/raid1/www/Hosts/bankrupt/TCRAP_Public/171006.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
Friday, October 6, 2017, Vol. 20, No. 199
Headlines
A U S T R A L I A
A&S SERVICES: ATO Raids Philip Whiteman Melbourne offices
EDWARDS CONSTRUCTIONS: First Creditors' Meeting Set for Oct. 13
GUARDIAN LAW: Second Creditors' Meeting Set for Oct. 13
KIMBERLEYS: Fashion Retailer Goes Into Receivership
RIMFIRE CONSTRUCTIONS: Second Creditors' Meeting Set for Oct. 13
SANGOKU INTERNATIONAL: First Creditors' Meeting Set for Oct. 16
SINCLAIR RECRUITMENT: Second Creditors' Meeting Set for Oct. 13
C H I N A
HANG SENG: Moody's Affirms Ba1 BCA & Changes Outlook to Stable
I N D I A
ADMARK CERAMIC: CRISIL Reaffirms B+ Rating on INR7.25MM Term Loan
ALLWELD ENGINEERS: CRISIL Assigns B+ Rating to INR6.0MM Loan
AMALA GRANITES: CRISIL Reaffirms B Rating on INR4.1MM Term Loan
AMBA AGRO: CRISIL Assigns B+ Rating to INR20MM Pledge Loan
AMBE TEXTILE: CRISIL Assigns B+ Rating to INR6.75MM LT Loan
BHALKESHWAR SUGARS: CRISIL Reaffirms D Rating on INR60MM Loan
BHUSHAN POWER: IRP Seeks Resolution Plan From Investors
BILPOWER LIMITED: CRISIL Reaffirms D Rating on INR90MM Cash Loan
COMMTRADE METALS: Ind-Ra Moves B+ Rating to Non-Cooperating
DAULAT RAM: Ind-Ra Migrates D Issuer Rating to Non-Cooperating
DEVPRAYAG PAPER: Ind-Ra Assigns B+ Issuer Rating, Outlook Stable
ELECON CONDUCTORS: CRISIL Cuts Rating on INR5.5MM Loan to 'B'
G S DEVELOPERS: Ind-Ra Hikes Issuer Rating to B+, Outlook Stable
GOPAL KRISHNA: CRISIL Assigns B+ Rating to INR8MM Cash Loan
GURULAXMI COTTEX: Ind-Ra Affirms 'BB+' LT Issuer Rating
HI-TECH ROBOTIC: Ind-Ra Alters Outlook to Pos, Affirms BB+ Rating
JOSEPH VELUPUZHAKKAL: CRISIL Ups Rating on INR8MM Cash Loan to B
JUJHAR CONSTRUCTIONS: CRISIL Cuts Rating on INR33MM Loan to B+
KUNNATHAN WOOD: CRISIL Assigns B+ Rating to INR3MM Cash Loan
MADRAS HARD: Ind-Ra Affirms 'B+' Issuer Rating, Outlook Stable
MAHESHWARI FABTEX: CRISIL Reaffirms B+ Rating on INR2.65MM Loan
MOTHERS AGRO: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
NKCM SPINNERS: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
PERFECT INFRAENGINEERS: Ind-Ra Lowers LT Issuer Rating to 'D'
PIONEER PANEL: CRISIL Reaffirms B+ Rating on INR8MM Term Loan
POULOMI INFRA: CRISIL Lowers Rating on INR10MM Cash Loan to B
RADHEY NARAYAN: Ind-Ra Gives B LT Issuer Rating, Outlook Stable
RAJALAXMI AGROTECH: Ind-Ra Migrates B- Rating to Non-Cooperating
RAJESHWARI COTSPIN: CRISIL Assigns B+ Rating to INR32MM Loan
RAVI MICRONS: CRISIL Assigns B+ Rating to INR9MM Term Loan
RELIANCE COMMUNICATIONS: Withdraws Tower Demerger Plan From NCLT
RELIANCE COMMUNICATIONS: Cancelled Deal No Impact on Moody's CFR
SAJJALA BIO: CRISIL Reaffirms B+ Rating on INR7.35MM LT Loan
SCHOLARS ACADEMY: CRISIL Lowers Rating on INR14MM Loan to 'D'
SHARVI PACKAGING: CRISIL Assigns B+ Rating to INR7.5MM Cash Loan
SREE SHANMUGA: Ind-Ra Assigns BB Rating to Additional Bank Loans
SRI SANTHOSHIMA: CRISIL Reaffirms B Rating on INR10MM Cash Loan
SUMIT TEXTILE: CRISIL Assigns B+ Rating to INR14MM Term Loan
SURYA BAKERY: CRISIL Lowers Rating on INR13.25MM Term Loan to B+
UNISONN INFRASTRUCTURES: CRISIL Cuts Rating on INR7.68M Loan to D
J A P A N
TOSHIBA CORP: Bain Capital Aims to List Chip Unit in 3 Years
TOSHIBA CORP: S&P Raises Senior Unsecured Rating to 'CCC-'
M A L A Y S I A
PDZ HOLDINGS: Court Dismisses Writs Over Unpaid Bunker Bills
S I N G A P O R E
ZETTA JET: Chapter 11 Trustee to Oversee Restructuring
S R I L A N K A
AMANA BANK: Fitch Affirms BB National Long-Term Rating
V I E T N A M
VIETNAM: Most Exposed to Credit Impact of Likely Korea Conflict
VINGROUP JSC: Fitch Affirms B+ Long-Term IDR; Outlook Stable
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A U S T R A L I A
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A&S SERVICES: ATO Raids Philip Whiteman Melbourne offices
---------------------------------------------------------
ABC News reports that investigators from the Australian Tax Office
(ATO) have raided the Melbourne offices of an alleged mastermind
of a massive tax evasion scheme following a tip off from the ABC.
Philip Whiteman, also known as Phil Graham and Phil Damon, is a
well-known pre-insolvency adviser who has allegedly helped
companies avoid paying tax on millions of dollars of income, the
report says.
The ABC has previously reported that Mr. Whiteman used "dummy
directors" who were often paid a small amount of cash to help his
clients hide from creditors.
The ABC relates that in April, the ATO placed four Whiteman
companies - A&S Services, DNV Accountants, Bolton & Swan
Solicitors, and AHW Solicitors - into provisional liquidation.
Since then, liquidators from Pitcher Partners have had access to
the company's files.
In June, liquidator Andrew Yeo tendered a report in the Federal
Court that warned the full scale of Mr. Whiteman's alleged
offences might be far greater than first expected, the report
recalls.
In his report, Mr. Yeo refers to an "extensive number of
contraventions" of the Corporations Act and Crimes Act, and said
there were "far too many" to list on an individual basis.
However, Mr. Whiteman appears to have been undeterred by the
serious allegations, the report says.
The ABC has learnt he is back in business using a new company
called ZZZ Accounting to advise clients.
Mr. Whiteman is now calling himself Phil James. The director of
the ZZZ Accounting is a man named Ronald Paul Thexton.
The ABC is not suggesting that Mr. Thexton has any role in, or
knowledge of, the company's activities.
ZZZ Accounting was registered in March. The company's registered
address in Prahran was the scene of another ATO raid targeting
Whiteman in April.
On Wednesday evening [Oct. 4], the ABC learnt that Mr. Whiteman
and at least a dozen staff were providing pre-insolvency advice to
clients from a shared office space on Duke Street in the Melbourne
suburb of Windsor.
A number of staff told the ABC they were working for the company
as unpaid interns.
The other occupants of the shared space alleged that Mr. Whiteman
had failed to pay his rent, but when they attempted to evict him,
he commenced proceedings at Victorian Civil and Administrative
Tribunal (VCAT) seeking access to the office, the ABC adds.
EDWARDS CONSTRUCTIONS: First Creditors' Meeting Set for Oct. 13
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Edwards
Constructions (NSW) Pty Ltd will be held at Kiera Room, Novotel
Wollongong Northbeach, 2-14 Cliff Road, in North Wollongong, NSW,
on Oct. 13, 2017, at 12:30 p.m.
Michael Slaven and Aaron Torline of Ernst & Young were appointed
as administrators of Edwards Constructions on Oct. 3, 2017.
GUARDIAN LAW: Second Creditors' Meeting Set for Oct. 13
-------------------------------------------------------
A second meeting of creditors in the proceedings of Guardian Law
Pty Limited has been set for Oct. 13, 2017, at 10:00 a.m., at the
offices of Jones Partners Insolvency & Business Recovery
Suite 301, Level 3, 4 Columbia Court, Nexus Building, Norwest
Business Park, in Baulkham Hills, 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. 12, 2017, at 5:00 p.m.
Bruce Gleeson of Jones Partners was appointed as administrator of
Guardian Law on Sept. 7, 2017.
KIMBERLEYS: Fashion Retailer Goes Into Receivership
---------------------------------------------------
Rachel Clayton at Stuff.co.nz reports that fashion retailer
Kimberleys has gone into receivership after 34 years in business.
Receivers Andrew Grace and Colin Gower from BDO Christchurch were
appointed on Oct. 2, the report states.
According to Stuff, Retail First managing director Chris Wilkinson
said the Kimberleys chain began in Christchurch and was one of New
Zealand's most successful fashion retailers.
"The stores are well located, their online representation has been
good, this simply seems to be a sad situation where sales have not
kept pace with costs, which is a situation challenging many
retailers," the report quotes Mr. Wilkinson as saying said.
"Our hope would be that some of the chain remains as stores such
as Kimberleys add a necessary diversity to New Zealand's retail
landscape."
Kimberleys started as a stockist of local labels and began
manufacturing its own knitwear in 1983. There are currently four
in-house labels and a range of international collections. There
are nine stores around New Zealand, including an outlet store.
There are four stores in Christchurch, two in Auckland, and one in
Wellington, Nelson and Dunedin.
RIMFIRE CONSTRUCTIONS: Second Creditors' Meeting Set for Oct. 13
----------------------------------------------------------------
A second meeting of creditors in the proceedings of Rimfire
Constructions (Qld) Pty Ltd has been set for Oct. 13, 2017, at
11:00 a.m., at Quest Breakfast Creek, 15 Amy Street, in Albion,
Queensland.
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. 12, 2017, at 4:00 p.m.
Ginette Muller of GM Insolvency was appointed as administrator of
Rimfire Constructions on Sept. 7, 2017.
SANGOKU INTERNATIONAL: First Creditors' Meeting Set for Oct. 16
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Sangoku
International Pty Ltd will be held at the offices of Worrells
Solvency & Forensic Accountants, Suite 1 Level 15, 9 Castlereagh
Street, in Sydney, New South Wales, on Oct. 16, 2017, at
10:30 a.m.
Nicholas Craig Malanos of Worrells Solvency were appointed as
administrators of Sangoku International on Oct. 4, 2017.
SINCLAIR RECRUITMENT: Second Creditors' Meeting Set for Oct. 13
---------------------------------------------------------------
A second meeting of creditors in the proceedings of Sinclair
Recruitment (NSW) Pty Ltd has been set for Oct. 13, 2017, at 11:00
a.m., at the offices of Cor Cordis Chartered Accountants,
One Wharf Lane, Level 20, 161 Sussex Street, in Sydney, NSW.
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. 12, 2017, at 4:00 p.m.
Mark Hutchins & Jason Tang of Cor Cordis Chartered Accountants
were appointed as administrators of Sinclair Recruitment on
Sept. 7, 2017.
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C H I N A
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HANG SENG: Moody's Affirms Ba1 BCA & Changes Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service has affirmed the long-term deposit
rating of HSBC Bank (China) Company Limited (HSBC China) at A1,
and that of Hang Seng Bank (China) Limited (Hang Seng China) at
A2.
At the same time, Moody's has upgraded HSBC China's baseline
credit assessment (BCA) to baa2 from baa3.
Further, Moody's has affirmed Hang Seng China's BCA at ba1 and
adjusted BCA at a2, and HSBC China's adjusted BCA at a1.
Moody's has revised the outlooks on the banks' ratings to stable
from negative.
RATINGS RATIONALE
Affirmation of deposit ratings
Moody's has affirmed HSBC China and Hang Seng China's deposit
ratings despite the downgrade of the adjusted BCAs of the banks'
parents, The Hongkong and Shanghai Banking Corp. Ltd (HBAP, Aa3
stable, a1) and Hang Seng Bank Limited (HSB, Aa3 stable, a1), to
a1 from aa3, which Moody's uses as an anchor when assessing
affiliate support.
On September 27, Moody's downgraded the long-term deposit ratings,
adjusted BCAs and BCAs of the banks' respective parents, HBAP and
HSB, and revised their rating outlooks to stable from negative.
Moody's continues to factor in a very high level of affiliate
support into HSBC China and Hang Seng China's ratings, resulting
in four notches of affiliate support uplift for HSBC China and
five notches of uplift for Hang Seng China based on Moody's Joint
Default Assessment (JDA) framework.
Moody's assumption of a very high level of support reflects HSBC
China and Hang Seng China's strategic importance to their
respective parents, the management and operational support from
the parents and the potential for reputational risks to their
parents through name association if they default.
The change in outlook to stable from negative follows the change
in outlook on HBAP's and HSB's ratings to stable.
Upgrade of HSBC China's BCA and affirmation of Hang Seng China's
BCA
The upgrade of HSBC China's BCA to baa2 from baa3 is driven by the
bank's track record of sound asset quality as well as
capitalization, and robust funding profile despite a relatively
small franchise when compared to Chinese state-owned and joint-
stock commercial banks.
HSBC China reported sound asset quality metrics when compared with
the system average, benefiting from its focus on serving large and
financially strong corporations, including multinational
companies, selective state-owned enterprises and medium-sized
firms. As of year-end 2016, HSBC China's NPL ratio was 0.63%,
slightly up from 0.43% as of year-end 2015 and much lower than the
system average of 1.74% as of year-end 2016. The bank has most of
its investment in marketable securities.
The upgrade of HSBC China's BCA is further supported by its
consistently strong capitalization in the past few years, due to
capital injections from its parent and good internal capital
generation ability relative to its growth of risk-weighted assets.
Leveraging its expertise in transaction banking, cash management
and international connectivity, the bank has been successful in
building its base of core deposit funding from corporations.
However, HSBC China's BCA also reflects its strained profitability
due to increased operating costs to support its expansion in the
Pearl River Delta and its high credit concentration to large
borrowers. Its high borrower concentration in serving
multinational and large corporations benefits its asset
performance but also exposes it to potential losses due to its
small customer base when compared to other rated Chinese banks.
The affirmation of Hang Seng China's ba1 BCA takes into account
its weak profitability, strained asset quality, and high
concentration to large borrowers owing to the structural
characteristics of its customer mix. The bank's BCA also reflects
its strong capitalization and satisfactory liquidity profile
despite its small domestic deposit franchise.
WHAT COULD MOVE THE RATINGS UP
HSBC China's BCA could experience upward pressure if (1) its asset
quality, profitability, and capital adequacy improve further;
and/or (2) macroeconomic conditions in China improve.
Hang Seng China's deposit rating and BCA could experience upward
pressure if (1) its funding structure improves, with solid growth
in core deposit funding; (2) its profitability, as measured by
return on average assets, strengthens; (3) its asset quality and
capital adequacy improve further; and/or (4) macroeconomic
conditions in China improve.
WHAT COULD MOVE THE RATINGS DOWN
HSBC China and Hang Seng China's deposit ratings could be
downgraded if the parents' BCAs are downgraded or if the parents'
willingness to support the banks weakens. Their BCAs could be
lowered if their operating environment weakens materially, for
example if China's economic growth moderates significantly.
In addition, HSBC China's BCA could experience downward pressure
if (1) its asset quality and profitability weaken materially; or
(2) its capital weakens significantly.
Hang Seng China's BCA could experience downward pressure if (1)
its funding structure, as measured by the ratio of market funds to
tangible assets, deteriorates; (2) its asset quality and
profitability weaken materially; or (3) its capital weakens
significantly.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
published in September 2017.
HSBC China, headquartered in China, reported total assets of
RMB422 billion as of the end of 2016.
Hang Seng China, headquartered in China, reported total assets of
RMB89 billion as of the end of 2016.
LIST OF AFFECTED RATINGS
HSBC Bank (China) Company Limited
- BCA upgraded to baa2 from baa3
- Adjusted BCA affirmed at a1
- Deposit rating affirmed at A1/P-1
- Issuer rating affirmed at A1/P-1
- CR Assessment affirmed at Aa3(cr)/P-1(cr)
- Outlook changed to stable from negative
Hang Seng Bank (China) Limited
- BCA affirmed at ba1
- Adjusted BCA affirmed at a2
- Deposit rating affirmed at A2/P-1
- Issuer rating affirmed at A2
- CR Assessment affirmed at A1(cr)/P-1(cr)
- Outlook changed to stable from negative
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I N D I A
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ADMARK CERAMIC: CRISIL Reaffirms B+ Rating on INR7.25MM Term Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Admark Ceramic Industries (ACI) at 'CRISIL B+/Stable/CRISIL
A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.1 CRISIL A4 (Reaffirmed)
Cash Credit 3 CRISIL B+/Stable (Reaffirmed)
Term Loan 7.25 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect modest scale of operations in an
intensely competitive ceramics industry, weak financial profile
and large working capital requirement. These rating weaknesses are
partially offset by the extensive experience of the partners, and
the proximity of the manufacturing facilities to sources of raw
material and labour.
Analytical Approach
CRISIL has treated the unsecured loans as neither debt nor equity
as these loans are interest free.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the intensely competitive ceramic
industry: Intense competition in a highly fragmented industry have
kept the scale of operations small, as reflected in the revenue of
INR13.41 crore in fiscal 2017, limiting the scope for a ramp-up.
* Modest financial risk profile: Networth remains modest at
INR3.89 crore, thus leading to high gearing of 1.81 times as on
March 31, 2017. Debt protection metrics remain average, with
interest coverage and net cash accrual to total debt ratios of
about 2.33 and 0.20 respectively.
* Working capital intensity in operations: Operations are highly
working capital intensive, as reflected in estimated gross current
assets of 320 days as on March 31, 2017, driven by large inventory
and stretched receivables.
Strength
* Extensive experience of the partners: The two-decade long
experience the ceramic industry has helped the partners to
understand the dynamics of the local market, and establish
relationships with suppliers and customers.
* Strategic unit location ensuring availability of raw materials
and cheap labour: The manufacturing facilities are located in
Morbi, which eases access to clay (main raw material),
availability of contractors, and skilled labourers. Other critical
infrastructure, such as gas and power is also well established at
these locations.
Outlook: Stable
CRISIL believes ACI will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if substantial cash accrual and revenue is generated,
while maintaining profitability, thereby improving liquidity. The
outlook may be revised to 'Negative' if financial risk profile,
particularly liquidity, weakens owing to low accrual, stretch in
working capital cycle, or any debt-funded capital expenditure.
Established in 2013, ACI is a partnership firm promoted by the
Morbi (Gujarat)-based Amrutia family. It manufactures ceramic
digital wall tiles and has an installed capacity of 36,600 tonne
per annum. The operations commenced in March 2014.
For fiscal 2017, on an estimated basis ACI reported a net profit
of INR0.20 crore on total sales of INR13.41 crore, against net
profit of INR0.05 crore on total sales of INR15.0 crore in the
previous fiscal.
ALLWELD ENGINEERS: CRISIL Assigns B+ Rating to INR6.0MM Loan
------------------------------------------------------------
CRISIL Ratings has revoked the suspension of its rating on bank
facilities of Allweld Engineers Private Limited (AEPL) and
assigned its 'CRISIL B+/Stable/CRISIL A4' rating to these bank
facilities. CRISIL had suspended the rating vide its rating
rationale dated June 10, 2014, as AEPL had not provided necessary
information required for a rating review. The company has now
shared the requisite information, enabling CRISIL to assign its
rating to the bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3.09 CRISIL A4 (Assigned;
Suspension Revoked)
Cash Credit 6.00 CRISIL B+/Stable (Assigned;
Suspension Revoked)
The ratings reflect the company's modest scale of operations with
exposure to tender based nature of operations and susceptibility
to volatilities in raw material prices. These rating weaknesses
are partially mitigated by extensive experience of the promoter in
engineering industry and average financial risk profile.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations with exposure to tender based nature
of operations: The Company has modest scale of operations,
reflected in revenues of INR7.6 crore for fiscal 2017. Further,
the company regularly participates in tenders floated by Ordinance
factories and other defense establishments. Although it has
received repeat orders in the past, but it is exposed to tender
based nature of operations amidst competition from other players.
* Susceptibility to volatilities in raw material prices: Since a
large part of the revenues are tender based, the prices of the
orders are fixed at the time of award of the tender. Any large
volatilities in raw material prices during the tenure of the raw
materials will impact the operating margins of the company.
Strengths
* Extensive experience of the promoter in engineering industry:
The promoters have been in the business for over three decades and
have established strong relationships with several large
engineering companies.
* Average financial risk profile: AEPL has an average financial
risk profile with an average capital structure and moderate debt
protection metrics.
Outlook: Stable
CRISIL believes that AEPL will maintain its business profile
backed by promoter's long presence in the industry. The outlook
may be revised to 'Positive' if the company scales up its
operations while prudently managing the working capital cycle and
financial risk profile. Conversely, the outlook may be revised to
'Negative' if the company undertakes large debt funded capital
expenditure or there is a stretch in working capital cycle
adversely affecting the liquidity position.
Established in 1995, AEPL is engaged in manufacturing of
specialized components to be utilized in defense equipment and in
specialized engineering projects. It is promoted by Mr. Jagadish K
Mohapatra.
AMALA GRANITES: CRISIL Reaffirms B Rating on INR4.1MM Term Loan
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Amala
Granites Products (AGP) for obtaining information through letters
and emails dated July 7, 2017, and August 14, 2017, among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term .9 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
Rupee Term Loan 4.1 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 Amala Granites Products. 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 Amala Granites Products is consistent with 'Scenario
1' outlined in the 'Framework for Assessing Consistency of
Information with CRISIL BB' rating category or lower. Based on the
last available information, CRISIL has reaffirmed the rating at
'CRISIL B/Stable'.
Set up in 2006, Amala Granite Products (AGP) is engaged in stone
crushing activities and has its own quarry spread across area of
12 acres in Thrissur, Kerela. The firm is a sole proprietorship
concern of Mr. V. J. Chaco. Firm has stone crushing capacity of
1000 tonnes per day.
AMBA AGRO: CRISIL Assigns B+ Rating to INR20MM Pledge Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating on the
long term bank facilities of Amba Agro Foods (AAF).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable
Pledge Loan 20 CRISIL B+/Stable
The rating reflects the below average financial risk profile and
modest scale of operations. These weaknesses are partially offset
by partner's extensive experience through other entities.
Key Rating Drivers & Detailed Description
Weaknesses
* Below average financial risk profile: The financial risk profile
of the firm is below average. The debt protection indicators are
weak marked by interest coverage and net cash accruals to adjusted
debt ratios of 1.60 times and 0.02 times for fiscal 2017. For
fiscal 2017, the net worth were modest and stood at 2.81 crore and
the gearing was high at 7.97 times.
* Modest scale of operations: The firm's operations were modest in
the fragmented rice industry. Its operating income stood at 88.14
crore for the fiscal 2017.
Strengths
* Extensive experience of the partners: The partners of the firm
have extensive experience in the rice industry through other
entities which has helped the firm to build and maintain long term
relationships with the customers and suppliers.
Outlook: Stable
CRISIL believes that AAF will benefit over the medium term from
the extensive industry experience of the partners. The outlook may
be revised to 'Positive' if the company improves its operating
margins thereby improving its net cash accruals which would
further improve its financial risk profile. Conversely, the
outlook may be revised to 'Negative' if the company's financial
risk profile deteriorates on account of decline in its revenue and
profitability or in case of any larger-than-expected, debt-funded
capex programme.
AAF was established as a partnership firm concern in 2012 by Mr.
Ashok Kumar and Mr. Narinder Kumar. The firm is engaged in the
export and trading of all varieties of rice to the Gulf and
African countries. The registered office of the firm is located in
Kurukshetra and it also has a branch office at Secundrabad. The
day to day operations are managed by Mr. Narinder Kumar. The
profit sharing ratio between the two partners is equal.
AMBE TEXTILE: CRISIL Assigns B+ Rating to INR6.75MM LT Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long term bank facilities of Ambe Textile (AT; part of Ambe
Group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2.25 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 6.75 CRISIL B+/Stable
The rating reflects the modest scale of operations in an intensely
competitive trading industry and below-average financial risk
profile. This weaknesses are partially offset by extensive
experience of the proprietor in the trading industry.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of AT and its group companies Priyanka
Enterprise (PE) and Devi Textiles (DE), collectively referred to
as the Ambe group. This is because all these entities, together
referred to as the Ambe group, are in the same line of business
and under a common management, and have operational synergies.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amid intense competition: Scale of
operations is modest, reflected in revenue of INR58 crore in
fiscal 2017, due to intense competition and fragmented trading
industry.
* Below-average financial risk profile: Small networth of INR2
crore, total outside liabilities to tangible networth (TOLTNW) of
12 times and debt protection metrics marked by interest coverage
and net cash accrual to total debt ratios of 1.6-1.7 times and
0.06 time, respectively, in fiscal 2017.
Strengths
* Extensive experience of the proprietor: AG benefits from its
proprietors' industry experience of over 30 years, which has
resulted in steady orders from customers and longstanding
relationships with suppliers and customers.
Outlook: Stable
CRISIL believes AG will continue to benefit from the extensive
experience of its proprietor. The outlook may be revised to
'Positive' if substantial increase in revenue and margin leading
to high cash accrual or substantial capital infusion leading to
improvement its financial risk profile. The outlook may be revised
to 'Negative' if decline in cash accrual, large working capital
requirement, or sizeable, debt-funded capital expenditure
constrains liquidity.
Set-up in 2001, AG is promoted by Mr. Ramniwas Agarwal. The group
is engaged into trading of yarns and fabric. The group is based
out in Ichalkaranaji.
BHALKESHWAR SUGARS: CRISIL Reaffirms D Rating on INR60MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL D' rating to the bank
facilities of Bhalkeshwar Sugars Limited (BSL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 18 CRISIL D (Reaffirmed)
Working Capital
Facility 60 CRISIL D (Reaffirmed)
The rating reflects instances of delay in repayment of the
company's term debt obligations on account of weak liquidity. The
rating also factors in weak financial risk profile, large working
capital requirement and susceptibility to cyclicality and
regulatory changes in the sugar industry
However, these weaknesses are partially offset by the
entrepreneurial experience of its promoters.
CRISIL had assigned its rating on the bank facilities of BSL at
'CRISIL D' through rating rationale dated 22nd August 2017
Key Rating Drivers & Detailed Description
Weakness
* Delays in repayment of term debt obligations: Delays in
repayment of term debt obligations on account of weak liquidity
insufficient cash accrual against term debt obligations.
* Weak financial risk profile: Financial risk profile is weak on
account of aggressive capital structure and subdued debt
protection metrics. Gearing, at over 4 times as on March 31, 2017,
is expected to deteriorate further on account of ongoing debt-
funded capital expenditure. Thus, debt protection metrics
particularly interest coverage ratio has remained subdued about
0.14 times during fiscal 2017.
* Large working capital requirement: Operations are working
capital intensive as reflected by high gross current assets of
over 500 days as on March 31, 2017.
* Cyclicality and regulatory changes in the sugar industry
The sugar industry is highly regulated in terms of cane prices,
export/import policy for sugar, and sugar release mechanisms.
This affects the credit quality of players in the industry. The
revenue of BSL has declined to about INR62 crore during FY 2017
against INR117 crore in the preceding year on account of shortage
of raw materials.
Strength
* Entrepreneurial experience of the promoters: The rating factors
the entrepreneurial experience of the promoters.
Incorporated in 2000, Karnataka-based BSL is promoted by Mr.
Prakash Khandre. It manufactures sugar and has a cane crushing
capacity of about 2500 tonne per day (TPD) and a 14 megawatt co-
generation power plant. It is undertaking a debt-funded capital
expenditure plan to enhance the sugar crushing capacity up to 4000
TPD and setting up distillery units with total capacity of 60 kilo
litres per day. Commercial operation of the distillery is expected
to commence from January 2018.
The company has reported loss of INR15 crore on net sales of
INR62.0 crore in fiscal 2017, against loss of INR0.4 crore on net
sales of INR117.2 in fiscal 2016.
BHUSHAN POWER: IRP Seeks Resolution Plan From Investors
-------------------------------------------------------
LiveMint.com reports that an interim resolution professional (IRP)
for Bhushan Power and Steel Ltd has sought a potential resolution
plan from prospective investors, according to a newspaper
advertisement.
"Any potential resolution applicant who is desirous of submitting
a resolution plan as above, is required to provide the relevant
qualification documents to establish satisfaction of the
qualification requirements, on or before October 6," the
advertisement, as cited by LiveMint.com, said.
Bhushan Power and Steel Limited manufactures and markets steel
products. It offers flat products, such as coated products,
galvanized/galvalume, color coated products, cable tapes, and cold
rolled products; and long products, including iron making and
sponge iron products. The company also provides steel pipes,
hollow steel sections, grooved pipes, and carbon steel tubes.
Mahendra Kumar Khandelwal was appointed as the IRP in the case
under an order passed by the National Company Law Tribunal (NCLT)
on July 26.
Bhushan Power, which owes over INR37,000 crore to a consortium of
lenders led by Punjab National Bank, was among 12 large companies
identified by the Reserve Bank of India against which banks were
directed to initiate insolvency proceedings, according to
LiveMint.com. Barring Era Infra Engineering Ltd, petitions have
been admitted in all other cases, LiveMint.com notes.
BILPOWER LIMITED: CRISIL Reaffirms D Rating on INR90MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Bilpower
Limited (Bilpower) for obtaining information through letters and
emails dated September 15, 2017, and September 18, 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 90 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Letter of credit 80 CRISIL D (Issuer Not
& Bank Guarantee Cooperating; Rating
Reaffirmed)
Proposed Long Term 4 CRISIL D (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
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 they are arrived at without any management
interaction and are 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 Bilpower. 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 Bilpower is consistent with 'Scenario 2' outlined in
the 'Framework for Assessing Consistency of Information with
CRISIL BBB' rating category or lower. Based on the last available
information, CRISIL has reaffirmed the rating at 'CRISIL D/CRISIL
D'.
Key Rating Drivers & Detailed Description
Weakness
* Delays in meeting debt obligation due to weak liquidity:
Bilpower has been delaying meeting debt obligation because of weak
liquidity that resulted from unrealised debtors and operating
losses.
* Weak financial risk profile: Networth was negative, driven by
large debtors (789 days as on March 31, 2017), continued operating
losses, and sizeable short-term debt.
Bilpower, incorporated in 1989, manufactures transformer
laminations. It has manufacturing units at Vadodara in Gujarat,
Silvassa in Dadra and Nagar Haveli, Kanchad in Maharashtra, and
Roorkee in Uttarakhand.
COMMTRADE METALS: Ind-Ra Moves B+ Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Commtrade Metals'
(CM) Long-Term Issuer Rating to the non-cooperating category. The
issuer did not participate in the surveillance exercise, despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND
B+(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR18.7 mil. Term loans migrated to non-cooperating category
with IND B+(ISSUER NOT COOPERATING) rating;
-- INR95 mil. Fund-based limit migrated to non-cooperating
category with IND B+(ISSUER NOT COOPERATING) rating; and
-- INR30 mil. Non-fund-based limit migrated to non-cooperating
category with IND A4(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Sept. 21, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Set up in 2010, CM is a partnership firm that manufactures
aluminium alloy ingots and aluminium die castings. The firm is
based in Chennai, Tamil Nadu and its day-to-day operations are
managed by its partners Mr. Uzair Ahmed, Mr. Jahir Ahmed and Mr.
Vipul Kumar Agarwal.
DAULAT RAM: Ind-Ra Migrates D Issuer Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Daulat Ram
Industries' Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND D(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR54.72 mil. Term loan (Long-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating;
-- INR170 mil. Fund-based working capital limit (Long-
term/Short-term) migrated to non-cooperating category with
IND D(ISSUER NOT COOPERATING) rating;
-- INR35 mil. Inland letter of credit limit (Short-term)
migrated to non-cooperating category with IND D(ISSUER NOT
COOPERATING) rating; and
-- INR15 mil. Bank guarantee (Short-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Sept. 23, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 1973, Daulat Ram Industries is a Bhopal-based
partnership firm. It manufactures air conditioners, dynamic brake
resistors and its accessories primarily for the Indian Railways.
DEVPRAYAG PAPER: Ind-Ra Assigns B+ Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Devprayag Paper
Mill Private Limited (DPMPL) a Long-Term Issuer Rating of 'IND
B+'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR20 mil. Fund-based working capital limit assigned with IND
B+/Stable/IND A4 rating;
-- INR40 mil. Term loan due on June 2020 assigned with IND
B+/Stable; and
-- INR10 mil. Proposed non-fund-based limit* assigned
Provisional IND A4 rating.
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by DPMP to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect DPMPL's small scale of operations and moderate
credit metrics. Revenue grew to INR347.10 million in FY17
(INR251.08 million) owing to increased orders from existing and
new customers. Net leverage (total adjusted net debt /EBITDA)
improved to 3.98x in FY17 (FY16: 5.15x) and EBITDA interest
coverage (operating EBITDA/gross interest expense) to 1.83x
(1.63x) on account of an increase in absolute EBITDA. However,
EBITDA margin deteriorated to 6.39% in FY17 (FY16: 7.84%) as the
company reduced margins to add new customers.
However, the ratings are supported by the company's comfortable
liquidity position with 84% average utilisation of fund-based
facilities during the 12 months ended August 2017. Net working
capital cycle improved to 28 days in FY17 (FY16: 66 days) due to
better inventory management and early realisations from debtors.
The ratings are also supported by the promoters' more than two
decades of experience in the manufacturing of paper reels.
RATING SENSITIVITIES
Negative: Elongation of working capital cycle and/or further
decline in the EBITDA margins leading to deterioration in the
credit metrics will be negative for the ratings.
Positive: A sustained improvement in the operating profitability
leading to an improvement in the credit metrics will be positive
for the ratings.
COMPANY PROFILE
Incorporated in 2011, DPMPL manufactures carbon paper and
stationary items. Its manufacturing facility is located in
Allahabad. Sandeep Agrawal, Mahesh Chandra Agrawal, Bharat
Aggarwal and Rajesh Bansal are the directors of the company.
ELECON CONDUCTORS: CRISIL Cuts Rating on INR5.5MM Loan to 'B'
-------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility of Elecon Conductors Limited (ECL) to 'CRISIL B/Stable'
from 'CRISIL B+/Stable', while reaffirming the short-term rating
at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL A4 (Reaffirmed)
Cash Credit 5.5 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Letter of Credit 3.5 CRISIL A4 (Reaffirmed)
The downgrade reflects stretch in ECL's liquidity on account of
the large working capital requirements owing to increase in
revenue levels (around 35% in fiscal 2017) and stretched
receivables, with delay in the receipt of the payments from
government bodies (which accounts for almost 100% of revenue).
This has put tremendous pressure on working capital borrowings,
given low accrual, leading to frequently overdrawn cash credit
limits. The liquidity may get a boost in the near term from the
expected enhancement in working capital limits; however, if the
situation of delayed receivables fails to improve, liquidity will
likely remain stretched over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Average financial risk profile: The financial risk profile is
constrained by weak debt protection metrics through supported by
healthy capital structure and return on capital employed. With low
profitability, the financial risk profile is expected to remain
average over the medium term.
* Modest scale: Small scale is reflected in top line of INR38.46
crore in fiscal 2017. The power transmission industry is highly
fragmented, with many players in the organised and the unorganised
segments, intensifying competition to secure large orders. ECL is
an authorised dealer for various government authorities, which
should help improve scale over the medium term.
* Large working capital requirement: Operations are working
capital intensive, with gross current assets of 193 days as on
March 31, 2017. This is on account of large inventory holding and
high debtors.
Strengths
* Promoters' extensive experience: Mr. Atul Jain and his family,
the promoters, have close to two decades of experience in the
power transformer and wire industries. The company also
manufactures copper wire and copper strips through Elecon
Conductor, a partnership company set up by Mr. Atul Jain and Ms
Vidushi Jain. The business risk profile is supported the
promoters' extensive experience in the cable industry which
demonstrates the company's ability to survive business cycles.
With its ability to supply quality products on time and promoters'
extensive experience, the business risk profile should remain
stable over the medium term.
Outlook: Stable
CRISIL believes ECL will continue to benefit from the promoters'
extensive experience. The outlook may be revised to 'Positive' if
significant scaling up of operations and profitability leads to
higher-than-expected cash accrual, while improving working capital
cycle and financial risk profile. Conversely, the outlook may be
revised to 'Negative' if revenue or margin declines, adversely
impacting cash accrual, or if working capital cycle stretches,
constraining liquidity, or if sizeable, debt-funded capital
expenditure weakens the financial risk profile.
Established in 1995, ECL manufactures power transformer, all alloy
aluminium conductors (AAAC), aluminium conductor steel-reinforced
(ACSR) cables, DPC wires, and distribution transformers. It
operates two plants in Meerut (Uttar Pradesh) and Roorkee
(Uttarakhand). Operations are managed by Mr. Atul Jain.
G S DEVELOPERS: Ind-Ra Hikes Issuer Rating to B+, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded G S Developers &
Contractors Private Limited's (GSDC) Long-Term Issuer Rating to
'IND B+'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR55 mil. Fund-based working capital limit long-term rating
upgraded; short-term rating affirmed with IND B+/Stable/
IND A4 rating; and
-- INR122.50 mil. (increased from INR72.50 mil.) affirmed with
IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects Ind-Ra's expectation of an increase in
revenue over FY18-FY19, considering its order book position as of
August 2017 was INR800 million (2.6x of FY17 revenue) and GSDC's
ability to maintain a comfortable operating margin (FY17
(provisional): 19.47%; FY16: 18.58%). It has been able to maintain
a comfortable operating margin on account of the company's focus
on the execution of high-margin projects.
The ratings are supported by the promoter's experience, as well as
the company's established track record, of over three decades in
civil construction.
The ratings, however, are constrained by small and declining scale
of operations and moderate credit metrics. In FY17, revenue was
INR306.25 million (FY16: INR397.95 million), interest coverage
(operating EBITDA/gross interest expense) was 2.75x (FY16: 2.70x)
and net financial leverage (total Ind-Ra adjusted net
debt/operating EBITDAR) was 0.94x (2.7x). Revenue declined owing
to the company's focus on the execution of high-margin projects.
Net leverage improved on account of a fall in debt, driven by
reduced dependence on fund-based limits.
The ratings are also constrained by moderate-to-tight liquidity
owing to an elongated working capital cycle of 96 days in FY17
(FY16: 13 days).
RATING SENSITIVITIES
Negative: A significant decline in profitability leading to
deterioration in the credit profile will be negative for the
ratings.
Positive: A significant improvement in overall revenue while
maintaining the credit profile and working capital cycle will be
positive for the rating.
COMPANY PROFILE
Incorporated in 1987, GSDC undertakes tender-based civil
construction for various educational institutions, corporates and
real estate builders across India.
GOPAL KRISHNA: CRISIL Assigns B+ Rating to INR8MM Cash Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Gopal Krishna Rice Mills (GKRM). The
rating reflects the firm's below-average financial risk profile
and modest scale of operations in the highly-fragmented rice
industry. These weaknesses are partially offset by its partners'
extensive industry experience.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 2 CRISIL B+/Stable
Analytical Approach
Unsecured loans of INR3.25 crore as on March 31, 2017, have been
treated as neither debt nor equity as these are subordinated to
bank debt and are from the partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in a highly-fragmented industry:
GKRM's modest scale is reflected in turnover of INR13.18 crore in
fiscal 2017 and its small milling and processing capacities in
comparison to large players in the industry. The rice industry is
highly fragmented due to low entry barriers because of low capital
requirement and limited value addition in operations.
* Below-average financial risk profile: Gearing was high at 4.87
times as on March 31, 2017, and debt protection metrics were
subdued, with net cash accrual to total debt and interest coverage
ratios at 0.02 time and 1.20 times, respectively, in fiscal 2017.
Strength
* Partners' extensive experience in the rice industry: The
partners' experience of around four decades in the rice milling
business has enabled the firm to ramp up operations. Further,
extensive experience of the partners has helped the company build
healthy relations with its customers and suppliers. Around 80 per
cent of the sale is to large export houses.
Outlook: Stable
CRISIL believes GKRM will continue to benefit from its partners'
extensive industry experience and their funding support. The
outlook may be revised to 'Positive' if there is a substantial
improvement in financial risk profile driven by capital infusion
or more-than-expected revenue growth leading to high cash accrual,
and if working capital management is efficient. The outlook may be
revised to 'Negative' if lower-than-expected cash accrual or large
working capital requirement or considerable debt-funded capital
expenditure lead to further pressure on liquidity.
GKRM is a partnership firm. It mills and processes basmati rice,
flour, and rice bran, at its facility at Gangoh in Saharanpur,
Uttar Pradesh. It has milling and sorting capacity of 4 tonne per
hour. The firm is promoted by Mr. Sanjay Garg and Ms Kusum Lata
Garg.
On a provisional basis, the company recorded PAT of INR0.1 crores
on operating income stood at INR13.18 crore in fiscal 2017. Profit
after tax was at INR0.05 crore on operating income of INR11.04
crore for fiscal 2016.
GURULAXMI COTTEX: Ind-Ra Affirms 'BB+' LT Issuer Rating
-------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Gurulaxmi Cottex
Private Limited's (GCPL) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable. Instrument-wise rating actions are:
-- INR159.62 mil. (reduced from INR 191.8 mil.) Long-term loan
due on March 2025 affirmed with IND BB+/ Stable rating;
-- INR100 mil. Fund-based working capital limits affirmed with
IND BB+/Stable/IND A4+ rating;
-- INR15 mil. Non-fund-based working capital limits affirmed
with IND A4+ rating;
-- INR250 mil. Term loan* due on June 2025 assigned with IND
BB+/Stable rating;
-- INR50 mil. Fund-based working capital limits* assigned with
IND BB+/Stable/IND A4+ rating; and
-- INR15 mil. Non-fund based working capital limits* assigned
with IND A4+ rating.
*The final ratings are assigned following the receipt of sanction
letter by Ind-Ra.
KEY RATING DRIVERS
The affirmation reflects GCPL's successful completion of capacity
addition in April 2017 to 30,000 spindles from 17,000 spindles and
revenue generation of INR450 million in 1QFY18 in line with Ind-
Ra's expectations. As per FY17 provisional financials, revenue
grew to INR1,101 million (FY16: INR994 million) on account of
increase in orders. However, the scale of operations remained
moderate. As of August 2017, the company had an order book of
INR250 million, to be executed within 60 days. Despite the revenue
increase, EBITDA margin declined to 6.1% (FY16: 8.5%) owing to an
increase in employee costs and raw material prices.
GCPL's credit metrics remained moderate, although deteriorated in
FY17 due to an increase in total debt to INR514 million in FY17
(FY16: INR386 million) for capacity expansion and a decline in
EBITDA to INR68 million (INR85 million). Interest coverage
(operating EBITDA/gross interest expense) was 2.7x in FY17P (FY16:
3.1x) and net leverage (adjusted net debt/operating EBITDA) was
7.6x (4.3x).
However, the ratings are supported by GCPL's comfortable liquidity
position with improved cash conversion cycle. The company's
average maximum utilisation of fund-based limits was 72.86% for
the 12 months ended August 2017. Net cash conversion cycle
improved to 80 days in FY17P (FY16: 125 days) due to a reduction
in inventory holding period to 82 days (108 days).
The ratings continue to benefit from the promoter's two decades of
experience in the cotton yarn manufacturing business.
RATING SENSITIVITIES
Positive: A substantial increase in the revenue and operating
profitability leading to an improvement in the credit metrics
could lead to a positive rating action.
Negative: Any decline in the company's EBITDA margins leading to a
sustained deterioration in the credit metrics could lead to a
negative rating action.
COMPANY PROFILE
Incorporated in 2010, GCPL manufactures cotton yarn at its
manufacturing unit in Yavatmal, Maharashtra.
HI-TECH ROBOTIC: Ind-Ra Alters Outlook to Pos, Affirms BB+ Rating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has revised Hi-Tech Robotic
Systemz Limited's (HRL) Outlook to Positive from Stable while
affirming its Long-Term Issuer Rating at 'IND BB+'.
The instrument-wise rating actions are:
-- INR36 mil. (reduced from INR62 million mil.) Term loan due on
June 2019 rating affirmed; outlook revised to positive from
stable with IND BB+/Positive
-- INR100 mil. Fund-based working capital limits rating
affirmed; outlook revised to positive from stable with
IND BB+/Positive/IND A4+ rating.
-- INR70 mil. Non-fund-based working capital limits rating
affirmed; outlook revised to positive from stable with
IND BB+/Positive/IND A4+ rating.
KEY RATING DRIVERS
The Outlook revision reflects strong revenue growth in FY17 and
Ind-Ra's expectation of a sustained increase in revenue in FY18
and beyond, given HRL has increased its focus on mobile robots for
the less cyclical industrial segment compared with defence, as
well as on new orders under the autonomous and driver assistive
systems segment. Moreover, it is expanding globally, with a focus
on North America, Latin America and Australia.
The affirmation reflects continued moderate scale of operations
and volatile EBITDA margin. According to provisional financials
for FY17, revenue increase of 66% yoy to INR453 million (FY16:
INR273 million). Revenue growth was driven by robust order inflows
and new customer addition across all major business segments and
products. EBITDA margin was 16.2%-36.4% over FY14-FY17 and
declined to 16.2% in FY17 from 19.0% in FY16 due to a rise in R&D
expenses and related employee costs, driven by an increase in R&D
activities. Ind-Ra expects EBITDA margin to moderate further,
given the company's continued focus on R&D and global hiring.
HRL's business operations are volatile. Revenue and EBITDA margin
are highly dependent on projects undertaken and the timing of
project delivery. Ind-Ra believes that an increased focus on the
industrial segment would make operations less volatile.
The ratings are constrained by HRL's elongated working capital
cycle. It had a working capital cycle of 216 days in FY17 (FY16:
257 days). The improvement was due to high working capital
requirements, as it has to maintain high inventory levels for
product customisation as per customer needs. In addition, it has a
debtor period of three-four months in line with tenor of the
contract. However, higher EBITDA resulted in positive cash from
operations of INR34 million in FY17 compared with negative INR5
million in FY16.
The ratings, however, are supported by HRL's moderate liquidity
profile and strong credit metrics. Its average utilisation of
fund-based limits was 58% for the 12 months ended July 2017. In
FY17, net leverage was 1.0x (FY16: 1.8x) and interest coverage was
5.0x (4.8x). The improvement in credit metrics was due to reduced
debt and higher EBITDA.
The ratings are also supported by the management's significant
technical expertise and product development experience in the
field of robotics, artificial intelligence and industrial
automation.
RATING SENSITIVITIES
Negative: A decline in revenue or profitability or the lengthening
of the working capital cycle leading to an increase in net
financial leverage on a sustained basis could result in the
Outlook revision to Stable.
Positive: A positive rating action could result from revenue
growth, while improving or maintaining credit profile, on a
sustained basis.
COMPANY PROFILE
Formed in 2004, HRL develops robotics, artificial intelligence,
automotive, embedded system, and computer vision and biometric
products/solutions. It has designed and developed several unmanned
robotics projects for the army, paramilitary forces and private
sector companies. Some of the major areas in industrial automation
include material handling application, robotic palletising and de-
palletising, robotic welding, automation in foundry and forging,
machine tending application, gantry and travel track-based
solution.
JOSEPH VELUPUZHAKKAL: CRISIL Ups Rating on INR8MM Cash Loan to B
----------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Joseph Velupuzhakkal (JV) to 'CRISIL B/Stable' from
'CRISIL B-/Stable', while reaffirming its short-term rating at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Cash Credit 8 CRISIL B/Stable (Upgraded
from 'CRISIL B-/Stable')
The rating upgrade reflects improvement in JV's business profile,
marked by better-than-expected cash accrual on account of improved
operating margin in fiscal 2017. The firm provisionally report
revenue of INR20 crores with an operating margin of 15% in fiscal
2017 as against INR21 crores and 5% respectively in previous year.
The improved margin led to better-than-expected cash accrual of
INR1.5 crores from INR0.2 crore in the said period. The improved
operating performance has led to improved financial risk profile
as reflected in the gearing and interest cover of 1.7 times and 5
times for fiscal 2017 as against 3.7 times and 1.5 times,
respectively for fiscal 2017. With stable high margin orders,
CRISIL believes that JV will maintain its improved business and
financial profile over medium term.
This improvement has also strengthened the interest cover to 5.21
times for fiscal 2017 against 1.52 times the previous fiscal.
The ratings also reflect the modest scale of operations in the
intensely competitive construction industry and susceptibility to
risks related to tender-based nature of operations. These
weaknesses are partially offset by the extensive experience of the
proprietor.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition: Intense
competition in the domestic civil construction sector, from large
players as well as small regional ones, keeps scale of operations
modest, and constrains profitability. This is reflected in
turnover of INR20.4 crore for fiscal 2017. Moreover, as operations
are focused only in Kerala and Karnataka, any slowdown in the
industry or force majeure event in the state could adversely
impact business
* Susceptibility to risks related to tender-based nature of
operations: As majority of sales are tender-based, revenue depends
on the firm's ability to successfully bid for tenders.
Furthermore, the tender-based business model also restricts JV's
pricing power and hence profitability.
Strength
* Extensive experience of the proprietor: Benefits from the
proprietor's three decade long experience in the industry should
support JV's business profile. The benefits include efficient and
timely execution of projects and obtaining regular orders from the
existing customers.
Outlook: Stable
CRISIL believes JV will continue to benefit from the extensive
experience of its proprietor. The outlook maybe revised to
'Positive' if increase in scale of operations or profitability
lead to higher-cash-accrual while maintaining its working capital
management. The outlook maybe revised to 'Negative' if lower cash
accrual or large working capital requirement or any debt-funded
capital expenditure constrains liquidity.
Established in 1985, JV undertakes roads and irrigation projects
in Kannur for the various departments of Kerala and Karnataka
state governments.
JUJHAR CONSTRUCTIONS: CRISIL Cuts Rating on INR33MM Loan to B+
--------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility Jujhar Constructions and Travels Private Limited (JCTL)
to 'CRISIL B+/Stable' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 33 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in financial risk profile,
especially liquidity, as cash accrual generated is just sufficient
to meet the sizable debt obligation, leading to high dependency on
external borrowing to fund large capex incurred and working
capital requirement. The working capital limit in the past 12
months was fully utilised. Furthermore, liquidity is also
constrained by high diversion of funds in other business ventures.
The business risk profile has been impacted with muted growth in
scale (5% over three fiscals through 2017), while the return on
capital employed has remained low at 1%-2%in the past two years.
The ratings continue to reflect the extensive experience of the
promoters in the transportation and logistics segments. These
rating strengths are partially offset by large working capital
requirement and a weak liquidity profile.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak liquidity profile: Liquidity is constrained as accrual of
INR11-12 crore will be just sufficient to meet debt obligation of
INR10-10.30 crore. Furthermore, due to transport business the
capex requirement has been modular in nature as reflected sizable
capex of INR40-60 crore in past three years through fiscal 2017.
In the medium term, liquidity is expected to remain weak and
improvement in accrual will be a key monitorable.
* Below-average financial risk profile: The total outside
liabilities to adjusted networth (TOLANW) ratio was high at 18.1
times as on March 31, 2017, because of moderate accretion to
reserves and high dependence on external debt. Debt protection
metrics were weak, with interest coverage and net cash accrual to
adjusted debt ratios of 3.2 times and 0.19 time, respectively.
Furthermore, expected capex of INR25-30 crore is likely to be
funded through debt in the absence of cushion available in cash
accrual, keeping TOLANW ratio weak.
Strengths
* Promoters' experience in transportation and logistics industry:
The two-decade experience of the promoters in the transportation
and logistics business has enabled them to develop strong
networking and establish relationships with original equipment
manufacturers (OEM). Although revenue had a muted growth, due to
volatility in passenger transport business, it is expected to grow
moderately, over the medium term.
* Leading market position in Punjab and diversified revenue stream
from distinct business segments: JCTL operates through two
business verticals: automobile logistics and passenger transport.
It derives around 70% of its revenue from automobile logistics
through its tie-ups with Maruti Suzuki India Ltd, Tata Motors Ltd,
Mahindra & Mahindra Ltd, Hyundai Motors India, & Toyota Kirloskar
Motor Pvt Ltd. The company now has a road-permit for around 25000
km which is renewed for each term (1/3/5 year) from District
Transport Authority.
Outlook: Stable
CRISIL believes JCTL will continue to benefit from the extensive
industry experience of its promoters and its strong market
position. The outlook may be revised to 'Positive' if there is
improvement in the financial risk profile, due to a substantial
increase in revenue and operating profitability, along with
efficient working capital management. The outlook may be revised
to 'Negative' if the financial risk profile weakens, most likely
because of significant low cash accrual or any debt-funded capex
is undertaken.
JCTL was incorporated in 1996 by Mr. Gurdeep Singh and Ms Manjeet
Kaur. The company operates in the transportation and logistics
segments in Punjab.
KUNNATHAN WOOD: CRISIL Assigns B+ Rating to INR3MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Kunnathan Wood Products (KWP).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B+/Stable
Import Letter of
Credit Limit 10 CRISIL A4
The rating reflects KWP's small scale and working capital-
intensive operations in the competitive plywood industry. These
weaknesses are partially offset by the extensive experience of
promoters in the plywood industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale in the competitive plywood industry: With a turnover
of INR23.90 crores in fiscal 2017, the scale remains small.
Furthermore, the industry is dominated by the unorganised sector,
resulting in intense competition.
* Working capital-intensive operations: Gross current assets (GCA)
were 173 days as on March 31, 2017, driven by high receivables and
inventory of 54 and 96 days respectively on account of
differentiation in product portfolio.
Strengths
* Extensive experience of promoters: Benefits from promoters' over
many years of experience in the plywood industry with sound
understanding of the business, and healthy relations with
suppliers and customers should continue to support business.
Outlook: Stable
CRISIL believes that KWP's business risk profile will continue to
benefit from its promoters long standing industry experience. The
outlook may be revised to 'Positive' in case of a significant
improvement in the company's operating margins leading to
improvement in cash accruals and net worth. Conversely, the
outlook may be revised to 'Negative' in case the company's lower
than expected cash accruals or larger than expected working
capital requirements leading to pressure on liquidity.
KWP was promoted by K.V. Abbas and K.V. Pareeth. The Company is
engaged in manufacturing of plywood and veneers. KWP's facility is
based in Odakalli (Kerala) and company sells under its brand name.
MADRAS HARD: Ind-Ra Affirms 'B+' Issuer Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Madras Hard Tools
Pvt Ltd's (MHPL) Long-Term Issuer Rating at 'IND B+'. The Outlook
is Stable.
The instrument-wise rating actions are:
-- INR245 mil. (reduced from INR275 mil.) Fund-based working
capital limits affirmed with IND B+/Stable/IND A4 rating;
-- INR19.42 mil. Long-term loans withdrawn (repaid in full) with
WD rating; and
-- INR10 mil. Non-fund-based limits affirmed with IND A4 rating.
KEY RATING DRIVERS
The ratings continue to reflect MHPL's tight liquidity, indicated
by instances of overutilisation during the 12 months ended August
2017, with monthly overutilisation for the period standing at one-
six days, and moderate scale of operations. Revenue declined to
INR1,009 million in FY17 from 1,085 million in FY16 due to a fall
in steel wire rope sales. FY17 financials are provisional in
nature.
The ratings, however, are supported by an improvement in credit
metrics, which continued to remain at a moderate level. In FY17,
interest coverage (operating EBITDAR/gross interest expense) was
2.0x (FY16: 1.6x) and net financial leverage (total adjusted net
debt/operating EBITDAR) was 6.0x (7.6x). The improvement in credit
metrics was due to a reduction in debt (FY17: INR294 million;
FY16: INR372 million) on account of the repayment of the term
loan. In addition, the ratings continue to be supported by the
four-decade experience of MHPL's promoter in the trading business.
RATING SENSITIVITIES
Negative: An improvement in the liquidity position will lead to a
positive rating action.
Positive: Deterioration in interest coverage could lead to a
negative rating action.
COMPANY PROFILE
Incorporated in 1972, MHPL is an authorised distributor of steel
wire ropes for Usha Martin Ltd ('IND BBB-'/Negative) and eight-
strand mooring ropes for Tuff Ropes Pvt. Ltd. Moreover, it
manufactures slings and PET bottles.
MAHESHWARI FABTEX: CRISIL Reaffirms B+ Rating on INR2.65MM Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term facility
of Maheshwari Fabtex Pvt Ltd (MFPL) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable (Reaffirmed)
Long Term Loan .35 CRISIL B+/Stable (Reaffirmed)
Proposed Cash
Credit Limit 2.65 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the company's small scale of
operations in the highly competitive textile trading industry, and
below-average financial risk profile. These weaknesses are
partially offset by the extensive experience of its promoters.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations and intense competition: Scale of
operations is modest with operating income of INR40.4 crore and
profitability margin of 4.9% in fiscal 2017. The textile industry
is intensely competitive due to the presence of several small and
large mills, power looms and handlooms limiting the bargaining
power of small players. Furthermore, competition from cheaper
imports, limited value addition and product differentiation
creates low entry barriers, which translates into thin operating
margin.
* Below-average financial risk profile: Financial risk profile is
below-average marked by small networth of INR2.9 crore and high
total outside liabilities to adjusted networth ratio of 4.35 times
as on March 31, 2017 and modest debt protection metrics with
interest coverage of 1.6 times in fiscal 2017.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' two decade-long experience in the industry and
established relationships with suppliers and customers should
support business. The benefits include repeat orders from reputed
clients such as Raymond Ltd, Bombay Dyeing, S Kumar, Grasim
Textiles and Aditya Birla Century. The company is also a channel
partner for Bombay Dyeing. While activities such as weaving,
processing, printing and dyeing of shirting fabric help maintain
quality, entry into job-work business helps the company to
increase revenue and profitability.
Outlook: Stable
CRISIL believes MFPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if increase in scale of operations and stable
profitability lead to high cash accrual and working capital
management is efficient. The outlook may be revised to 'Negative'
if large working capital requirement or low cash accrual, weakens
liquidity.
Incorporated in 2002 and promoted by Khator family, MEPL's
operations are managed by Mrs Bina Devi Khator and her nephew Mr.
Praful Khator. MFPL primarily trades grey and shirting fabric. In
2009, it also ventured into undertaking job-work for local dealers
and traders, wherein it processes grey fabric from yarn. The
manufacturing unit is in Bhiwandi, Maharashtra while the head
office is in Mumbai. The promoters also operate two other entities
- Khator Fibre and Fabrics Ltd processes and prints/dyes shirt
fabric and Goyal Creations Pvt Ltd engaged in weaving of grey
fabrics.
MOTHERS AGRO: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has been consistently following up with Mothers
Agro Foods Private Limited (MAFPL) for obtaining information
through letters and emails dated July 17, 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 5 CRISIL B+/Stable (Issuer
Not Cooperating; Rating
Reaffirmed)
Proposed Long Term 1.44 CRISIL B+/Stable (Issuer
Bank Loan Facility Not Cooperating; Rating
Reaffirmed)
Term Loan 1.80 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 Mothers Agro Foods 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 Mothers Agro Foods 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'.
MAFPL, incorporated in 2011, is engaged in processing wheat flour.
Operations are managed by promoters, Mr. TP Varkey and Ms. Dhanya
Varkey. The company is based at Ernakulam, Kerala.
NKCM SPINNERS: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated NKCM Spinners
Private Limited's (NKCM) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the rating
exercise despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR85.53 mil. Term loan migrated to non-cooperating category
with IND BB(ISSUER NOT COOPERATING) rating;
-- INR300 mil. Fund-based facilities migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating; and
-- INR37.5 Non-fund-based facilities migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on 2
September 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2008, NKCM manufactures cotton, polyester, viscose
and blended yarn. The day-to-day activities of the company are
managed by its managing director Mr. Narendra Kumar Nakhat. NKCM
has a current installed capacity of 15,160 spindles and
manufactures yarn of 20s-40s count.
PERFECT INFRAENGINEERS: Ind-Ra Lowers LT Issuer Rating to 'D'
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Perfect
Infraengineers Ltd's (PIL) Long-Term Issuer Rating to 'IND D' from
'IND BB'. The Outlook was Stable.
The instrument-wise rating actions are:
-- INR 0.9 mil. Term loan (long-term) due on March 2020
downgraded with IND D rating;
-- INR47.5 mil. Fund-based working capital limit (long-term)
downgraded with IND D rating; and
-- INR45 mil. Non-fund-based working capital limit (short-term)
downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects delays in servicing term debt obligations
by PIL during the 12 months ended August 2017 due to a stretched
liquidity owing to an elongated net working capital cycle of 319
days in FY17 (FY16: 271 days).
RATING SENSITIVITIES
Positive: A positive rating action may result from timely debt
servicing for at least three consecutive months.
COMPANY PROFILE
Incorporated in 1993, PIL is a turnkey project contractor for the
supply, installation, testing, commissioning and maintenance of
mechanical, electrical and plumbing and heating, ventilation and
air conditioning equipment. In addition, it undertakes annual
maintenance contracts and supplies air conditioners on rental. It
is listed on the National Stock Exchange.
PIONEER PANEL: CRISIL Reaffirms B+ Rating on INR8MM Term Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term facility of Pioneer Panel Products (PPP).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B+/Stable (Reaffirmed)
Proposed Term Loan 8 CRISIL B+/Stable (Reaffirmed)
Term Loan 4 CRISIL B+/Stable (Reaffirmed)
The rating reflects the small scale of operations of the firm in a
highly competitive particle board industry and average financial
risk profile. The firm is also exposed to project risk owing to
its capital expenditure (capex) plans. These weaknesses are
partially offset by the extensive experience of its partners and
adequate liquidity.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Scale of operations is modest with
operating income of INR12 crore for fiscal 2017, as operations
commenced only in August 2016, while first sales were registered
in October 2016. However, year-to-date revenue was INR24.8 crore
for the 5 months ending August 2017 and is expected to cross INR40
crore for fiscal 2018. Scale of operations should improve over the
medium term.
* Average financial risk profile: Gearing, moderate at 1.76 times
as on March 31, 2017, is expected to increase over the medium term
on account of additional debt being availed to fund the capex.
Debt protection indicators are weak with interest coverage of 0.96
times in fiscal 2017 due to low profitability as the business is
still in the initial stage. However with scaling up of operations,
profitability is expected to improve and debt protection
indicators should be strengthened.
* Project risk: A new plant is being installed at the same
premises to offer a wide range of products to increase revenue
base. The expected cost of the project is INR10 crore, of which
INR8 crore is to be funded by a bank loan and the remaining by own
funds. The new plant will enhance the quality of existing products
and also produce a new variety of plywood. Overall, it will help
in improving the scale of business, however, the firm will face
demand risk along with implementation risks for the new project.
Strengths
* Extensive experience of the partners: Benefits from the
partners' 15 years of experience in the industry should support
business.
* Adequate liquidity: Liquidity is adequate as reflected in low
bank limit utilisation'50% for 7 months through August 2017. Also,
equity infusion of INR0.64 crore in fiscal 2017 has provided
additional support to liquidity.
Outlook: Stable
CRISIL believes PPP will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if better cash accrual due to revenue growth and
efficient working capital management strengthens financial risk
profile on account of timely stabilisation of the project. The
outlook may be revised to 'Negative' if slowdown in growth, low
profitability or substantial debt-funded expansions weakens the
business and financial risk profiles or if delay in stabilization
of project leads to weakened liquidity.
PPP is a Rohtak, Haryana based partnership firm, established and
promoted in 2016 by Mr. Ashok Kumar Bansal, Mr. Lalit Gupta and
Mr. Satish Kumar Bansal. The firm manufactures medium density
fibre boards (MDF), pre laminated boards, high density fibre
boards and texture finish MDF boards. The firm started operations
in August 2016.
POULOMI INFRA: CRISIL Lowers Rating on INR10MM Cash Loan to B
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Poulomi
Infra Private Limited (PIPL) 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
Downgraded from 'CRISIL BB-
/Stable')
Proposed Long Term 0.7 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Downgraded from 'CRISIL BB-
/Stable')
Term Loan 7.3 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Downgraded from 'CRISIL BB-
/Stable')
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Poulomi Infra Private Limited.
This restricts CRISIL's ability to take a forward Poulomi Infra
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 downgraded the rating to 'CRISIL B/Stable'.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of PIPL and C5 Infra Pvt Ltd (C5). This is
because both the companies, together referred to as the Poulomi
group, are in the same line of business, have a common management,
and have fungible cash flows. Moreover, PIPL holds 98 percent
stake in C5.
PIPL was established in 2005 under the name Sudhama Projects
(India) Pvt Ltd. Its name was changed to PIPL in 2010. PIPL is a
civil contractor engaged in construction of buildings, primarily
in Hyderabad and its operations are managed by Mr. J Madan Mohan
Rao and Mr. J Sujit Rao.
Established in 2013 as a private Ltd company, C5, is a Hyderabad-
based civil contractor primarily undertaking irrigation projects.
RADHEY NARAYAN: Ind-Ra Gives B LT Issuer Rating, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Radhey Narayan
Industries Private Limited (RNIPL) a Long-Term Issuer Rating of
'IND B'. The Outlook is Stable.
Instrument-wise rating actions are:
-- INR 45.00 mil. Term loans due on January 2024 assigned with
IND B/Stable rating;
-- INR4.00 mil. Fund-based working capital limits assigned with
IND B/Stable/IND A4 rating; and
-- INR10.00 mil. Proposed fund-based working capital limits*
assigned with Provisional IND B/Stable/Provisional IND A4
rating.
* The ratings are provisional and shall be confirmed upon the
sanction and execution of documents for the above facilities by
RNIPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect RNIPL's short operational track record as the
company began commercial production of fabricated items such as
alloy steel, mild steel, among others on 20 August 2017. The total
estimated project cost of INR80 million is funded by term loans
(73%) and promoter's contribution (share capital and unsecured
loan, 27%).
The ratings are also constrained by the fragmented nature of
operations of the railway components industry.
However, the ratings are supported by RNIPL's locational advantage
as the company's manufacturing unit, located near Lucknow, has
accessibility to abundant raw materials, electricity and manpower.
RATING SENSITIVITIES
Negative: Inability to stabilise business operations and/or any
additional debt-led capex impacting the debt servicing capability
would be negative for the ratings.
Positive: Stabilisation of business operations will be positive
for the ratings.
COMPANY PROFILE
RNIPL was incorporated on 3 September 2015 for setting up a
manufacturing unit of fabricated items used as intermediate
products for manufacturing or building of rolling stocks such as
railway coaches. The company is managed by Gopal Swaroop, Vivek
Prakash Singh and Udit Singh.
RAJALAXMI AGROTECH: Ind-Ra Migrates B- Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Rajalaxmi
Agrotech (India) Private Limited's Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise, despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND B-(ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR145 mil. Fund-based facilities migrated to non-cooperating
category with IND B-(ISSUER NOT COOPERATING) rating; and
-- INR90 mil. Non fund-based facilities migrated to non-
cooperating category with IND B- (ISSUER NOT COOPERATING)/IND
A4 (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on 5
October 2016. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1995, Rajalaxmi Agrotech manufactures agricultural
fertilisers and has an installed capacity of 60,000 metric ton
annually.
RAJESHWARI COTSPIN: CRISIL Assigns B+ Rating to INR32MM Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank loan facilities of Rajeshwari Cotspin Limited
(RCL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 32 CRISIL B+/Stable
Bank Guarantee 3 CRISIL A4
Cash Credit 7.5 CRISIL B+/Stable
The ratings reflect the company's exposure to risks related to
project implementation and to timely stabilisation and
commensurate ramp-up in revenue during its initial phase of
operations. The ratings also factor susceptibility to volatility
in raw material prices, exposure to competition in the textile
spinning industry, and expected average financial risk profile
because of partly debt-funded project. These weaknesses are
partially offset by the extensive industry experience of the
promoters and their funding support, the company's eligibility for
fiscal benefits under the state government's textile policy, and
proximity to a textile processing hub.
Analytical Approach
For arriving at its ratings, CRISIL has treated unsecured loans
extended to RCL by its promoters and their relatives as neither
debt nor equity as the loans are likely to remain in the business
over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks related to timely project implementation and
stabilization: RCL is likely to commence manufacturing cotton yarn
in October 2017. Timely implementation, stabilisation, and
commensurate ramp-up in revenue during the initial phase of
operations will remain critical, and hence, be monitored closely.
* Subdued financial risk profile: The financial risk profile may
be constrained because of debt-funded capital expenditure (project
gearing is expected at 1.77 times).
* Exposure to competition in the textile spinning industry, and
susceptibility to volatility in raw material prices: The textile
spinning industry has several unorganised players with small
capacity. The entry barriers to the industry are low due to
limited capital and technology requirements and little
differentiation in end products. These factors will continue to
exert pricing pressure over the medium term. Moreover, revenue and
profitability will remain susceptible to volatility in the price
of raw material, cotton.
Strengths
* Extensive industry experience of the promoters: The promoters'
experience of a decade in cotton ginning and spinning through
group entities should support RCL's business risk profile in its
initial phase of operations.
* Promoters' fund support and eligibility for fiscal benefits
under the state government's textile policy: Equity and unsecured
loans from the promoters, and eligibility for fiscal benefits
under the government's textile policy, such as interest subsidy,
power tariff refund, and goods and service tax refund, will
support the company's liquidity in the initial years of
operations.
* Proximity to textile processing hub: RCL's ginning and spinning
unit will be at Dahegam in Gandhinagar, Gujarat, which is close to
several textile processing units and the textile trader market,
providing easy access to a large customer base.
Outlook: Stable
CRISIL believes RCL will benefit from its promoters' extensive
industry experience and funding support. The outlook may be
revised to 'Positive' if timely project implementation and
stabilisation of operations lead to anticipated revenue,
profitability, and cash accrual in the initial phase. The outlook
may be revised to 'Negative' if delay in project implementation or
stabilisation of operations leads to lower revenue and cash
accrual, or if a stretch in working capital cycle weakens the
financial risk profile, especially liquidity.
Incorporated in February 2013, RCL is establishing a greenfield
project for cotton ginning and will use the output captively to
manufacture cotton yarn for use in products such as bedsheets,
terry towels, suiting, shirting, and hosiery. Its ginning and
spinning facility at Dahegam, Gandhinagar ' Gujarat will have an
installed capacity of 5564 tonne per annum (tpa) for ginning (16
gins) and 3132 tpa for spinning (16,320 spindles). The company is
promoted by Mr. Mahesh Patel, Mr. Pravin Khunt, Mr. Bhavin Patel,
and Mr. Ramesh Patel, and is likely to commence commercial
operations from October 2017.
RAVI MICRONS: CRISIL Assigns B+ Rating to INR9MM Term Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Ravi Microns LLP (RML).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 9 CRISIL B+/Stable
The rating reflects the firm's exposure to risks related to
implementation of its project, and to timely stabilisation and
commensurate ramp-up in sales during the initial phase of
operations. The rating also factors expected subdued financial
risk profile because of debt-funded project. These weaknesses are
partially offset by the extensive experience of the partners in
manufacturing ceramic and related raw materials, and expectation
of low demand risk as most of the output will be consumed by
ceramic units belonging to the partners.
Analytical Approach
For arriving at the rating, CRISIL has treated unsecured loans
extended to RML by its partners as neither debt nor equity, as the
loans have lower interest than the market rate, and are likely to
remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Strengths
* Expected subdued financial risk profile: The financial risk
profile will be constrained by small networth and leveraged
capital structure. Gearing is expected to be high at 2.5-3.0 times
over the medium term, but should improve with build-up in networth
and gradual repayment of term loan. Debt protection metrics are
expected to be subdued.
* Exposure to project-related risks: Commercial operations are
likely to commence from November 2017. Timely implementation of
the proposed project, stabilisation of operations, and
commensurate ramp-up of sales will remain critical to achieve
growth in revenue and profitability.
Strength
* Extensive experience of the partners in manufacturing ceramic
and related raw materials: The firm has 13 partners and most of
them have significant business experience through various
entities. The key partners are associated with reputed entities
such as Jayco Ceramic, Romex Tiles Pvt Ltd, and Orange Polyfab
Industries.
* Low demand risk: Ceramic units of RML's partners will consume
30-40% of the firm's output, resulting in low demand risk.
Outlook: Stable
CRISIL believes RML will continue to benefit from the extensive
experience of its partners and from low demand risk. The outlook
may be revised to 'Positive' if timely project implementation and
stabilisation of operations lead to anticipated revenue,
profitability, and cash accrual during the initial phase of
operations. The outlook may be revised to 'Negative' if delay in
implementation of the project or in stabilisation of operations
leads to lower revenue and cash accrual, or if a stretched working
capital cycle results in a weaker-than-expected financial risk
profile, especially liquidity.
Established in 2017 as a partnership firm, RML is setting up a
green field project for manufacturing and purifying soda and
potash feldspar, majorly used in the ceramic industry, at Wankaner
in Rajkot, Gujarat.
RELIANCE COMMUNICATIONS: Withdraws Tower Demerger Plan From NCLT
----------------------------------------------------------------
The Times of India reports that Reliance Communications (Rcom), a
few days after it scrapped its merger with Aircel, has now
withdrawn a scheme to demerge its towers into a separate company
from the National Company Law Tribunal (NCLT) and said it will
file it afresh, the company said.
The demerger was to happen to enable stake sale in the tower unit
to Canada's Brookfield, the report says.
According to the report, the Anil Ambani-owned telco said on
Oct. 4 that it will file a fresh scheme of demerger of the towers
of Reliance Infratel before the NCLT "in due course." Sources said
RCom expects to file a fresh demerger scheme in the NCLT next week
after re-negotiating the INR11,000-crore deal for its stake in
tower unit Reliance Infratel to Brookfield, TOI relates. The
valuation is now expected to be lower.
"With the RCom-Aircel merger now off, the tower deal valuation
will be impacted," said brokerage CLSA in a note, TOI relays.
TOI relates that a person familiar with the matter said that the
talks between the two sides were on as both were keen on the deal.
"But one needs to keep in mind that RCom needs this deal more than
Brookfield".
On Oct. 1, RCom said it had scrapped its merger with Aircel by
mutual consent and followed that up by withdrawing the merger
scheme from the NCLT on October 3, TOI recalls. The scrapping of
the deal thus affected the valuation of RCom's stake sale in
Reliance Infratel to Brookfield, which was pegged on tenancies
from the RCom-Aircel combine, according to the report.
"As a consequence, the application for the withdrawal of the
scheme of the demerger of the tower business under RITL has also
been concurrently filed as on 3 October 2017. The RITL tower
demerger scheme shall, in due course, be taken up for application
with the required changes," RCom said.
About Reliance Communications
Based in Mumbai, India, Reliance Communications Ltd (BOM:532712)
-- http://www.rcom.co.in/Rcom/personal/home/index.html-- is a
telecommunications service provider. The Company operates through
two segments: India Operations and Global Operations. India
operations segment comprises wireless telecommunications services
to retail customers through global system for mobile
communication (GSM) technology-based networks across India;
voice, long distance services and broadband access to enterprise
customers; managed Internet data center services, and direct-to-
home (DTH) business. Global operations comprise Carrier,
Enterprise and Consumer Business units. It provides carrier's
carrier voice, carrier's carrier bandwidth, enterprise data and
consumer voice services. The Company owns and operates Internet
protocol (IP) enabled connectivity infrastructure, comprising
over 280,000 kilometers of fiber optic cable systems in India,
the United States, Europe, Middle East and the Asia Pacific
region.
As reported in the Troubled Company Reporter-Asia Pacific on
June 8, 2017, Moody's Investors Service has downgraded Reliance
Communications Limited's (RCOM) corporate family rating and
senior secured bond rating to Ca from Caa1. The outlook is
negative. This concludes the review of the ratings initiated by
Moody's on May 30, 2017.
The TCR-AP reported on June 8, 2017, that Fitch Ratings
downgraded Rcom's Long-Term Foreign- and Local-Currency Issuer
Default Ratings (IDR) to 'RD' from 'CCC'. Fitch has also
downgraded the rating on Rcom's USD300 million 6.5% senior secured
notes due 2020 to 'C/RR4' from 'CCC/RR4'.
The downgrade follows Rcom's June 2, 2017 announcement that all
of its bank lenders are prepared to waive debt service
obligations until end-2017 to provide time for the company to
lower its debt through two proposed transactions and present a
plan demonstrating how the debt can be serviced over the long
term.
Under Fitch ratings definitions this situation constitutes a
restricted default, as multiple waivers or forbearance periods
have been extended in parallel following a non-payment event.
RELIANCE COMMUNICATIONS: Cancelled Deal No Impact on Moody's CFR
----------------------------------------------------------------
Moody's Investors Service says that Reliance Communications
Limited's cancellation of the merger agreement of its mobile
business with Aircel Limited has no impact on RCOM's Ca corporate
family and senior secured bond ratings. The ratings outlook
remains negative.
On Oct. 1, 2017, RCOM announced that the merger agreement of its
mobile business with Aircel, signed in September 2016, had lapsed,
owing to legal and regulatory uncertainties, interventions by
vested interests, and delays in the receipt of relevant approvals.
RCOM's management had guided that the transaction with Aircel
would reduce its debt levels by INR140 billion through the
transfer of bank debt to the new merged entity, AirCom, together
with the transfer of INR60 billion of deferred spectrum
liabilities.
"This transaction was crucial to RCOM's delevering plans. Absent
this transaction, the company's debt levels will remain high and
its expected debt restructuring and corporate reorganization will
be further delayed," said Annalisa DiChiara, a Moody's Vice
president and Senior Credit Officer
RCOM's consolidated reported debt totalled INR457 billion at
March 31, 2017, including a $300 million senior secured bond due
Nov. 6, 2020 and a $350 million senior secured bond issued by its
100%-owned subsidiary GCX Limited (B3 negative) due August 2019.
GCX is not a restricted subsidiary under RCOM's $300 million bond
indenture and therefore its assets and cash flows are ring-fenced
from creditors at RCOM.
With the merger having failed, RCOM's debt levels will remain
elevated and leverage, as measured by adjusted debt to EBITDA,
will remain above 9.0x.
In June, RCOM's lenders agreed to consider a strategic debt
restructuring. As part of this process, the company received a
standstill on the debt servicing of its obligations through
December 2017, by which time the merger with Aircel and the sale
of 100% of its tower assets were to be completed.
If these transactions are not completed, the lenders can exercise
their right to convert their debt into equity and take over the
management of RCOM.
According to RCOM's October 1 press release, deadline for the
standstill was December 31, 2018.
No further update regarding the status of RCOM's agreement to sell
100% of its tower assets and related infrastructure to Brookfield
Infrastructure Partners LP for INR110 billion has been provided.
The rating outlook is negative, reflecting the ongoing uncertainty
regarding the company's cash flow-generation capabilities, debt
restructuring progress, and the recovery prospects for both
lenders and bondholders.
Failure to meet the restructuring timetable or remaining current
on the interest payable on RCOM's $300 million bond or GCX's $350
million bond will result in further downgrade pressure. According
to management, these bonds are excluded from the debt standstill
agreement in place.
RCOM's ratings are unlikely to be upgraded prior to (1) the
completion of its corporate restructuring and debt restructuring,
(2) the repayment of debt and accrued interest with the proceeds
from the asset sales, and (3) the emergence of clarity on the
company's capital structure for its remaining businesses.
Once completed, RCOM's ratings will be reviewed and potentially
upgraded to reflect the company's prospective capital structure
and the credit quality of the remaining businesses.
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
Reliance Communications Limited is an integrated
telecommunications operator in India, with a presence across the
wireless, enterprise, broadband, tower infrastructure and direct
(DTH) businesses. Through its wholly owned subsidiary, GCX Limited
(B3 negative), the company also provides data connectivity
solutions to major telecommunications carriers and large
multinational enterprises in the US, Europe, the Middle East and
Asia Pacific, which need multi-national IP-based solutions and
connectivity.
RCOM is listed on the BSE Limited and National Stock Exchange of
India Limited. As of March 31, 2017, its promoters owned 58.85% of
the company.
SAJJALA BIO: CRISIL Reaffirms B+ Rating on INR7.35MM LT Loan
------------------------------------------------------------
CRISIL Ratings has been consistently following up with Sajjala Bio
Labs Private Limited (SBLPL) 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 2 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Long Term Loan 7.35 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 Sajjala Bio Labs 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 Sajjala Bio Labs 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.
Incorporated in 2015, by Dr. Y Srinivasulu, SBLPL is a private
limited company that specialises in the manufacture of biogeneric
formulations. It commenced commercial operations at its plant in
Hyderabad in April 2016, and is managed by Dr. Y Srinivasulu and
Mr. S Ramakrishna.
SCHOLARS ACADEMY: CRISIL Lowers Rating on INR14MM Loan to 'D'
-------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Scholars Academy Education Trust (SAET) to 'CRISIL D' from
'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 5 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B-/Stable')
Term Loan 14 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The downgrade reflects delays in repayment of term loan.
Key Rating Drivers & Detailed Description
Weakness
* Weak liquidity: Liquidity has been weak owing to low cash
accrual vis-a-vis term debt repayment obligation, thus leading to
delays in servicing term loan repayment obligation.
Strengths
* Experience of promoter: Benefits from the promoter's experience
of around 20 years and well-defined organizational structure,
supported by qualified and experienced second-tier management that
has decision-making powers, should continue to support the
business.
SAET was founded on May 8, 2008, under the Indian Trust Act, 1882.
It promotes Scholar's Institute of Technology and Management, an
engineering college spread over a 10-acre campus in greater
Guwahati. The promoter, Mr. Sudip Lodh, is also the proprietor of
Scholar's Academy, which is a coaching institute for engineering
and medical exams since 1994.
SHARVI PACKAGING: CRISIL Assigns B+ Rating to INR7.5MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Sharvi Packaging Solutions Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.0 CRISIL B+/Stable
Cash Credit/
Overdraft facility 7.5 CRISIL B+/Stable
The rating reflects a modest scale of operations and an average
financial risk profile. These weaknesses are partially offset by
the extensive experience of promoters in the paper trading
industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operation: Scale is modest as reflected in
revenue at INR56.04 crore for fiscal 2017. Modest scale limits
bargaining power with suppliers as well as customers.
* Average financial risk profile: Financial risk profile is
average, with high total outside liabilities to tangible networth
ratio of 7.87 times as on March 31, 2017. Debt protection metrics
are moderate, with estimated interest coverage and net cash
accrual to total debt ratios at 3.4 times and 0.15 time,
respectively, for fiscal 2017.
Strength
* Extensive experience of promoters in paper trading business: The
promoters are having experience of over 10 years in the paper
trading business and by the virtue of this experience they have
established significant relationships both with its customers and
suppliers.
Outlook: Stable
CRISIL believes that SPSPL will continue to benefit over the
medium term from its promoters' experience in the industry. The
outlook may be revised to 'Positive', if the company records
considerable increase in revenues and profitability along with
improvement in its capital structure. Conversely, the outlook may
be revised to 'Negative', if STPL, records lower than expected
revenues and profitability or undertakes greater than expected
debt funded capex or its working capital cycle deteriorates
resulting in deterioration of its overall financial risk profile.
SPSPL is a Faridabad, Haryana based company, established and
promoted in 2015 by Mr. Ajay Kwatra and Mr. Ankur Dua. The company
is engaged in trading of packaging board and supplying the same to
its local customer base.
SREE SHANMUGA: Ind-Ra Assigns BB Rating to Additional Bank Loans
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has rated Sree Shanmuga Modern
Rice Mills Private Limited's (SSMRMPL) additional bank loans as
follows:
-- INR73.83 mil. Term loans due on March 2021 with IND BB/Stable
rating;
-- INR375.8 mil. Fund-based working capital facility assigned
with IND BB/Stable/IND A4+ rating; and
-- INR0.6 mil. Non-fund-based working capital facility assigned
with IND A4+ rating.
KEY RATING DRIVERS
RATING SENSITIVITIES
Negative: A decline in revenue and profitability leading to
deterioration in credit metrics could be negative for the ratings.
Positive: A significant increase in the revenue and profitability
leading to an improvement in credit metrics would be positive for
the ratings.
COMPANY PROFILE
Incorporated in 1993, SSMRMPL is based in Bangarpet, Karnataka.
The company is engaged in the processing of paddy into raw rice,
steam rice and parboiled rice. The company is headed by Mr. RN
Shanmugam and Mr. RS Dilip Kumar. It owns five units, each of
which has a production capacity of 29 tonnes per hour.
SRI SANTHOSHIMA: CRISIL Reaffirms B Rating on INR10MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the bank facilities of
Sri Santhoshima Parboiled Modern Rice Mill (SSMRM) at 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B/Stable (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
Long Term Loan .34 CRISIL B/Stable (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
Proposed Long Term 2.66 CRISIL B/Stable (Reaffirmed;
Bank Loan Facility Removed from 'Issuer Not
Cooperating')
The rating continues to reflects SSMRM's weak debt protection
metrics and modest scale of operations in the intensely
competitive rice milling industry. The rating also factors in the
susceptibility of the firm's operating margin to changes in
government regulations and to volatility in raw material prices.
These ratings weaknesses are partially offset by the extensive
experience of SSMRM's promoters in the rice milling industry.
Key Rating Drivers & Detailed Description
Weakness
* Weak debt protection metrics: Debt protection metrics were weak,
as reflected in NCATD and interest coverage ratios of around 0.06
times and 1.6times, respectively, in 2016-17. Net worth was modest
at INR7 Cr and gearing stood at 2.3 times as on March 31, 2017.
* Modest scale of operations in intensely competitive rice milling
industry: Business risk profile is marginally constrained by
modest scale of operations in the fragmented rice milling
industry. Revenue was INR31.5 Cr in 2016-17 and is expected to
remain modest with no major capacity addition plans.
* Susceptibility to changes in government regulations and
volatility in raw material prices: SSMRM has a moderate operating
margin, yet volatile; marked by 7.5-9 percent over the three years
ended March 31, 2017. The domestic rice industry is highly
regulated in terms of paddy prices, export/import policy for rice,
and rice release mechanism, which affects the credit quality of
players in the industry.
Strength
* Extensive experience of promoters in the rice milling industry:
SSMRM is promoted by Mr. Gouru Rajesh and his family, who have
been associated with the rice milling industry for over two
decades. Their extensive experience enabled the firm to establish
healthy linkages with farmers in the region and, thereby aiding
raw material (paddy) procurement.
Outlook: Stable
CRISIL believes that SSMRM will continue to benefit from the
extensive industry experience of its promoters' over the medium
term. The outlook may be revised to 'Positive' if the firm's
revenues and profitability increase substantially or in case of
significant infusion of equity resulting in an improvement in
financial risk profile. Conversely, the outlook may be revised to
'Negative' if there is a significant deterioration in the firm's
working capital management or if the firm undertakes a 'larger
than expected' debt funded capital expenditure program or if the
partners withdraw significant capital from the firm leading to
weakening of its financial risk profile.
Incorporated in 2002, SSMRM is engaged in milling of raw and
parboiled rice in Nalgonda (Telangana). The company is promoted by
Mr. Gouru Rajesh and his family
During fiscal 2017, the company provisionally reported a profit
after tax (PAT) of INR0.36 Crores on operating income of INR31.50
Crores against PAT of INR0.51 Crores on operating income of
INR42.56 Crores in the previous fiscal.
SUMIT TEXTILE: CRISIL Assigns B+ Rating to INR14MM Term Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Sumit Textile Industries (STI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Term Loan 14 CRISIL B+/Stable
Proposed Short Term
Bank Loan Facility 18 CRISIL A4
Foreign Bill
Negotiation 4 CRISIL A4
Proposed Export
Packing Credit 20 CRISIL A4
The ratings reflect a modest scale of operations in the highly
fragmented home textile industry, low operating margin, and
exposure to project-related risks. These weaknesses are partially
offset by comfortable financial risk profile and nil long-term
debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale in the highly fragmented home textile industry: STI
has a modest scale as reflected in topline of INR19.89 crore in
fiscal 2017, on account of intense competition.
* Low operating margin: Operating margin, at 5.62% in fiscal 2017,
will likely remain modest due to small scale and low bargaining
power with suppliers and customers.
* Project-related risks: STI is in the process of setting up an
integrated manufacturing facility for home textiles such as bed
sheets, blankets, quilts, and cushion covers. The total cost of
the project is around INR33.0 crore. About INR14.0 crore is
expected to be funded by term loan and rest through infusion of
equity (INR16.0 crore) and unsecured loan (INR3.0 crore). The
capital expenditure is expected to be completed by the end of June
2018. The firm will face demand-related risks, along with
implementation risk, due to the large size of the project. The
firm has not yet applied for term loan; however, the timely
disbursement, and equity infusion by promoters will remain
critical to project completion.
Strength
* Comfortable financial risk profile: The financial risk profile
is comfortable, with low gearing of 0.15 time as on March 31,
2017, and comfortable debt protection metrics, with interest
coverage and net cash accrual to total debt ratios at 13.85 times
and 0.8 time, respectively, for fiscal 2017.
* No long-term debt obligation: STI does not have any long-term
debt obligations. Thus, there are no fixed debt obligations,
enhancing the financial flexibility. Given nil term debt
obligations, accrual will solely be utilised to meet working
capital requirement.
Outlook: Stable
CRISIL believes STI will continue to benefit over the medium term
from partners' experience in the home textile industry. The
outlook may be revised to 'Positive' in case of successful
operations of the firm's plant, and strong revenue and
profitability. Conversely, the outlook may be revised to
'Negative' if considerable decline in revenue or profitability, or
significant debt-funded capital expenditure weakens the financial
risk profile.
Om Overseas, based in Panipat (Haryana), was established in 2014.
However, the firm was renamed STI, effective June 1, 2016. It
manufactures and exports home textiles such as bed sheets,
blankets, quilts, and cushion covers. The operations are managed
by the directors, Mr. Sumit Gupta and his brother Mr. Amit Gupta
who together have experience of five years in the textile
business.
SURYA BAKERY: CRISIL Lowers Rating on INR13.25MM Term Loan to B+
----------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facilities of Surya Bakery and Confectionery Private Limited
(SBCPL) to 'CRISIL B+/Stable' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1.5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Term Loan 13.25 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects weaker-than-expected operating performance
due to time and cost overrun for commencing commercial operations
at its new manufacturing facility, resulting in lower-than-
expected revenue for fiscal 2017. Revenue and profitability are
estimated to remain at INR8.99 crore and 20.45%, respectively, for
fiscal 2017. Financial risk profile remained average and weaker-
than-expected with networth and gearing at INR5.01 crore and 3.31
times, respectively, for fiscal 2017. This is primarily due to
lower-than-expected capital contribution from promoters during
fiscal 2017 and debt-funded capital expenditure (capex) which
resulted in high gearing at 3.31 times as on March 31, 2017,
against 2.08 times a year ago. Moreover, debt protection metrics
remained subdued by interest coverage and net cash accrual to
total debt ratios of 3.29 times and 0.06 time, respectively,
against 3.54 times and 0.16 time, respectively, the previous
fiscal. On the back of expected further debt contraction due to
cost overrun of the project, the financial risk profile will
likely remain average and hence, remains a key monitorable.
The rating continues to reflect improving, though modest scale,
exposure to risks related to timely stabilisation of operations of
its new manufacturing facility, and commensurate ramp-up in
revenue amid intense competition in the bakery products segment,
and average financial risk profile on the back of debt-funded
capex. These weaknesses are partially offset by promoters'
extensive entrepreneurial experience and funding support, and
established regional brand, resulting in healthy operating
profitability.
Analytical Approach
For arriving at the rating, CRISIL has treated as neither debt nor
equity, unsecured loans of INR3.18 crore received from promoters
and their family members. That is because the loans are expected
to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Improving yet modest scale and presence in competitive bakery
product manufacturing: Although revenue grew at a compound annual
growth rate of over 10% for the four fiscals through 2017, it
remained modest at an estimated INR8.99 crore for fiscal 2017.
This is because SBCPL remains exposed to geographical
concentration as current operations are in Gujarat, and risks
related to presence in the fragmented and competitive
confectionery and bakery products business, which has many small
and large players.
* Exposure to risks related to stabilisation of new manufacturing
facility, and ramp-up in revenue: SBCPL commenced commercial
operations at its newly established long shelf life and premium
bakery products from August 2017. Timely stabilisation of
operations, and commensurate ramp-up in revenue and its
contribution to overall operating profitability, during the early
stage of operations, remain critical.
* Average financial risk profile: Financial risk profile may
remain constrained by debt-funded capex, with gearing expected to
be at 3-3.4 times in the medium term.
Strengths
* Promoters' extensive experience, and established brand name in
Gujarat: Benefits from the decade-long experience of promoters in
confectionary manufacturing and retail business, their keen grasp
of market dynamics, and diversified product portfolio should
continue to support the business risk profile. Moreover, the
company has established its Oven Magick brand in Gujarat, and it
currently operates through 21 outlets (13 own and 8 franchisee) in
Ahmedabad, Baroda, Anand, Vallabh Vidyanagar, and Nadiad.
* Healthy operating profitability: Operating profitability has
been healthy, estimated at 20.45% for fiscal 2017, aided by
established brand of bakery items, and scale-up of operations
through own and franchisee outlets.
* Funding support from promoters: Promoters have extended funding
support through capital infusion and unsecured loan of INR1.80
crore and INR1.64 crore, respectively, during fiscal 2017. This
funding support was extended towards capex of the new
manufacturing facility.
Outlook: Stable
CRISIL believes SBCPL will continue to benefit over the medium
term from the promoters' extensive experience. The outlook may be
revised to 'Positive' if timely stabilisation and ramp-up of
operations in new facility generates higher-than-expected cash
accrual. Conversely, the outlook may be revised to 'Negative' if
delay in ramping up operations leads to lower cash accrual, thus
weakening the financial risk profile, especially liquidity.
Established in 2007, SBCPL, promoted by the Baroda-based Ms Sneha
Shah and Mr. Dharmendra Shah, manufactures bakery and
confectionary products which are sold through retail outlets and
franchisees in Baroda, Ahmedabad, Anand, Vallabh Vidyanagar and
Nadiad under the Oven Magick brand. The company has set up its
second unit for manufacturing long shelf life and premium bakery
products which commenced commercial operations from August 2017.
Revenue was INR8.99 crore and net profit was INR0.51 crore for
fiscal 2017, against revenue of INR8.51 crore and net profit of
INR0.36 crore, for fiscal 2016.
UNISONN INFRASTRUCTURES: CRISIL Cuts Rating on INR7.68M Loan to D
-----------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Unisonn Infrastructures (UI) to 'CRISIL D/CRISIL D' from
'CRISIL B/Stable/CRISIL A4'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan .12 CRISIL D (Downgraded from
'CRISIL B/Stable')
Overdraft 2.20 CRISIL D (Downgraded from
'CRISIL A4')
Proposed Long Term 7.68 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B/Stable')
The downgrade reflects the delays in repayment of term loans owing
to weak liquidity.
The rating continues to reflect UI's small scale of operations in
the fragmented civil construction industry and exposure to risks
related to tender-based business. The rating also factors in its
weak-average financial risk profile marked by high gearing, modest
debt protection metrics and networth. These rating weaknesses are
partially offset by the benefits that the firm derives from
extensive experience of partners in the civil construction
industry.
Key Rating Drivers & Detailed Description
* Delay in debt servicing: UI has been delaying in repayment of
term loan. Delays have been on account of stretch in liquidity on
account of stuck debtors.
Weaknesses
* Small scale of operations in intensely competitive civil
construction industry: UI's scale of operations has remained
small, as reflected in its sales of INR7.2 crore in 2016-17
(refers to financial year, April 1 to March 31). The small scale
of operations restricts the firm's ability to bid for projects,
since a track record of executing medium-sized projects is one of
the criteria for bidding for large projects.
* Fragmentation, tender based sales in construction industry: Most
of the sales of the firm are tender based, the revenues are
dependent on the firm's ability to bid successfully for tenders.
The margins come under pressure because of the competitive pricing
nature of the industry. Profitability on each project is subject
to pricing, availability of labour, machinery mobilization,
adverse weather conditions, geological conditions, etc.
* Weak financial risk profile: UI's financial risk profile is weak
on account of modest net worth, high gearing and weak debt
protection metrics. Net worth was low on account of low initial
paid up capital and nascent stage of operations. Debt protection
metric sis marked by interest coverage ratio and net cash accruals
to total debt of around 2 times and 8 percent respectively.
Strength
* Extensive experience of promoters: UI benefits from extensive
industry experience of its partners in the civil construction
industry. UI is a family owned business which is promoted by
Mr.Kaushik Vaishnav, Mr. Abhijeet Vaishnav (f/o Mr. K vaishnav)
and Mrs. Alpana Vaishnav (m/o of Mr. K Vaishnav). Mr. Abhijeet
Vaishnav has around 37 years of experience in cooling tower
business where he was associated with Paharpur Cooling towers for
almost 32 years and later with Siemens India. The day to day
operations are managed by Mr.Kaushik Vaishnav and Mr. Abhijeet
Vaishnav. Over the years, the partners have developed healthy
relationship with various suppliers and its key principals. CRISL
believes that the partner will benefit from extensive industry
experience of the promoters and its established relation with
suppliers and key principals over the medium term.
Established in 2009 as a partnership firm, Unisonn Infrastructures
(UI) is engaged in diversified industrial civil construction
activities primarily in construction & retrofitting of cooling
towers. Based in Vishakhapatnam (Andhra Pradesh), the firm is
promoted and managed by Mr.K Vaishnav and Mr.A Vaishnav.
=========
J A P A N
=========
TOSHIBA CORP: Bain Capital Aims to List Chip Unit in 3 Years
------------------------------------------------------------
Reuters reports that U.S. private equity firm Bain Capital LP on
Oct. 5 said it aims to list Toshiba Corp's chip unit on the Tokyo
Stock Exchange within three years, to cash in its investment after
leading an $18 billion acquisition of the business.
Bain, whose consortium signed the purchase deal last week, also
said it hopes to settle legal disputes over the transaction at an
early stage with Western Digital Corp, Toshiba's joint venture
partner, Reuters relates.
Toshiba aims to complete the sale by the end of its fiscal year in
March, Reuters says. It plans to use the proceeds to recover from
the bankruptcy of its U.S. nuclear power subsidiary, and save
itself from potential delisting.
With the clock ticking, Bain filed for antitrust approval in China
the day after signing, a person familiar with the matter said on
Oct. 4, Reuters reports.
Several other sources told Reuters that the strategic nature of
the chip industry for China and political complications -
including currently tense relations with South Korea, and the
presence of South Korea's SK Hynix Inc in the consortium - see the
process drawn out.
In the first news conference since the signing, Yuji Sugimoto,
head of Bain Capital in Japan, told reporters on Oct. 5 that Bain
hopes to achieve stability at the chip unit through contracts with
Apple Inc, a major client and member of the consortium, Reuters
adds.
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.
TOSHIBA CORP: S&P Raises Senior Unsecured Rating to 'CCC-'
----------------------------------------------------------
S&P Global Ratings said that it has affirmed its 'CCC-' long-term
corporate credit and 'C' short-term corporate credit and
commercial paper program ratings on Japan-based capital goods and
diversified electronics company Toshiba Corp. S&P also removed the
ratings from CreditWatch. The outlook is negative.
S&P said, "At the same time, we raised the senior unsecured rating
one notch to 'CCC-' from 'CC' following completion of our review
of the rating. The review follows our publication of our revised
issue rating criteria, "Reflecting Subordination Risk In Corporate
Issue Ratings" on Sept. 21, 2017, after which we placed the rating
"under criteria observation" (UCO). With our criteria review
complete, we are removing the UCO designation from the rating. We
also removed the senior unsecured rating from CreditWatch with
negative implications following our affirmation of the long-term
corporate credit rating and resolution of the CreditWatch.
"We lowered our long-term ratings on Toshiba and placed our long-
and short-term ratings on the company on CreditWatch with negative
implications in December 2016 in response to the company's
announcement that it might recognize massive losses relating to
its U.S. nuclear energy business. We took two downward rating
actions thereafter, on the long- and short-term ratings in January
2017 and on the long-term ratings in March 2017, and the ratings
have remained on CreditWatch negative throughout the period.
"The rating affirmation and CreditWatch resolution reflects our
view that the risk of a rapid surge of pressure on the ratings is
now less likely. The agreement to sell Toshiba Memory to a Bain
Capital-led consortium, coupled with a lower possibility of
additional losses and financial burden pertaining to the U.S.
nuclear power business, has lowered the risk of a surge of
downward pressure on the ratings in the event the company's
creditor financial institutions reduce their supportive stance.
The sale agreement is a step forward for the company's plan to
complete the sale of Toshiba Memory for about รน2 trillion by March
31, 2018, thereby avoiding insolvency in two consecutive fiscal
years. Accordingly, we see a stronger likelihood that creditor
financial institutions will maintain their support of Toshiba for
the foreseeable future.
"The negative outlook reflects our view that completion of the
sale of Toshiba Memory may be delayed or the sale plan may be
revised. This could happen if the review process for the sale
under antitrust laws in countries concerned takes longer than
planned or if the International Court of Arbitration approves a
request filed by U.S.-based Western Digital Corp. to suspend the
sale of joint venture interests between Toshiba and Western
Digital. In addition, some uncertainties relating to the companies
in the consortium and to the financial contribution scheme may
also affect the plan, in our opinion. Accordingly, there is over a
one-in-three chance that Toshiba will fail to receive sale
proceeds and resolve its insolvency by March 31, 2018, in our
view. If this scenario materializes, the company may consider
temporary financial restructuring measures by March 31, 2018, to
avoid delisting, which has the potential to negatively affect
Toshiba's ability to acquire new customers or projects.
Furthermore, if the plan to sell Toshiba Memory is unlikely to
materialize following the judgment of the International Court of
Arbitration, creditor financial institutions may change their
supportive stance.
"We may lower the ratings if we see a higher possibility of the
company's plan to sell Toshiba Memory and resolve its insolvency
by March 31, 2018, becoming less feasible and the company takes
temporary measures to restructure financially. Conversely, we may
revise the outlook upward or consider an upgrade if we see
progress in procedures for the sale of Toshiba Memory and the
company is likely to resolve its insolvency by March 31, 2018.
"We have taken this occasion to review our rating on the company's
senior unsecured debt according to our revised criteria for
corporate issue ratings and have raised the rating one notch to
'CCC-'. The rating now incorporates a one-notch downward
adjustment from the long-term corporate credit rating to reflect
the fact that senior debt such as secured debt which is higher in
payment priority than senior unsecured debt, may account for more
than 50% of Toshiba's consolidated total debt. Prior to the
criteria revision, we had incorporated a two-notch downward
adjustment based on our estimate that priority liabilities, such
as secured debt, accounted for more than 30% of total adjusted
assets. Meanwhile, we had also incorporated a one-notch upward
adjustment to reflect support from creditor financial
institutions, and this continues. As a result, we now equalize the
rating on the company's senior unsecured debt with the rating on
the long-term corporate credit rating on the company."
===============
M A L A Y S I A
===============
PDZ HOLDINGS: Court Dismisses Writs Over Unpaid Bunker Bills
------------------------------------------------------------
Seatrade Maritime News reports that the Kuala Lumpur High Court
has ruled in favor of PDZ Holdings over writs filed by three
creditors against the company over alleged non-payment of bunker
fuel supplied to its vessel PDZ Mewah.
According to Seatrade Maritime, the Malaysian High Court has
dismissed three writs involving claims of $11,671.30 by CCK
Petroleum, $118,920.26 by CCK Capital, and $128,571.49 by CCK
Petroleum (Labuan) Limited.
"The company wishes to announce that the Kuala Lumpur High Court
has on Oct. 4, 2017: 1) struck-out the writs; and 2) cost of
MYR5,000 ($1,200) was awarded," PDZ announced to the stock
exchange, Seatrade Maritime relays.
The three writs in admiralty in rem had led to the arrest of the
698-teu feeder vessel PDZ Mewah since January this year, the
report says.
In February this year, PDZ had said the company has a "strong
arguable case" to challenge the vessel arrest and setting aside of
the claims.
But troubles for PDZ are not over as the company still faces
claims of $592,808 allegedly owed to Dan-Bunkering (Singapore),
also from the non-payment of bunkers supplied to the same vessel
PDZ Mewah, according to Seatrade Maritime.
There was also another writ served in April by Continental
Platform for the sum of $127,309, again for default payment of
bunkers by PDZ Mewah. The Continental Platform's writ led to a
warrant of arrest on another PDZ vessel, the PDZ Maju, adds
Seatrade Maritime.
PDZ Holdings Berhad is an investment holding company. Through its
subsidiaries, the Company provides container shipping and related
services.
=================
S I N G A P O R E
=================
ZETTA JET: Chapter 11 Trustee to Oversee Restructuring
------------------------------------------------------
Zetta Jet Pte. Ltd., a global leader in private international,
business and luxury air travel, on Sept. 29, 2017, disclosed that
the U.S. Bankruptcy Court for the Central District of California
approved the U.S. Trustee's and its joint request to appoint a
Chapter 11 trustee. The Company took this action to ensure a
unified direction in the Company's restructuring efforts amidst
continued shareholder disputes. The U.S. Trustee's Office is
expected to appoint the Chapter 11 trustee shortly.
"We believe that having an independent and impartial trustee in
place to oversee the business as well as the company's Chapter 11
restructuring protects the interests of all of our stakeholders,
and is the best course to ensure the smooth operation of our
business throughout the proceedings," said Zetta Jet President and
CEO Michael Maher.
The Company also announced that to facilitate normal business
operations, it has received Court permission to pay a select group
of critical vendors in the ordinary course of business for
pre-petition debts owed.
"The Court's approval of our critical vendor motion is another
positive step in our efforts to restructure our debt while
continuing to provide safe, reliable and luxurious service to our
customers. We also appreciate the ongoing partnership of our
customers and suppliers, and thank our employees for their
continued dedication," Maher concluded.
The Company also said a recent emergency injunction ordered by a
Singapore Court to stop the Chapter 11 proceedings was null and
void given that a Singapore Court has no jurisdiction in U.S.
federal bankruptcy court.
About Zetta Jet
Headquartered in Singapore, Zetta Jet claims to be the world's
first truly personalized private airline. Zetta Jet promises to
deliver the ultimate in bespoke luxury experiences to a discerning
clientele with its unique experience that combines the dedicated
Asian service philosophy with the flexibility and 'can-do' spirit
of the U.S., adorned with the glamour of Europe's enduring chic on
its Bombardier fleet with ultra-long range intercontinental
capabilities across the Pacific Rim.
Zetta Jet is a FAA-certificated air carrier and the first only
part 135 operator authorized to conduct Polar flights, enabling
Zetta Jet to optimize routes without limitation. The Company has
offices both in Los Angeles and Singapore, and a network of sales
and support offices in New York, London, San Jose, Harbin and
Singapore.
Burbank, California-based Zetta Jet USA, Inc., and its
Singapore-based parent, Zetta Jet Pte. Ltd, filed voluntary
bankruptcy petitions under Chapter 11 of the U.S. Bankruptcy Code
in Los Angeles (Bankr. C.D. Cal. Case No. 17-21386 and 17-21387)
on Sept. 15, 2017.
Zetta Jet PTE and Zetta Jet USA each estimated assets and debt of
$50 million to $100 million.
Levene, Neale, Bender, Yoo & Brill L.L.P, serves as counsel to the
Debtors.
================
S R I L A N K A
================
AMANA BANK: Fitch Affirms BB National Long-Term Rating
------------------------------------------------------
Fitch Ratings Lanka has affirmed the National Long-Term Ratings on
five small and mid-sized Sri Lankan banks. The banks are:
-- Nations Trust Bank PLC (NTB)
-- Pan Asia Banking Corporation PLC (PABC)
-- Union Bank of Colombo PLC (UB)
-- SANASA Development Bank PLC (SDB)
-- Amana Bank PLC (Amana)
The affirmations follow Fitch's periodic review of small and mid-
sized Sri Lanka banks and are driven by the banks' intrinsic
profiles. Fitch expects the banks' capitalisation to remain thin
in the medium term, as they are likely to sustain a strong
increase in loans. PABC, SDB and Amana infused capital to meet
their respective minimum regulatory core capital levels. The
impact of the implementation of SLFRS 9 in 2018 could also
significantly reduce the banks' capital positions.
The banks' absolute non-performing loans (NPLs) increased in 1H17,
in line with Fitch expectations. Fitch believes asset-quality
risks are greater for these banks due to their greater exposure to
retail and SME customer segments, which Fitch see as more
susceptible to economic downturns.
KEY RATING DRIVERS
NATIONAL RATINGS AND SENIOR DEBT
NTB's ratings reflect its declining capitalisation, modest
franchise and high product concentration. NTB's capitalisation has
come under pressure due to strong loan expansion (12.9% in 1H17
and 23.5% in 2016), which exceeded internal capital generation.
Its Fitch Core Capital (FCC) and Tier 1 capital ratios continued
decreasing to 10.7% and 10.6%, respectively, at end-1H17, from
12.2% and 12.1% at end-2015.
NTB is a mid-size licensed commercial bank that had a modest
market share gain to 2.5% of banking sector assets at end-1H17.
Its current account, saving account (CASA) base decreased to 25.5%
of deposits at end-1H17, from 32.5% at end-2015, similar to the
trend seen across the sector.
Product concentration remains high against peers, as leasing and
credit cards accounted for 20.0% and 10.0%, respectively, of NTB's
gross loans at end-1H17. Its gross NPL ratio decreased to 2.5% at
end-1H17, from 2.8% at end-2015, despite an increase in absolute
NPLs.
PABC's rating reflects further deterioration in its asset-quality
metrics during 1H17 relative to higher-rated peers, which has put
pressure on the bank's improved capitalisation following its
LKR2.1 billion rights issue in March 2017. The rating also
reflects potential profitability pressure stemming from lower loan
growth and higher credit costs. PABC's gross NPL ratio rose to
6.3% at end-1H17 from 4.7% at end-2016, due to a 32% growth in
absolute NPLs stemming from high loan-growth periods. Its loan
book expanded by just 1% in 1H17 as the bank focused on
strengthening its book quality.
PABC requires a further LKR1.3 billion to meet the minimum
regulatory capital level of LKR10 billion by 1 January 2018. Fitch
expects the bank to achieve this through retained profits in 2017,
as further capital infusions are not expected. The bank's Tier 1
capital ratio increased to 10.8% at end-1H17, from 8.4% at end-
2016.
PABC's outstanding senior debentures are rated at the same level
its National Long-Term Rating as they rank equally with the claims
of its other senior unsecured creditors.
The Outlook on UB's rating remains Positive to reflect the shift
in UB's risk profile which is driven by structural changes in its
loan book composition that could support better asset quality.
This stems from more diversified customer exposures, which are
similar to higher-rated peers. However, UB has continued to
sustain a rapid increase in loans that could pressure asset
quality if not managed prudently. In addition, NPLs stemming from
subsidiary, UB Finance Co. Ltd (32% of total NPLs at end-1H17)
remains a significant drag on the group's total NPLs. However, the
bank's gross NPL ratio improved to 2.6% at end-1H17, from 3.6% at
end-2015.
UB's rating reflects its small franchise, weaker profitability and
higher capitalisation relative to higher-rated peers. The bank
accounted for just 1% of banking sector assets at end-1H17. Its
profitability has been constrained by low net interest margins
(NIM) and high cost structures. Fitch believes the bank is likely
to focus on increasing exposure to more profitable customer
segments and income generation to improve profitability. UB's FCC
ratio fell to 19.4% at end-1H17, from 21.2% at end-2015, with
sustained high loan growth of 14.4% in 1H17 and 38% in 2016. Fitch
expects capitalisation to decline to levels similar to peers in
the medium-term alongside continued rapid loan expansion.
SDB's rating captures its high-risk appetite in terms of
substantial exposure and rapid loan growth in the retail and
lower-end SME segments. Fitch believes this could pressure the
bank's capitalisation in the absence of capital raising, despite
its LKR1.4 billion capital infusion in May 2017, as internal
capital generation may be insufficient. SDB's profitability, as
measured by return on assets, remained low due to its high
operating and credit costs. This is despite a high NIM compared
with peers, which reflects its target market segment.
SDB's reported gross NPL ratio increased to 2.2% at end-1H17, from
2.1% at end-2016. Fitch expects asset quality to deteriorate as
loans season.
Amana's rating reflects its small and developing franchise and
high risk appetite stemming from its predominant exposure to SME
and retail segments. Amana began operations in 2011 and accounted
for 0.6% of banking sector assets at end-1H17. There has been a
large increase in the bank's capitalisation following a July 2017
rights issue to meet the higher 2018 regulatory minimum capital
requirements. Fitch expects Amana's capitalisation ratios to
moderate in the medium term from the estimated post-rights issue
FCC ratio of 22.7% as the loan book expands.
Amana's asset-quality metrics remain better than those of peers
despite deterioration in the bank's gross NPL ratio to 1.5% at
end-1H17 from 0.9% in 2016. Fitch expects asset-quality pressure
to increase as the loan book seasons due to the bank's high SME
and retail segment exposure of 75% of gross loans at end-2016.
Amana remains mainly deposit funded and has maintained a stable
CASA base relative to peers of over 50%. Fitch expects the bank's
profitability metrics to improve in the medium term relative to
better-rated peers as it capitalises on existing infrastructure
and enhances its franchise, leading to a lower cost/income ratio,
despite potentially higher credit costs from asset-quality
pressure and SLFRS 9 implementation.
SUBORDINATED DEBT
The Basel II compliant Sri Lanka rupee-denominated subordinated
debt of NTB and PABC are rated one notch below the banks' National
Long-Term Ratings to reflect subordination to senior unsecured
creditors.
RATING SENSITIVITIES
NATIONAL RATINGS AND SENIOR DEBT
NTB's rating could be downgraded if there is a continued decline
in capitalisation seen through sustained strong loan expansion in
the absence of capital raisings. Increased capital impairment risk
through continuous asset-quality deterioration could also result
in a downgrade. An upgrade is contingent upon lower product
concentration, a significant increase in capitalisation and a more
stable funding profile alongside progress in building a stronger
commercial banking franchise.
The upgrade of UB's rating is contingent upon its ability to
manage risks from continued high loan growth, despite structural
changes to its loan composition, which would be reflected through
sustained asset-quality improvement. The improvement in UB's
financial profile to levels similar to higher-rated peers could
also support an upgrade. Capital impairment risks stemming from
sustained rapid loan expansion or asset-quality deterioration
could pressure UB's rating.
SDB's rating could be downgraded if there is a continued
deterioration in capitalisation, either through aggressive loan
growth or greater unprovided NPLs. An upgrade would be contingent
upon moderation of its risk appetite and sustainable improvements
in asset quality and profitability.
Fitch does not see upside potential for PABC's ratings in the near
term, as the bank may face difficulty is sustaining adequate
capital buffers similar to higher-rated peers. PABC's rating would
be downgraded if loss-absorption buffers further deteriorate,
either through a greater share of unprovided NPLs, aggressive
loan-book growth or weaker internal capital generation.
A rating upgrade for Amana is contingent upon the expansion of the
bank's franchise and improved and sustained financial profile, in
particular, achieving profitability levels that are similar to
higher-rated peers. Deterioration in loss-absorption buffers,
either through excessive growth above management forecasts or a
greater share of unprovided NPLs, could put downward pressure on
Amana's rating.
Senior debt ratings will move in tandem with the banks' National
Long-Term Ratings.
SUBORDINATED DEBT
Subordinated debt ratings will move in tandem with the banks'
National Long-Term Ratings.
The rating actions are as follows:
Nations Trust Bank PLC
National Long-Term Rating affirmed at 'A(lka)'; Stable Outlook
Basel II-compliant subordinated debentures affirmed at 'A-(lka)'
Pan Asia Banking Corporation PLC
National Long-Term Rating affirmed at 'BBB-(lka)'; Stable Outlook
Senior debenture rating affirmed at 'BBB-(lka)'
Subordinated debenture rating affirmed at 'BB+(lka)'
Union Bank of Colombo PLC
National Long-Term Rating affirmed at 'BB+(lka); Positive Outlook
SANASA Development Bank PLC
National Long-Term Rating affirmed at 'BB+(lka)'; Stable Outlook
Amana Bank PLC
National Long-Term Rating affirmed at 'BB(lka)'; Stable Outlook
=============
V I E T N A M
=============
VIETNAM: Most Exposed to Credit Impact of Likely Korea Conflict
---------------------------------------------------------------
Moody's Investors Service says that uncertainty over the potential
for military conflict on the Korean peninsula is rising with the
increasingly strident rhetoric. A conflict would have a high
credit impact on Korea (Aa2 stable). Aside from Korea, Japan (A1
stable) and Vietnam (B1 positive) are the most exposed sovereigns.
Among the major potential protagonists, the broader implications
for the US (Aaa stable) and China (A1 stable) would be relatively
limited. For the US a sharp lift in military spending would add to
and bring forward fiscal pressure, weighing on its fiscal metrics.
By contrast, Japan's growth would likely slow markedly and this
would jeopardize a durable stabilization in government debt.
With Vietnam, the loss of exports to South Korea and supply chain
disruptions would weaken the Southeast Asian sovereign's credit
profile. With an already elevated debt burden (52.6% of GDP in
2016), the Vietnamese government may not have the space to buffer
the economic shock without a material weakening of fiscal
strength.
Moody's conclusions are contained in its just-released report,
"Sovereigns -- Global, Vietnam and Japan most exposed to credit
impact of a potential Korean conflict".
In the report, Moody's focuses on the credit implications of a
broad and protracted conflict. In the case of a short and
contained event, the effects for global sovereigns would likely be
limited.
The report considers the credit impacts of a major conflict on
sovereigns other than Korea through the economic effects of lower
exports to Korea, disrupted global chains, the economic and fiscal
impacts of prolonged lower LNG and oil prices, and liquidity
pressures due to refinancing difficulties in turbulent financial
markets. It follows previous analysis of the implications of a
conflict for Korea's credit profile.
Among other sovereigns, the credit implications of a major
conflict would be more limited for Singapore (Aaa stable), Hong
Kong (Aa2 stable) and Taiwan (Aa3 stable). In particular, these
governments have fiscal space to buffer weaker exports to Korea.
The impact on Korean and global growth of a conflict would put
downward pressure on energy demand. In particular, South Korea is
the second-largest importer of LNG globally. If LNG and oil prices
were to fall on a sustained basis as a result, pressure on
sovereign producers and exporters of these commodities would rise.
Meanwhile, if a Korean conflict led to sustained capital flows
away from higher-risk emerging markets, external vulnerability and
liquidity risk would increase. Which sovereigns were affected
would depend on the timing of the conflict and when debt
maturities were falling due.
In this respect, Mongolia's (Caa1 stable) credit profile could be
impaired by global financial market turmoil if financial markets
seize up at a time when refinancing needs are pressing. Two large
international sovereign bond repayments are due in early and mid-
2018. Without market access, Mongolia's ability to repay foreign
debt would be very limited given its small reserves.
VINGROUP JSC: Fitch Affirms B+ Long-Term IDR; Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Vietnam-based property developer
Vingroup JSC's Long-Term Foreign- and Local-Currency Issuer
Default Ratings at 'B+' with Stable Outlook. The agency has also
affirmed the company's senior unsecured rating at 'B+' with
Recovery Rating of 'RR4'.
The affirmation of Vingroup's ratings reflects the company's
continued robust property sales, healthy performance of its retail
malls and the resultant strong cash flows, which fund the
aggressive expansion of its other businesses to a great extent,
thus supporting steady leverage. Vingroup's rating is moderated by
its aggressive expansion into consumer retail, such as
supermarkets and convenience stores, which is likely to remain
unprofitable in the near term, although it could bring long-term
diversification benefits. Fitch believes that Vingroup will be
better placed to withstand the cyclicality in property demand once
its other businesses start to generate healthy operating cash
flows.
KEY RATING DRIVERS
Property Sales to Remain Strong: Fitch expects Vingroup's property
sales to remain robust over the next three to five years,
supported by Vietnam's (BB-/Positive) strong macroeconomic growth
outlook. The company's contracted sales rose to USD3.6 billion in
2016 from USD3 billion in 2015 due to the resurgence in property
demand. Contracted sales were USD1.5 billion in 1H17. A large part
of existing sales stem from the higher-end Vinhomes-branded villas
and apartments, but the company expects its mid-market Vincity
product to account for more sales in the future. Fitch expects the
new product to attract demand from less-speculative end-users.
Strong Macroeconomic Performance: Fitch expects Vietnam's GDP
growth to remain robust at 6.3% in 2017 and 6.4% in 2018,
supported by a steady inflow of foreign direct investments, which
is driving increased industrialisation. These trends are
underpinned by the country's favourable demographics and rising
incomes, and the government's policies, which appear to favour
macroeconomic stability over growth.
Other Businesses Expanding Rapidly: Vingroup is using the strong
cash flows from its domestic property sales since 2015 and its
retail mall business to fund rapid expansion in retail mall
leasing, consumer retail, hospitality and other segments. The
expansion into these other segments is driving strong revenue
growth, but operating cash flows are lagging and will only improve
once new retail outlets, such as supermarkets and convenience
stores, break even, which takes about three years on average in
the company's estimates. Fitch currently expects Vingroup to spend
around VND11 trillion (USD484 million) a year in capex in the next
two years, to expand these other businesses, compared with the
VND14 trillion it spent annually in 2015 and 2016.
Satisfactory Financial Profile: Fitch expects Vingroup's financial
profile to remain satisfactory and in line with the parameters of
its 'B+' ratings over the medium term. At end-2016, Vingroup's
leverage, defined as net adjusted debt/adjusted inventory,
increased slightly to 41% from 38% in the previous year. Cash
collected from property sales/gross debt improved to 1.6x from
1.0x over the same period. Fitch expects leverage and
collections/gross debt to remain at around 50% and 1.0x,
respectively, over the next few years. However, the financial
profile may deteriorate faster if the company expands its other
businesses more aggressively than Fitch currently expects.
DERIVATION SUMMARY
Vingroup's rating compares well with peers such as Modern Land
(China) Co., Limited (B+/Stable), Logan Property Holdings Company
Limited (BB-/Stable) and PT Modernland Realty Tbk (B/Stable).
Although Vingroup has a dominant position in its domestic market,
its annual contracted sales are larger and its EBITDA margins are
slightly higher than those of Modern Land China, the Chinese
company has lower leverage and operates in a more stable market
than Vingroup. Furthermore, Vingroup's ratings are limited by its
aggressive expansion into retail and other businesses over the
medium term. Fitch believes VIngroup will be better placed to
weather a downturn in property markets once these other businesses
start to generate operating cash flows. For these reasons Vingroup
and Modern Land China are rated at the same level.
Compared to Vingroup, Modernland Realty has a significantly
smaller scale of operations, and around half of its contracted
sales stem from the more volatile industrial property segment.
However Modernland Realty is domiciled in Indonesia, which is a
more mature market than Vietnam, and has stronger EBITDA margins
than Vingroup on account of its lower-cost land bank. Still,
Vingroup's significantly larger operating scale and leading
domestic market position, supports a higher rating than Modernland
Realty.
Vingroup operates in Vietnam, which has a generally more risky
macroeconomic environment than Indonesia (BBB-/Positive) and China
(A+/Stable), where most of Vingroup's international peer-
homebuilders are based. Compared with these other economies,
Vietnam's property market is in a nascent stage of its
development, having emerged only in 2015 from a sharp multi-year
downturn. The improvement in demand was supported by new
regulations that allow foreigners to own properties. Fitch
believes that the proportion of property sales in Vietnam that is
driven by investor demand rather than end-user demand is higher
than for Indonesia and China, which can result in higher sales
volatility during economic downturns.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
- Vingroup will have USD3 billion and USD3.5 billion of
contracted sales in 2017 and 2018, respectively
- The cost of construction will amount to VND78 trillion and
VND85 trillion in 2017 and 2018, respectively
- Retail business will continue to generate negative EBITDA in
the next two years due to new store growth outpacing the
turnaround in existing stores
- Vingroup will have capex of around VND11 trillion a year in
aggregate for all non-property business segments
Key Recovery Rating Assumptions:
- The recovery analysis assumes that Vingroup will be liquidated
in a bankruptcy rather than continue as a going concern
because it is primarily an asset-trading company
- Fitch has assumed a haircut of 25% for VND2.9 trillion in
receivables, a 35% haircut on adjusted inventory of VND69.5
trillion (which is net of customer advances and loans received
for the purpose of booking property units) and a 50% haircut
on the VND26.1 trillion of property plant and equipment.
- 10% administrative claims are applied on the liquidation
value.
- VND27.1 trillion of debt is secured against the company's
fixed assets, while a further VND12.6 trillion is secured
against shares and other non-fixed assets, which are treated
as unsecured debt.
- Based on the above, Fitch estimates that Vingroup's
liquidation value will be able to cover 100% of the value of
its secured and unsecured debt, corresponding to a 'RR1'
Recovery Rating for its senior unsecured debt, after adjusting
for administrative claims. Nevertheless Fitch continues to
rate Vingroup's senior unsecured debt-class rating at 'B+'
with a Recovery Rating of 'RR4' because, under Fitch's
Country-Specific Treatment of Recovery Ratings criteria,
Vietnam falls into 'Group D' of creditor-friendliness.
Instrument ratings of issuers with assets in this group are
subject to a soft cap at the issuer's IDR.
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Net adjusted debt to adjusted inventory increasing to more than
60%, or
- Cash collections from property sales to gross adjusted debt
remaining below 1.0x on a sustained basis
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Net adjusted debt to adjusted inventory improving to below
40%,
- The consumer retail business generating positive EBITDA, and
- Vingroup generating positive consolidated free cash flows
(consolidated cash flow from operations less capex less
dividends) on a sustained basis
LIQUIDITY
Adequate Liquidity: At end-2016, Vingroup had VND2.9 trillion of
approved but undrawn credit lines to cover VND5.6 trillion of debt
maturing in the near term, and a cash balance of VND10 trillion.
Fitch expects Vingroup to post a free cash flow deficit for 2017
for which the company will need to seek external financing.
*********
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
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Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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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Information contained herein is obtained from sources believed
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thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***