/raid1/www/Hosts/bankrupt/TCRAP_Public/171005.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, October 5, 2017, Vol. 20, No. 198
Headlines
A U S T R A L I A
BRISCONNECTIONS: Receivers Sue Arup for $2BB Over Collapse
HERRINGBONE PTY: Second Creditors' Meeting Set for Oct. 12
BRUYNZEEL AUSTRALIA: Second Creditors' Meeting Set for Oct. 11
GRAND CATERING: Second Creditors' Meeting Set for Oct. 12
RHODES & BECKETT: Second Creditors' Meeting Set for Oct. 12
UNIVERSITY OF NEW SOUTH: 2nd Creditors' Meeting Set for Oct. 12
I N D I A
ALUMINIUM INDIA: ICRA Lowers Rating on INR40cr Bank Debt to D
BABA RICE: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
BHARGAV FOODS: CRISIL Assigns B+ Rating to INR15MM Cash Loan
BHUSHAN STEEL: Bankers Halt Fresh Loans Amid Insolvency
BINANI INDUSTRIES: Calcutta High Court Enters Wind Up Order
BUDDHA SORTEX: ICRA Moves B+ Rating to Not Cooperating Category
CASCADE SYSTEMS: ICRA Withdraws B+ Rating on INR5.0cr Cash Loan
COMET HANDICRAFTS: CRISIL Reaffirms B+ Rating on INR10MM Loan
DARWIN PHARMA: ICRA Moves 'B' Rating to Not Cooperating Category
DOOR SANCHAR: ICRA Moves 'D' Rating to Not Cooperating Category
ELECTROPATH SERVICES: ICRA Moves D Rating to Not Cooperating
ETA ENGINEERING: CRISIL Reaffirms 'D' Rating on INR441.25MM Loan
JAGANNATH RICE: CRISIL Reaffirms B+ Rating on INR12.55MM Loan
JIA AUTO: ICRA Moves 'C' Rating to Not Cooperating Category
KAIRASONS JEMS: CRISIL Reaffirms B+ Rating on INR8MM Cash Loan
KAFILA HOSPITALITY: CRISIL Reaffirms B+ Rating on INR40MM Loan
MONET ISPAT: JSW Stee, Tata Steel Joins Other Investors in Bid
MUTHA INDUSTRIES: ICRA Reaffirms B Rating on INR4.02cr Term Loan
NAGPUR BEVERAGES: CRISIL Reaffirms B Rating on INR6MM Loan
OM SRI: CRISIL Assigns 'B' Rating to INR9.80MM Rupee Term Loan
PMC RUBBER: CRISIL Reaffirms B Rating on INR33.75MM Cash Loan
PR PACKING: ICRA Assigns B+ Rating to INR1.88cr Fund Based Loan
RADIANT INFO: CRISIL Lowers Rating on INR4MM Term Loan to B-
PRAGATI TRANSMISSION: ICRA Moves B+ Rating to Not Cooperating
RAVILEELA GRANITES: CRISIL Lowers Rating on INR6MM Cash Loan to D
RENOM ENERGY: ICRA Assigns B+ Rating to INR4.0cr Cash Loan
SAIMAX CERAMIC: ICRA Reaffirms B+ Rating on INR8.05cr Loan
SARAVANA SAI: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan
SARIA INDUSTRIES: CRISIL Hikes Rating on INR12MM Cash Loan to B+
SATHYANARAYANA AGRO: ICRA Reaffirms B+ Rating on INR5cr Loan
SHIKARPUR & BHANDAPUR: ICRA Reaffirms B- Rating on INR5.06cr Loan
SHREE DURGA: CRISIL Lowers Rating on INR5.50MM Loan to B-
SIRPUR PAPER: Put Under Corporate Insolvency Resolution Process
SOLNOVA POWER: CRISIL Lowers Rating on INR15MM LT Loan to B+
SRS LIMITED: CRISIL Reaffirms FD Fixed Deposits Rating
SRI VELA: CRISIL Reaffirms D Rating on INR19.45MM Term Loan
SUNBRIGHT CERAMIC: CRISIL Lowers Rating on INR2.5MM Loan to B
SWASTIK METCAST: CRISIL Cuts Rating on INR5.42MM Cash Loan to B-
VIKAS COTTON: ICRA Reaffirms B+ Rating on INR12cr Loan
J A P A N
TOSHIBA CORP: Buying Back 10% Stake in Westinghouse for $522MM
M A L A Y S I A
PERISAI PETROLEUM: External Auditors Question Firm's Viability
S I N G A P O R E
GEO COAL: Fitch Rates US$300MM Sr. Unsecured Notes 'B+'
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A U S T R A L I A
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BRISCONNECTIONS: Receivers Sue Arup for $2BB Over Collapse
----------------------------------------------------------
John Reed at The Financial Times reports that the receivers of
BrisConnections are suing London-based global engineering company
Arup in Australia for $2 billion.
BrisConnections, the company that finished building a toll road
linking Brisbane's central business district with its airport in
2012, went into administration the following year with debts
worth more than $3 billion.
According to the FT, PPB Advisory, acting as BrisConnections'
receivers, are seeking $2 billion in compensation for Arup's
traffic forecasting, which proved far off the mark -- traffic on
the road reached only about a quarter of what the UK group
forecast.
The FT relates that the dispute went into litigation after the
company's collapse, and moved into court in Sydney on Oct. 3
after the parties failed to reach a resolution behind closed
doors.
The litigation has ensnared Macquarie Group, one of the backers
of the project's initial public offering, the FT says. The
Australian investment bank faces a cross-claim brought by Arup
that contends the bank shoulder a part of any award paid.
Arup is arguing that Macquarie, which put together the financial
vehicle behind the road project, should be liable for a portion
of any damages, the FT relays, citing a person familiar with the
case. Arup has denied any wrongdoing in documents filed in court,
the FT says.
Arup was founded by Sir Ove Arup, the engineer behind the Sydney
Opera House. The group's high-profile projects include the high-
speed rail link between London's St Pancras Station and Europe,
and infrastructure for the park used in the UK capital's 2012
Olympic Games, the FT cites.
According to the FT, BrisConnections' three backers, which
include Macquarie, have denied Arup's allegations in the lawsuit
over the Brisbane road, saying Arup is trying to assign
responsibility for its conduct to them, even though they were not
involved in the traffic forecasting work.
This would not be the first time the Brisbane road project
created problems for Macquarie, which served as bookrunner for
BrisConnections' IPO in July 2008, the FT relays. The IPO fell
almost 60% on the first day of trading after analysts weighed in
with bearish forecasts for its projects and general concern in
the middle of global financial crisis about funding long-term
infrastructure, according to the FT.
The FT says the lawsuits will be watched for any precedent they
might set on the potential liability of companies that do
forecasts for motorway or other big infrastructure projects.
Investors in another Australian infrastructure project that
soured, Brisbane's Clem7 tunnel, last year won a $121 million
award after a class-action lawsuit against traffic forecaster
Aecom and RiverCity Motorway, its owner operator, over big
discrepancies between forecasts for the facility and how many
drivers actually used it, the FT relays. The tunnel went into
receivership in 2011. The settlement was conditional on approval
by federal court, the FT adds.
About BrisConnections Group
BrisConnections Group is the company behind the AUD4.8 billion
Airport Link tunnel. AirportlinkM7 is the toll road linking
Brisbane's CBD to the northern suburbs and the Brisbane Domestic
and International Airport.
David McEvoy, Christopher Hill and Michael Owen of PPB Advisory
were appointed as Receivers and Managers to the BrisConnections
Group on Feb. 19, 2013. This follows the appointment of partners
of McGrathNicol as Voluntary Administrators by the Board of
BrisConnections Group.
BrisConnections went into administration on debts worth more than
the tunnel.
HERRINGBONE PTY: Second Creditors' Meeting Set for Oct. 12
----------------------------------------------------------
A second meeting of creditors in the proceedings of Herringbone
Pty Ltd has been set for Oct. 12, 2017, at 11:00 a.m., at the
offices of Cor Cordis Chartered Accountants, Level 29, 360
Collins Street, in Melbourne, Victoria.
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. 11, 2017, at 5:00 p.m.
Luke Christopher Targett, Bruno A Secatore and Daniel P
Juratowitch of Cor Cordis Chartered Accountants were appointed as
administrators of Herringbone Pty on Feb. 6, 2017.
BRUYNZEEL AUSTRALIA: Second Creditors' Meeting Set for Oct. 11
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Bruynzeel
Australia Pty Limited has been set for Oct. 11, 2017, at
10:00 a.m., at the offices of WJ Hamilton & Co., Suites 508-509,
147 King Street, in Sydney, New South Wales.
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. 11, 2017, at 9:00 a.m.
William James Hamilton of William Hamilton was appointed as
administrator of Bruynzeel Australia on Sept. 5, 2017.
GRAND CATERING: Second Creditors' Meeting Set for Oct. 12
---------------------------------------------------------
A second meeting of creditors in the proceedings of Grand
Catering Pty Ltd has been set for Oct. 12, 2017, at 11:00 a.m.,
at the offices of PKF, Level 8, 1 O'Connell Street, in Sydney,
New South Wales.
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. 11, 2017, at 4:00 p.m.
John Vouris and Mark Roufeil of PKF were appointed as
administrators of Grand Catering on Sept. 6, 2017.
RHODES & BECKETT: Second Creditors' Meeting Set for Oct. 12
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Rhodes &
Beckett Pty Ltd has been set for Oct. 12, 2017, at 10:00 a.m., at
the offices of Cor Cordis Chartered Accountants, Level 29, 360
Collins Street, in Melbourne, Victoria.
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. 11, 2017, at 5:00 p.m.
Luke Christopher Targett, Bruno A Secatore and Daniel P
Juratowitch of Cor Cordis Chartered Accountants were appointed as
administrators of Rhodes & Beckett on Feb. 6, 2017.
UNIVERSITY OF NEW SOUTH: 2nd Creditors' Meeting Set for Oct. 12
---------------------------------------------------------------
A second meeting of creditors in the proceedings of University of
New South Wales International House Limited has been set for
Oct. 12, 2017, at 11:00 a.m., at the offices of Ferrier Hodgson,
Level 25, One International Towers Sydney, 100 Barangaroo Avenue
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. 11, 2017, at 4:00 p.m.
Robyn Louise Duggan and Morgan Kelly of Ferrier Hodgson were
appointed as administrators of University of New South Wales
International on Sept. 6, 2017.
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I N D I A
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ALUMINIUM INDIA: ICRA Lowers Rating on INR40cr Bank Debt to D
-------------------------------------------------------------
ICRA Limited has revised the long-term rating of Aluminium India
(AI) from [ICRA]BB- (Stable) to [ICRA]D for the INR40.00 crore
bank lines. ICRA has also revised the long term/short-term rating
from [ICRA]BB-(Stable)/[ICRA]A4 to [ICRA]D for the INR2.00 crore
unallocated limits of AI. The rating has moved to the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash
Credit 40.00 [ICRA]D; ISSUER NOT CO-
OPERATING; Ratings
downgraded from [ICRA]BB-
(Stable) Rating moved to
the 'Issuer Not Co-operating'
category
Unallocated 2.00 [ICRA]D; ISSUER NOT CO-
OPERATING; Ratings
downgraded from [ICRA]BB-
(Stable)/[ICRA]A4 Rating
moved to the 'Issuer Not
Co-operating' category
Rationale
As part of its process and in accordance with its rating
agreement with Aluminium India, ICRA has been trying to seek
information from the company so as to undertake a surveillance of
the ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of
requisite information, ICRA's Rating Committee has taken a rating
view based on best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as: "[ICRA]D ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
The rating revision factors in delays in debt servicing by the
company following pressures on liquidity.
Key rating drivers
Credit strengths
* Significant experience of the firm in the field of Aluminium
trading: The firm have more than 40 years of experience in
Aluminium trading; resulting in established relationship with
major customers in the industry
* Healthy growth in the revenues: The operating income of the AI
increased from INR291.89 crore in FY2014 to INR392.72 crore in
FY2015 on the back of increased trading volumes
Credit weaknesses
* Delays in debt servicing: The rating is constrained by delays
in debt servicing by AI.
* Strong competition owing to low entry barriers in regards to
trading nature of business: The ratings also take into account
the intense competition in the business due to low entry barriers
resulting from its trading nature, thus exerting pressure on
margins and volumes.
* Risk from Partnership nature of business: Any substantial
withdrawal would adversely affect the capital structure of the
firm
Aluminium India (AI), set up in 1965 as a proprietorship firm by
Mr. Chiranji Vyas, to primarily trade in aluminium and is based
out of Hyderabad. The firm was reconstituted as a partnership
firm in 1975, with Mr. Chiranji Vyas, Mr. Niranjan Vyas, Mr.
Suresh Vyas and Mr. Baiju Vyas as its partners. In the year 1995,
AI diversified into trading of copper as well. The firm majorly
procures the material from Hindalco Industries Limited (HIL). The
day to day operations of the firm are looked after by Mr. Suresh
Vyas.
BABA RICE: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has been consistently following up with Baba Rice
Industry (BRI) for obtaining information through letters and
emails dated July 18, 2017, and August 17, 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 10 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 Baba Rice Industry. 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 Baba Rice Industry 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'.
Established as a partnership firm in 2000, BRI processes raw
rice. It has an installed paddy milling capacity of 5 tonne per
hour (tph). Its rice mill is located in Nellore (Andhra Pradesh).
The operations are managed by Mr. M Sree Rama Raju and Mr. M
Narayan Raju.
BHARGAV FOODS: CRISIL Assigns B+ Rating to INR15MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Bhargav Foods (BGF).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 15 CRISIL B+/Stable
The rating reflects modest scale owing to new business and
susceptibility to raw material price increases. Liquidity is also
moderate as evident from high bank limit utilisation and exposure
to project risk. These weaknesses are partially offset by
proprietor's extensive experience.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Scale is modest, as reflected in
YTD figures of INR25 crore for the five months through August
2017, owing to early stage of operations. With proprietor's
experience and market relations, the scale is expected to improve
over the medium term.
* High bank limit utilisation: The bank lines are highly
utilised at 95-98% levels due to working capital-intensive
operations. However, proprietor's support, along with cash
accrual against minimal debt obligations, should provide
liquidity cushion over the medium term.
* Susceptibility to volatility in raw material prices: BGF
procures its key raw material, wheat, from mandis and commission
agents. Shortage in wheat production because of adverse weather
conditions can negatively affect availability and prices. Also,
the firm mainly sells in the wholesale market and hence the
ability to pass on input price increases is also lower owing to
intense competition, resulting in low procurement and
profitability.
* Demand risk: As the company is in the initial phase, it is
exposed to demand risks over the medium term. However, with the
family experience in the similar line of business, the business
risk profile is expected to be at comfortable levels owing to
established relations with the suppliers and customers.
Strengths
* Proprietor's industry experience: Mr. Nitin Gaur's family has
been trading in wheat flour from the past 12-14 years. The
family's longstanding experience has helped in building good
customer and supplier relations.
Outlook: Stable
CRISIL believes BGF will continue to benefit over the medium term
from its proprietor's extensive experience. The outlook may be
revised to 'Positive' in case of significant improvement in scale
and profitability, while maintaining its working capital
requirement or substantial capital infusion, strengthening the
financial risk profile. Conversely, the outlook maybe revised to
'Negative' in case of lower-than-expected cash accrual or larger-
than-expected working capital requirement or larger-than-
expected, debt-funded capital expenditure, leading to
deterioration in financial risk profile.
BGF is a proprietorship firm set up in April 2017. The firm is
based out of Delhi and is promoted and managed by Mr. Nitin Gaur.
The firm has a manufacturing plant in Mayapuri with a processing
capacity of 5 tons per hour for wheat processing. Currently the
firm is operating for 16 hours daily. The company sells the wheat
under its brand 'Pavitra Aahar'. The operations of the company
started in April, 2017.
BHUSHAN STEEL: Bankers Halt Fresh Loans Amid Insolvency
-------------------------------------------------------
Financial Express, citing senior bankers, reports that the
committee of creditors to Bhushan Steel is reluctant to sanction
fresh interim funding of around INR500 crore as part of the
corporate insolvency process.
The company already owes banks INR44,500 crore. According to the
report, bankers said that they conveyed their decision to the
resolution professional (RP) Vijaykumar V Iyer, after he
presented the plan at a recent meeting. "We have pointed out we
already have a large exposure to Bhushan Steel and any additional
loans will be difficult to recover," the bankers, as cited by FE,
said. They added that the RP may look at other institutions such
as asset reconstruction companies which are keen to offer loans
at higher interest rates, FE relates.
Bhushan Steel had initially objected to the insolvency
proceedings alleging that the State Bank of India (SBI) had
inflated the dues by around INR100 crore, the report says. The
company's counsel had said SBI classified both term loans and
working capital as default debt but the company had not received
a recall notice for the entire amount. The counsel claimed 65% of
the debt referred to as default was in the form of working
capital.
However, the National Company Law Tribunal (NCLT) had admitted
insolvency proceedings against the company in July, FE cites.
"Therefore, the company can easily manage without the interim
finance," lenders explained, FE relays.
While State Bank of India (SBI) heads the consortium for working
capital, Punjab National Bank (PNB) is the leader of the term
loan consortium, the report states.
According to FE, banks have been unwilling to commit fresh credit
to companies against whom insolvency petitions have been
admitted. Bhushan Steel is among the 12 bad accounts identified
by Reserve Bank of India (RBI) for immediate resolution under the
Insolvency and Bankruptcy Code (IBC). National Company Law
Tribunal (NCLT) on July 26 has allowed banks to start insolvency
proceedings against Bhushan Steel, Infoline reported.
India-based Bhushan Steel manufactures auto-grade steel.
BINANI INDUSTRIES: Calcutta High Court Enters Wind Up Order
-----------------------------------------------------------
LiveMint.com reports that the Calcutta high court has ordered for
the winding up of Binani Industries Ltd, the holding company of
Binani Cement Ltd, for having defaulted on paying Rs5.65 crore to
advertising agency Milestone Brandcom Pvt Ltd.
LiveMint.com relates that in the order passed on Sept. 20, the
court said, "The debt of the company towards the petitioning
creditor, to my mind is indisputable. The company has no defence
whatsoever to the claim of the petitioning creditor. It is liable
to be wound up."
The case pertained to a public campaign that Milestone Brandcom
ran for Binani from 2009 to 2016, LiveMint.com says. The high
court has also ordered the company to pay interest at 18% per
annum to Milestone.
Lawyers told LiveMint.com the only recourse Binani now has to
avoid a winding up is to pay up Milestone and make a joint appeal
to the court before it appoints an official liquidator.
"Binani has now time till December 4, when the court will next
hear the matter, to pay Milestone and convince it to tell the
court that it doesn't seek a winding up anymore," the report
quotes a senior lawyer as saying on the condition of anonymity.
What's interesting about the Calcutta high court decision is that
it comes at a time when Binani Cement is facing insolvency
proceedings at the Kolkata bench of the National Company Law
Tribunal (NCLT), LiveMint.com states. According to the report,
lawyers said in case Binani Industries fails to stop its winding
up, the insolvency proceedings against Binani Cements will also
get affected and so would be its potential acquisition by one of
the several suitors that are reported to be interested in it.
Binani Industries Limited engages in the business of logistic
management services and trading in shares and securities. The
Company is engaged in the business of providing logistics
solutions, media, publication services, trading in shares and
securities and trading and export of goods and management support
services. The Company's segments include Zinc & by products,
Cement and Glass Fibre & its Products. Its geographical segments
include India and Out of India. Its Binani Cement is a
manufacturer of cement with a manufacturing capacity of 11.25
million tons per annum with an integrated plant in India and
China, and grinding units in Dubai. The Company's product
portfolio includes Ordinary Portland Cement (OPC), Pozzolona
Portland Cement (PPC) and Ground granulated blast-furnace slag
(GGBFS). Binani Cement has its sales network in India, the United
Arab Emirates, the United Kingdom, Sudan, South Africa, Tanzania
and Namibia.
BUDDHA SORTEX: ICRA Moves B+ Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA Limited has moved the long-term rating on the INR6.75-crore
bank facilities of Buddha Sortex Rice Industries Private Limited
to the 'Issuer Not Co-operating' category. The long-term rating
is now denoted as: "[ICRA]B+ (Stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 6.75 [ICRA]B+(Stable) ISSUER NOT
COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Rationale
The rating is based on no updated information on the company's
performance since the time it was last rated in March 2016. The
last rating exercise was based on detailed information. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as it
does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA. However, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As a part of its process and in accordance with its rating
agreement with BSRIPL, ICRA has been seeking information from the
entity so as to monitor its performance. Despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Stable demand outlook for the rice industry given healthy
demand in domestic and international markets
* Easy availability of paddy in local mandis
Credit weaknesses
* Intense competition in the industry limits pricing flexibility
* Modest financial risk profile marked by low profitability, high
gearing and weak coverage indicators.
* Agro-climatic risks, which can affect the availability of the
paddy in adverse weather conditions
BSRIPL was established in 2013 and is involved in milling and
sorting of non-Basmati rice. The company's unit located at
Hetimpur Deoria (UP) has an installed capacity of 8 tonne/hour.
The company caters to both domestic and export customers. The
day-to-day operations of the company are managed by Mr. C P
Gupta.
CASCADE SYSTEMS: ICRA Withdraws B+ Rating on INR5.0cr Cash Loan
---------------------------------------------------------------
ICRA Limited withdraws the long-term rating outstanding of
[ICRA]B+ on the INR5.00-crore cash-credit facility of Cascade
Systems and Communication Private Limited (CSCPL). ICRA also
withdraws the short-term rating outstanding of [ICRA]A4 on the
INR1.00-crore non-fund based limits of CSCPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund-
based Cash Credit 5.00 [ICRA]B+; Rating withdrawn
Short-term-Non-
fund Based
Facilities 1.00 [ICRA]A4; Rating withdrawn
Rationale
The ratings are withdrawn in accordance with ICRA's policy on
withdrawal and suspension, as desired by the company and based on
the no dues certificate provided by its banker.
Incorporated in 2001, Cascade Systems and Communication Private
Limited is engaged in sales, distribution and after sales support
for IT hardware and computer peripherals. The company primarily
deals with printer consumables like printer cartridges, ink and
toner of leading brands like HP, Canon, Epson, Samsung, etc,
point of sale devices including billing terminals, label
printers, keyboards and cash register of TVS Electronics, optical
media and data storage devices like CDs, DVDs, Blu-Ray Discs and
pen-drives from Moser Baer, LG surveillance systems, Emerson UPS
and Amaron batteries. The company has tied up with large national
distributors like Ingram, Redington, Compuage and Savex, among
others for product sourcing. The company also has an IT division,
which undertakes driving-test automation project for the RTOs on
a turnkey basis. Although majority of its customers are wholesale
and semi-wholesale dealers, the company also deals directly with
end customers, which includes IT companies and government
departments. The company is equipped with a service team to cater
to the after sales and maintenance requirements of its end
customers. The company has a branch in Hyderabad, however,
receives majority of its revenues from Karnataka.
COMET HANDICRAFTS: CRISIL Reaffirms B+ Rating on INR10MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on long-term bank
facilities of Comet Handicrafts (Comet) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Credit Limit Under
Gold Card 2 CRISIL B+/Stable (Reaffirmed)
Export Packing Credit 10 CRISIL B+/Stable (Reaffirmed)
Foreign Bill Purchase 3.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect susceptibility of the firm's
operating margins to geographical concentration and fluctuations
in foreign exchange (forex) rates, large working capital
requirement, and modest networth. These strengths are partially
offset by established presence in the home decorative articles
industry and strong relationship with customers.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility of operating margins to geographical
concentration and fluctuations in forex rates: Majority of
revenue comes from European countries, which exposes the firm to
any region-specific event. Moreover, entire income is derived
from the international market, while purchases are in INR. In the
absence of a defined hedging policy, Comet remains susceptible to
any sharp fluctuation in forex rates. In the three years through
fiscal 2017, operating margin has remained in the 11-13.4% range.
Hence, firm's business risk profile is expected to remain exposed
to geographical concentration and forex fluctuation risk over the
medium term.
* Large working capital requirement: Gross current assets have
been at 329-386 days in the three years ended March 31, 2017,
because of large inventory of 282-340 days due to long
manufacturing process. Operations are expected to remain working
capital-intensive over the medium term.
* Modest networth: As on March 31, 2017, networth is estimated
to have been INR4.9 crore and is expected to remain modest over
the medium term in the absence of equity infusion.
Strengths
* Established presence in the home decorative articles industry
and strong relationship with customers: Presence of over three
decades in the home decor industry has enabled the promoters to
establish strong relationship with customers (bag repeated orders
from them) and suppliers Benefits from extensive partner
experience are expected to continue over the medium term.
Outlook: Stable
CRISIL believes Comet will continue to benefit over the medium
term from its promoters' extensive experience and established
relationship with customers. The outlook may be revised to
'Positive' in case of increase in profitability margins and
revenue; or significant improvement in capital structure backed
by better working capital management or sizeable capital infusion
by promoters. The outlook may be revised to 'Negative' in case of
a steep decline in profitability, or if capital structure
deteriorates because of large, debt-funded capital expenditure or
further stretch in working capital cycle.
Established in 1996 as a partnership firm by Agarwal family,
Comet manufactures home decorative articles such as vases,
lanterns, wall lamps, candle stands, and trays at its unit in
Moradabad, Uttar Pradesh.
Estimated operating income in fiscal 2017 is INR15 crore.
DARWIN PHARMA: ICRA Moves 'B' Rating to Not Cooperating Category
----------------------------------------------------------------
ICRA Limited has moved the ratings for the INR10.00 crore bank
facilities of Darwin Pharma Private Limited (DPPL) to the 'Issuer
Not Cooperating' category. The rating is now denoted as:
"[ICRA]B(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Unallocated 10.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in March 2016. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with DPPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information, and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Prior experience of the promoters in establishing the
manufacturing facility in Uttarakhand coupled with strong
contacts in the coastal Andhra region: The promoters have
previous experience in the industry and have also been associated
with a firm by the name M/s Darwin Research Laboratories which
has a manufacturing unit in Uttarakhand. The promoter has also
served as a Chairman for Organizing Committee of "Krishna
District Chemist and Druggist Association".
Credit weaknesses
* Implementation risk arising out of the project stage of the
company: The company planned to complete construction of the
facility and trial runs by May'16 and thereby involved
implementation risk.
* High Debt to Equity ratio of 1.84:1 for the project being
executed: The promoters plan to infuse equity of INR6.99 and
term loan of INR12.90 crore would be availed translating to debt
to equity ratio of 1.84:1.
* The proposed moratorium period of 6 months would put pressure
on debt servicing metrics: The short moratorium period would
impact the debt servicing in the initial years of operations for
DPPL.
The company was incorporated in the year 2009 by Mr. Devenini
Venkata Kiran, Mr. China Venkata Ratnam and Mr. Rajashekhara
Reddy for setting up an oral therapeutic manufacturing unit at
Nuziveed, Krishna district of Andhra Pradesh. The project cost
for establishing the unit is INR19.80 crore which will be part
funded by the term loan of INR12.90 crore (not yet sanctioned)
and remaining through equity. The manufacturing plant would have
2 lines and the combined capacity of 30,000 liters per day.
DOOR SANCHAR: ICRA Moves 'D' Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA Limited has moved the ratings for the INR24.33-crore bank
facilities of Door Sanchar Hydro Power Private Limited to the
'Issuer Not Cooperating' category. The rating is now denoted as
"[ICRA] D ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 24.15 [ICRA]D ISSUER NOT
COOPERATING, Rating moved
to the 'Issuer Not Co-
operating' category
Unallocated Limits 0.18 [ICRA]D ISSUER NOT
COOPERATING, Rating moved
to the 'Issuer Not Co-
operating' category
Rationale
The ratings are based on limited information on the entity's
performance since the time it was last rated in March 2016. The
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the it
does not adequately reflect the credit risk profile of the
entity. HCL's credit profile may have changed since the time it
was last reviewed by ICRA but in the absence of the requisite
information, ICRA was unable to take a definitive rating action.
As a part of its process and in accordance with its rating
agreement with HCL, ICRA has been seeking sufficient information
from the company so as to undertake a surveillance of the
ratings. Despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of the
requisite information, and in line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
Key rating drivers
Key strengths
* Limited off-take risk: The company has firm power purchase
arrangement with Himachal Pradesh State Electricity Board Limited
(HPSEBL) for a tenure of 40 years which limits the off-take risk
Key weaknesses
* Project execution risk: Exposure to risks arising out of
factors like difficult terrain, seismic risks, risks of
geological surprises, insurgency etc. Lack of adequate evacuation
infrastructure has resulted in low PLFs for the company.
Door Sanchar Hydro Power Private Limited (DSHPPL) has been
promoted by Mr. Rajiv Batra and Sravanthi Group. Mr. Batra and
his wife are the majority share-holders with 51% stake while
Sravanthi group is the minority share-holder holding the
remaining 49% share capital. Sravanthi group is actively involved
in the operation of the project. The group has been founded by
Mr. DV Rao, ex-Joint Managing Director of Lanco Infratech Ltd,
where he was instrumental in developing the power vertical with
aggregate capacity of over 12000MW. Apart from power generation,
the group is also present in EPC business (through Sravanthi
Infratech Private Limited) and power consultancy business
(Sravanthi Consultancy Services Pvt Ltd).
ELECTROPATH SERVICES: ICRA Moves D Rating to Not Cooperating
------------------------------------------------------------
ICRA Limited has downgraded the ratings for the INR50.00 crore
bank facilities of Electropath Services (India) Private Limited
to [ICRA]D/[ICRA]D from [ICRA]B+/[ICRA]A4. ICRA has also moved
the ratings to the 'Issuer Not Cooperating' category. The rating
is now denoted as "[ICRA] D/ [ICRA]D ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Cash
Credit Limits 21.27 [ICRA]D ISSUER NOT
COOPERATING; Rating
downgraded from [ICRA]B+
and moved to the 'Issuer Not
Cooperating' category
Non Fund Based
Limits 28.73 [ICRA]D ISSUER NOT
COOPERATING; Rating
downgraded from [ICRA]A4
and moved to the 'Issuer
Not Cooperating' category
Rationale
The rating downgrade follows the delays in debt servicing by
ESIPL to the lender(s), as confirmed by them to ICRA. ICRA has
limited information on the entity's performance since the time it
was last rated in March 2016, which was based on detailed
information. As part of its process and in accordance with its
rating agreement with ESIPL, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a
rating view based on the best available information.
Key rating drivers
Credit strengths
* Experience of promoters in executing turnkey power projects:
The promoters of ESIPL have more than two decades of experience
in executing turnkey power projects; such experienced track
record helps them fetch new orders.
Credit weakness
* Delays in meeting debt obligations: ESIPL has been delaying on
its debt obligations pertaining to the cash credit facility. The
company's operations are working capital intensive, straining
cash flows of the company.
* High client concentration with total dependence on MSEDCL;
revenues remain vulnerable to order cycle and execution co-
operation provided by MSEDCL: ESIPL is wholly dependent on
Maharashtra State Electricity Distribution Company Limited
(MSEDCL) for getting new orders, making it vulnerable to high
client concentration risk. Also, its revenues remain vulnerable
to order cycle and execution co-operation provided by MSEDCL.
* Inherent execution risks given project nature of business: The
company is exposed to the inherent execution risks given the
project nature of business it operates in. Any deferment in the
ongoing projects can hamper the timelines of other projects.
Established in 2006, the company is engaged in executing turnkey
power projects for MSEDCL. The company provides services like
designing, Erecting, Commissioning, testing for project like
electricity distribution and transmission lines, electricity
distribution transformer centers, substations, etc. The promoter,
Mr. Sambhaji Nathrao Gitte has experience of more than two
decades in electrical contracting. Started as trader of electric
supplies in 1993, the promoter had then setup plant for
manufacturing and repairing of distribution transformers. In
2005, Electropath Services was setup for providing services like
erecting, commissioning and testing for power projects of MSEDCL.
ETA ENGINEERING: CRISIL Reaffirms 'D' Rating on INR441.25MM Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of ETA Engineering Private Limited (ETAE) at 'CRISIL D/CRISIL D'.
The reaffirmation reflects ETAE's delay in meeting obligation on
its bank loan facilities in a timely manner on account of
devolvement of non-fund based facilities and invocation of bank
guarantees.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 95 CRISIL D (Reaffirmed)
Letter of credit
& Bank Guarantee 441.25 CRISIL D (Reaffirmed)
Proposed Short Term
Bank Loan Facility 97.40 CRISIL D (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Devolvement in Letter of Credit and Invocation of Bank
Guarantee: The BG issued by the bank was invoked which the bank
has paid and needs to recover from the company. There have also
been instances of LC devolvements.
* Working Capital intensive operations: ETAE's operations are
working capital intensive, as reflected in GCAs of 239 days as on
March 31, 2014. ETAE's bank limit utilisation was, therefore,
high at 95 per cent over the 8 months through January 2015.
Strengths
* Experience of promoters: ETAE had established its position in
the MEP solution supported by its moderate track record and
healthy order book.
Incorporated in 1994, ETAE is a part of the Dubai-based ETA
group; the company undertakes heating, ventilating, and air-
conditioning (HVAC) projects; electromechanical projects and
services (EMPS); and MEP works. In 2006, the ETA group entered
the multi-modal logistics business by obtaining a licence from
the Indian Railways through ETAE, the license was subsequently
sold in 2012-13.
JAGANNATH RICE: CRISIL Reaffirms B+ Rating on INR12.55MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the bank facility of
Jagannath Rice Mills (JRM) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12.55 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect the firm's weak financial risk
profile and modest scale of operations. These weaknesses are
partially offset by the extensive experience of its partners in
the flour mill industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Financial risk profile is weak,
marked by low networth, which declined to INR4.82 crore as on
March 31, 2017 from INR5.79 crore as on March 31, 2016 due to
capital withdrawal that resulted in negative accretion to
reserve. Gearing also fell to 2.8 times from 2.56 times.
* Modest scale of operations: With processing capacity of 250
tonne per day, scale of operations is modest in the highly
competitive wheat processing industry that has many small-scale
unorganised players because of low entry barriers. This leads to
low value addition and limited bargaining power with suppliers
and customers, which in turn constrain operating margin.
Strength
* Extensive experience of the partners: The partners' extensive
experience in diverse businesses such as power, steel, and flour
milling, conducted through more than 50 entities should support
business.
Outlook: Stable
CRISIL believes JRM will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if high cash accrual due to significant ramp-up in
operations improves capital structure and liquidity. The outlook
may be revised to 'Negative' if delay in realisation of
receivables, large capital withdrawal, or substantial cash
outflow to related parties weakens liquidity.
Set up in 1974 as a partnership firm by Odisha-based Mr. Gupta
and family, JRM manufactures milled wheat products such as flour,
maida, and suji at its mills in Bhubaneswar.
JIA AUTO: ICRA Moves 'C' Rating to Not Cooperating Category
-----------------------------------------------------------
ICRA Limited has moved the long-term rating of the INR17.00-crore
fund-based cash-credit limit and INR9.50-crore term loan of Jia
Auto Sales Private Limited to 'Issuer Not Cooperating' category.
ICRA has also moved the short-term rating of the INR5.50 crore
non-funds based limits of the company to 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]C /[ICRA]A4 ISSUER
NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-limit- 17.00 Reaffirmed at [ICRA]C
cash credit facility ISSUER NOT COOPERATING;
Rating moved to the 'Issuer
Not Cooperating' category
Fund-based-limit- 9.50 Reaffirmed at [ICRA]C
term-loans ISSUER NOT COOPERATING;
Rating moved to the 'Issuer
Not Cooperating' category
Non-fund-based-limit 5.50 Reaffirmed at [ICRA]A4
ISSUER NOT COOPERATING;
Rating moved to the 'Issuer
Not Cooperating' category
Rationale
The rating is based on no significant updated information on the
entity's performance since the time it was last rated in March,
2016. The lenders, investors and other market participants are
thus advised to exercise appropriate caution while using this
rating as the rating does not adequately reflect the credit risk
profile of the entity. The entity's credit profile may have
changed since the time it was last reviewed by ICRA; however, in
the absence of requisite information, ICRA is unable to take a
definitive rating action.
As part of its process and in accordance with its rating
agreement with JASPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Significant experience of the management in the passenger
vehicle industry: JASPL was incorporated in 1996, and has been
taken over by the current management in the year 2008. Thus the
management of the company have a presence of almost a decade in
the passenger vehicle industry. The company is an authorized
dealer for sales of vehicles, sales of spare parts and servicing
of Skoda cars in West Bengal.
Credit weaknesses
* Continuous decline in sales of vehicles by the company during
the last five years: The number of vehicles sold by the company
has declined continuously over the period FY2013 to FY2017.
During FY2017 JASPL reported sales of 160 Skoda vehicles as
compared to sales of 427 Skoda vehicles during FY2013.
* Low tangible networth of the company, due to significant
erosion of the same in the past, on account of losses incurred by
the company: The absolute tangible networth of the company stood
at INR4.15 crore as on March 31, 2016. JASPL's tangible networth
has gradually declined on account of significant losses incurred
by the company in the past.
* Inherent cyclicality of the Indian passenger car industry,
intense competition from other passenger car dealers given the
highly competitive environment in the passenger car segment with
aggressive launches and expansion of service networks: The
company is exposed to intense competition from other car dealers
given the highly competitive environment in the passenger car
segment with aggressive launches of new models by the other
vehicle manufacturers as well as expansion of service networks.
JASPL was taken over by the Kolkata based Modi family, during
FY08. The company is an authorized dealer for the sale of
passenger cars as well as for services and sale of spares for
Skoda cars within the State of West Bengal. JASPL has one
showroom and a service centre in Kolkata, West Bengal.
KAIRASONS JEMS: CRISIL Reaffirms B+ Rating on INR8MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the long-term bank facilities of Kairasons Jems & Jewels LLP
(KJJL). The rating continues to reflect the early stage of the
firm's operations in the intensely competitive gold jewellery
retailing business, and its subdued financial risk profile. These
weaknesses are partially offset by association with the
Tribhovandas Bhimji Zaveri Ltd (TBZ) brand, which has a strong
presence across India.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Subdued financial risk profile: The financial risk profile
remained constrained by modest networth of INR5.7 crore as on
March 31, 2017. Debt protection metrics were weak, with interest
coverage ratio and net cash accrual to total debt ratios at 1.42
and 0.04 time, respectively, in fiscal 2017. Total outside
liabilities to tangible networth ratio, however, remained
comfortable at 1.48 times as on March 31, 2017, on account of low
working capital debt.
* Modest scale of operations in the intensely competitive gold
jewellery retailing market: The retail jewellery industry in
India is intensely competitive and highly fragmented. The
presence of a large number of small and big players in the retail
jewellery market leads to pressure on profitability. KJIL's
operating margin is expected to be low at 4-5% over the medium
term. Also, players have to continuously offer new designs and
adopt innovative marketing practices to attract and retain
customers. The firm's scale of operations remained modest, with
turnover of INR14.6 crore in fiscal 2017. Also, KJJL has a
limited market share as it operates only one retail showroom.
Strengths
* Strong brand and diversified product profile: KJJL retails
gold and diamond-studded jewellery, including necklaces,
earrings, finger rings, bracelets, and pendants through an outlet
at Dhanbad in Jharkhand under a franchise agreement with TBZ,
which has a strong brand across the country. The firm has a nine-
year agreement with TBZ for the showroom. This is the first
franchisee store of TBZ in India.
Outlook: Stable
CRISIL believes KJJL will continue to benefit from the strong
brand of TBZ in the gold jewellery business. The outlook may be
revised to 'Positive' if capital structure and debt protection
metrics improve driven by higher revenue and profitability, and
large cash accrual. The outlook may be revised to 'Negative' if
financial risk profile weakens because of low growth in revenue
and profitability, stretch in working capital cycle, or large
capital expenditure.
KJJL, based in Dhanbad, was established in September 2015. The
firm retails gold and diamond studded jewellery at its outlet at
Dhanbad under a franchise agreement with TBZ. The partners are
business associates and have experience in the real estate, coal
trading, and sand mining sectors. KJIL is their first venture in
the gold jewellery segment. The firm's operations are managed by
Mr. Rahul Vyas and Mr. Sumit Singh.
KAFILA HOSPITALITY: CRISIL Reaffirms B+ Rating on INR40MM Loan
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Kafila
Hospitality and Travels Private Limited (KHTPL) for obtaining
information through letters and emails dated August 18, 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
---------- --------- -------
Cash Credit 40 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Cash 1 CRISIL B+/Stable (Issuer Not
Credit Limit 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 Kafila Hospitality and Travels
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 Kafila Hospitality
and Travels 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'.
Set up by the Delhi-based Chadda family in 2008, KHTPL undertakes
airline ticket and hotel bookings through the B2B (business-to-
business) and B2C (business-to-consumer) models, and also
operates a 26-room guest house in Delhi.
MONET ISPAT: JSW Stee, Tata Steel Joins Other Investors in Bid
--------------------------------------------------------------
The Economic Times reports that JSW Steel and Tata Steel may have
to compete with a raft of private equity investors, including
Blackstone, in the race for a controlling stake in Monnet Ispat,
the troubled maker of the alloy now in bankruptcy courts for loan
defaults.
US-based TPG, Blackstone, and Singapore-based SSG Capital are
believed to be among the likely bidders that have sent formal
expressions of interest (EoI) for the troubled steelmaker before
the workday drew to a close, ET relates citing a source close to
the development. After a round of initial scrutiny, the list of
bidders is likely to be pruned in the next couple of months, the
report says.
According to the report, the shortlisted applicant will draw up a
resolution plan to infuse fresh capital, a move that will help
repay part of the company's outstanding dues to creditors.
Collectively, Monnet Ispat has a debt exposure of about INR12,000
crore, ET disclsoes.
Last July, the National Company Law Tribunal (NCLT) admitted the
insolvency proceedings against Monnet Ispat and Energy after the
bankers, led by the State Bank of India, confirmed the default
amount at INR1,539 crore. Monnet Ispat was the second such
company to be admitted for bankruptcy proceedings, ET notes.
It reported a INR400-crore loss for the April-June quarter as
lower sales and higher interest cost dented its margins, marking
its 12th consecutive quarter of losses, ET discloses. Net sales
fell 17.7% to INR346 crore.
Monnet Ispat and Energy Limited is a holding company. The Company
is engaged in the business of conducting coal mining operations
and manufacturing coal-based sponge iron and various other
steel/iron-based products. The Company operates through three
segments: Iron & Steel, Power and Others. Its principal products
and services include steel and power. It has an integrated steel
plant at Raigarh that has a production capacity of 1.5 million
tons per annum (MTPA) to produce hot rolled (HR) plates, rebars
and structure profiles to cater to the infrastructure and
construction industry. The Company has coal blocks, such as Gare
Palma IV/5, Utkal B2, Urtan North, Raigmar dipside block and
Mandakini. It is also engaged in producing ferro-alloys, which
includes vital alloys, such as Ferro Manganese (Fe-Mn) and
Silico-Manganese (Si-Mn). These are supplied in diverse shapes
and forms from billets and ingots to powders, fillers and allied
reinforcements.
MUTHA INDUSTRIES: ICRA Reaffirms B Rating on INR4.02cr Term Loan
----------------------------------------------------------------
ICRA Limited has reaffirmed the long-term rating of [ICRA]B
assigned to the INR2.75-crore cash-credit and the INR4.02-crore
term-loan facilities (revised from INR7.89-crore earlier) of
Mutha Industries Private Limited. ICRA has also reaffirmed the
short-term rating of [ICRA]A4 assigned to the INR0.40-crore
bank-guarantee facility of MIPL. ICRA has also reaffirmed the
long-term rating of [ICRA]B and the short-term rating of [ICRA]A4
assigned to the INR4.13-crore unallocated limits (revised from
INR0.26 crore earlier) of MIPL. The outlook on the long-term
rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 2.75 [ICRA]B (Stable); Reaffirmed
Fund-based-Term
Loan 4.02 [ICRA]B (Stable); Reaffirmed
Non Fund-based-
Bank Guarantee 0.40 [ICRA]A4; Reaffirmed
Unallocated Limits 4.13 [ICRA]B (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The reaffirmation of the ratings takes into account MIPL's
limited operational track record and limited experience of the
promoters in the industry, small scale of current operations, and
weak financial profile as reflected by an adverse capital
structure and subdued level of coverage indicators. The ratings
are further constrained by the company's high working capital
intensity of operations, which exerts pressure on the liquidity
position. Moreover, the company continues to be dependent on
borrowings from group entities and promoters for timely servicing
of its debt obligations since the cash flows from the business
remained inadequate. However, ICRA notes that the interest-free
unsecured loan from group entities and promoters, a part of which
cannot be withdrawn without the repayment of bank term loans,
provides some comfort.
The ratings also derive comfort from the company's presence in a
major bamboo-growing region, which ensures easy availability of
bamboo and low landed cost of raw material. Besides, the company
witnessed growth in the top-line during the last fiscal, and has
an outstanding order book of ~INR11 crore, which ensures revenue
visibility in the near term, at least. The ratings also take note
of MIPL's entitlement to various fiscal benefits, which is likely
to support cash flows, going forward. However, timely receipt of
the same remains a concern.
In ICRA's opinion, the company's ability to scale up operations
while maintaining profitability, improving its capital structure
and coverage indicators, and managing its working-capital cycle
efficiently would remain key rating sensitivities, going forward.
Key rating drivers
Credit strengths
* Proximity to raw-material sources: The manufacturing facility
of the company is located in close proximity to a bamboo-growing
region in Agartala, Tripura, which ensures easy availability of
major raw material and low procurement cost.
* Entitlement to various fiscal benefits: The company is
entitled to various subsidies under NEIIPP, 2007 which is likely
to support the cash flows, going forward. However, timely receipt
of the same remains a concern.
* Growth witnessed in the top-line during the last fiscal;
however, the scale of operations continues to remain small: The
top-line of the company increased from INR1.01 crore in FY2016 to
INR7.32 crore in FY2017 on the back of higher sales volume and
subsidy income of ~INR0.92 crore. However, due to nascent stage
of operations, the scale of operations continues to remain small.
Credit weaknesses
* Limited operational track record in the industry: The
commercial operations of the company started in April 2014, which
limits the operational track record of MIPL and experience of the
promoters in the industry.
* Weak financial profile characterised by an adverse capital
structure and subdued level of coverage indicators: The capital
structure remained adverse due to negative net worth, and high
external borrowings for meeting project cost and working-capital
requirements. High debt level, coupled with low profits kept the
coverage indicators subdued.
* Dependence on external financing from group entities: The
company continues to be dependent on borrowings from group
entities and promoters for servicing its debt obligations since
the cash flows remained inadequate, given the sizable debt-
service obligations and small scale of current operations.
* High working-capital intensity of business exerts pressure on
the liquidity position of the company: The company makes
payments to its suppliers within 7-8 days and receives payments
from private parties immediately or against LC. The inventory
level of the company continued to remain high, which primarily
consists of semi-finished bamboo beams. Accordingly, the working
capital requirement remains high, which exerts pressure on its
liquidity position.
Incorporated in 2012, Mutha Industries Private Limited (MIPL)
manufactures bamboo-flooring tiles, beams and furniture. The
company's manufacturing facility is located at Bamboo Park Area,
Agartala, Tripura. MIPL has an annual installed capacity of
manufacturing 1,26,964 square metre of bamboo floorings and 2,400
cubic metre of bamboo beams. The company commenced its commercial
operations in April, 2014. Besides, MIPL installs the flooring
tiles based on customer requirement. The products are sold under
the brand 'Epitome'.
In FY2017, the company reported a net profit of INR0.99 crore on
an operating income of INR7.32 crore compared to a net loss of
INR3.23 crore on an operating income of INR1.01 crore in the
previous year.
NAGPUR BEVERAGES: CRISIL Reaffirms B Rating on INR6MM Loan
----------------------------------------------------------
CRISIL Ratings has been consistently following up with Nagpur
Beverages Private Limited (NBPL) for obtaining information
through letters and emails dated July 13, 2017, and August 17,
2017, among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
CRISIL gave this rating:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 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 Nagpur Beverages 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 Nagpur Beverages Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' category or lower. Based on the last available information,
CRISIL has reaffirmed the rating at 'CRISIL B/Stable.
Incorporated in 1968, NBPL is a distributor of PepsiCo products
in Cuttack and surrounding regions in Odisha. The company is a
part of the SMV group, which undertakes soft drink bottling for
PepsiCo.
OM SRI: CRISIL Assigns 'B' Rating to INR9.80MM Rupee Term Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facilities of Om Sri Lakshmi Venkateswara Agro
Boards Private Limited (OSLV).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Rupee Term Loan 9.80 CRISIL B/Stable
Cash Credit 4.65 CRISIL B/Stable
Proposed Fund-Based
Bank Limits 0.55 CRISIL B/Stable
The rating reflects the company's nascent stage of operations,
exposure to risks related to timely ramp-up in revenue, and
expected below-average financial risk profile. These weaknesses
are partially offset by the extensive experience of its promoters
in the particle board industry.
Analytical Approach
Unsecured loans of INR1.35 crore have been treated as neither
debt nor equity as they bear a nominal interest rate and are
expected to remain in the business.
Key Rating Drivers & Detailed Description
Weaknesses
* Start-up phase and exposure to risks related to timely ramp-up:
OSLV started operations in July 2017 and will face risks related
to ramp-up in sales during the initial phase. Its scale of
operations is expected to remain small over the medium term.
Profitability and working capital management remain key
monitorables.
* Below-average financial risk profile: The networth was small
at INR3.35 crore and gearing was over 3.6 times as on March 31,
2017. Debt-funded project and working capital requirement will
keep the gearing over 2 times over the medium term.
Strength
* Extensive industry experience of the promoters: OSLV will
benefit from its promoters' experience of more than two decades
and their understanding of the particle boards industry, and
established business relationships.
Outlook: Stable
CRISIL believes OSLV will benefit from its promoters' industry
experience and established relationships. The outlook may be
revised to 'Positive' if there is a healthy growth in revenue and
profitability, leading to adequate cash accrual during the
initial phase of operations. The outlook may be revised to
'Negative' if financial risk profile, especially liquidity,
deteriorates due to lower-than-expected cash accrual or larger-
than-expected working capital requirement.
OSLV, incorporated in July 2015, manufactures bagasse-based
particle boards used in making furniture. Its registered office
is at Secunderabad and manufacturing facility is at Zaheerabad in
Telangana. The company started commercial production in July
2017.
PMC RUBBER: CRISIL Reaffirms B Rating on INR33.75MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank loan
facilities of PMC Rubber Chemicals India Private Limited (PRCIPL)
to 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Reaffirmed)
Cash Credit 33.75 CRISIL B/Stable (Reaffirmed)
Letter of Credit 11.25 CRISIL A4 (Reaffirmed)
The rating continue to reflect PRCIPL's large working capital
requirements and the susceptibility of its operating margin to
fluctuations in raw material prices and foreign exchange rates.
The rating also factors in PRCIPL's modest financial risk
profile, with small networth, high gearing, and below-average
debt protection metrics. These rating weaknesses are partially
offset by established customer base and the promoters' extensive
experience in the rubber chemicals industry.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility of operating margin to volatility in raw
material prices and forex rates: PRCIPL's operating
profitability is susceptible to fluctuations in input prices and
limited bargaining power with customers. The company imports
around 70 per cent of its raw material requirement therefore its
operating margin is vulnerable to movements in forex rates.
Furthermore, on account of lower bargaining power and fixed
price-based contracts with customers, PRCIPL's ability to pass on
increase in raw material prices to customers remains limited. Its
operating margin also fluctuates because of trading in rubber
chemicals.
* Large working capital requirement PRCIPL has large working
capital requirements, marked by estimated gross current assets of
162 days as on March 31, 2017, primarily on account of large
receivables and inventory. PRCIPL sells rubber chemicals majorly
to tyre companies which include MRF Tyres Ltd, Birla Tyres Ltd,
Goodyear India Ltd, CEAT Ltd, Apollo Tyres Ltd, Falcon tyres Ltd,
Balakrishna Tyre Industries, TVC Srichakra Tyres Ltd, Ahuja
Continental Ltd. The non-tyre customers include TEGA Industries
Ltd, Phoenix Conveyor Belt Systems GmbH etc. It sells its
products mainly against credit of 60 to 90 days.
* Modest financial risk profile: Financial risk profile of PRCIPL
remained modest with small net worth base, deteriorated gearing
and below average debt protection metrics. PRCIPL's net worth is
modest, and the same is estimated to remain at INR7.7 crores as
on March 31, 2017. The net worth is expected to remain modest
over the medium term on account of modest accretion to reserves.
Small networth limits the ability of the company to act against
any potential adverse condition or business downturn.
Strength
* Strong clientele and extensive experience of promoter: PRCIPL
is promoted by Mr. P M Chakraborty, who has experience of around
three decades in the rubber chemicals and related industries. The
company's day-to-day operations are managed by Mr. Subir Sen, who
has experience of around a decade in the rubber chemicals
business. Backed by the promoters' experience, The promoters have
developed healthy relationship with suppliers and customers. The
company's clientele consists of large tyre manufacturers such as
Ceat Ltd, Birla Tyres Ltd, Goodyear India Ltd, Apollo Tyres Ltd,
MRF Tyres Ltd, and Falcon Tyres Ltd. The promoters have healthy
relationship with suppliers from whom they procure raw materials
and rubber chemicals for their trading operations.
Outlook: Stable
CRISIL believes PMC Rubber Chemicals India Pvt Ltd (PRCIPL) will
continue to benefit over the medium term from its established
customer base and the promoters' extensive experience. The
outlook may be revised to 'Positive' in case of improvement in
the company's working capital management or a significant
increase in profitability, leading to better liquidity.
Conversely, the outlook may be revised to 'Negative' in case of
low accruals, a stretch in its working capital cycle, and large
debt-funded capital expenditure (capex), weakening its financial
risk profile particularly liquidity.
PRCIPL manufactures and trades in rubber chemicals such as
accelerators, antioxidants, retarders, and peptisers. It is held
by PMC Group France, SARL, and PMC Chemicals India Pvt Ltd. Its
day-to-day operations are managed by Mr. Subir Sen.
PR PACKING: ICRA Assigns B+ Rating to INR1.88cr Fund Based Loan
---------------------------------------------------------------
ICRA Limited has assigned the long-term rating of [ICRA]B+ and a
short-term rating of [ICRA]A4 to the INR23.00 crore bank
facilities of PR Packing Service. The outlook on the long-term
rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term and Short- 18.50 [ICRA]B+(Stable)/[ICRA]A4;
term Non Fund and Assigned
Fund-based limits
Fund based limits 1.88 [ICRA]B+(Stable); Assigned
Unallocated limit 2.62 [ICRA]B+(Stable)/[ICRA]A4;
Assigned
Rationale
The assigned ratings are constrained by the financial profile of
the firm, which is characterised by stagnant operating income
during the past two fiscals, low profitability, leveraged capital
structure and high working capital intensity of the its
operations due to extended credit given to its customers.
Further, the firm's pricing flexibility remains limited owing to
its presence in the highly competitive packaging industry, while
its profits remain vulnerable to any adverse fluctuations in the
prices of raw materials.
The ratings however, take comfort from the extensive experience
of the promoter in the packaging industry, the reputed client
base and the firm's established relationship with them which has
resulted in repeat orders. The benefits enjoyed by the firm in
the form of lower power cost, sourcing and logistics convenience
by virtue of its location were also favourably considered while
assigning the ratings.
Key rating drivers
Credit strengths
* Extensive experience of the promoter in the paper and packaging
industry: The promoter of the firm, Mr. Dhananjay Bhansali has
been in the paper and packaging industry for more than three
decades.
* Location advantages with proximity to supplier base: The
factories of PRPS are located in Silvassa. By virtue of being
located in the Union Territory of Dadra and Nagar Haveli, the
firm benefits from the availability of uninterrupted power
supply, cheaper electricity and labour at this unit. PRPS
benefits from the proximity of both its factories to its
suppliers who are located mainly in Gujarat and Maharashtra which
ensures prompt supply of raw materials and provides logistical
convenience.
* Customer base includes several reputed players: The customer
base of PRPS comprises reputed players located in the domestic
market, which mitigates the counter party credit risk to an
extent. PRPS has built healthy relationships with its clientele
which has resulted in repeat orders. Reliance Industries Limited
is the firm's top customer with consistent order flow throughout
the year.
Credit weaknesses
* Financial profile characterised by stagnant operating income
low profitability, leveraged capital structure and high working
capital intensity: The operating income has remained at the same
levels in FY2017 at INR84.48 crore due to stagnant demand.
Interest expenses rose during FY2016 and FY2017 due to higher
interest on partner's capital, which weakened the profitability
at the net level in those two years. Due to high debt, the
capital structure is leveraged at 2.10 times as on March 31,
2017. With liberal credit period offered to customers and high
inventory maintained, the working capital intensity is high at
21% in FY2017.
* Profitability remains exposed to any adverse fluctuations in
raw material prices: PRPS maintains a ready inventory of its key
raw materials in order to minimise the lead time for processing
an order. With high levels of inventory maintained, the
profitability of the firm remains susceptible to any adverse
fluctuations in the prices of the raw materials. The customer
base of the firm comprises large players, against whom the firm
has limited bargaining power. Consequently, the firm often
absorbs the increase in prices in order to retain its customers.
* Highly competitive industry with competition from several
organised as well as unorganised players: The market for
packaging products is highly competitive in nature and includes
some large players who are into varied types of packaging
products and focus on the higher end of the market (in terms of
product quality and costs) as well as numerous players in the
unorganised segment who operate with a small to medium sized set
up and deal with the lower tier of the market. PRPS faces stiff
competition from the players in the organised and unorganised
markets thereby limiting its pricing flexibility.
PR Packing Service is a partnership firm established in 1999 by
Mr. Dhananjay Bhansali and his wife Mrs. Rekha Bhansali. The firm
manufactures corrugated boxes using kraft paper. PRPS'operations
are managed by Mr. Pathik Bhansali and Mr. Parth Bhansali, sons
of Mr. Dhananjay Bhansali. PRPS has two manufacturing units in
Silvassa (Union Territory of Dadra and Nagar Haveli) with a
collective production capacity of 2,400 tonnes per month. The
firm is ISO 9001:2008 and ISO 22000:2005 certified and is a
member of the Western India Corrugated Box Manufacturers
Association (WICMA).
In FY2017, the firm reported a net profit of INR0.72 crore on an
operating income of INR84.48 crore (provisional numbers), as
compared to a net profit of INR0.77 crore on an operating income
of INR84.27 crore in FY2016.
RADIANT INFO: CRISIL Lowers Rating on INR4MM Term Loan to B-
------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
loan facilities of Radiant Info Systems Limited (Radiant) to
'CRISIL B-/Stable' from 'CRISIL B/Stable' while reaffirming the
short-term rating at 'CRISIL A4'. The rating downgrade reflects
CRISIL's expectation that Radiant's below-average financial risk
profile could deteriorate in the medium term owing to erosion of
net worth on account of operating losses.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.5 CRISIL A4 (Reaffirmed)
Cash Credit 2.5 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Proposed Term Loan 4 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Term Loan 2 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade also factors in a business profile marked by
stagnant turnover and inefficient receivables management. These
rating weaknesses are partially offset by an established market
position in providing online reservation system and the
promoter's extensive industry experience.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Radiant's scale of operations has
been small as reflected in the revenues of around INR97.14 crore
during fiscal 2017. This is largely on account of tender-based
operations. CRISIL believes that Radiant's small scale of
operations, resulting in limited clout and bargaining power for
the company, will continue to constrain its overall business
prospects.
* Below-average financial risk profile: Radiant's financial risk
profile is marked by a sharp decline in net worth, the erosion
thereof caused by operating losses. Largely on account of the
receding net worth, which stands at INR1.1 crore as at March 31,
2017, Radiant's capital structure exhibits a high degree of
leverage, as indicated by total outside liabilities to tangible
net worth (TOLTNW) ratio of 13.57 times as at March 31, 2017. On
account of operating losses, Radiant's debt protection metrics
are adverse, reflecting the overall financial risk profile of the
company.
Strengths
* Established market position in providing online reservation
system (ORS): Radiant has an established market position in the
transportation logistics business for online reservation portals
for various state transport corporations. Over the years, the
company has executed software development projects to provide
transport departments under the state governments of Karnataka,
Tamil Nadu, and Gujarat among others with ORS. CRISIL believes
that Radiant's strong position in its industry, shall hold the
company in good stead, particularly as it attempts to reverse its
trend of operating losses in the medium term.
* Promoters' extensive experience in IT industry: Radiant's
promoters have over a decade's experience in the software
development business. The promoters commenced their business by
providing software solutions for customers based outside India,
before shifting their focus to domestic market. Over the years,
they have developed a deep insight on the finer nuances of the
industry. CRISIL believes that Radiant will benefit over the
medium term from its promoters' extensive industry experience.
Outlook: Stable
CRISIL believes that Radiant will continue to benefit from its
promoters' extensive experience in the IT industry. The outlook
may be revised to 'Positive' if sustained improvement in scale of
operations and profitability leads to stronger cash accruals and
therefore, liquidity. Conversely, the outlook may be revised to
'Negative' if the financial risk profile, particularly liquidity,
weakens as a result of low cash accruals, or large debt-funded
capital expenditure or working capital requirements.
Incorporated in 1997 as Radiant Info Systems Ltd, Radiant was
reconstituted as a closely held public limited company in 2008.
The company, promoted by Mr. Venu Myneni, Mr. Vinod Koduru and
Mr. C. Narayanacharyulu, has its headquarters in Bengaluru.
Radiant provides IT solutions with focus on transportation and
logistics, e-governance and smart cards. The company provides ORS
to state road corporations including those of Karnataka, Tamil
Nadu and Gujarat.
Radiant made estimated loss of INR2.31 crores on estimated net
sales of INR97.52 crores in fiscal 2017 as against reported loss
of INR2.23 crores on net sales of INR99.28 crores in fiscal 2016.
PRAGATI TRANSMISSION: ICRA Moves B+ Rating to Not Cooperating
-------------------------------------------------------------
ICRA Limited has moved the ratings for the INR5.00-crore bank
facilities of Pragati Transmission Private Limited (PTPL) to the
'Issuer Not Cooperating' category. The rating is now denoted as:
"[ICRA]B+(Stable) /A4ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund- 4.50 [ICRA]B+(Stable) ISSUER
based facilities NOT COOPERATING; Rating
moved to the 'Issuer Not
Cooperating' category
Short-term Non-fund 0.50 [ICRA]A4 ISSUER NOT
based facilities COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Rationale
The rating is based on no information about the entity's
performance since the time it was last rated in March, 2016. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
same does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA. However, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As a part of its process and in accordance with its rating
agreement with PTPL, ICRA has been trying to seek information
from the entity to monitor its performance. Despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strength
* Significant experience of promoters in the industrial gears
manufacturing business: Established in 2006, PTPL is engaged in
the manufacturing, supplying and export of precision gears used
in aerospace, industrial gear boxes, power tools, and machine
tools & automobiles. The partners Mr. P.D. Kadam and Mr. Atul S
Bhirangi, have more than two decades of experience in the
industrial gears manufacturing business. The company has its
manufacturing facility at Peenya Industrial area, Bangalore, with
an annual capacity to produce 15,00,000 gears; it can produce
spur and helical gears from 6mm to 400mm diameter.
Credit weaknesses
* Small scale of operations: The operating income of the company
was small at INR19.17 crore in FY2015.
* Intense competition led to reduced bargaining power: The
company has limited bargaining power in terms of pricing due to
intense competition from numerous players in the unorganised
market, leading to pricing pressures.
* Working-capital intensive nature of operations: The
manufacturing of industrial gears business is working-capital
intensive in nature owing to high inventory requirement and
stretched receivable cycle.
Pragati Transmission Pvt. Ltd (PTPL) was incorporated in the year
2006 as a private limited company. The directors of the company
are Mr. P.D. Kadam and Mr. Atul S Bhirangi. PTPL is engaged in
manufacturing, supplying and exporting of precision gears used in
aerospace, industrial gear boxes, power tools, and machine tools
& automobiles. The group companies of PTPL are 'ACE-Micromatic'
and Pragati Automation Pvt Ltd and these companies are present in
machine tool manufacturing in India and promoted by technocrats
with more than three decades of experience in machine tools,
power tools and automobile industries.
RAVILEELA GRANITES: CRISIL Lowers Rating on INR6MM Cash Loan to D
-----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Ravileela
Granites Limited (RGL) for obtaining information through letters
and emails dated July 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
---------- --------- -------
Cash Credit 6 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB-/Stable')
Foreign Bill 2 CRISIL D (Issuer Not
Discounting Cooperating; Downgraded
from 'CRISIL BB-/Stable')
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
CRISIL has downgraded its rating on the long-term bank facilities
of RGL to 'CRISIL D' from 'CRISIL BB-/Stable'.
The rating downgrade reflects overdrawls in the Adhoc limits for
more than 30 days. The delays have been due to weak operating
performance.
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on strategic intent of RGL.
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 RGL is consistent with 'Scenario 2'
outlined in the 'Framework for Assessing Consistency of
Information with CRISIL BBB category or lower. Based on the last
available information, CRISIL has downgraded ratings to 'CRISIL
D' from 'CRISIL BB-/Stable'.
Incorporated in 1980, Ravileela Granites Ltd is involved in
processing and export of granites.
RENOM ENERGY: ICRA Assigns B+ Rating to INR4.0cr Cash Loan
----------------------------------------------------------
ICRA Limited has assigned a long-term rating of [ICRA]B+ to the
INR4.00-crore fund based facilities and a short-term rating of
[ICRA]A4 to the INR4.00 crore non-fund based bank facilities of
Renom Energy Services LLP. The outlook on the long-term rating is
'stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 4.00 [ICRA]B+ (Stable); Assigned
Non-fund based-
Letter of Credit 4.00 [ICRA]A4; Assigned
Rationale
The assigned rating takes into account the sound technical
ability of the firm required to manage wind and solar assets and
the firm long term contracts for operations and maintenance of
solar and wind assets which provide some revenue visibility to
RESLLP. Being part of the Ghodawat group, the firm enjoys strong
group support enabling it to garner new projects.
The ratings however remain constrained by the firm's limited
track record of operations, low operating profitability given the
high fixed costs, and high working capital intensity of
operations as on March 31, 2017 on account of high inventory
holding of high value spares especially for the wind projects.
The ratings also take into account the high competitive intensity
in the business and vulnerability of profitability to fluctuation
in prices of key inputs and spares.
Key rating drivers
Credit strengths
* Technically sound team having considerable experience in
renewable asset management and project execution: The firm
currently has over 120 employees with an average experience of
six years for execution of solar and projects as well as holistic
management of operation and maintenance of wind/solar assets
located in seven states like Maharashtra, Gujarat, and Karnataka
among others. The technical team has experience not only in
handling hardware but also digital administration of the power
assets.
* Annual contracts for solar and wind power asset operations and
maintenance provide revenue visibility: The firm currently has
399 MW of wind and solar power assets covered under operations
and maintenance contracts. The firm currently manages 81 MW
Ghodawat group's power assets and 318 MW of power assets held by
various customers. The average tenure of the current O/M
contracts is five years, which also provide revenue visibility to
the firm to a larger extent.
Credit weaknesses
* Limited track record; modest scale of operations of operations
and weak profit margins: RESLLP has a limited track record of
operation spanning two years. However, given the support from the
parent Ghodawat group, the firm has been able to establish a good
customer base within the limited period. The company's scale of
operations remains modest at present with operating income of
INR.13.64 crore in FY2017. The company's operating margins have
remained low at ~5.43 % in FY2017 primarily due to higher fixed
costs (mainly employee costs and rent for various offices).
* High working capital intensity resulting from high inventory
levels which impacts liquidity: The firm has to maintain a stock
of high value spares for the wind assets due to which the working
capital intensity of operations remains on a higher side as
reflected by NWC/OI of 29% as on March 31, 2017. The liquidity
position also remains weak as reflected by negative cash flows
for FY2017.
* Intense competition, given the low complexity of work involved:
The company faces stiff competition from other unorganised
players chiefly in the wind assets operations and management
segment which limits its pricing flexibility and bargaining power
with customers, thereby putting pressure on its revenues and
margins.
* Vulnerability of profitability to any adverse fluctuation in
input prices: The operating profitability remains exposed to
fluctuations in prices of key inputs and spares, especially given
the high inventory holding periods.
Incorporated in July 2015, Renom Energy Services LLP is primarily
involved in operations and maintenance of solar and wind assets
within the parent Ghodawat group and other entities. The firm, in
addition also undertakes execution of solar projects.
In FY2017, on a provisional basis, the company reported PAT of
INR0.36 crore on an operating income of INR13.64 crore, as
compared to a net profit of INR0.23 crore on an operating income
of INR4.09 crore in the previous year.
SAIMAX CERAMIC: ICRA Reaffirms B+ Rating on INR8.05cr Loan
----------------------------------------------------------
ICRA Limited has reaffirmed the long-term rating of [ICRA]B+ to
the INR8.05-crore fund-based limit of Saimax Ceramic Private
Limited. ICRA has also reaffirmed the short-term rating of
[ICRA]A4 to the INR2.75-crore non-fund based limits of SCPL. The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limit 8.05 [ICRA]B+(Stable); Reaffirmed
Non-fund Based Limit 2.75 [ICRA]A4; Reaffirmed
Rationale
The reaffirmation of the rating continues to take into account
the extensive experience of the promoters in the ceramic
industry. ICRA further notes the favourable location of the
company's plant, resulting in easy access to the raw material
sources.
The ratings, however, continue to be constrained by the company's
modest scale of operations. They are further impacted by the high
working capital intensive nature of business, as evident from the
stretched receivables. However, the longer credit period from
suppliers reduces liquidity crunch. ICRA notes its vulnerability
to adverse movements in prices of key input materials and gas.
Furthermore, the ratings take into consideration the highly
fragmented nature of the industry, due to a large number of
manufacturers, which coupled with low entry barriers, lead to
stiff competition that pressurise pricing and margins.
Going forward, the company's ability to scale up its revenue,
while maintaining profitability and the efficient management of
its working capital cycle, will be the key rating considerations.
Key rating drivers
Credit strengths
* Experience of key promoters in the ceramic industry: The
company was incorporated in FY2011 and the promoters have an
extensive experience in manufacturing tiles.
* Location in India's ceramic hub provides easy access to raw
material sources: The manufacturing facility is located in
Morbi, Gujarat, which ensures easy availability of raw material.
Credit weaknesses
* Modest scale of operations, increase in sales in FY2017 on
account of export demand: The operating income of the company
increased from INR31.96 crore in FY2016 to INR39.08 crore in
FY2017 due to the increase in sales volume for the increase in
exports.
* High receivable days; longer credit period from suppliers
reduces liquidity crunch: The company provides higher credit
period to customers. However, on account of extended credit
period from the suppliers, SCPL is able to manage high working
capital intensive nature of its operations.
* Presence in highly competitive and fragmented segment of
business impacting price flexibility: The ceramic industry is
highly fragmented with a large number of organised and
unorganised players which limit its pricing flexibility and
bargaining power.
* Profitability is susceptible to raw material price volatility
and gas price: The margins of the company remain susceptible to
fluctuations in the prices of power and fuel. Any adverse
movement in the prices of fuel could have an adverse impact on
the margins, considering the limited ability to pass on the price
hike owing to intense competition in the sector. The price
fluctuations also impact the realisations of the company.
Saimax Ceramic Private Limited was incorporated in July 2011 by
Mr. Nitin D. Shirvi and Mr. Kalpesh M. Rangpariya. SCPL is
involved in the manufacturing of glazed ceramic wall tiles and
sells its products under the brand name Saimax. The company has
its manufacturing facility located at Morbi, Gujarat and
commercial production started from April 2012. At present, the
plant has an installed capacity of manufacturing 40,000 MTPA of
wall tiles p.a. It manufactures wall tiles of size 10" X13", 10"
X 15", 10" X 10" and 18" X 12".
The directors of the company are associated with another
associate concern - Saiwin Ceramic Private Limited - rated at
[ICRA]B/A4 as of October 2016.
SARAVANA SAI: CRISIL Reaffirms B+ Rating on INR6MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has been consistently following up with Saravana
Sai Rice Industries (SSRI) for obtaining information through
letters and emails dated August 14, 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
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 1 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Saravana Sai Rice Industries.
This restricts CRISIL's ability to take a forward looking view on
the credit quality of the entity. CRISIL believes that the
information available for Saravana Sai Rice Industries is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower. Based on the last available information, CRISIL has
reaffirmed the rating at 'CRISIL B+/Stable.
Set up in 2002 as a partnership entity by Mr. Kakuturu Surya
Pratap Reddy and his family. Based out of Nellore in Andhra
Pradesh, SSRI is involved in the milling and processing of paddy
into rice, rice bran, broken rice and husk.
SARIA INDUSTRIES: CRISIL Hikes Rating on INR12MM Cash Loan to B+
----------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long term bank
facilities of Saria Industries (SI) to 'CRISIL B+/Stable' from
'CRISIL B/Stable' while reaffirming the rating on the short term
bank facility at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Packing Credit 3 CRISIL A4 (Reaffirmed)
Proposed Long Term 5 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
The upgrade reflects improvement in liquidity profile, backed by
gradual restoration of inventory levels to 31 days as on March
31, 2017 from 250 days as on March 31, 2015. As a result,
reliance on bank debt reduced, as reflected in bank limit
utilisation of 19% during the 15 months through June 2017,
against 90% earlier. Consequently, financial risk profile has
improved with total outside liabilities to tangible networth
(TOLTNW) ratio at 1.76 times as on March 31, 2017 and interest
coverage ratio at 1.33 times for fiscal 2017 as against 5.05
times and 1.17 times, respectively, a year earlier. CRISIL
believes sustenance of improved working capital cycle and the
absence of debt-funded capital expenditure (capex) should
continue to lend support to the improving financial flexibility.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Despite increasing from
INR3.1 crore, post capital infusion of INR0.48 crore and
sustained accretion to reserve, networth remained small at
INR3.74 crore as on March 31, 2017, due to low profitability.
TOLTNW ratio has remained moderate but financial risk profile is
constrained by weak debt protection metrics. The financial
metrics are likely to improve in the absence of any debt-funded
capex and stable working capital cycle, but remain weak over the
medium term.
* Small scale of operations and intense competition: Despite
being in business for four decades, scale of operations remains
small with operating revenue of INR58.48 crore in fiscal 2017.
This prevents the firm from benefitting from economies of scale
and limits its ability to bargain with its suppliers and
customers, which adversely impacts the operating profitability.
Being non-peak season, till June 2017, revenue of INR3.24 crore
was booked. Growth is expected to remain slow over the medium
term since it is susceptible to fluctuations in rice prices.
Profitability moderated to 2.5% in fiscal 2017 from 4.5% the
previous fiscal owing to lower economies of scale; expected to
sustain at 2.5-3.0%over the medium term.
Strength
* Extensive experience of the proprietor: Benefits from the
proprietor's four-decade long experience in the industry,
established procurement network and healthy relations with
customers should support business.
Outlook: Stable
CRISIL believes SI will continue to benefit from the extensive
experience of its proprietor. The outlook may be revised to
'Positive' in case of significant improvement in net cash
accrual, driven by a substantial increase in operating revenue or
profitability, along with efficient working capital management.
The outlook may be revised to 'Negative' if stretch in working
capital cycle or large, debt-funded capital expenditure, or
capital withdrawal weakens financial risk profile, particularly
liquidity.
SI, a proprietary concern based in Sirsa, Haryana, was
established in 1970 by Mr. Satya Narayan Saria. The firm
processes and trades in basmati and non-basmati rice. Operations
are managed by Mr. Satya Narayan Saria and his son, Mr.
Radheshyam.
SATHYANARAYANA AGRO: ICRA Reaffirms B+ Rating on INR5cr Loan
------------------------------------------------------------
ICRA Limited has reaffirmed the long-term rating at [ICRA]B+ for
the INR1.0-crore term loans, the INR5.00-crore cash-credit
facility of Sathyanarayana Agro Industries (SAI). The outlook on
the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Term Loan 1.0 [ICRA]B+ (Stable); Reaffirmed
Long-term-Fund-based
Cash Credit 5.0 [ICRA]B+ (Stable); Reaffirmed
Rationale
The rating reaffirmation takes into account the moderate scale of
operations of the firm and the high working capital intensive
nature of operations, leading to reliance on external borrowings,
resulting in high gearing and moderate coverage indicators. The
rating also factors in the intensely competitive nature of the
rice industry with the presence of several large and small-scale
players which constrain volumes and pricing flexibility of rice
millers. The rating also takes into account the susceptibility of
revenues and margins to inherent agro-climatic risks and changes
in Government policies, which impact the availability and the
price of paddy. The rating also takes note of the risks inherent
in the partnership nature of the firm such as limited ability to
raise funds, withdrawal of capital, etc. The rating, however,
continues to derive comfort from the long experience of the
promoters in the rice industry, the firm's proximity to paddy-
growing areas in Raichur and the nearby districts, in turn,
facilitating easy procurement of raw materials and the stable
demand outlook, as rice is an important part of the staple Indian
diet. Going forward, the firm's ability to improve its scale of
operations and profitability, and generate adequate cash flows,
while efficiently managing working capital requirements would
remain the key rating sensitivities.
Key rating drivers
Credit strengths
* Long experience of promoters in the rice-milling business:
Incorporated in 2014, SAI is a partnership firm involved in the
processing of raw rice and parboiled rice. The firm's milling
unit at Raichur has an installed capacity of 8 MT per hour. The
promoters have been involved in the rice milling business for
over two decades, and the sale of whole rice contributes to a
major portion to revenues.
* Proximity to rice-growing areas: The firm's plant is located
in Raichur, which is surrounded by areas such as Manvi, Sindhnoor
and Gangawati where a majority of the paddy is cultivated. This
results in low transportation cost for the firm and easy
availability of paddy.
Credit weaknesses
* Moderate scale of operations resulting in limited economies of
scale: The firm has moderate scale of operations with revenues
of INR44.50 crore in FY2017, which marginally declined from
INR45.10 crore in FY2016 on account of a reduction in volumes
during FY2017.
* Financial profile characterised by high gearing and moderate
coverage indicators: The working capital intensive nature of
operations lead to high reliance on external working-capital
borrowings resulting in high debt levels, which, coupled with the
low net worth resulted in high gearing of 2.89 times as on
March 31, 2017 and moderate coverage indicators.
* Intense competition marked by presence of large number of
players: Owing to low entry barriers with readily-available
technology and proximity to rice cultivating belt, there are more
than 90 rice-milling units in and around Raichur leading to
intense competition for paddy procurement, in turn affecting
volumes and pricing flexibility of rice millers like SAI.
* Inherent agro-climatic risks and vulnerability to changes in
Government policies: Being in the agricultural business,
industry players continue to face inherent threats such as
unfavourable monsoons, availability of raw material at reasonable
prices, epidemics in paddy crop or shift of farmers to other cash
crops and cyclicality, as well as changes in Government
regulations.
* Partnership nature of business: Risk inherent in the
partnership nature of the firm such as limited ability to raise
funds, withdrawal of capital, etc.
Established in 2014 by Mr. R Narayana and family, SAI is a
partnership firm, involved in the milling of paddy and produces
raw rice. The firm's major products include boiled rice, raw
rice, bran, broken rice and husk. The firm commenced its
operations in April, 2014 with a new plant, in Raichur district
of Karnataka with a capacity to process 8 MT of paddy per hour;
however the promoters have been engaged in a similar business for
more than two decades. The firm sells raw rice under the brand
names 'Rich India'and 'Namo India'.
In FY2017, on a provisional basis, the firm reported a net profit
of INR0.66 crore on an operating income of INR44.50 crore, as
compared to a net profit of INR0.34 crore on an operating income
of INR45.10 crore in the previous year.
SHIKARPUR & BHANDAPUR: ICRA Reaffirms B- Rating on INR5.06cr Loan
-----------------------------------------------------------------
ICRA Limited has re-affirmed the long-term rating of [ICRA]B-
assigned to the INR5.06-crore tea hypothecation limit, the
INR2.17-crore term loan and INR0.25-crore bank guarantee of
Shikarpur & Bhandapur Tea Estates Private Limited (SBTEPL). The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Tea
Hypothecation Limits 5.06 [ICRA]B- (Stable) Re-affirmed
Fund Based-Term
Loan 2.17 [ICRA]B- (Stable) Re-affirmed
Non-fund based-Bank
Guarantee 0.25 [ICRA]B- (Stable) Re-affirmed
Rationale
The rating takes into account SBTEPL' s adverse financial risk
profile as reflected by the small scale of operations, low net
profitability and negative net worth on account of past
accumulated losses. However, ICRA notes that the interest-free
unsecured loans from the promoters of around INR6.4 crore, which
as per agreement with banks cannot be withdrawn without prior
consent, provides some comfort. Moreover, the low productivity of
the company's estate along with fixed-cost intensive nature of
the bulk-tea industry resulted in low operating profits. ICRA
notes that the presence of both gardens in the Dooars region of
West Bengal accentuates the agro-climatic risks associated with
tea, and the inherent cyclicality in the tea industry that leads
to variability in profitability and cash flows of the company.
The rating also factors in the risks associated with tea being an
agricultural commodity, which is dependent on agro-climatic
conditions.
The rating, however, takes comfort from the experience of
promoters in the tea industry. The improvement in tea production
in the current year is likely to support growth in its turnover.
Going forward, SBTEPL's ability to scale up its operations and
improve its profitability in the light of adverse cost structure
would be the key rating sensitivities.
Key rating drivers
Credit strengths
* Experience of promoters in the tea industry: SBTEPL was
acquired by the present management in 2011 from the erstwhile
promoters. The company's promoter has wide experience in tea
business through tea trading as well as managing tea estates
through various other group entities.
* Improvement in tea production in the current year is likely to
support turnover growth: The production of the company improved
by around 33% to 6.89 lakh kg during the five months period from
April 2017 till August 2017 from 5.14 lakh kg in the
corresponding period in FY2016, which is likely to support growth
in turnover in FY2018.
Credit weaknesses
* Weak financial profile as reflected by small scale of
operations, low net profitability and negative net worth on
account of past accumulated losses: SBTEPL has an adverse
financial risk profile as reflected by the small scale of
operations, low net profitability and negative tangible net worth
on account of past accumulated losses. Regular losses suffered by
the company till FY2010 before the current management took over
the company have kept the tangible net worth at negative levels.
However, the interest-free unsecured loans from the promoters of
around INR6.4 crore, which as per the agreement with banks cannot
be withdrawn without their prior consent, provides some comfort.
* Low productivity of the company's estate along with fixed-cost
intensive nature of the bulk tea industry resulted in low
operating profits: SBTEPL's garden costs, in line with that of
the industry, are almost fixed, with labour costs accounting for
a major portion of its production cost. Risks associated with the
fixed-cost nature of the bulk-tea industry remains high for the
company due to low productivity of the tea estates, primarily on
account of unfavourable age profile of its tea bushes. Moreover,
the utilisation of the company's current installed capacity
remained low and stood at 59% in FY2017.
* Exposed to agro-climatic risks; SBTEPL's sensitivity to such
risks is more as both the gardens are located in the Dooars
region: The company has two gardens, both in the Dooars region
of West Bengal, which accentuates the agro-climatic risks
associated with tea. Besides, there is an inherent cyclicality in
the tea industry that leads to variability in profitability and
cash flows of the company.
* Dependence on purchased leaves primarily from the market
increases risks related to green leaves availability, quality and
price: The company is still dependent on purchased leaves
primarily from the market as around 25% of the company's
production are made from bought-out leaves, which increases the
risks related to availability, quality and price of green leaves.
However, recent increase in owned production is expected to
minimise dependence to an extent.
SBTEPL was acquired by the present management in 2011 from the
erstwhile promoters. SBTEPL has two tea gardens in the Dooars
region of North East India, with a total area of around 550
hectares under plantation. The total annual production capacity
of SBTEPL is around 20 lakh kg of tea.
In FY2017, on a provisional basis, the company reported an
operating income of INR15.74 crore compared to a net profit of
INR0.26 crore on an operating income of INR18.41 crore in the
same period previous year.
SHREE DURGA: CRISIL Lowers Rating on INR5.50MM Loan to B-
---------------------------------------------------------
CRISIL Ratings has downgraded its rating on bank facilities of
Shree Durga Parameshwari Motors Private Limited (SDPMPL) to
'CRISIL B-/Stable' from 'CRISIL B+/Stable.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.50 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
Long Term Loan 2.32 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
Proposed Long Term 2.18 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B+/Stable')
The downgrade reflects weakening of financial flexibility, with
company reporting PAT loss of 0.63 Crores, despite operating
income increasing by 20% to INR55.8 crore in fiscal 2017.
Consequently, net worth declined to INR0.11 Cr from INR0.77 Cr.
Operating margins will remain subdued, given the trading nature
operations, thus leading to tightly matched cash accrual against
maturing debt in the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile: Net worth is small at
INR0.1 crore as on March 31, 2017, and is expected to increase to
INR0.2 crore as on March 31, 2018.
* Susceptibility to economic cyclicality, and exposure to intense
competition in the automobile dealership industry: While SDPMPL
is a leading authorised dealer of HMSI in Hyderabad CBD, HMSI
faces intense competition from other two-wheeler manufacturers,
particularly in the premium motorcycle segment.
Strengths
* Extensive experience of promoters: The company benefits from
the extensive industry experience of the promoters. The company
is promoted by Mr. Belman Purushottam Raghavendra Rao hails from
a well-known hotelier family that promoted Hotel Dwaraka, one of
the oldest hotels in Hyderabad.
Outlook: Stable
CRISIL believes SDPMPL will continue to benefit from the healthy
entrepreneurial experience of its promoters. The outlook may be
revised to 'Positive' if profitability increases or capital
structure improves on the back of sizeable equity infusion. The
outlook may be revised to 'Negative' if profitability margin
declines steeply or large debt contracted to meet capex or
working capital requirement weakens the capital structure.
SDPMPL was set up in 2012 by Mr. Belman Purushottam Raghavendra
Rao and his family members. The company is an authorised dealer
for two-wheelers of Honda Motorcycle and Scooter India Pvt Ltd
(HMSI) in Hyderabad.
During fiscal 2017, the company provisionally reported a profit
after tax (PAT) loss of INR0.63 Crores on operating income of
INR55.8 Crores against PAT of INR0.11 Crores on operating income
of INR46.7 Crores in the previous fiscal.
SIRPUR PAPER: Put Under Corporate Insolvency Resolution Process
-----------------------------------------------------------------
Equity Bulls reports that M/s. Rama Road Lines and others have
filed applications under Section 9 of the Insolvency and
Bankruptcy Code 2016 against The Sirpur Paper Mills Ltd for
initiation of 'Corporate Insolvency Resolution Process' (CIRP)
before the Honorable National Company Law Tribunal (NCLT),
Hyderabad Bench.
According to the report, the NCLT has admitted the said
applications and passed Orders for initiation of Corporate
Insolvency Resolution Process in respect of the Company on
September 18, 2017 and appointed Mr. Mahadev Tirunagari as the
Interim Resolution Professional (IRP).
Equity Bulls says that by virtue of the said orders of the NCLT,
the Company is now under insolvency resolution process in
accordance with the provisions of the Insolvency and Bankruptcy
Code, 2016 and the management of the affairs of the Company
stands vested in the said IRP. Equity Bulls relates that the
powers of the board of directors of the Company shall stand
suspended and be exercised by the said IRP.
India-based Sirpur Paper Mills Ltd. manufactures and deals in
pulp and paper of all kinds and articles made from paper or pulp
and materials used in paper and pulp manufacture and treatment.
Papers manufactured include writing, printing, bank ledger,
Indian account book paper, cream laid, wrapping, duplicating and
other kinds of papers. Products are sold under the "Sirpur" trade
name.
SOLNOVA POWER: CRISIL Lowers Rating on INR15MM LT Loan to B+
------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long term bank
loan facilities of Solnova Power Private Limited (SPPL) to
'CRISIL B+/Stable' from 'CRISIL BB/Stable'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 15 CRISIL B+/Stable (Downgraded
from 'CRISIL BB/Stable')
The downgrade reflects weakening in SPPL's credit risk profile
owing to delays in commencement of operations in its newly added
capacities of 3.2 MW (megawatts) resulting in lower than expected
cash accruals for debt servicing. This coupled with higher debt
levels has resulted in weakening of debt service coverage ratio
(DSCR). The DSCR is expected to deteriorate to less than 1 time
over the medium term. The newly added capacities are expected to
commence operations in October 2017 against the earlier
expectation of July 2016. The timely scaling up and
stabilization of capacities, timely payments from customers and
sustenance of PLF would remain key rating sensitivity factors
over the medium term.
The rating continues to reflect exposure to regulatory risk,
implementation and stabilisation risk associated with its ongoing
project and the company's dependence on favourable climatic
conditions for power generation. These ratings weakness are
partially offset by long term power purchase agreement (PPA) with
its customers, presence of a debt service reserve account and
moderate DSCR over the tenure of the loan.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to regulatory risk, implementation and stabilization
risk associated with its ongoing project: The Company is
currently setting up additional capacity of 1.2 MW which is
expected to commence operations in October 2017. Though the
implementation risk is moderate given the past experience of
promoters, the company's revenues remain exposed to risks
associated with stabilization of the plant.
* Company's dependence on favorable climatic conditions for power
generation: The plant performance which is dependent on the PLF
is driven by the climatic conditions. Though the geography in
which the plant operates has conducive climate for plant
operations, PLF varies with changing seasons thereby altering the
generation and hence the cash flows.
Strengths
* Long term power purchase agreement (PPA) with its customers:
The company has entered into long-term offtake (take-or-pay)
arrangement for about 5 MW of capacity, with Everest Organics
Limited at a levellised tariff of INR7.50 INRper unit (Fixed) for
capacity of 1.8 MW and with Trio Properties private limited at a
levellised tariff of INR5.95 per unit (3% increase YOY basis) for
capacity 3.2 MW providing assured revenue stream.
* Presence of a debt service reserve account and moderate DSCR
over the tenure of the loan: The Company maintains a debt service
reserve account (DSRA) equal to INR57 lacs equal to one quarter
principal and interest .This ensures timely servicing of debt
obligations to encounter any marginal delays in the receipt of
payments and hence support the liquidity. Although DSCR would
remain weak over the medium term, the ratio would improve with
steady repayment of debt year on year.
Outlook: Stable
CRISIL believes SPPL will continue to benefit over the medium
term from its long-term PPA with its customers. The outlook may
be revised to 'Positive' in case of sustained increase in PLF,
improvement in liquidity profile through maintenance of higher
DSRA and continued timely payment by customer, resulting in a
better financial risk profile. Conversely, the outlook may be
revised to 'Negative' if low cash accrual because of lower-than-
expected PLF, or delays in collection of receivables, or larger-
than-expected debt-funded capital expenditure, lead to
deterioration in the financial risk profile.
SPPL, set up in 2013, operates a 1.8 (MW) Solar power plant in
Nalgonda District, Telangana. SPPL is currently setting up a
solar power plant with an installed capacity of 3.2 megawatt (MW)
in Nalgonda District, Telangana. SPPL is promoted by Mr. Varun
and Mr. Siddharth.
SPPL has recorded losses of INR0.15 Cr on operating income of
INR2.11 Crore for the fiscal 2017 vis-a-vis losses of INR0.38 Cr
on operating income of INR0.79 Cr for the fiscal 2016.
SRS LIMITED: CRISIL Reaffirms FD Fixed Deposits Rating
------------------------------------------------------
CRISIL Ratings has reaffirmed SRS Limited's fixed deposits rating
at 'FD'. The reaffirmation is based solely on information
available in the public domain as SRS has not cooperated with
CRISIL in its surveillance process.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Fixed Deposits 125 FD (Reaffirmed)
The company has continued to delay on its working capital
facilities and has also delayed payment on fixed deposits
outstanding. The company also has a weak financial risk profile
and negative operating profitability in the competitive gold
jewellery industry, and large working capital requirement with
most receivables being on an open credit basis. However, SRS
benefits from its diversified product and services portfolios.
Key Rating Drivers & Detailed Description
Weakness
* Delay in servicing the working capital facility and fixed
deposits: As per auditor comments, the company has continued to
delay servicing its working capital facilities and fixed deposits
on account of delay in collection of payments from customers.
* Stretched liquidity on account of large working capital
requirement: Liquidity has weakened over the past one year on
account of delay in payments by customers leading to high debtors
of 421 days as on March 31, 2017. This delay in receipts was
compounded by the fact that the company generally maintains an
inventory of about a month but this increased to 71 days as on
March 31, 2017. The weakening liquidity has resulted in
deterioration in the credit risk profile. Liquidity is likely to
remain weak over the medium term.
* Weak financial risk profile and operating losses: The interest
coverage ratio was a negative 0.63 time on account of operating
losses, and the net cash accrual to total debt repayments ratio
was also negative because of net losses, in fiscal 2017.
Strengths
* Diversified product and services portfolio: SRS started off in
2004 with the screening of movies in its cineplex and then
diversified into the retail chain for fast-moving consumer goods
(FMCG) and apparel. Later, it started trading in and
manufacturing gems and jewellery; also, it entered the food and
beverages industry by opening up several food courts and
restaurants. Although 90% of its revenue comes from the gems and
jewellery segment, it has increased its presence in all the other
segments since fiscal 2014. The jewellery segment is the largest
in size in terms of value as well as volumes, but the cinema
vertical is the higher-margin business
Incorporated as SRS Commercial Company Ltd in 2000, SRS got its
current name in 2009. It operates in four business verticals:
gems and jewellery (SRS Jewells brand), cinema exhibition
(multiplexes under SRS Cinema), retail value chains (under SRS
Value Bazaar and SRS Fashion Wear), and food and beverages (under
SRS 7 Dayz, Asian Amigo, Punjabi Haandi, and Desi Cafe). The
company has been listed on the Bombay Stock Exchange and National
Stock Exchange since September 2011. It is managed by Dr Anil
Jindal, a first-generation entrepreneur.
Net loss was INR160 crore on an operating income of INR998 crore
in fiscal 2017, against a profit after tax of INR15.98 crore on
an operating income of INR3730 crore in fiscal 2016.
SRI VELA: CRISIL Reaffirms D Rating on INR19.45MM Term Loan
-----------------------------------------------------------
CRISIL's ratings on the bank facilities of Sri Vela Smelters
Private Limited (SVSPL) continue to reflect instances of delay in
servicing its debt; the delays have been caused by modest
liquidity, owing to weak operating performance.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL D (Reaffirmed)
Funded Interest
Term Loan 2.45 CRISIL D (Reaffirmed)
Letter of Credit 4.50 CRISIL D (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.55 CRISIL D (Reaffirmed)
Term Loan 9.96 CRISIL D (Reaffirmed)
Working Capital
Term Loan 19.45 CRISIL D (Reaffirmed)
The ratings also reflect SVSPL's modest scale of, and working
capital intensive, operations. However, the company benefits from
the extensive experience of its promoters in the steel industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of, and working capital intensive operations:
Modest scale of operations, reflected in revenue of INR20 crore
in fiscal 2016, constrain business risk profile. Operations are
working capital intensive with gross current assets of 583 days
as on March 31, 2016, driven by inventory days of 345.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' extensive experience in the industry and established
relationships with suppliers and customers should support
business.
SVSPL, incorporated in 2003, is promoted by Mr. T M Murugesan.
The company, based in Namakkal, Tamil Nadu, manufactures thermo-
mechanically treated steel bars and angles.
Profit after tax was negative INR9.1 crore on operating income of
INR19.7 crore in fiscal 2016 against negative INR22.3 crore and
INR10.8 crore, respectively, in fiscal 2015.
SUNBRIGHT CERAMIC: CRISIL Lowers Rating on INR2.5MM Loan to B
-------------------------------------------------------------
CRISIL Ratings has downgraded its long-term rating on the bank
facilities of Sunbright Ceramic Private Limited (SCPL) to 'CRISIL
B/Stable' from 'CRISIL B+/Stable', while reaffirming its short-
term rating at 'CRISIL A4.'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Reaffirmed)
Cash Credit 2.5 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Long Term Loan 2.0 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Proposed Long Term 2.0 CRISIL B/Stable (Downgraded
Bank Loan Facility from 'CRISIL B+/Stable')
The downgrade reflects weakening of the business risk profile,
due to a decline in revenue and operating profit, to INR6.8 crore
and INR0.68 crore in fiscal 2017, against INR9.69 crore and
INR1.03 crore, respectively, in the previous fiscal. This led to
a decline in cash accrual to INR0.18 crore in fiscal 2017, from
INR0.40 crore a year earlier. Debt protection metrics remained
average, with interest coverage ratio weakening to 1.36 times in
fiscal 2017, against 1.6 times a year ago. Networth was small at
INR3.16 crore as on March 31, 2017. The downgrade also factors in
the stretched working capital cycle, as reflected in high gross
current assets of 323 days, as on March 31, 2017.
The ratings continue to reflect the modest scale of operations
and large working capital requirement. These rating weaknesses
are partially offset by the extensive experience of the promoter
in the ceramics industry.
Analytical Approach
To arrive at the rating, CRISIL has treated unsecured loans from
SCPL's promoters as debt, as the loans are not subordinated to
bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Intense competition from several
small players in the ceramic industry, keeps the scale of
operations modest, as reflected in net sales of INR6.7 crore in
fiscal 2017, and restricts bargaining power with customers or
suppliers.
* Large working capital requirement: Operations remained working
capital intensive, with gross current assets of 323 days as on
March 31, 2017, led by receivables and inventory of 142 and 113
days, respectively.
Strength
* Promoters' extensive experience in the ceramics industry
The decade-long experience of key promoters, Mr. Jayantilal
Pranjivan Detroja, Mr. Kantilal Sundarji Padaliya and Mr.
Narendra Sundarji Padaliya in the ceramic tiles business, and
their established relationships with major suppliers and
customers, will further help strengthen the market position.
Outlook: Stable
CRISIL believes SCPL will benefit from the extensive experience
of the promoters in the ceramic industry. The outlook may be
revised to 'Positive' if significant increase in scale of
operations and profitability, leads to substantial cash accrual.
The outlook may be revised to 'Negative' if reduced profitability
or revenue leads to lower cash accrual, or if a stretch in the
working capital cycle or considerable pressure on liquidity,
weakens the financial risk profile.
SCPL was set up in 2014, at Morbi, Gujarat, by the promoters, Mr.
Jayantilal Detroja, Mr. Kantilal Padaliya and Mr. Narendra
Padaliya. The company manufactures multi-coloured digitally
printed ceramic wall tiles. Commercial operations started from
December 2014.
SWASTIK METCAST: CRISIL Cuts Rating on INR5.42MM Cash Loan to B-
----------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long term bank
facilities of Swastik Metcast Private Limited (SMPL) to 'CRISIL
B-/Stable' from 'CRISIL B+/Stable/Issuer not Cooperating' and has
reaffirmed its short term rating to 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .21 CRISIL A4 (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
Cash Credit 5.42 CRISIL B-/Stable (Downgraded
from 'CRISIL +/Stable/Issuer
Not Cooperating')
Letter of Credit 1.50 CRISIL A4 (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
Term Loan 1.01 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable
/Issuer Not Cooperating')
The downgrade reflects sharp decline in the business risk profile
largely on account of sizeable dip in operating margin to 3.60%
in fiscal 2017 against 13.60% in fiscal 2016, coupled with fall
in revenue. The decline in business risk profile was on account
of operational inefficiency of the company's foundry. The
sizeable dip in operating margin resulted in cash losses of INR96
lakh in fiscal 2017 impacting overall liquidity. CRISIL believes
the operating margins and cash accruals will remain constraint
over the medium term.
The ratings reflect SMPL's small scale, and working capital-
intensive operations. These weaknesses are partially offset by
promoter's extensive experience.
Key Rating Drivers & Detailed Description
Weakness
* Small scale and susceptibility to intense competition in the
castings industry: SMPL is a small player in the fragmented
casting industry, as reflected in revenue of INR15.69 crore in
fiscal 2017. The castings and fabrication industry in India is
intensely competitive, with numerous players in the organised and
unorganised segments. Also, limited capital cost requirements for
setting up a casting project have resulted in relatively low
entry barriers. Hence, both organised and unorganised players
intensify competition, which is aggravated by small scale.
Fragmentation in the industry and relatively small scale limit
SMPL's ability to bargain with suppliers and customers.
* Large working capital requirements: Business is highly working
capital intensive, as reflected in gross current assets (GCAs) of
274 days as on March 31, 2017; the GCAs have been at similar
levels in the past. This is because of large inventory and
stretched receivables.
Strength
* Comfortable position in the aluminium casting business: The
promoters' extensive experience has helped get repeat orders from
customers, supporting the business risk profile over the medium
term.
Outlook: Stable
CRISIL believes SMPL will continue to benefit over the medium
term from its established market position, backed by promoters'
extensive experience in the aluminium castings business. The
outlook may be revised to 'Positive' if the financial risk
profile improves significantly on the back of higher-than-
expected revenue growth and profitability. Conversely, the
outlook may be revised to 'Negative' if operating profitability
and cash accrual decline, or the company undertakes an
unexpectedly large, debt-funded capital expenditure.
Established in 1959 as a partnership firm, SMPL was reconstituted
as a private limited company in 2004. It manufactures aluminium
alloy castings. Its foundry is in Liluah and machining and
testing unit in BT Road, both near Kolkata, and has a total
installed capacity of around 150 tonne per month. SMPL has a
capacity to produce castings of weight ranging from 0.1 kilogram
(kg) to 500 kg.
VIKAS COTTON: ICRA Reaffirms B+ Rating on INR12cr Loan
------------------------------------------------------
ICRA Limited has reaffirmed the long-term rating of [ICRA]B+ to
the INR12.00-crore fund-based facilities of Vikas Cotton Ginning
& Pressing (VCGP). ICRA has also reaffirmed the long-term rating
of [ICRA]B+ to the INR5.10-crore unallocated limits of VCGP. The
outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 12.00 [ICRA]B+(Stable); Reaffirmed
Unallocated Limits 5.10 [ICRA]B+(Stable); Reaffirmed
Rationale
The rating continues to favorably factor in the extensive
experience of the partners in the cotton ginning industry and the
proximity of the firm's manufacturing unit to raw material
sources, easing procurement. The ratings further positively
factor in the consistent infusion of capital by its partners,
thus, continuously improving the net worth of the firm.
However, the ratings remain constrained by the low value additive
nature of the cotton ginning activities, which, coupled with
intense competition, results in thin operating profit margins.
ICRA also notes the susceptibility of the profit margins to agro-
climatic risks and fluctuation in the raw-cotton prices due to
changes in the minimum support price and the Government's
procurement policy. Furthermore, ICRA's rating continues to
remain constrained due to the weak coverage indicators, the high
working capital intensity, the stretched liquidity with around
94% utilisation of the working capital borrowings and the
negative cash flows. The partnership nature of the constitution
of the firm exposes it to the risk of capital withdrawal and
dissolution.
Key rating drivers
Credit strengths
* Extensive experience of the partners in cotton ginning
industry: VCGP was established in 2006, by Mr. Afzal Kaladiya,
Mr. Mahmadrafik Kaladiya and Mr. Amin Allarakha, who have
extensive experience in cotton ginning industry.
* Proximity of manufacturing unit to cotton-producing belt of
Gujarat, easing procurement: The firm's manufacturing facility is
located in Surendranagar, Gujarat, which provides the firm with
access to raw material sources enabling easy availability of raw
material.
* Consistent infusion of capital by partners: The partners have
been consistently infusing capital into the firm since the last
five years, thus, strengthening its net worth base.
Credit weaknesses
* Decline of 9% in FY2017 revenue: The firm's operating income
declined from INR122.10 crore in FY2016 to INR110.97 crore in
FY2017 due to lower volume sales of cotton bales owing to the
weak demand scenario.
* Financial profile characterised by low profitability, high
working capital intensity and weak coverage indicators: The
profitability of the firm remained low, primarily due to the low
value addition in the cotton ginning business, which, coupled
with high borrowing levels, resulted in weak coverage indicators.
The working capital intensity of the firm has remained high, due
to high year-end inventory holdings, as reflected by the NWC/OI
of 20% in FY2017.
* Intense competition and fragmentation in the industry given the
low entry barriers: The firm faces stiff competition as there are
a large number of organised and unorganised players who limit its
pricing flexibility and bargaining power.
* Vulnerability of profitability to fluctuation in raw material
prices which is subject to seasonality and Government
regulations: The profit margins of the firm are exposed to the
fluctuation in raw material prices, which depend upon factors
like seasonality, monsoon condition, international demand and
supply situation, export policy etc. Further, it is exposed to
the regulatory risks, as prices are decided through the minimum
support price, set by the Government.
Established in 2006, Vikas Cotton Ginning & Pressing (VCGP) is a
partnership firm owned and managed by Mr. Mahmadrafik Allarakha
Kaladiya, Mr. Afzal Allarakha Kaladiya and Mr. Amin Allarakha.
The manufacturing facility of the firm, located at Surendranagar,
Gujarat, is equipped with 42 ginning and one fully automatic
pressing machine, with a production capacity of 450 finished
bales per day. The firm also has five expellers for cottonseed
crushing. It also trades in castor seeds, cumin seeds, wheat,
coriander and other agro-products.
The firm reported a profit before tax of INR0.04 crore on an
operating income of INR110.97 crore in FY2017 as per the
provisional financials and as compared to a net profit of INR0.10
crore on an operating income of INR122.10 crore in the previous
year.
=========
J A P A N
=========
TOSHIBA CORP: Buying Back 10% Stake in Westinghouse for $522MM
--------------------------------------------------------------
Reuters reports that Toshiba Corp. said on Sept. 28 it is buying
back a 10 percent stake in Westinghouse Electric Co from minority
shareholder Kazatomprom for JPY59 billion (US$522 million),
taking full ownership of the bankrupt U.S. unit.
The move comes as Westinghouse is exploring selling itself, with
a deal likely valuing it at close to $4 billion, Reuters reported
last week, quoting people familiar with the matter.
Private equity firms Blackstone Group and Apollo Global
Management have teamed up to bid for Westinghouse, the sources
said. And buyout firm Cerberus Capital Management is in talks
with U.S. nuclear power plant component provider BWX Technologies
about submitting a joint bid, the sources added, Reuters relays.
A successful sale would reduce the financial hit to Toshiba
caused by Westinghouse's failure, Reuters states.
Kazakh uranium miner Kazatomprom, which bought the stake in 2007,
has exercised a put option that allows it to sell it back to
Toshiba, the troubled conglomerate said in a statement, Reuters
relays.
According to Reuters, Toshiba said it would book an impairment
charge of JPY15.3 billion that had already been included in the
earnings estimates for the current financial year.
The stake buyback will take place on January 1, 2018, Toshiba
said.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
June 19, 2017, S&P Global Ratings said it has kept its 'CCC-'
long-term and 'C' short-term ratings on Toshiba Corp. on
CreditWatch with negative implications. The long- and short-term
ratings on Toshiba have remained on CreditWatch with negative
implications since December 2016, when S&P also lowered the long-
term ratings because of a likelihood that the company might
recognize massive losses in its U.S. nuclear power business. S&P
kept them on CreditWatch negative when it lowered the long- and
short-term ratings in January 2017 and when S&P lowered the long-
term ratings in March 2017.
The ratings remain on CreditWatch, reflecting S&P's view that
creditor banks' support for Toshiba together with the company's
liquidity levels warrant continued close monitoring because its
plan to sell its memory business has yet to materialize and
additional losses or financial burdens might still arise in
connection with its U.S. nuclear power business. S&P continues
to hold the view that without unanticipated, significantly
favorable changes in Toshiba's circumstances, the company might
become unable to fulfill its financial obligations in a timely
manner or might undertake a debt restructuring S&P classifies as
distressed in the next six months.
===============
M A L A Y S I A
===============
PERISAI PETROLEUM: External Auditors Question Firm's Viability
--------------------------------------------------------------
The Star Online reports that Perisai Petroleum Teknologi Bhd,
which was hammered by the oil price plunge in recent years, now
faces the question about its viability following a report by its
external auditors.
According to the report, Perisai said on Oct. 4 its external
auditors Messrs Baker Tilly AC had issued a statement of
"material uncertainty related to going concern" following its
audited financial statements for the financial period ended
June 30, 2017.
The Star relates that Messrs Baker Tilly said for the financial
year ended June 30, 2017, the group incurred net loss of
MYR606.95 million and its current liabilities exceeded its
current assets by MYR1.34 billion.
As for the company, it incurred a net loss of MYR308.61 million
and its current liabilities exceeded its current assets by
MYR729.54 million.
Perisai's board of directors also said the independent auditors
have expressed unqualified opinion of the Audited Financial
Statement (AFS) 2017 and that their opinion is not modified in
respect of the Statement on the matter, The Star relays.
It said the group was in the midst of formalising a restructuring
and regularisation plan with its consultants to address its net
current liabilities positions and PN17 status.
"The group is pursuing all avenues available to recover the
receivables," it said.
About Perisai Petroleum
Perisai Petroleum Teknologi Bhd. (KLSE:PERISAI) --
http://www.perisai.biz/-- is a Malaysia-based investment holding
company engaged in the provision of management, administrative
and financial support services to its subsidiaries. The Company
operates in three segments: Drilling Units, which is engaged in
the operations and maintenance service and the provision of
offshore assets, which are primarily for oil and gas offshore
drilling; Production units, which is engaged in the operations
and maintenance service and the provision of offshore assets,
which are primarily for oil and gas production, and Marine
Vessels, which is engaged in the provision of vessels, barges and
equipment on vessel charter services. Its subsidiaries include
Alpha Perisai Sdn. Bhd., which is engaged in the provision of
administrative support services; Perisai Offshore Sdn. Bhd.,
which is engaged in the provision of oil and gas services in
upstream oil sector, and Perisai production Holdings Sdn. Bhd.,
which is an investment holding company, among others.
As reported in the Troubled Company Reporter-Asia Pacific on
Oct. 14, 2016, The Star Online said Perisai Petroleum Teknologi
Bhd has been classified as a Practice Note 17 (PN17) company
after its unit Perisai Capital (L) Inc defaulted on SGD125
million debt notes due on Oct. 3.
The Star related that the upstream oil and gas provider said in a
statement to Bursa Malaysia that it therefore must regularize its
financial position within 12 months and implement the
regularization plan within the timeframe stipulated by either the
Securities Commission or Bursa Malaysia Securities Bhd.
=================
S I N G A P O R E
=================
GEO COAL: Fitch Rates US$300MM Sr. Unsecured Notes 'B+'
-------------------------------------------------------
Fitch Ratings has assigned Geo Coal International Pte. Ltd.'s
US$300 million 8% senior unsecured guaranteed notes due 2022 a
final rating of 'B+' and a Recovery Rating of 'RR4'.
Geo Energy Resources Limited (Geo, B+/ Stable) and its key
subsidiaries unconditionally and irrevocably guarantee the senior
unsecured notes. Geo Coal is a wholly owned subsidiary of Geo.
The notes will rank pari passu with other senior unsecured
borrowings of Geo and its subsidiaries. The assignment of the
final rating follows a review of the final documentation, which
conforms to the draft documentation previously received. The
final rating is the same as the expected rating assigned on 27
September 2017.
Geo's 'B+' rating reflects its small scale of operations, low
cost position, minimal off-take and operational risks,
comfortable financial profile and liquidity. Geo has recently
announced plans for investing in an e-commerce venture. Fitch
does not expects this unrelated business to have a significant
impact on Geo's business and financial profile as it is in the
initial stages and the company's proposed investment is minimal.
However, any significant investment that increases the business
risk profile of Geo and/ or weakens its financial profile may
negatively impact its rating.
KEY RATING DRIVERS
Small Scale of Operations: Geo has proved reserves of around 80
million metric tonnes (MMT), total reserves of around 95MMT and
produced around 6MMT of coal in 2016. Fitch expects the company
to ramp up production volumes to around 10MMT in 2017 and around
15MMT in 2018. Geo's current operations are also concentrated,
with its two key co-located mines in Indonesia accounting for the
majority of its reserves and production; the concessions for
these mines expire in 2022.
However, Fitch expects Geo to make further investments to boost
reserves and production, and extend its concession period. Geo's
commitment to expand its operations and reserves is also
supported by a mandatory obligation to repurchase the notes 3.5
years after issue unless the company fulfils a specified minimum
reserves level and maintains producing mines with a specified
concession life.
Exposure to Cyclical Coal Industry: Geo remains vulnerable to the
commodity cycle, as its earnings and cash flow are linked to the
thermal coal industry. Thermal coal prices have come off a peak
in late 2016, reflecting China's policies aimed at managing coal
prices. Fitch expects some production uptick in response to
higher prices, which should lead to some moderation in prices
over the medium term. This is reflected in Fitch price
assumptions (see Updating Fitch's Mid-Cycle Commodity Price
Assumptions, dated 2 March 2017). However, these risks are
partially mitigated by Geo's position as a low-cost producer.
Low-Cost Position: Geo has a competitive cost position, with its
low cash cost of production for its two key mines, PT Sungai
Danau Jaya (SDJ) and PT Tanah Bumbu Resources (TBR) (mid-range
calorific value (CV) of coal at 4,000 - 4,200 kcal). The company
also benefits from well-connected infrastructure and logistics
for its key mines. Fitch expects the low-cost position to support
Geo's stable profitability and operating cash flows over the
medium term.
Asset-Light Model: Geo has entered into production contracts for
its SDJ mine with PT Bukit Makmur Mandiri Utama (BUMA, BB-
/Stable), the second-largest coal mining contractor in Indonesia.
The company intends to follow this asset-light model over the
medium term, thereby limiting any large capex for its mines. Geo
has also entered into off-take agreements simultaneously with a
commodity trading company, minimising operational and off-take
risks. Coal off-take agreements expose Geo to customer
concentration and resultant counterparty risks. At the same time,
the mid-range CV of coal from its key mines, the flexibility to
sell directly (in the case of any default under the off-take
agreements), and Geo's relationships with end-buyers offset these
risks to a large extent. Geo is in the process of entering into
coal mining contracts with BUMA and off-take agreements with
advance funding options for the TBR mine.
Investments to Continue: Fitch expects Geo to continue investing
over the medium term to augment its coal reserves and production
scale. Geo acquired TBR (proved reserves of around 41MMT and
total reserves of around 45MMT) for a purchase consideration of
USD90 million in June 2017. TBR's location, adjacent to SDJ, is
likely to help ramp up production swiftly and also provide
synergies. Fitch expects Geo to acquire additional mines/mining
concessions in the near term. Geo may focus primarily on
producing - or nearly producing - mines of acceptable CV,
limiting the risks relating to development of the acquired mines.
Any investments in new coal mines expose Geo to additional risks,
while Fitch derives comfort from the company's track record and
previous experience as a coal-mining contractor before divesting
the business in early 2016.
Comfortable Financial Profile: Fitch anticipates Geo's
operational cash flows will improve, driven by rising coal
volumes, its competitive cost position and Fitch coal-price
assumptions. This is likely to support investments in the near to
medium term. Credit metrics are likely to remain comfortable,
with FFO net leverage of around 1.5x (2016:0.2x) and FFO fixed-
charge cover of over 5x (2016: 8.6x) over the medium term. This
factors Fitch's assumptions of continuing moderate investments of
around USD250 million over the next three years (excluding TBR);
in the absence of these investments, Fitch expects Geo to achieve
a net cash position after 2018.
DERIVATION SUMMARY
Geo's rating of 'B+' reflects its small scale of operations, low
cost position, minimal off-take and operational risks,
comfortable financial profile and liquidity. By comparison,
China's Yanzhou Coal Mining Company Limited (B/Stable) is
constrained by its aggressive financial profile and weak
liquidity. Geo's comfortable financial profile and relatively
lower cost position results in the higher rating despite
Yanzhou's much larger and diversified operations with an improved
cost position. PT ABM Investama Tbk's (ABM, BB-/ Stable)'s rating
is one notch higher than Geo's due to its more diversified and
integrated business despite ABM's marginally weaker financial
profile compared with Geo's.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for Geo include:
- Coal prices in line with Fitch's mid-cycle commodity price
assumptions, adjusted for difference in calorific value
(average Newcastle 6000 kcal free-on-board (FOB): USD65/MT
from 2018 onwards).
- Investments of around USD100 million-130 million in the next
6-12 months
- Coal production volumes of around 9MMT in 2017 and around
15MMT in 2018.
- Dividend pay-out of around 15%-20%
Fitch's key assumptions for bespoke recovery analysis include:
- The recovery analysis assumes that Geo would be considered a
going concern in bankruptcy, and that the company would be
reorganised rather than liquidated. Fitch has assumed a 10%
administrative claim.
- Geo's going-concern EBITDA is based on last 12 months (LTM)
December 2016 EBITDA, and includes pro forma adjustments for
the EBITDA contributions from the acquired TBR mines and other
similar-sized acquisitions in the next 6-12 months.
- The going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganisation EBITDA level upon which Fitch
base the valuation of the company. The going-concern EBITDA is
25% below the mid-cycle EBITDA based on the long-term average
thermal coal price assumptions used by Fitch. The post-
reorganisation EBITDA assumes some post-default operating
improvement, and is at a level that may violate the intended
covenants for its US dollar notes.
- Fitch generally assumes a fully drawn working-capital facility
of USD40 million - the extent allowed under the intended
covenants of the US dollar notes - in its recovery analysis,
since working-capital debt is tapped as companies are under
distress.
- An enterprise value (EV) multiple of 4x is used to calculate a
post-reorganisation valuation, and reflects a derived EBITDA
multiple based on a distressed valuation metric of around
USD3-USD5 per ton of Geo's proved reserves - including
expected acquisitions subject to adjustment. The historical EV
multiple for companies in the natural resources sector ranged
from 5.8x-11x, with a median of 8.7x. However, Fitch has used
a conservative multiple, due to the small size of Geo and its
limited concession period.
- The waterfall results in a recovery of around 100% for the US
dollar note holders. However, Fitch applies a soft cap of
'RR4' for the Recovery Ratings of Geo as all of its mining
operations are located in Indonesia, a Group D country. Fitch
consequently rates the senior unsecured US dollar notes at
'B+'/'RR4'.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Fitch does not expect any upgrade, given the small size of
Geo's operations, which constrains its business profile.
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Any significant increase in business risk profile as a result
of investments in businesses unrelated to coal mining.
- Any sustained weakening in operating profile including
production, reserves or cost position
- FFO net leverage of over 2.5x on a sustained basis
- FFO fixed-charge cover sustained below 5x
LIQUIDITY
Adequate Liquidity: Fitch expects liquidity to remain adequate in
the absence of any major debt maturities following the issuance
of the US dollar notes. The company plans to use part of the
proceeds to repay its outstanding SGD100 million notes due 2018.
Fitch expects strong operating cash flows and the cash balance
from the notes' proceeds to support investments in the near to
medium term.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
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