in prevailing prices of sugar in
the market. However operations still remain working capital
intensive due to high inventory position of the company.
* Below average financial risk profile: The Company's financial
risk profile is below-average marked by subdued debt protection
metrics albeit supported by moderate net worth and gearing.
Company's net worth is estimate to be moderate at INR54.8 crore
against total debt outstanding of INR150 crore resulting in
moderate gearing of around 2.76 times as on March 31 2017.
The company's interest coverage and net cash accruals to total
debt (NCATD) ratios were estimated at around 0.97 times and 0 %,
respectively for 2016-17.
Company's liquidity is also stretched as reflected in fully
utilized bank limits and net cash accruals expected to fall short
of maturing debt obligations over the medium term. However
continuous funding support from promoters, in term of unsecured
loans, supports the liquidity profile of the company. As per
management promoters are expected to bring in funds in case of
any short fall to repay its maturing debt obligations however
failing in doing the same could result in downward pressure on
ratings.
* Exposure to risks related to the adverse impact of changes in
government regulations, and to cyclical demand in the sugar
industry: The sugar industry is highly regulated, with
government controls on pricing, supply of sugarcane, and sugar
release mechanism. This affects the credit quality of players
like LSPL in the sugar industry. Further, the small scale of
operations of LSPL with relatively small capacities of 3500 TCD
and with no integration benefits make its credit profile more
susceptible to the cyclicality in the sugar industry and the
risks inherent in the agro commodity sector namely vagaries of
monsoons, excessive government controls. The statutory minimum
price of sugarcane and prevailing sugar prices are two key
factors that determine a sugar mill's profitability.
Strength
* Moderate business risk profile supported by the promoter's
extensive experience in the sugar industry: LSPL has a moderate
business risk profile supported by promoter's long standing
experience in the sugar industry. LSPL's sugar manufacturing
facility located at Belgaum (Karnataka) has good access to cane
with no other manufacturing facility located within a radius of
40-60 kilometres from these manufacturing facilities. This is
evident from the fact that LSPL was able to crush 480,000 to
570,000 MT of cane in the first year of operations post the lease
operations. This has largely been on account of its lessee Sri
Bhagya Laxmi Sahakara Sakkere Kharkhan Niyamit, established
presence in the region since 1995 and its healthy and
longstanding relationships with farmers, as it undertakes several
initiatives for their upliftment/benefit such as giving
guarantees to banks for loans availed by certain farmers.
Outlook: Stable
CRISIL believes that LSPL will continue to benefit over the
medium term from its promoters' extensive industry experience.
The outlook may be revised to 'Positive' if there is a sustained
improvement in its working capital management, or there is a
substantial improvement in its capital structure on the back of
sizeable equity infusion by the company's promoters. Conversely,
the outlook may be revised to 'Negative' if there is a steep
decline in LSPL's profitability margins, or significant
deterioration in its capital structure caused most likely by
large debt-funded capital expenditure or a stretch in its working
capital cycle.
Incorporated in Vijayawada (Andhra Pradesh) in 2009, LSPL
manufactures sugar and its by-products: molasses, bagasse, and
press mud. It is a part of the Laila group of companies having
diverse business interests, including sugar, paper,
nutraceuticals, herbals, and educational institutions.
LSPL is estimated to have reported net losses of INR1.92 crore on
revenue of INR171crore in fiscal 2017, against a PAT INR0.03
crore and revenue of INR120.86 crore in fiscal 2016.
MAGNA HOMES: CRISIL Assigns 'B' Rating to INR30MM Term Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its CRISIL B/Stable rating to the
long-term bank facility of Magna Homes (MH). The rating reflects
the firm's exposure to project risk and cyclicality in the real
estate industry. These weaknesses are partially offset by the
extensive experience of the key promoter in real estate industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 30 CRISIL B/Stable (Assigned)
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to project implementation risks: The project is in
the initial phase of execution with only around 22% of the total
cost incurred. Also with bookings yet to commence, offtake and
funding risks are high. About 70% of the project is to be funded
by customer payments. Slow bookings or delay in inflow of
advances may, therefore, impact both project implementation and
liquidity.
* Exposure to inherent risks and cyclicality in the real estate
industry: The real estate sector in India is cyclical and marked
by sharp movements in prices and a highly fragmented market
structure. The overall uncertain economic climate and changing
regulatory environment exposes the firm to cyclicality in the
sector.
Strengths
* Extensive experience of the key promoter in real estate
industry: The promoter has been in the real estate sector for
more than a decade. The partners have collectively completed 7
projects covering area of 10 lakh square feet in Hyderabad,
leading to established brand of Magna.
Outlook: Stable
CRISIL believes MH will continue to benefit from its promoters'
extensive experience in the residential real estate industry. The
outlook may be revised to 'Positive' if sizeable customer
advances and timely implementation of ongoing project lead to
healthy cash flows. The outlook may be revised to 'Negative' if
significant time or cost overrun on the project, or low cash flow
and subdued offtake impact liquidity.
MH, set up in December 2016, develops real estate in Hyderabad.
The firm is promoted by Mr. Madadi. The firm is currently
constructing one residential project, Majestic Meadows, at
Kollur, Telangana.
MILLENNIUM AUTOMATION: CRISIL Reaffirms B+ on INR44.4MM Term Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on Millennium
Automation and Systems Limited (MASL) at 'CRISIL B+/Stable/CRISIL
A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 6 CRISIL A4 (Reaffirmed)
Cash Credit 2 CRISIL B+/Stable (Reaffirmed)
Foreign Exchange
Forward 0.6 CRISIL A4 (Reaffirmed)
Letter of Credit 12 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 44.4 CRISIL B+/Stable (Reaffirmed)
The ratings reflect the modest scale and working capital
intensive operations. These weaknesses are partially offset by
extensive experience of MASL's promoters in the information
technology (IT) hardware trading and system integration industry
and above-average financial risk profile.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Scale of operations remains modest
with operating income of INR40.3 crore as on March 31, 2017. The
ramp-up in the scale of operations will be contingent on success
ration in the tenders.
* Working capital intensive operations: Operations are working
capital intensive as reflected in gross current assets of 250
days as on March 31, 2017, driven by stretched receivables (192
days) on account of catering to government and public sector
clients.
Strengths
* Above-average financial risk profile: Financial risk profile
is moderate, as indicated by low total outside liabilities to
tangible networth (TOLTNW) ratio of 0.55 time as on March 31,
2017, on provisional basis; with interest coverage and NCATD (net
cash accruals to total debt) of 2.7 times and 1.0 times,
respectively for fiscal 2017.
* Extensive experience of the promoters: Benefits from the
promoters' near two-decade experience in the industry and
established relationship with customers and suppliers should
support business. Benefits include repeat orders from customers
and timely supply from suppliers.
Outlook: Stable
CRISIL believes MASL will benefit from the extensive experience
of its promoters and their established relationship with
customers and suppliers. The outlook may be revised to 'Positive'
if scale of operations from operations and profitability improves
along with the working capital management. The outlook may be
revised to 'Negative' if revenue declines or if significant
increase in working capital requirement weakens financial risk
profile, particularly liquidity.
MASL, a closely held public limited company, provides IT
solutions, mainly in system integration services, and trades in
IT hardware. The company, incorporated in 1997, is promoted by
Mr. Varinder Singh Jawanda, a Delhi-based entrepreneur, and his
family members.
MADHAVA HYTECH: CRISIL Lowers Rating on INR10MM Bank Loan to D
--------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the bank facility of
Madhava Hytech Infrastructures India Private Limited (MHIPL) to
'CRISIL D/CRISIL D' from 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 4 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects delays in interest payment on term loan
due to weak liquidity that resulted from stretched receivable.
Servicing debt obligation on time will remain a key rating
sensitivity factor.
The rating reflects modest scale of operations, large working
capital requirement, and exposure to intense competition in civil
construction industry. These weaknesses are partially offset by
extensive experience of the company's promoters in the civil
construction industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and Exposure to intense competition
in civil construction industry: With revenues of INR12.5 crores
in 2016-17 (refers to financial year, April 1 to March 31), MHIPL
has modest scale of operations in the highly competitive civil
construction segment.
* Large working capital requirement: MHIPL's business is highly
working capital intensive, as reflected in gross current asset
(GCA) days of 363 days as on March 31, 2016; the GCA days have
been at similar levels in the past.
Strengths
* Extensive experience of promoters: The promoters of the MHIPL
have extensive experience in the civil construction industry
across various parts of India. Mr. Dileep Kilaru has been
involved in the business of constructing roads and bridges since
the late 1980s.
MHIPL undertakes civil construction work on contract basis for
Railways, and State Road authorities. The company is promoted by
Mr. Pradeep Kilaru and is based out of Hyderabad.
During fiscal 2017, the company provisionally reported a profit
after tax (PAT) of INR0.64 Crores on operating income of INR12.54
Crores against PAT of INR0.78 Crores on operating income of
INR23.11 Crores in the previous fiscal.
MANOJ JAISWAL: CRISIL Reaffirms 'B' Rating on INR3MM LT Loan
------------------------------------------------------------
CRISIL Ratings has been consistently following up with Manoj
Jaiswal and Others (MJ) for obtaining information through letters
and emails dated July 10, 2017 and September 5, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 6 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 3 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 Manoj Jaiswal and Others. This
restricts CRISIL's ability to take a forward Manoj Jaiswal and
Others is consistent with 'Scenario 1' 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'.
MJ is an association of persons (AOP) having 134 members. The
firm was established in 2004 by the Jaiswal family. It primarily
retails liquor in Jodhpur (Rajasthan). The firm currently has
nine retail shops in the city.
METAGUARD ENGINEERS: CRISIL Reaffirms B+ Rating on INR14MM Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Metaguard Engineers & Contractors (MEC) at 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4 (Reaffirmed)
Overdraft 14 CRISIL B+/Stable (Reaffirmed)
Proposed Short Term
Bank Loan Facility 4.5 CRISIL A4 (Reaffirmed)
The ratings continue to reflect the firm's small scale of
operations in the intensely competitive civil construction
industry, large working capital requirement, and subdued
financial risk profile. These weaknesses are partially offset by
the extensive industry experience of the proprietor.
Analytical Approach
Unsecured loans of INR0.75 crore from the proprietor have been
treated as neither debt nor equity as they are expected to remain
in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Modest scale restricts the firm's
ability to bid for large projects.
* Large working capital requirement: Operations are working
capital intensive because of large receivables from government
entities.
* Subdued financial risk profile: Financial risk profile is
constrained by modest networth, high gearing, and weak debt
protection metrics.
Strength
* Extensive industry experience of the proprietor: The
proprietor's experience of two decades in the civil construction
industry should support the firm's business.
Outlook: Stable
CRISIL believes MEC will continue to benefit from the extensive
industry experience of its proprietor. The outlook may be revised
to 'Positive' if increase in revenue and stable profitability
lead to higher cash accrual and better liquidity. The outlook may
be revised to 'Negative' if low revenue or profitability, stretch
in working capital cycle, or large, debt-funded capital
expenditure weakens the financial risk profile, particularly
liquidity.
Set up in 1990 and based in Kerala, MEC executes road
construction projects for government undertakings. Operations are
managed by the proprietor, Mr. Sasidharan Kuttan Pillai. The firm
is a registered 'A' class contractor in the state.
MOREISH FOODS: CRISIL Raises Rating on INR10MM Cash Loan to B+
--------------------------------------------------------------
CRISIL Ratings has upgraded its ratings on the long-term bank
facilities of Moreish Foods Ltd (MFL) to 'CRISIL B+/Stable' from
'CRISIL B/Stable/Issuer Not Cooperating' and reaffirmed its
'CRISIL A4 rating to short-term facility.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .07 CRISIL A4 (Reaffirmed; Removed
from 'Issuer Not Cooperating')
Cash Credit/ 10.00 CRISIL B+/Stable (Upgraded
Overdraft facility from 'CRISIL B/Stable/Issuer
Not Cooperating')
Long Term Loan 7.90 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable/Issuer
Not Cooperating')
Proposed Long Term 3.03 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable/Issuer
Not Cooperating')
The upgrade reflects MFL's modest scale of operations amid
intense competition and exposure to fluctuation in prices of raw
materials. These weaknesses are partially offset by moderate
financial risk profile and experience of promoters.
Analytical Approach
CRISIL has treated a portion of unsecured loans of INR6.09 crore
extended to MFL by its promoters and affiliates as neither debt
nor equity based on an undertaking from the management that the
loans will remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations amid intense competition: Modest
scale of operations, with revenue of INR67.41 crore in fiscal
2017 and intense competition limits pricing power with customers
and suppliers. Scale may increase over the medium term, once
operations commence in the upcoming unit at Domjur (West Bengal).
* Exposure to fluctuations in prices of raw material: MFL
purchases goods (amounting to 50-55% of revenue) from the local
market (on short credit) on current market price. Therefore, even
a small change in the cost of raw materials could have a
multiplied effect on the operation margin. This trend may
continue over the medium term.
Strengths
* Moderate financial risk profile: The financial risk profile
remains comfortable, supported by healthy interest coverage ratio
of 2.65 times in fiscal 2017. It is expected to improve even
further with full repayment of term loan. Further, net cash
accrual to total debt ratio was moderate at 0.19 time in fiscal
2017 with networth of INR7.79 crore as on March 31, 2017.
* Experience of promoters: Benefits from the promoters'
experience of over two decades and healthy relations with
suppliers and distributors should continue to support the
business.
Outlook: Stable
CRISIL believes MFL will benefit over the medium term from the
promoters' experience. The outlook may be revised to 'Positive'
if scale of operations and cash accrual increase substantially
with efficient working capital management. Conversely, the
outlook may be revised to 'Negative' if decline in operating
margin, stretch in working capital cycle, or large, debt-funded
capital expenditure weakens financial risk profile and liquidity.
MFL was set up in 1992 as a proprietorship firm by Mr. Narendra
Kumar. It was reconstituted as a private limited company and
later into a limited company. Mr. Narendra Kumar, Mr. Vikram
Jain, and Ms Anvita Singh are the present directors. The Ranchi
based company manufactures and sells bread and baked items.
NAHALCHAND LALOOCHAND: CRISIL Reaffirms B+ Rating on INR20MM Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the long-term bank facility of Nahalchand Laloochand Pvt Ltd
(NLPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 20 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect significant off-take risk for its
ongoing projects and exposure to inherent risks and cyclicality
in the real estate industry. These weaknesses are partially
offset by established track record of promoter in the real estate
industry, and low implementation and funding risk.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility to flow of customer advances: There have been
34% bookings in NL Himalaya and 64% in NL Aryavarta. Bookings of
Himalaya have been lower than expectations leading to lower
customer advances. Only 46% of the advances as compared to total
cost were received. The timely repayment of debt obligations is
dependent on the future bookings and timely flow of customer
advances.
* Vulnerability to cyclicality inherent in the Indian real estate
sector: The real estate sector in India is cyclical, and marked
by volatile prices, opaque transactions, and a highly fragmented
market structure because of several regional players.
Strengths
* Promoters' extensive experience in the real estate business:
NLPL is a part of the NL group, which has been in the real estate
sector since 1970. They have successfully completed 16 real
estate projects in the last 15 years in Mumbai mainly in the
western suburbs of Dahisar and Malad, leading to established
presence and brand value.
* Low implementation and funding risk: The company's projects
are in advanced stages of completion and hence have low
completion and funding risk. Over 87% of the construction is
currently completed, duly funded by project loans, promoters'
contribution, and advances received from customers against
bookings.
Outlook: Stable
CRISIL believes NLPL will continue to benefit over the medium
term from promoters' extensive experience. The outlook may be
revised to 'Positive' if significantly better-than-expected
bookings and timely receipt of advances lead to substantial cash
inflows and improvement in the financial risk profile. The
outlook may be revised to 'Negative' if cash flow is
significantly below expectation, either due to lower bookings or
delayed receipt of customer advances, constraining its cash
flows.
Incorporated in 1948, NLPL, is engaged in residential real estate
development in Mumbai. The company is promoted by the Himatlal
family, and currently, the operations are managed by the Mr.
Rajesh Himatlal and Mr. Mukesh Himatlal. The company currently
has 2 ongoing projects- NL Himalaya and NL Aryavarta, both in
Dahisar, Mumbai.
NATIONAL GLASS: CRISIL Assigns B+ Rating to INR3MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of National Glass Works (NGW). The
ratings reflect NGW's small scale of operations, below-average
financial risk profile, and vulnerability to volatile raw
material prices. These rating weaknesses are partially offset by
the extensive experience of the proprietor in the chemical
manufacturing industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.0 CRISIL B+/Stable
Letter of Credit 2.5 CRISIL A4
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: Despite a compounded annual growth
rate of 24% in the three years through fiscal 2017, scale of
operations remains constrained by intense competition: revenue
was INR13.79 crore in fiscal 2017.
* Below-average financial risk profile: Networth was modest at
INR1.7 crore, and gearing high, at 1.9 times as on March 31,
2017, following withdrawal of capital of INR71 lakh by the
proprietor. Net cash accrual to total debt ratio was weak at 0.03
time in fiscal 2017. However, the financial may improve gradually
with higher accretion to reserve, stable operating margin, and
absence of fresh capital withdrawals.
* Volatility in raw material prices: Operating margin has varied
from 4.8 to 11.1% in the three years through March 2017, because
of volatility in the prices of main raw material, soda ash, which
forms nearly 70 per cent of the total raw material requirement.
Strength
* Extensive industry experience of the proprietor in the chemical
manufacturing industry: Though the firm was set up only in 2000
by Mr. Arvind Miharia, his family has been in this business since
1947. Earlier, they operated as a partnership firm, which is now
shut down. Over the years, the proprietor has diversified the
firm's reach and customer base, and helped maintain a stable
stream of repeat and new orders. The customer base includes
diverse industries such as soaps and detergents, paper, and iron
and steel. Benefits from the proprietor's experience and healthy
relationships with customers should continue to support business
risk profile.
Outlook: Stable
CRISIL believes that NGW will continue to benefit over the medium
term from its proprietor's extensive experience. The outlook may
be revised to 'Positive' if significant ramp-up in scale of
operations, stable profitability, improved capital structure and
absence of capital withdrawals strengthen financial risk profile.
Conversely, the outlook may be revised to 'Negative' if low cash
accrual, withdrawals of capital, or any large capital expenditure
weakens the financial metrics, including capital structure.
A proprietorship firm set up by Mr. Arvind Miharia in 2000, NGW
manufactures sodium silicate. It also trades in silica sand. The
manufacturing unit in West Bengal has annual capacity of 15,000
tonnes.
For fiscal 2017, profit after tax (PAT) was INR0.69 crore on
sales of INR13.79 crore, against a PAT of INR0.27 crore on sales
of INR9.68 crore for fiscal 2016.
P K OVERSEAS: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated P K Overseas
Private Limited's Long Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR380 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB(ISSUER NOT COOPERATING)/IND
A4+(ISSUER NOT COOPERATING) rating; and
-- INR170 mil. Proposed fund-based working capital limit
migrated to non-cooperating category with Provisional
IND BB(ISSUER NOT COOPERATING)/Provisional IND A4+(ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Sept. 28, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
P K Overseas Private Limited, an ISO 22000:2005 company
incorporated in May 1994, is engaged in the processing and
exporting of both basmati and non-basmati rice. It has an
installed capacity to process eight tons rice hourly with four
prominent basmati rice brands named India Salaam Basmati Rice,
Mansa Basmati Rice, Trimurti Basmati Rice and Rajshahi Basmati
Rice. Basmati rice produced by the company complies with the
international standard; the company was also awarded 'Export
House' by ministry of Commerce and Industry, the government of
India.
PRADHVI MULTITRADE: CRISIL Assigns 'D' Rating to INR10MM Loan
-------------------------------------------------------------
CRISIL Ratings has revoked the suspension of its ratings on the
bank facilities of Pradhvi Multitrade Private Limited (PMPL) and
has assigned its 'CRISIL D' rating to its long term bank loan
facility. CRISIL had suspended the ratings on June 25, 2015, as
the company had not provided the necessary information for a
rating review. It has now shared the requisite information,
enabling CRISIL to assign rating to the facility.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL D (Assigned;
Suspension revoked)
Rating reflects instances of over-utilisation of its working
capital limits for more than 30 days on account of stretched
liquidity and weak financial risk profile. These weaknesses are
partially offset by extensive industry experience of promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Stretched liquidity: Stretched liquidity has resulted in over
utilization of its working capital limits for more than 30 days.
* Weak financial risk profile: The financial risk profile is
weak, as reflected in a modest networth of INR2.73 crore and high
total outstanding liabilities to adjusted networth of 6.44 times
as on March 31, 2017. Interest coverage was subdued at 1.12 times
for fiscal 2017
Weakness
* Extensive experience of promoters: PMPL promoter have
extensive experience, reflected in their established customer and
supplier relations.
Incorporated in February 2011, Pradhvi Multitrade Pvt Ltd (PMPL)
is promoted by Mr. Rajpal Singh. Company was not operational
until November 2012 and started trading in processed fabrics in
Dec 2012.
PREM TEXTILES: CRISIL Reaffirms B+ Rating on INR7MM Loan
--------------------------------------------------------
CRISIL Ratings has been consistently following up with Prem
Textiles International (PTI) for obtaining information through
letters and emails dated July 17, 2017, and August 14, 2017,
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Packing Credit 7 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 4 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 Prem Textiles International.
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 Prem Textiles International is
consistent with 'Scenario 1' 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.
Set up in 1977, PTI manufactures home furnishings. Its facility
is in Karur, Tamil Nadu and Mr. Veerappan manages the daily
operations.
QUAIL CV 2016: Ind-Ra Affirms B+ Issuer Rating on Series A3 PTCs
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Quail CV IFMR
Capital 2016 (an ABS transaction) as follows:
-- INR27.74 mil. Series A2 pass-through certificates (PTCs),
issued on June 30, 2016 at 12.75 % coupon rate, due on
December 17, 2019, affrimed with IND A-(SO)/Stable rating;
and
-- INR17.48 mil. Series A3 PTCs, issued on June 30, 2016 at 16%
coupon rate, due on December 17, 2019, affirmed with IND
B+(SO)/Stable rating.
The new and used commercial vehicle (56.7%), multi-utility
vehicle (21.5%), tractor (5.0%) and car (16.8%) loan pool has
been originated by Kogta Financial India Limited (KFL).
KEY RATING DRIVERS
Originator's Servicing, Underwriting & Collection Capabilities:
The affirmation reflects the adequate levels of credit
enhancement (CE), overall performance of the loans in the pool,
and the servicing, collection and recovery capabilities of KFL.
The agency is of the opinion that the issuer's origination and
servicing capabilities are of an acceptable standard. Origination
of loans is primarily through an empanelled list of direct
selling agents. KFL follows a relationship-based model and has
tie-ups with these direct selling agents for more than 5-10
years. It has an in-house field investigation team and collection
team. The company has centralised operations wherein all the
approvals are done at the state branch level. All loan applicants
go under strong due diligence process to assess the
creditworthiness of the prospective customer. Collection of loans
is mostly processed through cheques and electronic clearance
service while cash is a less preferred option. KFL repossesses
vehicles only as a last resort. The state collection head
analyses the capacity and the intention of the borrower to pay
and takes the decision of repossession.
Availability of External Credit Support: According to the payout
report dated 16 September 2017, the available CE was INR8.74
million and the current principal outstanding (POS) including
overdues was INR65.5 million. The current CE for PTCs increased
to 13.33% of the current pool POS including overdues at end-
August 2017 from 6.00% at end-September 2016. The available CE is
in the form of fixed deposit with RBL Bank Ltd.
There has been no use of the CE until date, as the excess spread
and overcollateralisation in the transaction have been sufficient
to absorb the shortfalls. As of August 2017, the level of
overcollateralisation available to Series A2 PTCs and Series A3
PTCs is 53.9% and 24.8%, respectively, of the current POS.
Key Pool Characteristics: At end-August 2017, the 534-loan pool
had a weighted average seasoning of 22.1 months and the pool has
been amortised by 62.5%, indicating a significant repayment track
record of underlying borrowers. Loans delinquent by over 90 days
past due (dpd) were 3.32% of the original POS and 8.84% of the
current POS as of the collection month of August 2017. The agency
has also seen a cumulative prepayment of 12.7% in the transaction
in the last 15 months.
Key Assumptions: At the time of the initial rating, Ind-Ra
derived a base case gross default rate (90+dpd) in the range of
10%-12%. The agency had analysed the characteristics of the pool
and established its base case assumptions through the four key
performance variables, namely default rate, recovery rate,
recovery timeline and prepayment rate, which collectively affect
the credit risk in a transaction. In the last 15 months since the
transaction closing, the peak 90+dpd observed was 4.2%, which is
well within the initial assumption. The current available CE can
absorb more than 50% of stressed defaults. The default rates
(90+dpd) well within the initial assumption and stable
performance of the loans in the pool have led to the affirmation
of the rating of PTCs.
RATING SENSITIVITIES
Ind-Ra conducted rating sensitivity tests for purchaser payouts.
If the assumptions of both base case default rate and base
recovery rate were simultaneously worsened by 20%, the model-
implied rating sensitivity suggests that the PTCs' rating will
not be impacted.
COMPANY PROFILE
Incorporated in 1996, KFL is western India-based non-banking
financial company with an operating track record of over 19
years. It primarily provides commercial vehicle, car, two-
wheeler, and small and medium enterprise loans. The company is
based out of Jaipur and operates in Rajasthan, Gujarat and
Maharashtra. KFL has 72 disbursement points across India and
employs 265 employees.
As of March 2017, KFL had INR2,385 million worth assets under
management (up 48.9% yoy). In FY17, its profit after tax was
INR50 million (FY16: INR31 million). Net non-performing assets
increased to 2.02% as of March 2017 from 1.62%, a year ago.
RAGHUVAR INDIA: CRISIL Reaffirms B+ Rating on INR30.75MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Raghuvar
India Limited (Raghuvar India) for obtaining information through
letters and emails dated August 24, 2017, and September 8, 2017,
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .25 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Cash Credit 30.75 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 1.00 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
Term Loan 8.00 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 Raghuvar India 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 Raghuvar India Limited is consistent
with 'Scenario 1' 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'.
Raghuvar India is a part of the Alwar (Rajasthan)-based Data
group and was acquired in 2004 from Turner Morisson (The Times of
India group). Raghuvar India manufactures mustard oil, vanaspati
oil, refined oil, and oil cakes, and markets its products under
the Hanuman brand. The company also started manufacturing
crockery in 2012-13 which currently constitutes around 15 percent
of total revenue. It has two manufacturing facilities in Jaipur
(Rajasthan).
SARVAJNIK SHIKSHONNYAN: CRISIL Reaffirms B+ Rating on INR1MM Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the long-term bank facility of Sarvajnik Shikshonnyan Sansthan
(SSS).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Fund-
Based Bank Limits 1 CRISIL B+/Stable (Reaffirmed)
The rating reflects the society's below-average financial risk
profile because of small networth; and small scale of, and not-
for-profit nature of operations. These weaknesses are mitigated
by healthy relations with government authorities and
implementation of various social welfare development schemes.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Networth on provisional
basis was small at INR3.61 crore as on March 31, 2017, primarily
due to low accretions to reserve, since the society operates as a
not for profit organisation.
* Small scale of operations and low profitability due to not-for-
profit nature of operations: SSS imparts education through
colleges, Kasturba Gandhi Balika Vidyalaya and training centers
in addition to running old age homes, de-addiction centers and
open shelter homes. Operations have remained small with an annual
turnover of INR6.87 crore in fiscal 2017.
Strength
* Established relations with government authorities: Benefits
from the two-decade long industry experience of the members of
the society and healthy relationships with government authorities
and officials should support business. The benefits include
repeat orders.
Outlook: Stable
CRISIL believes the credit metrics of SSS will remain constrained
on account of small scale of operations and small cash accrual.
The outlook may be revised to 'Positive' if increase in scale of
operations and cash accrual, strengthens financial risk profile.
The outlook may be revised to 'Negative' if decline in income or
cash accrual or any large, debt-funded capital expenditure
weakens financial risk profile.
SSS, setup in 1981, is organised as a not-for-profit society in
Hardoi, Uttar Pradesh and executes various schemes operated by
the state and central governments in the region. The society runs
colleges and training centers along with various schemes under
the social justice and empowerment ministry, social and women
welfare departments, and swatch bharat abhiyaan.
SHRI RAMSWAROOP: Ind-Ra Hikes Ratings on Bank Facilities to BB-
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has undertaken the following
rating actions on Shri Ramswaroop Memorial Charitable Trust's
(SRMCT) bank loans:
-- INR128 mil. (reduced from INR216.87 mil.) Term loan, issued
on February 2015, due on February 2022, upgraded with IND BB-
/Stable rating;
-- INR338.30 mil. (reduced from INR350 mil.) Term loan issued
on March 2015, due on March 2021, updgraded with IND BB-
/Stable rating; and
-- INR368.00 mil. (reduced from INR370 mil.) Fund-based
working capital facilities upgraded with IND BB-/Stable
rating.
KEY RATING DRIVERS
The upgrade reflects timely debt servicing by SRMCT over July-
September 2017.
The ratings are supported by SRMCT's student strength, which
increased at a CAGR of 77.46% to 5,991 over FY13-FY17. Moreover,
the trust has industry affiliation in the form of tie-ups with
various companies, which provide training and internship
programmes to students. Revenue increased at a 59.66% CAGR to
INR630.80 million over FY13-FY17. Its operating margin improved
to 52.87% in FY17 (FY16: 50.76%) due to an increase in tuition
fee income and a fall in operating costs. Revenue and operating
margin continue to remain at moderate levels.
The ratings, however, are constrained by a high debt burden,
indicated by a debt/current balance before interest and
depreciation (CBBID) of 3.37x in FY17 (FY16: 3.42x). Ind-Ra
expects debt/CBBID to deteriorate in FY18, driven by ongoing
capex (funded via debt and equity) that is likely to be completed
by FYE18.
The ratings are also constrained by SRMCT's weak liquidity
position. In FY17, its available funds-to-operating expenditure
was 8.08% (FY16: 16.41%) and available funds-to-financial
obligations was 3.17% (4.47%). In FY17, the trust is relying on
short-term borrowings to meet long-term debt servicing
obligations.
RATING SENSITIVITIES
Negative: Any unexpected fall in student demand, along with a
higher-than-expected rise in debt-led capex, resulting in a
strained liquidity position could trigger a negative rating
action.
Positive: A sustained rise in student enrolments leading to an
increase in income resulting in an improved liquidity position
could trigger a positive rating action.
COMPANY PROFILE
SRMCT was established by Shri Ramswaroop Memorial Group in May
2010. Under its aegis, Shri Ramswaroop Memorial University was
established under the UP State Government Act 1 of 2012. Spread
across 52.46 acres of land, the university has been established
under a separate state act, Shri Ramswaroop Memorial University
Act, 2011.
The university is located in Uttar Pradesh. The university was
set up to provide education in various fields such as science,
engineering and technology, management, law, hotel, management,
teaching and others.
SRI KRISHNA: CRISIL Reaffirms B- Rating on INR15MM Cash Loan
------------------------------------------------------------
CRISIL's ratings on the bank facilities of Sri Krishna Shipping
Corporation (SKSC) continue to reflect large working capital
requirement, small scale of operations in the intensely
competitive steel industry. The ratings also reflect below-
average financial risk profile because of modest networth, high
gearing and weak debt protection metrics. These rating weaknesses
are mitigated by the extensive industry experience of promoters.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL A4 (Reaffirmed)
Cash Credit 15 CRISIL B-/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Large working capital requirement: SKSC's business is highly
working capital intensive, as reflected in gross current asset
(GCA) days of 201 days as on March 31, 2017; the GCA days have
been at similar levels in the past. The high GCA days emanates
from the firm's estimated high inventory levels of around 90 days
and receivables cycle of 65 days.
* Small scale of operations in the intensely competitive steel
industry: SKSC's modest of operations is small reflected in
estimated operating income of INR51.3 Crore during 2016-17.Also
there is intense competition in the industry given the low entry
barriers that actually constrains the bargaining power of firm
and hence the scale of operations.
* Below-average financial risk profile: The firm has below
average financial risk profile marked by modest net worth, high
TOLTNW and weak debt protection metrics. The net worth of the
firm is modest at INR6 Cr as on March 3,12017.High TOLTNW at 4.2
times is due to the high reliance on the bank lines contracted
and modest networth. NCATD and Interest coverage at 0.01 times
and 1.2 times are weak for 2016-17
Strengths
* Extensive industry experience of promoters: The partners of
the firm include Mr.Y Rama Rao Choudary, his wife Mrs. Y
Adilakshmi, and his sons Mr. Y Venkateswara Rao and Mr. Y Rayudu.
Initially, Sri Krishna undertook material-handling works of RINL
and SAIL in Visakhapatnam. Over the years, the management has
developed strong relationships with its major customers and
suppliers. Sri Krishna deals in a large range of steel products,
including TMT bars, channels, angles, plates, joints and others,
with major focus on TMT bars.
Outlook: Stable
CRISIL believes SKSC will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' if revenues and
profitability improve, or networth increases substantially backed
by capital additions by promoters. Conversely, the outlook may be
revised to 'Negative' if revenue or profitability decline, or
capital structure weakens because of large, debt-funded capital
expenditure or stretched working capital cycle.
Set up in 1986 as a partnership firm, SKSC trades various steel
products such as thermo-mechanically treated bars, channels,
angles, I-beams, billets, squares, blooms, and rounds. The firm
is promoted by Mr. Y S V Rama Rao Chowdary and family, and is
headquartered in Visakhapatnam.
The Firm has recorded PAT of INR0.1 Cr on operating income of
INR51.3 Crore for the fiscal 2017 vis-a-vis PAT of INR0.3 Cr on
operating income of INR52.8 Crore for the fiscal 2016
SRI DURGASHREE: CRISIL Reaffirms B Rating on INR4.75MM Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable' rating on the
long-term bank facilities of Sri Durgashree Cashews (SDC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.75 CRISIL B/Stable (Reaffirmed)
Long Term Loan .78 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.47 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect the firm's modest scale of
operations amidst intense competition in the cashew industry, and
below-average financial risk profile. These weakness are
partially offset by extensive experience of partners in the
cashew processing industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in an intensely competitive
industry: Intense competition in the cashew processing business
has kept the scale of operations modest, as reflected in
estimated revenue of around INR9 crore in fiscal 2017, and may
continue to constrain the business risk profile.
* Below-average financial risk profile: Financial risk profile
is below-average, marked by modest net worth and high gearing of
INR1.16 crore and 4.31 times, respectively, as on March 31, 2017,
and average debt protection metrics, with interest coverage ratio
of 2.23 times and net cash accrual to total debt ratios of 0.11
time, respectively, in fiscal 2017.
Strength
* Experience of the partners in the cashew industry: The
partners, Mr. Adarsh Hegde and Mr. Pramod Hegde were engaged in
trade of raw cashew nuts, and have built healthy relationships
with overseas suppliers and clients in a short span of time.
CRISIL believes that the firm may benefit over the medium term,
from the industry experience of the promoters.
Outlook: Stable
CRISIL believes SDC will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if substantial growth in revenue and profitability,
and better working capital management, strengthens the financial
risk profile. The outlook may be revised to 'Negative' if cash
accrual is lower than expected, or if any major capital
expenditure, or stretch in the working capital cycle, weakens
liquidity.
SDC, set up as a partnership firm in 2012, processes raw cashew
nuts and sells cashew kernels. The firm has a facility in Udupi,
Karnataka. Operations are managed by Mr. Adarsh Hegde and Mr.
Pramod Hegde.
For fiscal 2017, SDC's estimated profit after tax (PAT) was
INR0.39 crore on net sales of INR8.85 crore, against a PAT of
INR0.07 crore on net sales of INR6.61 crore for fiscal 2016.
SURABI JEWELLERSS: CRISIL Assigns B+ Rating to INR.70MM LT Loan
---------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank loan facilities of Surabi Jewellerss (SJ).
The ratings reflect the firm's leveraged capital structure and
modest scale of operations, amidst intense competition. These
weaknesses are partially offset by the extensive experience of
the promoters in the jewellery manufacturing business.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan .14 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility .70 CRISIL B+/Stable
Cash Credit .50 CRISIL B+/Stable
Letter Of Guarantee 5.50 CRISIL A4
Key Rating Drivers & Detailed Description
Weakness
* Profitability constrained by intense competition in South
India: Intense competition from wholesaler jewellers in South
India and limited differentiation in the retail jewellery
segment, have kept the scale of operations moderate and operating
margin muted, thus leading to low cash accrual.
* Average financial risk profile: Financial risk profile is
marked by small networth and high gearing of around INR2 crore
and 2.04 times, respectively, as on March 31, 2017, mainly
constrained by low net cash accrual and a limited track record of
operations.
Strengths
* Extensive experience of the partners in the jewellery industry:
The decade-long experience of the partners in the jewellery
business, through Surabi Bullion (SB), a gold bullion supplier,
and established relationships with retail jewellers and
goldsmiths, will continue to support the business risk profile.
Outlook: Stable
CRISIL believes SJ will continue to benefit from the extensive
experience of its partners, in the jewellery business. The
outlook may be revised to 'Positive' if growth in revenue and
profitability strengthens the financial risk profile. The outlook
might be revised to 'Negative' if any major capital expenditure
weakens the financial risk profile.
SJ is a partnership firm of Mrs K Nagadhurgha and Mrs Subashree
K. The firm, based in Coimbatore, Tamil Nadu, deals in gold
jewellery in the wholesale segment, and commenced operations in
March 2015.
SURFACE PREPARATION: CRISIL Reaffirms B Rating on INR5MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable/CRISIL A4'
ratings on the bank facilities of Surface Preparation Solutions
and Technologies Private Limited (SPST).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL A4 (Reaffirmed)
Cash Credit 5.0 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .79 CRISIL B/Stable (Reaffirmed)
The ratings reflect the company's large working capital
requirement, and below-average financial risk profile, with
modest net worth, moderate gearing, and weak debt protection
metrics. These weaknesses are partially offset by promoter's
extensive experience in the industrial machinery business.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans
of INR6.05 crore (as on March 31, 2017) extended to SPST by its
promoters as neither debt nor equity as the loans are expected to
be retained in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Working capital
requirements are large on account of high inventory balance.
Inventory holding period is over 456 days, largely comprising
work-in-progress inventory. Maintaining such large inventory
balance has led to a longer gross current assets of 350-500 days.
Large inventory is funded through cash credit of INR5.0 crore
which had average utilisation of 98% over the 12 months ended
July 31, 2017, and unsecured loans of INR6.05 crore from
promoters. Working capital requirement will likely remain high
with its policy of maintaining large inventory. Hence, working
capital management will remain a key rating sensitivity factor
over the medium term.
* Below-average financial risk profile: Financial risk profile
is constrained by modest net worth of INR9.83 crore and moderate
gearing of 1.55 times as on March 31, 2017. Debt protection
metrics are average, with net cash accrual to total debt and
interest coverage ratios at over 0.08 time and 1.57 times,
respectively, for fiscal 2017. The financial risk profile will
likely remain below average over the medium term.
Strength
* Promoter's extensive experience in the industrial machinery
business: The promoter has over a decade of experience in the
same line of business, indicating his ability to maintain
business viability and steer the business through operational
hurdles. His understanding of the dynamics of the local market
and established relationships with customers and suppliers should
sustain business growth over the medium term.
Outlook: Stable
CRISIL believes SPST will continue to benefit from its promoter's
extensive experience. The outlook may be revised to 'Positive' in
case of significant scaling up of operations while maintaining
profitability and improving working capital management. The
outlook may be revised to 'Negative' in case of large, debt-
funded capital expenditure, weakening the capital structure, or
considerable incremental working capital requirement.
SPST, incorporated in 1987, designs and manufactures surface
preparation equipment and painting solutions. It commenced
commercial operations in January 2010.
For fiscal 2017, SPST's profit after tax (PAT) was INR0.14 crore
on net sales of INR12.86 crore, against a PAT of INR0.18 crore on
net sales of INR11.73 crore for fiscal 2016.
TANVIRKUMAR & CO: CRISIL Hikes INR11.2MM LT Loan Rating to 'B'
--------------------------------------------------------------
CRISIL Ratings has revised its ratings on the bank facilities of
Tanvirkumar & Co (TKC) from 'CRISIL B+/Stable/CRISIL A4' to
'CRISIL D/CRISILD', and simultaneously upgraded the ratings to
'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Post Shipment Credit 53.3 CRISIL A4 (Revised from
'CRISIL A4' to 'CRISIL D'
and Simultaneously Upgraded
to 'CRISIL A4')
Proposed Long Term 11.2 CRISIL B/Stable (Revised from
Bank Loan Facility 'CRISIL B+/Stable' to
'CRISIL D' and Simultaneously
Upgraded to
'CRISIL B/Stable')
The downgrade takes into account continuous overdue bills for
more than 30 days in the past. However, the rating has been
upgraded because of timely debt servicing over the past 90 days.
The ratings reflect deterioration in the firm's credit risk
profile on account of weak liquidity driven by large working
capital requirement, as reflected in its almost fully utilised
working capital limit. However, the business performance is
expected to improve on the back of increased focus on the
jewellery manufacturing segment, resulting in expected
improvement in revenue and profitability, and consequently,
stronger liquidity.
The ratings also factor in large working capital requirement and
a leveraged capital structure. These weaknesses are partially
offset by partners' extensive experience in the diamond industry.
Analytical Approach
For arriving at the rating, CRISIL has now assessed the business
and financial risk profiles of TKC on a standalone basis, unlike
previously when those of Summit Jewellery LLP (Summit),
Tanvirkumar Diamonds Ltd (TDL), Eternity Jewels (Eternity) were
also considered. That's because from September 2015, the business
of Summit, TDL, and Eternity was transferred to TKC. Summit and
TDL have become partners in TKC, while Eternity has closed
operations. The company has provided the consolidated provisional
report for fiscal 2017.
CRISIL has treated unsecured loans from partners as neither debt
nor equity as these are interest bearing to an extent of 10-12%
and are expected to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Gross current assets were
high at 340 days as on March 31, 2017, due to large receivables
and inventory of 163 days and 169 days, respectively.
* Leveraged capital structure: Total outside liabilities to
adjusted networth (TOLANW) ratio weakened to 4.32 times as on
March 31, 2017, from 3.45 times a year earlier, mainly because of
withdrawal of INR2.6 crore in fiscal 2017.
Strengths
* Partners' extensive experience in the diamond industry: TKC
was set up in 1976 by Mr. Tanvir Kirtilal Chokshi and Mr. Kamlesh
Jhaveri, and is currently managed by Mr. Nailesh Choksi, Mr.
Milan Choksi and Mr. Mihir Jhaveri. On account of the partner's
long standing experience of over 5 decade, the firm has developed
healthy relationship with customers, like Tribhovandas Bhimji
Zaveri (CRISIL BBB+/Stable), C. Krishniah Chetty & Sons,
Joyalukkas India Private Limited (CRISIL A/Stable), etc.
Outlook: Stable
CRISIL believes TKC will continue to benefit over the medium term
from its partners' extensive experience and established customer
relationships. The outlook may be revised to 'Positive' if there
is a substantial and sustained increase in profitability with
stable revenue, or a continued improvement in working capital
cycle. The outlook may be revised to 'Negative' in case of lower-
than-expected profitability, or significant deterioration in
capital structure because of stretch in working capital cycle.
TKC (erstwhile, Milan Jewellers) was set up in 1976 by Mr. Tanvir
Kirtilal Chokshi and Mr. Kamlesh Jhaveri. It manufactures and
trades in polished diamonds and diamond studded jewellery,
through its retail outlet, by the brand name 'Moksh'. Currently,
Mr. Milan Choksi, Mr. Mihir Jhaveri, Mr. Shanay Choksi and Mr.
Nailesh Choksi are the key partners in the firm.
TATA STEEL: Fitch Keeps BB IDR on RWE Amid thyssenkrupp JV
----------------------------------------------------------
Tata Steel Limited's (TSL) memorandum of understanding with
thyssenkrupp AG (BB+/Rating Watch Positive) to create a 50:50 JV
in Europe paves the way for TSL to reduce exposure to a
structurally weaker business, says Fitch Ratings.
However, TSL's Long-Term Issuer Default Rating (IDR) of 'BB'
remains on Rating Watch Evolving until further clarity on the
proposed JV emerges with the signing of definitive agreements,
which is expected by March 2018. In addition, Fitch will look out
for details on TSL's plans to significantly expand capacity in
India and evaluate its impact on TSL's financial metrics and
credit profile.
TSL's operations in Europe face weak regional demand, high
conversion costs and lack of captive raw-material sources. Fitch
believes the reduction in direct exposure to this industry and
the increase in the significance of its more-profitable Indian
operations will not only reduce earnings volatility, but also
improve TSL's overall business profile.
The proposed JV, which TSL announced on September 20, 2017, will
be called thyssenkrupp Tata Steel. It will be formed on a non-
cash basis, with both shareholders contributing assets and
liabilities in order to achieve fair valuation. The JV will be
the second-largest European flat steel producer with annual
shipments of about 21 million tonnes. TSL intends to transfer its
European flat steel assets and around EUR2.5 billion of term debt
to the JV, while thyssenkrupp would transfer pension liabilities
of EUR3.6 billion and its European flat steel assets and steel
mill services. The companies expect to sign definitive agreements
after due diligence and shareholder approval by March 2018 and
close the deal after anti-trust and other regulatory approvals in
late 2018.
The proposed JV's intended capital structure has been designed by
the two partners to be self-sustaining, with the ratio of term
debt to EBITDA in the last 12 months below 2x and expected cost
synergies of EUR400 million-600 million annually. TSL expects to
service offshore net debt of around INR170 billion with the help
of dividends from the JV. Given the lack of recourse by the JV to
TSL and cash-flow exposure limited to dividends, Fitch will use
the equity accounting method for this new entity, rather than
proportionally consolidate the JV's financials when assessing
TSL. Fitch will also place an emphasis on the significance of the
Indian business when assessing the business profile of the group.
TSL's India operations are highly profitable; they generated
EBITDA per tonne of around USD160 in the financial year ended
March 2017 (FY17). TSL benefits from significant vertical
integration in India as captive mines provided all of its iron
ore and 36% of its coal requirements in FY17. The company has
been steadily ramping up output from its Kalinganagar plant,
which has capacity of 3 million tonnes a year, since its
commissioning in May 2016. While recent steel demand growth in
India has been muted at around 4% yoy in April-August 2017, the
outlook is supported by accelerating public-sector spending and a
preferential policy for locally processed steel in government
procurement. In addition, long-term anti-dumping duties provide
protection from the threat of imports should international steel
prices weaken.
TSL has stated that it intends to double its capacity in India
from 13 million tonnes in the next five years to enhance its
market position. Apart from organic growth at its Kalinganagar
and Jamshedpur sites, the company may acquire distressed assets
in India. Indian steelmakers Essar Steel, Bhushan Steel and
Electrosteel Steels are in bankruptcy proceedings. Fitch believes
further details on TSL's plans are likely to emerge over the next
six to nine months. While the company has indicated a financially
prudent approach to capacity growth, substantial investments over
the next two to three years could hinder sustainable
deleveraging.
TSL's FFO adjusted net leverage improved to around 5x at FYE17,
from 13x at FYE16. We estimate TSL's leverage to decline further
to 4x by FY19, driven by robust EBITDA in India and reduced
capex. TSL's capex averaged around INR120 billion each year over
FY14-17 as it set up its Kalinganagar plant, and we assume
roughly half of that level will be spent annually over the next
three years resulting in positive FCF. However, higher-than-
expected spending to pursue capacity growth is a key risk to our
estimates.
TATA STEEL: S&P Affirms 'BB-' CCR Amid Thyssenkrupp Merger
----------------------------------------------------------
S&P Global Ratings said it affirmed its long-term corporate
credit ratings at 'BB-' on Tata Steel Ltd. (TSL) and 'B+' at Tata
Steel UK Holdings Ltd. (TSUKH). S&P said, "At the same time, we
affirmed our short-term corporate ratings on TSUKH at 'B'. S&P
also affirmed our 'BB-' issue ratings on notes guaranteed by TSL.
The long-term outlook on both companies is stable."
S&P said, "We have affirmed our ratings on TSL because any
potential leverage benefits from the announced 50/50 joint
venture (JV) of its European operations with thyssenkrupp AG are
least two years away and depend on approvals from shareholders
and multiple regulatory agencies. Nevertheless, plans to inject
all of the European assets into the JV indicate a limited
potential for support in future. We have reassessed the group
status for TSUKH to strategically important from highly
strategic."
Under the proposed transaction, TSL will transfer EUR2.5 billion
in debt held under TSUKH to the JV. As such, TSL will no longer
consolidate this debt in its financial statements; it will also
deconsolidate interest expenses or capital expenditures under
TSUKH. S&P projects this will improve TSL's ratio of funds from
operations (FFO) to debt from around 15% to about 17% in fiscal
year ending in March 31, 2020, thereby crossing our upgrade
trigger for TSL. However, such an improvement is conditional on
the Indian operations' sustaining current estimates of
profitability and moderate capital spending.
TSL will also transfer all of TSUKH's assets into the JV. As
such, its operating scale will be smaller post-merger, and more
focused on its Indian assets. S&P said, "We believe TSL will
likely deploy its managerial and financial resources toward
building additional scale--either organically or through
acquisition--in its India steel-making business. We expect TSL to
produce 12 million tons of steel per annum at an average per ton
EBITDA of Indian rupee (INR) 11,500 over the next two to three
years and that capital expenditure will stay around INR60 billion
annually in this period."
The JV will have TSL and thyssenkrupp, two strong parents, both
lending their names to it. Based on a memorandum of understanding
signed earlier this month, the post-merger company, to be named
Thyssenkrupp Tata Steel BV, will have a flat-rolled steel
capacity of 20-21 million tons per annum. The JV will likely have
an annual EBITDA of EUR1.5 billion in fiscal 2020; this is based
on the last 12 months' operational performance and before
including any synergy benefits. S&P estimates it will have gross
long-term debt and pension liabilities of about EUR6.5 billion
(including thyssenkrupp's pension liabilities, which will be
injected into the JV).
S&P said, "We have affirmed our rating on TSL's fully owned
subsidiary TSUKH because we expect TSL will continue to support
TSUKH at least until the formation of the merger with
thyssenkrupp. In our view, TSL's plans to shift TSUKH's assets
and part of its debt to the JV indicate a shrinking potential of
extraordinary support from TSL towards the European assets and a
reduced long-term strategic importance. In light of these
developments, we no longer consider TSUKH to be highly strategic
to TSL. However, TSUKH's large size, contribution to TSL, name-
sharing, and record of financial and managerial support by TSL
still suggests, in our opinion, a degree of strategic importance
and likely forthcoming support if needed until the assets are
formally injected into the JV. Once we have more clarity on debt
composition at TSUKH after a definitive agreement is signed
between the partners, we will reassess TSUKH's standing in the
group.
"We expect the JV partners to work out a binding agreement by
April 2018. This document will likely provide us more clarity on
the management structure and key decision-making responsibilities
after the merger. Moreover, if any of TSUKH's debt is refinanced
prior to its shifting to the JV, we will have clear understanding
of debt at TSL (outside of JV) and the standing of TSUKH in the
Tata Steel group structure in such scenario.
"We will reassess the impact of the deal on TSL as more details
become available via a binding agreement, timelines for
approvals, and any information on potential debt reconfigurations
at TSUKH.
The stable outlook on Tata Steel reflects our expectation that
the company will maintain its healthy profitability in its Indian
operations and fair operating performance in Europe. This is
supported by strong steel prices in India on the back of Indian
government's protection measures, and an improved demand-supply
in global steel markets. We also believe that Tata Steel will
manage its capital expenditure and working capital needs such
that its free cash flow turns positive starting in fiscal 2018.
Although unlikely over next 12 months, we could lower our rating
on Tata Steel if the operating performance is weaker than we
anticipated, such that its EBITDA interest coverage stays below
2.0x for a prolonged period. This weakness in operating and
financial metrics would likely result in EBITDA per ton of steel
stagnating below INR8,000 at the India operations.
"We could upgrade the company if the ratio of FFO to debt
sustainably crosses 15%. This could happen if EBITDA per ton at
the India operations reaches INR15,000 sustainably and the Europe
operations generate a healthy EBITDA. Prudently controlled
capital expenditure leading to positive free operating cash flow
generation would also support an upgrade. The formation and ramp
up of the merger with thyssenkrupp could improve ratios to a
level commensurate with upgrade trigger."
THRIMATHY CONTRACTING: CRISIL Reaffirms B+ Rating on INR13MM Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Thrimathy Contracting Company (TCC) at 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 10 CRISIL A4 (Reaffirmed)
Cash Credit 13 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect modest scale, susceptibility to
government decisions due to tender-based operations, and average
financial risk profile due to modest networth, owing to
significant withdrawals. These weaknesses are partially offset by
the extensive experience of managing partner.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks related to tender-based operations: The firm
is a contractor for the Public Works Department, Kerala, for
roads and bridges; all the works are executed on the basis of
tenders allocated. This leads to volatile revenue when orders are
low.
* Recent capital withdrawals: The partners have withdrawn funds
in fiscals 2016 and 2017 due to the demise of a partner. However,
no further withdrawal of profits is expected.
Strengths
* Managing partner's extensive industry experience: The managing
partner has an experience of over 15 years in the civil
construction business.
* Average financial risk profile: Total outside liabilities to
tangible networth ratio was low at 0.47 time as on March 31,
2017; the interest coverage ratio is expected to be above average
at 4.40 times in fiscal 2018.
Outlook: Stable
CRISIL believes TCC will continue to benefit from the extensive
experience of managing partner. The outlook may be revised to
'Positive' in case of an increase in scale and profitability. The
outlook may be revised to 'Negative' in case of further capital
withdrawals or inefficient working capital management, leading to
deterioration in the financial risk profile, particularly
liquidity.
TCC was established in 2001 by the late Mr. V P Thrimathy and is
presently managed by his son, Mr. VP Harshad. The firm, based in
Malappuram, Kerala, is a civil contractor.
VASUMATHY TRADERS: CRISIL Assigns 'B' Rating to INR5MM Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facilities of Vasumathy Traders (VT).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 0.5 CRISIL B/Stable
Cash Credit 5 CRISIL B/Stable
Key Cash Credit 4.5 CRISIL B/Stable
The rating reflects VT's low operating margin in the intensely
competitive agricultural products market, and below-average
financial risk profile. These weaknesses are partially offset by
experience of promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Low operating margin: Operating margin has historically
remained low at around 2% due to the trading nature of operations
and volatile prices of its products.
* Intense competition from local players: Intense competition
constrains pricing power with customers and suppliers and limits
the ability to bid for large tenders. Revenue may hence remain
restricted.
* Below-average financial risk profile: Networth was modest at
INR3.2 crore with moderate gearing of 2.87 times as on March 31,
2017. Interest coverage ratio was 1.5 times for fiscal 2017. The
financial risk profile is expected to remain below average over
the medium term.
Strength
* Experience of promoters: Benefits from the promoters'
experience of four decades and a strong reputation with the Tamil
Nadu Government for procurement of imported pulses for its
various civil schemes should continue to support the business.
Outlook: Stable
CRISIL believes VT will continue to benefit from the experience
of promoters. The outlook may be revised to 'Positive' if scale
of operations and operating margin substantially increase along
with healthy capital structure. Conversely, the outlook may be
revised to 'Negative' if decline in revenue, stretch in
liquidity, or sizeable withdrawal of funds weakens capital
structure.
VT, based in Virudhunagar (Tamil Nadu), was set up in 1977 by Mr.
A. Surendran. The firm sells imported pulses to Tamil Nadu
Government; it also sells spices to Tamil Nadu Government and few
private players.
ZIMIDARA PESTICIDES: CRISIL Reaffirms B+ Rating on INR10MM Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facility of Zimidara Pesticides (ZP) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect exposure to risks related to
geographic concentration in revenue, and weak financial risk
profile because of high total outside liabilities to tangible
networth (TOLTNW) ratio and below-average debt protection
metrics. These weaknesses are partially offset by proprietor's
extensive experience in the pesticides trading segment and
moderate risk management policies.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale in a highly fragmented industry: Scale is modest,
as reflected in revenue of INR85.77 crore in fiscal 2017, in line
with previous year's level. Furthermore, pesticide trading is
highly fragmented, with several small players, and hence, revenue
in the medium term is expected to be at INR100-105 crore.
Operating margin is also likely to remain low at 1.8-2.0%.
* Working capital-intensive operations: Operations are working
capital intensive as reflected in gross current assets (GCAs) of
170 days as on March 31, 2017, driven by inventory of 50 days and
debtors of 89 days. High GCAs have increased dependency on
external bank lines; bank limit utilisation was over 95% in the
12 months through August 2017. This has led to constrained
liquidity. However, liquidity is supported by supplier credit,
low debt obligation, and consistent support from promoters
through unsecured loans. In the medium term, with large working
capital requirement and moderate accrual, liquidity is likely to
remain constrained.
* Below-average financial risk profile: Financial risk profile
is subpar, with below-average debt protection metrics'interest
coverage ratio was at 1.14 times, for fiscal 2017. Net cash
accrual to adjusted debt ratio was negative, owing to capital
withdrawal in fiscal 2017. Total outside liabilities to tangible
networth (TOLTNW) ratio was high at 4.57 times as on March 31,
2017, because of low accretion to reserve and considerable
working capital borrowings. However, nil capital expenditure plan
for the medium term and low incremental working capital
requirement due to small scale should support the financial risk
profile.
Strength
* Proprietor's experience: The proprietor has been in trading in
pesticides for over 25 years and has developed established
relations with customers, leading to steady orders over the
medium term.
Outlook: Stable
CRISIL believes ZP will maintain its business risk profile over
the medium term, backed by the proprietor's extensive experience.
The outlook may be revised to 'Positive' if networth increases
substantially, driven by sustained improvement in profitability
or fresh equity infusion, while maintaining its working capital
cycle. Conversely, the outlook may be revised to 'Negative' if
scale or profitability declines on account of change in
government regulations in the agro-chemical industry, or if
liquidity weakens on account of a stretched working capital
cycle.
Established in 1990 as a proprietorship firm by Mr. Om Prakash,
ZP trades in pesticides, seeds, and fertilizers. ZP is an
authorised dealer and distributor of around 42 pesticide
companies in Abohar (Punjab). The operations are managed by Mr.
Om Prakash.
* INDIA: 46 Insolvency Cases Filed at Chennai Bench of NCLT
-----------------------------------------------------------
The Hindu reports that as many as 46 cases of insolvency have
been filed at the National Company Law Tribunal (NCLT) under the
Insolvency and Bankruptcy Code 2016.
The Chennai bench started hearing insolvency-related cases from
April 2017 and has been one of the most active benches, the
report states.
According to The Hindu, the Centre had introduced the Insolvency
and Bankruptcy Code 2016 to quickly resolve the non-performing
assets problem of the banks and as part of its pledge to ensure
ease of doing business.
Under the code, a bank or financial institution (called a
financial creditor) that has lent money to the company or a
supplier of goods to the company (called an operational creditor)
can file an insolvency petition against a company for non-payment
of dues.
Alternatively, the company itself (called the corporate debtor)
can file for voluntary insolvency.
According to a study by Chennai-based corporate lawyer Anant
Merathia, 46 cases of insolvency has been filed at the NCLT
Chennai as on September 24, 2017, the Hindu relays.
During the period, the Chennai bench of NCLT had also delivered
some high-profile verdicts. It had dismissed an insolvency plea
against Tamil Nadu State power utility - Tamil Nadu Generation
and Distribution Corporation (Tangedco) - initiated by a private
power producer.
The Chennai bench had also ordered insolvency proceedings against
start-up Stayzilla initiated by its vendor Jigsaw Solutions.
In another case, State Bank of India was also barred by the NCLT
from selling properties of a personal guarantor during the
moratorium period offered during the insolvency proceedings.
=========
J A P A N
=========
TAKATA CORP: Seeks to Pay $200K Retainer Fee to Special Master
--------------------------------------------------------------
Vince Sullivan, writing for Bankruptcy Law360, relates that TK
Holdings Inc. has asked the Delaware bankruptcy court to allow
its parent company Takata Corp. to pay half of the $400,000
retainer fee for Eric D. Green as special master overseeing the
$1 billion fund created under a plea agreement with the U.S.
Department of Justice to pay restitution to victims of Takata's
faulty air-bag inflators.
The Official Committee of Unsecured Creditors and the Official
Committee of Unsecured Tort Claimant Creditors have filed
objections to the Debtor's request.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the
U.S., amid recall costs and lawsuits over its defective airbags.
Takata and its Japanese subsidiaries commenced proceedings under
the Civil Rehabilitation Act in Japan in the Tokyo District Court
on June 25, 2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No. 17-11375) on June 25, 2017. Together with the bankruptcy
filings, Takata announced it has reached a deal to sell all its
global assets and operations to Key Safety Systems (KSS) for
US$1.588 billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and
Lazard is serving as investment banker to Takata. Ernst & Young
LLP is tax advisor. Prime Clerk is the claims and noticing
agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of
the Chapter 11 Debtors, obtained an order of the Ontario Superior
Court of Justice (Commercial List) granting, among other things,
a stay of proceedings against the Chapter 11 Debtors pursuant to
Part IV of the Companies' Creditors Arrangement Act. The
Canadian Court appointed FTI Consulting Canada Inc. as
information officer. TK Holdings, as the foreign representative,
is represented by McCarthy Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants. The Official Committee of Tort Claimants selected
Pachulski Stang Ziehl & Jones LLP as counsel.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and
Tyson Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New
York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in Washington, D.C., as its bankruptcy counsel. The
Committee has also tapped Chuo Sogo Law Office PC as Japan
counsel.
Frankel Wyron LLP serves as counsel to the Future Claimants'
Representative.
Chapter 15 Cases
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
====================
N E W Z E A L A N D
====================
123 MART: Owes NZ$330K to Bank of New Zealand, Liquidators Say
--------------------------------------------------------------
Rachel Clayton at Stuff.co.nz reports that discount store chain
123 Mart owes almost NZ$330,000 to Bank of New Zealand after
shareholders decided to liquidate the company.
The 123 Mart went into liquidation last week and the first
liquidator's report shows Bank of New Zealand was owed NZ$328,929
and preferential creditors a total of more than NZ$1 million,
Stuff discloses.
Stuff relates that Staple Rodway liquidators Tony Maginness --
tony.maginness@staplesrodway.com -- and Jared Booth --
jared.booth@staplesrodway.com -- said 18 stores and two
warehouses were still operating, but 42 stores around New Zealand
had been closed or sold prior to the company being liquidated.
According to the report, Messrs. Maginness and Booth said in
their report 123 Mart went into liquidation because of unpaid tax
to Inland Revenue and prosecution by the Commerce Commission
after selling choking and fire hazards.
In July, Judge Rob Ronayne found 123 Mart sold about 9,000 of
seven types of toys with small parts that were choking hazards
for young children, Stuff recalls.
Stuff says the company had already pleaded guilty to five charges
that it sold more than 1,200 items of children's pyjamas that did
not have the required fire danger labels, and more than 11,000
items of clothing that failed to comply with labelling
requirements.
Preferential creditors include employees, who were owed a total
of about NZ$190,000 in unpaid wages and holiday pay, and Inland
Revenue, owed NZ$839,000, the report discloses.
Unsecured creditors were owed NZ$6.3 million, Stuff adds.
The 123 Mart was opened in 1995 by Joseph Choi and operated under
four different brands, including The 123 Mart, Dollar Store 123,
King Dollar Store and Max!Out.
=================
S I N G A P O R E
=================
TT INTERNATIONAL: Big Box Mall Placed Into Receivership
-------------------------------------------------------
Jacqueline Woo at The Strait Times reports that receivers have
been appointed for Big Box, which owns and operates the same-name
eight-storey warehouse mall in Jurong East.
But operations at the mall "continue unaffected", according to TT
International, which owns 51 per cent of Big Box, the report
relays.
Consumer electronics retailer TT International is being
restructured under a scheme of arrangement, The Strait Times
notes.
Mall tenants such as Mr. Kevin Soh, director of 24-hour self-
service laundromat Laundry Loft, told The Straits Times it is
"business as usual", although he will have to keep monitoring the
situation.
Ms. Angela Ee Meng Yen and Mr. Aaron Loh Cheng Lee have been
appointed as the receivers, The Strait Times discloses citing a
Sept. 27 letter issued by Ernst & Young Solutions, which is
acting for OCBC as security trustee for the lenders under the Big
Box facility.
OCBC had asked Big Box in July to repay SGD111.3 million by
Aug. 14, in relation to a SGD125 million loan facility granted in
April 2013, the report recalls.
According to the report, TT International said then that it was
in talks with lenders to obtain funding of up to SGD380 million
needed to refinance and repay the Big Box facility and its other
payment obligations.
On Sept. 7, TT International said the High Court had granted its
moratorium application to restrict all creditors from taking
further action against itself until next Feb. 11, the report
says.
The Strait Times relates that the High Court had also ordered
that no receiver or manager could be appointed over any of the
firm's property or undertaking.
TT International said in its statement on Sept. 29 that its
efforts to secure refinancing for the group, including Big Box,
are continuing, the report relays.
It is also seeking legal advice on the appointment of the
receivers and managers, adds The Strait Times discloses.
Trading in the company's shares has been voluntarily suspended
since Aug 4. Its last traded price was 1.4 cents, on July 28, the
report notes.
===============
T H A I L A N D
===============
CTH PLC: Shareholder Files Complaint With DSI Over Shutdown
-----------------------------------------------------------
The Nation reports that a minor shareholder of CTH Plc on
Sept. 25 filed a complaint with the Department of Special
Investigation (DSI) for the company to be investigated in the
wake of a June ruling by the Central Bankruptcy Court that
rejected a rehabilitation plan for the cable TV operator and
ordered it to enter bankruptcy.
Sumet Sonsut, a lawyer representing the minor shareholder, said
that, with the complaint to the DSI, it wants an investigation
into the company's conduct, The Nation relates.
According to The Nation, the complaint cited the effect of the
company's bankruptcy on the minor shareholders and also on CTH's
business relationships, including with members of the Thailand
Cable TV Association (TCTA) and scores of equipment installation
companies. In all, about 100 companies have been affected across
Thailand, the report states.
The Nation, citing the filing with the DSI, relates that the
financial damage incurred by the minor shareholders and TCTA
members is THB1.9 billion. Combined, more than 100 people
nationwide have been affected by CTH's business shutdown, the
filing said. Thaivisa.com relates that TCTA president Viriya
Thamruengthong said that the association's members face even more
losses as a result of issues following the shutdown of TCH's
operations.
They need to make arrangements with CTH on matters such as their
inventories and money guarantees since the operations ended, The
Nation says.
"We need the DSI to investigate CTH Plc over its corporate
governance and the way it has done business, related to when
Central Bankruptcy Court issued a statement on June 22, 2017,
that CTH Plc be declared a bankrupt firm," The Nation quotes
Viriya as saying.
According to the report, the DSI's director of the bureau of case
management, Police Major Worranan Srilum, said that the
department would consider the filed complaint within 10 days,
before sending it on to the DSI's director-general to decide
whether to proceed with an investigation.
"If the DSI's director-general issues an order to accept this
case for an investigate by the DSI, we will take a maximum of six
months to investigate, before deciding whether to take any
action," the report quotes Mr. Worranan as saying. "We cannot say
at this time whether the DSI has accepted this case for
investigation. [Yesterday] only marks that we have accepted this
case for registration of a complaint and that will be followed by
a study into the case."
CTH Plc shut down its cable TV operations on August 1, 2016. The
company made a filing with the Central Bankruptcy Court on
October 20, 2016, for a business rehabilitation, The Nation
discloses.
The Nation relates that in that filing, it said it total debts
of THB21.45 billion, which exceeded its total assets of THB9.9
billion. In the rehabilitation plan, the company had proposed
that it enter the energy sector with a biomass venture for
electricity production.
But on June 22 this year, the Central Bankruptcy Court issued a
statement rejecting its rehabilitation plan and ordered the
company to enter bankruptcy, The Nation notes.
CTH Plc was established on October 8, 2009, with registered
capital of THB3 billion, by major shareholders Yingluck
Watcharapol and Wichai Thongtang, who each hold 25 per cent, with
the rest held by minor shareholders, The Nation discloses.
*********
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
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about which we report.
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related conferences are encouraged. Send announcements to
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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-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Copyright 2017. All rights reserved. ISSN: 1520-9482.
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