/raid1/www/Hosts/bankrupt/TCRAP_Public/171101.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, November 1, 2017, Vol. 20, No. 217
Headlines
A U S T R A L I A
DELAFORCE GROUP: Second Creditors' Meeting Set for Nov. 6
DIG DEEP: First Creditors' Meeting Scheduled for Nov. 8
EASTERN GURUMA: First Creditors' Meeting Set for Nov. 7
GROWING EQUITY: Second Creditors' Meeting Set for Nov. 7
MERRANDA: Receivers Put Shopping Center Up for Sale
PREMIUM AFFORDABLE: Second Creditors' Meeting Set for Nov. 6
SPA TRADING: First Creditors' Meeting Set for Nov. 8
TEN NETWORK: Three Shareholders Seek to Block Takeover
C H I N A
DANDONG PORT: Defaults on Bond Payment as Borrowing Costs Jump
I N D I A
AURANGABAD THERMOCOL: CRISIL Ups Rating on INR7MM Loan to B+
BANSAL BROTHERS: CRISIL Ups Rating on INR8.17MM Cash Loan to B+
BANSAL SUPER MARKET: Ind-Ra Assigns 'BB-' Rating, Outlook Stable
BHUSHAN AUTOMOBILES: CRISIL Reaffirms B+ Rating on INR7MM Loan
ELECTROSTEEL STEELS: BanyanTree to Back Mideast Integrated Bid
GANTA SRIRAM: ICRA Moves B+ Rating to Not Cooperating
INDO SHELL: Ind-Ra Migrates BB+ Issuer Rating to Not Cooperating
JSR MULBAGAL: CRISIL Assigns B- Rating to INR10MM Term Loan
KISHAN GINNING: ICRA Reaffirms B+ Rating on INR13.50cr Loan
KPR INDUSTRIES: ICRA Moves 'D' Issuer Rating to Not Cooperating
KRANTI COTTON: ICRA Raises Rating on INR7.02cr Loan to B+
KUSUM METALS: ICRA Reaffirms B+ Rating on INR4cr LT Loan
LORD KRISHNA: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
LOVIN TILES: ICRA Assigns 'B' Rating to INR10.25cr Loan
NAMASTE AIRPORT: CRISIL Reaffirms B+ Rating on INR13.5MM LT Loan
PADMAVATHI COTTON: ICRA Cuts INR11cr LT Loan Rating to D
PAL AND PAUL: CRISIL Ups Rating on INR20MM Proposed Loan to B+
PASUPALA FOODS: CRISIL Assigns B+ Rating to INR7.5MM Cash Loan
PHI LEARNING: CRISIL Assigns 'B' Rating to INR8MM Cash Loan
PORWAL GINNING: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
RATNAGIRI CERAMICS: ICRA Withdraws B Rating on INR7.22cr Loan
RENGANAYAGI VARATHARAJ: CRISIL Cuts Rating on INR20MM Loan to D
SALGUTI INDUSTRIES: ICRA Raises Rating on INR34.99cr Loan to B-
SEAGULL TRUST II: Ind-Ra Rates Series A2 PTCs B+(SO)/Stable
SHARDA ROAD: CRISIL Reaffirms B+ Rating on INR1MM Cash Loan
SHRI RAMALINGA: Ind-Ra Downgrades LT Issuer Rating to 'BB-'
SHYAM PLASTIC: CRISIL Reaffirms 'B' Rating on INR4.5MM Loan
SILK WOVEN: ICRA Reaffirms B- Rating on INR6.50cr Loan
SKI HIMALAYAS: Ind-Ra Affirms 'BB+' Issuer Rating, Outlook Stable
SONEX TV: CRISIL Reaffirms B+ Rating on INR11MM Cash Loan
SOUTH INDIA: CRISIL Assigns B+ Rating to INR5.4MM LT Loan
SRI SIDDIRAMESHWAR: ICRA Reaffirms B Rating on INR45cr Loan
SVG GRANITES: Ind-Ra Affirms 'B' Issuer Rating, Outlook Stable
VIBHAV FARMS: CRISIL Assigns 'D' Rating to INR4.57MM Loan
VIJAYA KRISHNA: ICRA Moves B Rating to Not Cooperating Category
VIJETA PROJECTS: ICRA Lowers Rating on INR194.5cr Loan to 'D'
WINMAX CERAMIC: ICRA Reaffirms 'B' Rating on INR6cr Cash Loan
* INDIA: KGS Organises Panel Discussion on Insolvency Code
N E W Z E A L A N D
CAVALIER CORP: Expects Earnings to Improve After Restructuring
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A U S T R A L I A
=================
DELAFORCE GROUP: Second Creditors' Meeting Set for Nov. 6
---------------------------------------------------------
A second meeting of creditors in the proceedings of Delaforce
Group Pty Ltd has been set for Nov. 6, 2017, at 10:00 a.m., at
Dexus Place, Level 31, Waterfront Place, 1 Eagle Street, in
Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 3, 2017, at 4:00 p.m.
Darryl Kirk and Matthew Joiner of Cor Cordis were appointed as
administrators of Delaforce Group on Sept. 29, 2017.
DIG DEEP: First Creditors' Meeting Scheduled for Nov. 8
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Dig Deep
Contracting Pty Ltd will be held at Hotel Lord Forrest, 20
Symmons St, in Bunbury, on Nov. 8, 2017, at 2:30 p.m.
Samuel John Freeman and Brett Stephen Lord of Ernst & Young were
appointed as administrators of Dig Deep on Oct. 30, 2017.
EASTERN GURUMA: First Creditors' Meeting Set for Nov. 7
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Eastern
Guruma Pty Ltd will be held at Jarrah Room, Holiday Inn, 788 Hay
Street, in Perth, West Australia, on Nov. 7, 2017, at 10:00 a.m.
David Ashley Norman Hurt and Jimmy Trpcevski of WA Insolvency
Solutions were appointed as administrators of Eastern Guruma on
Oct. 26, 2017.
GROWING EQUITY: Second Creditors' Meeting Set for Nov. 7
--------------------------------------------------------
A second meeting of creditors in the proceedings of Growing
Equity Pty Ltd has been set for Nov. 7, 2017, at 9:30 a.m., at
the offices of FTI Consulting, 22 Market Street, in Brisbane,
Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 6, 2017, at 4:00 p.m.
Joanne Dunn and John Park of FTI Consulting were appointed as
administrators of Growing Equity on Oct. 3, 2017.
MERRANDA: Receivers Put Shopping Center Up for Sale
---------------------------------------------------
Tegan Annett at The Observer reports that a new Auckland shopping
centre with a supermarket and medical centre formerly owned by
Brisbane developer Merranda is for sale by the company's
receivers.
Also for sale by Ray White Commercial is a parcel of land in Kin
Kora where Merranda was going to build 41 luxury executive
villas, The Observer says.
According to The Observer, the sales come off the back of a
"strong rebound" in Gladstone's commercial property market with
AUD55.341 million of sales in the sector recorded this year by
Ray White Commercial.
The 3 Shaw St, Avion Shopping Centre was valued at just over AUD1
million (site value) last year, the report discloses citing RP
data.
According to RP Data, the land was last sold in 2004 for
AUD400,000, and by 2009 it was transformed into a 10-space
shopping centre, the report relays.
It's unknown what price the Ray White real estate agents who have
the site listed are hunting. The sale is open via expressions of
interest until November 16, the report notes.
Meanwhile, the almost two-hectare block at 112 Sun Valley Road
sold mid-2007 for AUD660,000, according to RP Data.
The site has development approval for 41 residential units, given
the go ahead by Gladstone Regional Council in 2011.
Developers Merranda - now in receivership with McGrathNicol -
planned to build Sun Valley Rise on the 1.9-hectare block, which
it said would "set a new benchmark in Gladstone living
standards".
The residential site will be auctioned on November 17 in
Brisbane, the report adds.
PREMIUM AFFORDABLE: Second Creditors' Meeting Set for Nov. 6
------------------------------------------------------------
A second meeting of creditors in the proceedings of Premium
Affordable Living 1 Pty Ltd has been set for Nov. 6, 2017, at
11:00 a.m., at 8 Brindabella Circuit, Brindabella Business Park,
in Canberra Airport, ACT.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 3, 2017, at 4:00 p.m.
Ezio Senatore at Deloitee was appointed as administrator of
Premium Affordable on Oct. 4, 2017.
SPA TRADING: First Creditors' Meeting Set for Nov. 8
----------------------------------------------------
A first meeting of the creditors in the proceedings of SPA
Trading Pty Ltd will be held at Level 4, 232 Adelaide Street, in
Brisbane, Queensland, on Nov. 8, 2017, at 11:00 a.m.
Peter Anthony Lucas of P A Lucas & Co was appointed as
administrator of SPA Trading on Oct. 27, 2017.
TEN NETWORK: Three Shareholders Seek to Block Takeover
------------------------------------------------------
Dana McCauley at The Australian reports that Ten Network's
takeover by CBS has been further delayed by a trio of disaffected
shareholders opposing the deal's approval by the Supreme Court of
New South Wales.
The Australian says the court hearing, which began on Oct. 31 and
was initially listed for up to three days, could now drag on
until at least Nov. 3 after lawyers acting for Ten's receivers
and administrators sought to introduce a new report into
evidence.
Justice Ashley Black adjourned Oct. 31's proceedings early to
give the shareholders time to read the report, the report
relates.
According to the report, the case got off to a halting start,
when the deal's opponents were joined by a former stockbroker who
made a last-minute application to join as an interested party.
With the court's approval the only thing standing in the way of
the troubled free-to-air broadcaster's sale to the US giant after
the deal was approved by the Foreign Investment Review Board, Ten
boss Paul Anderson will no doubt be hoping for a swift
resolution, The Australian says. The network's ratings have
fallen dramatically since the company went into administration
and 21st Century Fox ripped up its AUD376.8 million contract to
provide shows including The Simpsons and Modern Family.
The serial self-funded litigant, who told The Australian he had
appeared unsuccessfully in eleven legal cases over the years --
including one that took him to the High Court of Australia --
argued that he should have his say on the Ten sale because his
son had bought 250,000 contracts for difference (CFDs) on the
company's shares, at a time when the shares were trading at 20
cents.
"My company has provided an indemnity to my son in connection
with all his CFD trading positions," Mr. Matthews told the court,
The Australian relays. "Therefore I have an interest . . . I
haven't just casually dropped by the court."
After Justice Black explained the possibility that costs might be
awarded against him if he was unsuccessful, Mr. Matthews
gracefully bowed out, according to The Australian.
The Australian relates that the court went on to hear submissions
from Robert Newlinds SC on behalf of Ten's receivers and
administrators KordaMentha, which relied on an independent expert
report by KPMG that deemed the network's shares worthless.
According to the report, Mr. Newlinds told the court the KPMG
report showed that Ten's shares (TEN) had a negative valuation
even under the best case scenario, once deductions were made for
debts owed to creditors including CBS and Fox.
Shareholders Yunfeng Du, David Gubbay and Chun Leung have
challenged the expert report in a bid to block the transfer, the
report says.
The three men, who are also self-represented, required some
assistance from Justice Black with regard to court etiquette and
procedure, with His Honour advising them when to sit and stand
and reminding them that they ought not speak for each other,
while emphasising the information he provided did not constitute
legal advice, The Australian relates.
Mr. Newlinds also told the court of a plan B under which Ten's
administrators intend to ensure the sale goes ahead regardless of
whether it approves the shares transfer, the report adds.
Under that plan, detailed in the KPMG report, the company's
assets would be sold to CBS under the same conditions as the
proposed deal.
The hearing will continue today, Nov. 1, the report notes.
About Network Ten
Network Ten is a division of Ten Network Holdings, one of
Australia's leading entertainment and news content companies,
with free-to-air television and digital media assets. Ten Network
Holdings includes three free-to-air television channels - TEN/TEN
HD, ELEVEN and ONE - in Australia's five metropolitan markets of
Sydney, Melbourne, Brisbane, Adelaide and Perth, plus the online
catch-up and streaming service tenplay.
Network Ten was forced to go into voluntary administration in
June 2017 when its billionaire shareholders backed out from
guaranteeing a loan for the Company. KordaMentha Restructuring
partners Mark Korda, Jenny Nettleton and Jarrod Villani were
appointed as voluntary administrators.
The creditors of Ten Network on Sept. 19 voted in favor of a
AUD209.7 million takeover bid from CBS Corp.
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C H I N A
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DANDONG PORT: Defaults on Bond Payment as Borrowing Costs Jump
--------------------------------------------------------------
Bloomberg News reports that another Chinese company has missed a
local bond payment, highlighting how weaker firms in the nation
are struggling to honor their debts as borrowing costs jump.
Dandong Port Group Co. failed to repay part of notes investors
sold back to the issuer on Oct. 30, Bloomberg relates citing a
statement on the Chinamoney website that cited the firm's "big
debt burden." The privately held company is based in Dandong, an
industrial city bordering North Korea that has been an area of
focus amid United Nations sanctions against Kim Jong Un's regime,
Bloomberg says.
Bloomberg notes that bond yields in China have surged after
central bank governor Zhou Xiaochuan voiced concern about high
corporate borrowing on Oct. 15. That sparked a 16 basis point
jump in the the average yield on AA- rated corporate securities
this month, set for the biggest increase since May, according to
Chinabond data cited by Bloomberg. Twenty onshore bonds have
defaulted this year, compared with 21 in the same period of 2016,
according to Bloomberg-compiled data.
"The rising borrowing costs have eroded companies' profits and
made it more and more difficult to roll over existing debt," Xu
Hanfei and Li Yuze, analysts at China Merchants Securities Co.
said in a report Oct. 31, commenting on the default, Bloomberg
relays.
Dandong Port sold the CNY1 billion ($151 million) of five-year
bonds in 2014 with an initial coupon rate of 5.86 percent and an
option for investors to sell them back to the company early,
according to Bloomberg. All the investors have exercised that
option, and the company only paid back a portion of the
principal, it said without specifying an amount. It paid
CNY58.6 million in interest on Oct. 30, according to the
statement cited by Bloomberg.
Dandong is the biggest Chinese city along the border with North
Korea and the center of the country's trade with Kim's regime,
Bloomberg notes.
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I N D I A
=========
AURANGABAD THERMOCOL: CRISIL Ups Rating on INR7MM Loan to B+
------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Aurangabad Thermocol Plates & Containers Private
Limited (ATPCPL) to 'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Rupee Term Loan 7 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects CRISIL's belief that post stabilisation of
the production facility, ATTPL will continue to sustainably grow
its scale of operations at healthy operating margin and thus will
its strengthen business risk profile. In fiscals 2016 and 2017,
operations ramped up with revenue of INR9.62 crore and INR13.18
crore, respectively. With further addition in capacity in fiscal
2017, revenue is expected to improve over the medium term. The
company has been able to scale up operations accompanied by
operating margin of 15-16.5% in the past two fiscals through 2017
and will further increase over the medium term. Resultantly, cash
accrual is expected to rise to INR1.6-2 crore over the medium
term.
Further, with expected surge in cash accrual, capital structure
will also improve as gearing is expected to decline to 3-3.5
times over the medium term from 7.46 times as on March 31, 2017.
Analytical Approach
CRISIL has treated unsecured loans (outstanding at INR73 lakh as
on March 31, 2017) extended to ATPCPL by the directors as neither
debt nor equity. This is because they are expected to remain in
the business over the medium term and interest rate charged over
it is lower than bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Revenue of INR13.18 crore in fiscal
2017 reflects modest scale of operations.
* Leveraged capital structure: Gearing is high at 7.46 times as
on March 31, 2017, due to small networth and sizeable, debt-
funded capital expenditure.
Strengths
* Promoters' experience: Benefits from the promoters' experience
of around two decades and healthy relations with suppliers and
customer should continue to support the business profile.
* Healthy operating margin: Operating margin has been comfortable
at 15.0-16.5% over the two fiscals through 2017.
Outlook: Stable
CRISIL believes ATPCPL will continue to benefit over the medium
term from experience of its promoters. The outlook may be revised
to 'Positive' if significant increase in sales leads to sizeable
cash accrual and thus strengthening financial risk profile,
particularly capital structure. Conversely, the outlook may be
revised to 'Negative' if lower than expected sales, stretch in
working capital cycle or large debt-funded capital expenditure
weakens financial risk profile, particularly liquidity.
ATPCPL is a private-limited company incorporated in 2013. The
company has a manufacturing facility in Chitegaon, Aurangabad
(Maharashtra) producing thermocol disposable plates, cups, food
packing containers, and electronic goods packaging. The
operations of the company are managed by Mr. Mujibullah Khan and
Mr. Maruf Khan.
BANSAL BROTHERS: CRISIL Ups Rating on INR8.17MM Cash Loan to B+
---------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Bansal Brothers Private Limited (BBPL) to 'CRISIL
B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8.17 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term 1.83 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
The upgrade reflects improvement in the company's business risk
profile driven by growth in operating revenue and improved
profitability level, on the back of higher trading activities in
fiscal 2017, and an upward revision in storage rentals. Operating
revenue rose to around INR4.61 crore in fiscal 2017, from INR3.02
crore in fiscal 2016, and expected to remain stable over the
medium term. Furthermore, any upward revision in rental for cold
storage space may lead to increase in revenue and profitability.
The rating also factors in comfortable liquidity, and the
extensive experience of promoters.
These rating strengths are partly offset by modest financial risk
profile, and susceptibility to regulatory changes in the cold
storage industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest financial risk profile: Financial risk profile is marked
by small networth of INR2.8 crore as on March 31, 2017, and
modest debt protection metrics, with interest coverage and net
cash accrual to total debt ratios of around 1.83 times and 0.57
time, respectively, in fiscal 2017. Lower accretion to reserves
may continue to constrain networth in the medium term.
* Highly regulated and competitive nature of the cold storage
industry in West Bengal (WB): The potato cold storage industry in
WB is regulated by the West Bengal Cold Storage Association.
Rental rates, fixed by the state department of agricultural
marketing, limit players' ability to leverage on their strengths
and the favourable location. Further, intense competition in the
cold storage industry, with the largest entity having a market
share of less than 0.5%, limits bargaining power, and forces
players to offer discounts to ensure healthy capacity
utilisation.
Strength
* Extensive experience of the promoters: Business risk profile is
augmented by over three decade-long experience of the promoters
in the cold storage business, which ensures healthy utilisation
of storage capacity.
Outlook: Stable
CRISIL believes BBPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if a sustained and substantial increase in cash
accrual, and better working capital management, strengthen the
financial risk profile. The outlook may be revised to 'Negative'
if there is pressure on liquidity due to delays in loan repayment
by farmers, considerably low cash accrual, or significant debt-
funded capex.
BBPL was incorporated in 1989, by Bansal family. The WB-based
company provides cold storage facilities for potato
manufacturers, and has a capacity of 2.7 lakh tonne per annum.
The company also trades in potatoes, though the share of revenue
from the business is small.
BANSAL SUPER MARKET: Ind-Ra Assigns 'BB-' Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Bansal Super
Market (BSM) a Long-Term Issuer Rating of 'IND BB-'. The Outlook
is Stable. The instrument-wise rating actions are :
- INR100 mil. Long-term loans due on December 2022 assigned with
IND BB-/Stable rating;
- INR153.5 mil. Fund-based working capital limits assigned with
IND BB-/Stable/IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect BSM's moderate scale of operations and credit
metrics due to the trading nature of business. According to
provisional financials for FY17, revenue was INR692 million in
FY17 (FY16: INR289 million). Revenue growth was driven by the
opening of a new outlet in December 2015. BSM booked INR250
million in revenue for 1QFY18. Moreover, in FY17, EBITDA interest
coverage (operating EBITDA/gross interest expense) was 2.3x
(FY16: 1.7x) and net financial leverage (total adjusted net
debt/operating EBITDAR) was 6.1x (8.0x). The improvement in
credit metrics was due to an increase in absolute EBITDA.
The ratings are constrained by a volatile EBITDA margin of
negative 0.1%-7.0% over FY13-FY17 due to its presence in a highly
competitive retail industry. EBITDA margin was 4.2% in FY17
(FY16: 7.0%). The management expects EBITDA margin to stay at the
FY17 level in the near term on account of the absorption of
variable costs by the new outlet. Moreover, the ratings are
constrained by the proprietorship nature of the business.
The ratings, however, are supported by a comfortable liquidity
position, indicated by an average utilisation of 64.3% of the
fund-based limits for the 12 months ended September 2017.
Moreover, its promoters have an experience of 14 years in the
retail industry.
The ratings are also supported by the firm's established track
record of more than a decade in the retail industry.
RATING SENSITIVITIES
Negative: A decline in EBITDA margin resulting in a significant
deterioration in credit metrics on a sustained basis will be
negative for the ratings.
Positive: A significant increase in the scale of operations and
EBITDA margin leading to an improvement in credit metrics on a
sustained basis would be positive for the ratings.
COMPANY PROFILE
Formed by Mr Babulal B Agrawal in 2002, BSM is a proprietorship
concern that operates a supermarket chain offering food and
groceries, general merchandise, including home, furniture,
electronics and appliances, and apparels and accessories.
It has three stores in Akota, Karelibag and Majalpur in Vadodara,
Gujarat.
BHUSHAN AUTOMOBILES: CRISIL Reaffirms B+ Rating on INR7MM Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facility of Bhushan Automobiles Private Limited (BAPL) at 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.4 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflects weak operating performance
reported over the three fiscals through March 2017. Although
revenue grew 22% year-on-year in fiscal 2017, margin remained
subdued at 0.3% owing to the fixed commission-based agreement
with the principal, Escorts Ltd (Escorts). This led to a weak
financial risk profile, also indicated by the weak capital
structure and muted debt protection metrics.The rating also
reflects significant geographical concentration in revenue and
exposure to intense competition in the auto dealership business.
These weaknesses are partially offset by the established
relationship with Escorts.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile: Networth was small at
INR4.13 crore as on March 31, 2017, on account of muted accretion
to reserves and profitability. TOL/TNW remained high at 3.62
times as on same date, and expected to remain leveraged with the
increase in scale of operations. Lower profitability and high
interest cost, given significant reliance on bank debt, may
continue to constrain debt protection metrics in the medium term.
* Geographical concentration and exposure to intense competition:
The company operates only within Bihar, and deals in tractors
manufactured by Escorts, and hence, faces significant
geographical and supplier concentration risk. Intense competition
from other large players, further limits the bargaining power and
scope to hike commission.
Strength
* Established relationship with the principal, Escorts: BAPL has
been associated with Escorts for almost a decade, and is one of
the faster-growing tractor distributors in Bihar. If a particular
dealer does not perform well (in case of market share in new
vehicles in a particular zone, falling below the state average),
Escorts may redistribute areas between its dealerships. However,
CRISIL believes the business risk profile draws support from the
established market position in Bihar and support from Escorts.
Outlook: Stable
CRISIL believes BAPL will continue to benefit from its
established relationship with the principal, Escorts. The outlook
may be revised to 'Positive' if an equity infusion by the
promoter, or improvement in operating margin, leading to large
cash accrual, strengthens the financial risk profile. The outlook
may be revised to 'Negative' in case of a significant slowdown in
revenue, or large debt-funded capex, weakening the financial risk
profile, particularly liquidity.
BAPL was set up in 2005, by the promoter, Mr. Bhushan Kumar and
his family members. The company is a distributor of Escorts' farm
vehicles in Bihar.
ELECTROSTEEL STEELS: BanyanTree to Back Mideast Integrated Bid
--------------------------------------------------------------
Reghu Balakrishnan at LiveMint.com reports that BanyanTree
Finance Pvt. Ltd has joined the race for Electrosteel Steels Ltd
which is currently in bankruptcy courts, two people aware of the
development said.
Banyan Tree will back Mideast Integrated Steels Ltd (MISL), part
of Odisha-based Mesco Steel group, for the Electrosteel bid, the
first of the two people said on condition of anonymity,
LiveMint.com says. MISL has submitted an expression of interest
with the insolvency professional named by the National Company
Law Tribunal (NCLT).
Mesco is among six bidders for Electrosteel's assets. Others
include Tata Steel Ltd, Dalmia Bharat Ltd, Electrosteel Castings
Ltd, Srei Infrastructure Finance Ltd and Edelweiss ARC, the
second person cited said, LiveMint.com relays.
BanyanTree Finance is the local adviser to BanyanTree Growth
Capital, which manages assets of $300 million across two private
equity funds. In 2015, Banyan Tree Bank Ltd, Mauritius, the
sister concern of BanyanTree Finance, had made a INR40 crore debt
investment in MISL - one of the largest integrated steel
manufacturing companies in India.
Electrosteel Steels owes INR10,274 crore to a consortium of banks
led by State Bank of India (SBI).
"It is true that we are bidding for Electrosteel Steels Ltd and
our financial adviser is Banyan Tree Capital Advisors," the
report quotes Rita Singh, chairperson and managing director,
MISL, as saying. However, the debt and equity structure are still
being worked upon, she said. Therefore, the company is not in a
position to give further details now, she added. An Electrosteel
spokesman confirmed that about six expressions of interest have
been submitted without disclosing details, the report notes.
"It is a policy of the bank not to comment upon individual
accounts and its treatment," the report quotes an SBI
spokesperson as saying. "Tata Steel would not like to respond to
market speculations. As a company, we are always open to
evaluating various options that could create shareholder value,"
said a Tata Steel spokesperson, LiveMint.com relays .
About Electrosteel Steels
Electrosteel Steels Limited is an India-based company, which is
engaged in basic iron and steel business. The Company is engaged
in selling thermo mechanically treated (TMT) bars, billets,
ductile iron (DI) pipes, pig iron and wire rod. The Company is
engaged in setting up a 2.51 million ton per annum (MTPA)
capacity Greenfield Integrated Steel and DI Pipes Plant in the
district of Bokaro, Jharkhand. It produces TMT bars in Fe500,
Fe500D and Fe500D corrosion resistance steel (CRS) variants. It
manufactures DI pipes in sizes ranging from 100 millimeters (mm)
to 1,200 mm. Its billets offer applications, such as general
engineering, structural, rerolling and high tensile applications.
Its wire rods have applications in engineering, construction,
power and automobile sectors. It consists of a sinter plant,
pellet plant, coke oven, blast furnace, basic oxygen furnace,
billet caster, wire rod mill, bar mill and power plant.
The Kolkata bench of the National Company Law Tribunal (NCLT), on
July 21, had admitted the petition filed by the State Bank of
India (SBI) against Electrosteel Steels and appointed Dhaivat
Anjaria, partner in consultancy firm PwC, as the interim
resolution professional (IRP).
The company, which owes lenders INR11,309 crore, was referred to
the bankruptcy court under Section 7 of the IBC following a nudge
from the Reserve Bank of India (RBI).
GANTA SRIRAM: ICRA Moves B+ Rating to Not Cooperating
-----------------------------------------------------
ICRA has moved the ratings for INR10.00 crore bank facilities of
Ganta Sriram Educational Society (GSES) to the 'Issuer Not
Cooperating' category. The rating is now denoted as:
"[ICRA]B+(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term fund 5.90 [ICRA]B+(Stable)ISSUER NOT
Based COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Long term Unallocated 4.10 [ICRA]B+(Stable)ISSUER NOT
COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in March, 2016.The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with GSES, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No:SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Significant experience of the member of the society in the
field of education: The members of the society have near three
decades experience in the educational industry through various
colleges.
Credit weaknesses
* Pending receivables from government: Government of Andhra
Pradesh accounts for majority of the receivables of the society,
any delays in payments would impact the liquidity position.
* High competition from other educational institutions: Addition
of more private colleges to increase the competitive intensity in
the industry, making it difficult to attract quality faculty as
well as students.
Ganta Sriram Educational Society was established in 2007. The
society runs "Ramachandra College of Engineering" in Eluru, West
Godavari district of Andhra Pradesh. The college is affiliated to
Jawaharlal Nehru Technological University, Kakinada. The courses
run by college are recognised and approved by All India Council
for Technical Education (AICTE). Mr. GS Ramachadra Rao is the
current Chairman of the society.
INDO SHELL: Ind-Ra Migrates BB+ Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Indo Shell
Automotive Systems India Private Limited's (ISAS) 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 BB+(ISSUER NOT
COOPERATING)'on the agency's website. The instrument-wise rating
action is:
-- INR197 mil. Term loan migrated to non-cooperating category
with IND BB+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 27, 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 2006, Coimbatore-based ISAS is engaged in the
foundry business, manufacturing precision castings for
automobiles (majorly two-wheeler engines) for the global market.
The company has a manufacturing unit with an annual installed
capacity of 10,000 metric tons, with a 55% capacity utilisation.
The day-to-day operations of the company are run by Mr Balaji
Jagadeesan and Mr Rajesh Jageedesan.
JSR MULBAGAL: CRISIL Assigns B- Rating to INR10MM Term Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B-/Stable' on the long-
term bank loan facilities of JSR Mulbagal Tollways Private
Limited (JSR)'. The ratings reflect CRISIL's belief that JSR's
revenues shall continue to remain susceptible to risks associated
with toll collections. The ratings also factor in a below-average
financial risk profile, marked by a heavily indebted capital
structure. These rating weaknesses are partially offset by
favourable location of the tollway project.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 10 CRISIL B-/Stable
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility of revenues to risks associated with toll
collections: JSR's revenue generation is entirely dependent on
collection of toll, which, in turn, is based on traffic volumes,
which tend to be inherently volatile. Moreover, the 22.188 km
stretch operated by JSR forms part of a 100 km-plus stretch,
major parts of which are expected to be operational only after
about 30 months from now, making JSR's revenues even more
vulnerable during this phase. CRISIL expects that JSR's revenues
shall continue to remain susceptible to risks associated with
toll collections, which shall hinder the overall prospects of the
company.
* Below-average financial risk profile: JSR has a below-average
financial risk profile marked by low net worth, a highly
leveraged capital structure and poor interest coverage. On
account of successive losses in fiscals 2016 and 2017, the
company's net worth has receded to INR8.7 crores as at March 31,
2017. JSR's capital structure exhibits a high degree of gearing,
as is typically the case with special purpose vehicles, as
indicated by total outside liabilities to tangible net worth
(TOLTNW) ratio of 17.77 times as at March 31, 2017. Low operating
margins coupled with fixed interest outlay have resulted in
interest coverage ratio of less than 1 time in fiscals 2016 and
2017. JSR's financial risk profile is expected to remain below-
average in the medium term.
Strengths
* Favourable location and topography of tollway project: JSR has
been set up to augment National Highway No. 4 on the Mulbagal -
Andhra Pradesh/Karnataka section in Karnataka. A 100 km/h speed
limit have been planted by the side of the road, which is the
first time that such speeds are allowed in the city's vicinity.
Road speeds are designed based on the number of curves, among
other factors. The favourable location and topography of the
tollway are expected to benefit JSR in the medium term.
Outlook: Stable
CRISIL believes that JSR would continue to benefit over the
medium term on account of the favorable location and topography
of the tollway project. The outlook may be revised to 'Positive'
in case of sustained increase in toll collections leading to an
improvement in the debt service coverage ratio. Conversely, the
outlook may be revised to 'Negative' if the company's debt
service coverage ratio declines sharply because of less-than-
expected toll collections or higher operating expenditure.
JSR is a special purpose company promoted by JSR Constructions
Private Limited for augmentation of National Highway No. 4 from
km 216.912 to km 239.100 (approx. 22.188 km) on the Mulbagal -
AP/KNT border section in Karnataka under NHDP Phase III, by four-
laning on design, build, finance, operate and transfer (DBFOT) on
toll basis. JSR Constructions Private Limited has 70%
shareholding in JSR with the remaining 30% being held by the
directors of the company.
KISHAN GINNING: ICRA Reaffirms B+ Rating on INR13.50cr Loan
-----------------------------------------------------------
ICRA has re-affirmed the long-term rating of [ICRA]B+ to the
INR13.50- crore cash credit facility of Kishan Ginning & Pressing
Factory. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-
Cash Credit 13.50 [ICRA]B+ (Stable); re-affirmed
Rationale
The rating reaffirmation takes into account the extensive
experience of the partners in the cottonseed oil business and the
proximity of the firm's manufacturing unit to raw material
sources, easing procurement. The rating further considers the
significant growth in the operating income in FY2017 due to
increasing economies of scale.
The rating, however, remains constrained by the low profit
margins, in line with the low value additive nature of the
business, leveraged capital structure and weak coverage
indicators. ICRA also notes the moderate scale of operations,
with vulnerability associated with agro-climatic conditions
primarily in the nature of cotton availability and price
movements, which has a direct bearing on the revenues and
profitability. ICRA also notes the low techno intensive nature of
the cottonseed oil extraction business resulting in a large
number of players in the industry. Further, the partnership
nature of the constitution of the firm exposes it to the risk of
capital withdrawal and dissolution.
Key rating drivers
Credit strengths
* Experience of the promoters in cottonseed oil segment: KGPF was
established in 2008 for the purpose of crushing of cottonseeds
and ginning of raw cotton. The promoters are spanning more than
seven years in this segment.
* Proximity to cotton-producing belt in Gujarat resulting in easy
availability of raw material: The firm purchases its raw material
(cottonseeds) from Gujarat, mainly cotton ginners. It enjoys easy
availability of raw material by virtue of its location in Rajkot,
cotton belt of Gujarat.
* Increase in operating income in FY2017: The firm's operating
income has significantly increased from INR86.56 crore in FY2016
to INR123.11 crore in FY2017 mainly because of the increase in
the sales volume and realisation of cottonseed oil and oil cake.
Credit weaknesses
* Financial profile characterised by moderate scale of operations
with low profitability and leveraged capital structure: The
firm's scale of operations remains moderate with low operating
margins, primarily due to low value-additive nature of its
business, which, coupled with high borrowing levels, resulted in
weak coverage indicators. Further, the gearing level continued to
remain on the higher side due to the leveraged capital structure.
* Intensely competitive and fragmented nature of industry: The
firm operates in an intensely competitive environment, since
cottonseed oil extraction is a low techno intensive business,
resulting in a large number of players in the industry.
* Profitability susceptible to the vagaries of fluctuation in raw
material prices, agro-climatic conditions, and cotton
availability: As cottonseeds are purchased from ginners at
prevailing spot prices; the firm's profit margins are exposed to
volatility in cottonseed prices. The industry is susceptible to
agro-climatic conditions, which determines the availability of
raw materials and their prices. Further, given the high
volatility in international edible oil prices, domestic players
are exposed to risk of unexpected squeeze on margins due to
pricing mismatch between raw materials (which are linked to
domestic factors) and final product prices that are affected by
global factors.
Established in 2008, Kishan Ginning and Pressing Factory (KGPF)
is a partnership firm, at present, owned and managed by Mr. Dipak
Parmar, Mr. Hitesh Chachadia, Mr. Kishor Manvar and Mr. Ramesh
Chachadia. Initially, the firm was in the business of ginning and
pressing of raw cotton and crushing of cottonseeds. However, from
FY2017, it has discontinued the ginning operation. The
manufacturing facility of the firm, located at Rajkot, Gujarat,
is equipped with 25 expellers, with a production capacity of 20
metric tonnes cottonseed oil per day. It also trades in raw
cotton, corn powder and cattle feed mixture.
In FY2017, the firm reported a net profit of INR0.67 crore on an
operating income of INR123.11 crore, as compared to a net profit
of INR0.51 crore on an operating income of INR86.56 crore in the
previous year.
KPR INDUSTRIES: ICRA Moves 'D' Issuer Rating to Not Cooperating
---------------------------------------------------------------
ICRA has moved the ratings for the INR495.00 crore bank
facilities of KPR Industries (India) Limited (KPR) to the 'Issuer
Not Cooperating' category. The rating is now denoted as:
"[ICRA]D/[ICRA]D; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 337.54 [ICRA]D ISSUER NOT
Term Loan COOPERATING; Rating moved
to the 'Issuer not
cooperating' category
Unallocated-Long 157.46 [ICRA]D/[ICRA]D ISSUER NOT
term/Short term COOPERATING; Rating moved
to the 'Issuer not
cooperating' category
Rationale
The rating is based on limited cooperation from the entity since
the time it was last rated in April 2016. As part of its process
and in accordance with its rating agreement with KPR Industries
(India) Limited, ICRA has been sending repeated reminders to the
entity for payment of surveillance fee that became due. However,
despite multiple requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite cooperation
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/
119, dated November 1, 2016, the company's rating has been moved
to the "Issuer Not Cooperating" category.
Key rating drivers
Credit strengths
* Part of the KPR group which has diversified interests in
fertilizers, poultry, rice mills, and seeds: KPRIL is promoted by
Mr. Kovvuri Papa Reddy and is part of the KPR Group which has
diversified presence in fertilizers, poultry, and rice mills in
Andhra Pradesh and Karnataka.
* Plant is forward integrated with many chlorine derivative
products such as Chlorinated Paraffin Wax (CPW), Mono Chloro
Acetic acid (MCAA), Sodium Hypochlorite and Stable Bleaching
Powder: In addition to setting up 200 TPD caustic potash plant,
KPRIL is forward integrated into manufacturing of chlorine
derivatives and expects to utilize around 70% of its chlorine
production to manufacture chlorine derivatives given that
chlorine off-take is the constraining factor for caustic soda &
caustic potash plant utilizations in India. Chlorine generated is
proposed to be used in the manufacturing of Hydro Chloric acid
(HCL), Stable Bleaching Powder, Chlorinated Paraffin Wax and Mono
Chloro Acetic Acid. SBP is used in water treatment and cleaning
applications; Chlorinated Paraffin Wax (CPW) is used in the
manufacturing of PVC (Poly Vinyl Chloride) as secondary
plasticizers which are chemical additives imparting flexibility
and fire resistance to PVc; and Mono Chloro Acetic Acid (MCAA)
which is used as a chemical intermediate in the manufacture of
Carboxymethyl Cellulose (CMC) and production of herbicides such
as Glyphosate.
Credit weaknesses
* Delays in debt servicing: The Company is delaying on term loan
repayment obligations as the project got stuck due to pending
equity infusion and bank disbursement.
Incorporated in 2011, KPR Industries (India) Limited (KPRIL) is
setting up a 210 tons per day (TPD) caustic soda plant along with
chlorine derivative products such as chlorinated paraffin wax (30
TPD), stable bleaching powder (50 TPD), and mono chloro acetic
acid (20 TPD) at Biccavolu, East Godavari district, Andhra
Pradesh. The initial project cost was INR740.65 crore which was
to be funded by equity of INR290.65 crore equity and term loan of
INR450 crore. The project scope got revised downwards with
deferment of caustic potash and sulphuric acid plant construction
owing to prevailing adverse market scenario for these products
resulting in project cost revision from INR740.65 crore to
INR570.10 crore and to be funded by equity of INR232.56 and term
loan of INR337.54 crore with revision in commercial operations
date (COD) from November 2014 to May 2015. Due to delays in
construction, the total project cost increased to INR691.27 crore
and to be funded by term loan of INR409.28 crore and equity of
INR281.99 crore. The plant could not achieve the scheduled COD of
November 2016.
KRANTI COTTON: ICRA Raises Rating on INR7.02cr Loan to B+
---------------------------------------------------------
ICRA has upgraded the long-term rating to [ICRA]B+ from [ICRA]B
on the INR7.02-crore fund-based limit of Kranti Cotton and Oil
Industries. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limit 7.02 [ICRA]B+(Stable); Upgraded
from [ICRA]B
Rationale
The rating upgrade primarily factors in the improvement in the
company's capital structure as evident from the low gearing level
in FY2017. The rating also derives comfort from the long-standing
experience of the promoters in the cotton ginning industry and
the proximity of the firm's manufacturing unit to raw material
sources, which eases procurement. The rating further positively
factors in the increase in FY2017 operating income.
The ratings, however, remain constrained by the company's modest
scale of operation and its weak financial profile, as evident
from low profitability and stretched capital structure. ICRA also
takes into account the commoditised nature of the firm's products
and the vulnerability of its profitability to adverse movements
in cotton prices, which are subject to seasonality and crop
harvest. The firm's operations are also exposed to regulations
governing the industry such as restrictions on cotton exports and
minimum support price (MSP). Furthermore, the ratings are also
constrained by the highly fragmented nature of the industry, due
to the presence of a large number of manufacturers, which coupled
with low-entry barriers leads to stiff competition, thereby
pressurising pricing and margins.
Going forward, ICRA expects KCOI's scale of operation to remain
modest in FY2018 given the expectation of tight cotton
availability and firmer cotton prices in near term. In ICRA's
view, the ability of the firm to scale up its operation while
managing the impact of raw material price fluctuations on its
profitability in a highly competitive business environment and
improve its capital structure and coverage indicators while
managing working capital requirements will remain the key rating
sensitivities.
Key rating drivers
Credit strengths
* Experience of key promoters in the cotton industry: KCOI was
incorporated in 2013 and the promoters have long experience in
ginning and pressing of raw cotton.
* Strategic location of the plant in the cotton producing belt of
India: The manufacturing facility of the company is located in
Morbi, Gujarat, which ensures easy availability of raw material.
* Improvement in the capital structure: Gearing of the firm
declined from 3.54 times as on March 31, 2016 to 2.26 times as on
March 31, 2017 due to repayment of term loan and unsecured loans.
Credit weaknesses
* Modest scale of operations; increase in sales in FY2017: The
company's operating income increased from INR36.23 crore in
FY2016 to INR39.85 crore in FY2017 because of the increase in
sales volume and sales realisation.
* Financial profile characterised by low profitability: The
financial profile of the company remains weak, as evident from
its thin net profit margin (0.87% in FY2017). This is primarily
because of low value-added operations.
* Highly fragmented industry structure: The cotton industry is
highly fragmented, with a large number of organised and
unorganised players, because of low-entry barriers. This limits
the pricing flexibility and bargaining power of the industry
players.
* Exposure of operations to regulatory restrictions on cotton
export and minimum support price (MSP): The company is exposed to
regulatory risks as prices are decided through the minimum
support price set by the Government.
Kranti Cotton and Oil Industries was established in August, 2013,
by Mr. Shaileshbhai Kavar and four other partners. KCOI is
involved in ginning and pressing of raw cotton and crushing of
cotton seeds. The company's manufacturing facility is located at
Morbi, Gujarat. Its commercial production started on March, 2014.
At present, the plant has 17010 MTPA for ginning and 10159 MTPA
for crushing operation capacity.
The partners of the firm are associated with other concerns
namely Patel Oil Industries and Kranti Oil Industries.
KUSUM METALS: ICRA Reaffirms B+ Rating on INR4cr LT Loan
--------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ and the
short-term rating of [ICRA]A4 for the INR34.00-crore bank
facilities of Kusum Metals Private Limited (KMPL). The outlook on
the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund-
Based 4.00 [ICRA]B+ (Stable); reaffirmed
Short Term Fund-
based 30.00 [ICRA]A4; reaffirmed
Rationale
The reaffirmation of the ratings takes into account the long-
standing experience of the promoter group in the steel scrap
trading business. Furthermore, the presence of group entities in
Europe, the Middle East, and Indonesia has led to sourcing
advantages and an established customer profile has enabled the
company to scale up its volumes within a short span of time. The
ratings also factor in KMPL's capital structure characterized
mostly by working capital borrowings with no repayment pressure;
however coverage indicators remain stretched. The ratings are,
however, constrained by KMPL's large outstanding payable position
leading to elevated Total Outside Liabilities to Tangible Net
Worth (TOL:TNW) ratio and stretched working capital metrics
driven by high receivables. High dependence on working capital
debt coupled with the trading nature of its business has resulted
in moderate profitability and debt protection indicators. The
rating also factors in KMPL's small scale of operations and the
fragmented and competitive nature of the industry, which limits
the pricing flexibility and exposes the company to fluctuations
in raw material prices and foreign exchange fluctuations as
evidenced in the past.
Key rating drivers
Credit Strengths
* Long-standing experience of the promoters in the steel scrap
trading segment with a global network of entities operating out
of UK, Singapore, Dubai, etc: The promoters are involved in metal
scrap business since 1996 through its Indian company M/s Kusum
Metals Pvt Ltd and International flagship company Global Metcorp
Ltd, with its registered office in London to source scrap from
Europe.
* Access to high quality scrap imports mainly through the Group's
presence in Europe and Middle East: The company imports high
quality steel scrap in containers from the UK, the USA, Dubai and
Singapore and caters to various customers in India, Malaysia,
Singapore, Pakistan, Bangladesh, Vietnam, Indonesia, Spain and
other far eastern markets.
* Diversified product profile with company trading in all grades
of scrap: The products traded are various grades of iron, cast
iron, steel, stainless steel and aluminum scraps, in addition to
TMT bars and billets. From FY2016, the company has shifted its
new portfolio additions: Rice and Steam Coal divisions to its
group companies resulting in substantial reduction in traded
volumes and focussed majorly on HMS and other steel scraps. The
company is able to source a high percentage of these products due
to the procurement from Europe and other developed countries
where recycling rates are higher as compared to India.
Credit Weaknesses
* Margins exposed to cyclical nature of industry in addition to
volatility witnessed in scrap prices and forex: The company
sources scrap predominantly through imports and sell them
exclusively in the domestic market. Hence due to the absence of a
natural hedge, the company's margins are exposed to exchange
fluctuation risks. Moreover, because of the volatility in prices
and the trading nature of operations, the margins of the company
remain stressed.
* Thin operating margins due to low value added nature of
business; net margins further subdued due to high financial
expenses arising out of forex fluctuations: Due to the trading
nature of the business where no major value addition is done to
the products, the margins remain thin restricting the growth of
the business. Net margins have also been low over the years and
impacted due to forex losses arising through high forex payables
and financial expenses arising from LC discounting.
* Financial profile characterized by moderately high gearing and
stretched coverage indicators: The company's debt profile
comprises of buyer's credit, cash credit and term loans with
INR22.23 crore outstanding as on March 31, 2017. Despite regular
debt repayment and low working capital utilisation, gearing
remains moderately high at 1.63 times in FY2017, although
improving from 2.35 times in FY2016. KMPL's TOL/TNW has witnessed
moderation from levels in initial years, but nevertheless
remained stretched at 4.26 times as on March 2017. Interest
coverage indicator also remains stretched due to lower operating
profit and high financial expense.
Kusum Metals Pvt. Ltd. (KMPL), established in 2008, is part of
the Greta Group of Companies founded by the Chennai- based
Chaudhari family. The Group commenced operations in 1996, and is
primarily engaged in trading scrap from end-of-life
vehicles/consumer products and construction/demolition
activities. The business of the erstwhile firm -- Kusum
International, set up in 1996 - was taken over by KMPL in 2008.
The company has a 2.37-acre scrap yard at Vallur III Village,
Ponneri Taluk, Tiruvallur District in Tamil Nadu. The Group has
been involved in the metal scrap business since 1996 through its
International flagship company - Global Metcorp Limited, UK.
Other Group entities include Greta Energy Limited, which operates
a 15 MW (megawatt) biomass-based power plant at Chandrapur,
Maharashtra; and Dyna Agro Private Limited which operates a
36,000MTPD (metric tons per day ) flour mill in Andhra Pradesh.
The Group also holds coal assets in East Kalimantan, Indonesia,
through Greta Industries Private Limited. The Group is also
setting up a steel plant - Greta Steels Limited - with a 130-Ton
Per Day (TPD) coal washery, as well as two 350-TPD Direct Reduced
Iron (DRI) plants, near Tbilisi, Georgia.
LORD KRISHNA: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facility of Lord Krishna Rice Mills - Gangoh (LKRM) at 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect LKRM's modest financial risk
profile, marked by high leverage and modest net worth, and modest
scale of operations in the highly fragmented rice industry. These
rating weaknesses are partially offset by its partners' extensive
industry experience and their funding support.
Analytical Approach
CRISIL has treated INR71.6 lakhs of unsecured loans, outstanding
as on March 31, 2017, from partners' of the Lord Krishna Rice
Mills ' Gangoh as neither debt nor equity as these funds are
subordinated to bank debt and are expected to remain in the
business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the highly fragmented basmati
rice industry: LKRM has a modest scale of operations reflected in
its operating income of INR21 crore in fiscal 2017 and its modest
milling and sorting capacities in comparison to other large
players in the industry. India is the world's second largest
producer as well as consumer of rice after China. The industry is
highly fragmented with the presence of over one lakh rice mills
divided into small, medium, and large units. Organized players
account for around 10 per cent of the total market. Competition
is high in exports market where players are majorly branded and
into basmati rice. In domestic market, many small players are
present. Easy access to raw materials (paddy) and low capital
intensity of the industry would ensure that SMEs continue to have
a large presence.
* Modest financial risk profile: LKRM reported leverage of 7.5
times as on March 31, 2017. The leverage is high on account of
the high reliance of the firm on creditors and bank lines to fund
its large working capital requirements given its modest net worth
(INR1.8 crore as on March 31, 2017). The debt protection metrics
were also modest marked by net cash accruals to adjusted debt
ratio and interest coverage ratio of 0.09 times and 2.7 times,
respectively, during fiscal 2017.
Strengths
* Partners' extensive industry experience: The partners of LKRM
have over 3 decades of experience in the rice milling business.
This has enabled the firm to establish healthy relationships with
suppliers and distributors and gradually ramp up its scale of
operations over the past few years.
* Funding support from the partners: LKRM's partners have
extended funding support to the firm in the form of unsecured
loans and capital infusion. The unsecured loans from the partners
stood at INR71.6 lakhs as on March 31, 2017.
Outlook: Stable
CRISIL believes LKRM will continue to benefit over the medium
term from its partners' extensive industry experience and their
funding support. The outlook may be revised to 'Positive' if
financial risk profile improves substantially because of
significant revenue growth leading to large cash accrual, or
capital infusion and efficient working capital management.
Conversely, the outlook may be revised to 'Negative' in case of
low cash accrual or large working capital requirements or
sizeable debt-funded capital expenditure, leading to weaker
liquidity.
LKRM was established as a partnership firm in 1978 by Mr.
Yogender Kumar Garg and his wife Ms. Sunita Rani. The firm mills
and processes basmati rice. Its facilities are at Gangoh in
Saharanpur (Uttar Pradesh), and have milling and sorting capacity
of 5 tonnes per hour, utilised at 60 per cent. Operations are
managed by the founders' son Mr. Harsh Garg.
LOVIN TILES: ICRA Assigns 'B' Rating to INR10.25cr Loan
-------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B to the INR6.00-
crore1 cash credit limit, INR10.25-crore term loans and INR0.05-
crore unallocated limits of Lovin Tiles LLP (LTL). ICRA has also
assigned a short-term rating of [ICRA]A4 to the INR1.70-crore
non-fund based limits of LTL. The outlook on the long-term rating
is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash
Credit (Proposed) 6.00 [ICRA]B (Stable); Assigned
Fund-based Term
Loan (Proposed) 10.25 [ICRA]B (Stable); Assigned
Fund-based
Unallocated 0.05 [ICRA]B (Stable); Assigned
Non-fund Based
Limits (Proposed) 1.70 [ICRA]A4; Assigned
Rationale
The assigned ratings are constrained by the nascent stage of the
firm's operations, as it is still in the project stage and the
risks associated with the stabilisation of the plant, as per the
expected operating parameters. The ratings also remain
constrained by the highly fragmented nature of the tiles
industry, resulting in intense competition. Furthermore, the
ratings also take note of the cyclical nature of the real estate
industry which is the main consuming sector; and the exposure of
the firm's profitability to volatility in raw material and gas
prices as well as to adverse foreign exchange fluctuations. The
assigned ratings also take into account the firm's financial
profile, which is expected to remain weak in the near term, given
the debt-funded nature of the project (debt to equity ratio of
1.96 times) and impending debt repayment.
The assigned ratings, however, favourably factor in the
experience of the promoters in the ceramic industry, the
locational advantage of the firm for raw material procurement by
virtue of its presence in Morbi (Gujarat). The ratings derive
comfort from the benefits derived from its associate concerns, in
terms of marketing and distribution.
Going forward, the timely commissioning of operations within the
estimated cost will remain important from the credit perspective.
The firm's ability to establish a market for its products, scale
up its operations in a profitable manner, amidst intense
competition and maintain a healthy financial risk profile will be
some of the key rating sensitivities.
Key rating drivers
Credit strengths
* Extensive experience of the promoters in the ceramic industry:
The promoters have an extensive experience of close to two
decades, vide their association with other companies in the
ceramic industry. The commissioning of LTL would enable the
promoter Group to enter into a new product segment, of glazed
vitrified floor tiles, and would benefit the firm from the dealer
network and customer base of the associate companies.
* Proximity to raw material sources: The main raw materials
required by LTL are clay mineral, natural minerals such as
feldspar, that are used to lower the firing temperature,
chemicals, and additives required for the shaping process. These
raw materials are abundantly available in Gujarat and Rajasthan.
The presence of the manufacturing plant in the ceramic belt of
Rajkot, in Gujarat, will benefit the firm in terms of
uninterrupted supply of raw material and allow savings on the
transportation cost.
Credit weaknesses
* Risks associated with stabilisation and successful scale up of
operations: Being in a nascent stage, with the operations yet to
commission (expected from December, 2017), the firm remains
exposed to the risks associated with stabilisation and successful
scale-up of operations, as per the expected parameters. Moreover,
the debt repayments, coupled with the long gestation period, are
likely to keep the credit profile constrained over the near term.
The timely commissioning of operations, without any significant
cost overruns, would remain a key rating sensitivity.
* Intense competition and fragmented industry structure - The
ceramic industry is highly fragmented with competition from both
the organised and the unorganised segments, apart from imports.
The large number of players in the unorganised segment, most of
whom are based in Gujarat and operate with low-cost structures,
create a pressure on the price.
* Vulnerability of profitability and cash flows to cyclicality
inherent in the real estate industry: The real estate industry is
the key end-user for vitrified tiles. Hence, the profitability
and cash flows are expected to remain vulnerable to the inherent
cyclicality of the real estate industry.
* Profitability to remain susceptible to volatility in raw
material and fuel prices: Raw material and fuel are the two major
components determining the cost competitiveness for the ceramic
industry. The firm can, however, exercise little control over the
prices of key inputs such as natural gas and raw materials. Thus,
the margins are expected to remain exposed to the movement in raw
material and gas prices and its ability to pass on any upward
movement to the customers.
Lovin Tiles LLP (LTL), incorporated in May, 2017, is setting up a
Greenfield project at Morbi in Gujarat to manufacture medium-
sized glazed vitrified tiles. The unit has an estimated installed
capacity of producing 63,000 metric tonnes of tiles per annum.
NAMASTE AIRPORT: CRISIL Reaffirms B+ Rating on INR13.5MM LT Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Namaste Airport Services Private Limited (NASPL) at
'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 13.5 CRISIL B+/Stable (Reaffirmed)
Term Loan 3.5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect NASPL's modest networth and scale
of operations. These rating weaknesses are partially offset by
the established market position due to the locational advantage
and experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: The scale of operations of the
company has remained modest marked by revenues of INR 5.12 cr in
fiscal 2017. The scale had remained modest due to stiff
competition from other vendors. However the scale is expected to
remain modest over the medium term due to limited bargaining of
the company in terms of revision of the rentals against its
vendors.
* Modest Networth: The networth of the company was modest at
INR6.47 cr in fiscal 2017. The same is due to initial stages
operations of the company. However the promoters have infused
equity in fiscal 2017 to fund the incremental capital
expenditure. The networth of the company is expected to remain
modest despite high operating margins due to modest scale of
operations.
Strengths
* Established market position due to the locational advantage:
The company has set up its food joint 'Namaste Midaway' in NH58
(Delhi- Haridwar highway) near Mansurpur, Uttar Pradesh. The
company has the locational advantage as it is a busy highway and
the food court is well equipped to serve travellers.
* Experience of the promoters:
The promoters of the company have around 7 years of experience
company. Promoters previous to this had already set up the
Bikanerwala outlet in Haridwar and have managed to open branded
outlets in its venture.
Outlook: Stable
CRISIL believes NASPL will maintain its business risk profile
over the medium term, backed by the locational advantage of the
food court. The outlook may be revised to 'Positive' if an
increase in scale of operations leads to considerably higher cash
accrual and net worth. Conversely, the outlook may be revised to
'Negative' if liquidity deteriorates on account of lower-than-
expected cash accrual or any large, debt-funded capital
expenditure.
Established in 2009, NASPL, promoted by Mr. Arvind Rathi and Ms
Charu Rathi, is primarily engaged in providing rural tourism
services in Uttar Pradesh. NASPL also operates a food court
joint, Namaste Midway, on National Highway-58 (Delhi-Haridwar
Highway) near Mansurpur, Uttar Pradesh.
PADMAVATHI COTTON: ICRA Cuts INR11cr LT Loan Rating to D
--------------------------------------------------------
ICRA has revised the long term rating for INR11.00 crore bank
facilities of Padmavathi Cotton Industries (PCI) from [ICRA]B to
[ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term fund 11.00 [ICRA]D, Downgraded from
based limits [ICRA]B
Rationale
The rating revision considers continuous overdrawals of the cash
credit facility for more than 30 days during the period May-
August 2017 on account of constrained liquidity position owing to
high repayment obligations and high working capital requirements
with high inventory and debtor days. The rating considers small
scale of operations of the firm in a highly fragmented industry
with weak entry barriers limiting the ability of the firm to pass
on any adverse price movements to its customers. The rating also
considers week financial profile of the firm characterized by
high gearing and stretched coverage indicators. ICRA however
takes note of the extensive experience of the promoters in cotton
industry.
Going forward, the ability of the firm to increase its scale of
operations, improve profitability while effectively managing
working capital requirements, given high repayments would be the
key rating sensitivities.
Key rating drivers
Credit strengths
* Extensive experience of the promoter in the cotton industry:
More than two decades experience of promoters in cotton industry
helps in understanding the market trend resulting in procuring
better raw materials at competitive rate.
* Presence of the firm in major cotton producing regions of
Telangana: PCI is located in Nalgonda district of Telangana,
which is a major cotton producing area resulting in easy
availability of kappas.
Credit weaknesses
* Continuous overdrawals from cash credit account: There have
been continuous overdrawal of cash credit account during the
period May 2017 to August 2017owing to constrained liquidity
position given the high repayments and high working capital
requirements owing to high inventory and debtor days.
* Small scale of operations: The firm has small scale of
operations in a highly fragmented industry characterised by
presence of large number of players which limits company's
ability to pass on any adverse movement to its customers.
* Weak financial profile: PCI has a weak financial profile
characterized by high gearing of 4.69 times as on March31, 2017
and stretched coverage indicators with an interest coverage ratio
of 1.76 times, NCA/total debt ratio of 7% for FY2017(based on
provisional financials)
Padmavathi Cotton Industries, located at Chintapally Mandal in
Nalgonda district of Telangana, is a partnership firm established
in March 2015 and started its operations on 28th January 2016.
The firm is engaged in cotton ginning. The ginning facility
includes 48 double roller gins, auto pressing, and an auto
feeder. The installed capacity of the ginning and pressing unit
is 351000 Quintals of kappas per annum.
PAL AND PAUL: CRISIL Ups Rating on INR20MM Proposed Loan to B+
-------------------------------------------------------------
CRISIL Ratings has upgraded its long term rating on the bank
facilities of Pal and Paul Builders Limited (PPBL) to 'CRISIL
B+/Stable' from 'CRISIL B/Stable/Issuer Not Cooperating' and
assigned a 'CRISIL A4' rating to the company's short-term
facility.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 5 CRISIL A4 (Reassigned)
Proposed Overdraft 20 CRISIL B+/Stable (Upgraded
Facility from 'CRISIL B/Stable/Issuer
Not Cooperating')
The upgrade reflects expectation that the company's business risk
profile will improve over the medium term backed by healthy
revenue growth and operating profitability. Operating income
increased significantly INR11.93 crore in fiscal 2017, from
INR3.11 crore, the previous fiscal, owing to healthy realisation
from the sale of flats. Financial risk profile has improved, too,
with gearing reducing to 0.11 time as of March 2017, from 0.34
time a year earlier. Interest coverage improved to 4.45 times
from 2.17 times.
The ratings continue to reflect exposure to risks and cyclicality
inherent in the real estate sector in India, and modest scale and
geographical concentration in operations. These weaknesses are
mitigated by moderate financial risk profile, and the promoters'
extensive experience.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks and cyclicality in the real estate industry:
The real estate segment is cyclical and intensely competitive.
* Geographical concentration in revenue profile: Despite industry
presence of 30 years, PPBL derives its entire revenue from its
hotel and service apartments, resulting in geographical
concentration.
* Modest scale of operations: Demand for projects depends on
individual income, real estate prices, and interest and mortgage
rates and hence, given the intense competitive pressure,
operating income remains modest at INR12.05 crore in fiscal 2017.
Strengths
* Extensive experience of promoter: Mr. DS Pal has implemented
several successful residential projects across Delhi in the past
three decades, resulting in established relationship with
suppliers and contractors, and with Japanese companies for
service apartments. Also, occupancy of hotel was around 70% in
fiscal 2017.
* Moderate financial risk profile: Financial risk profile is
expected to remain moderate. Networth and gearing were estimated
at INR18.87 crore and 0.11 time, respectively, as on March 31,
2017. Net cash accrual to adjusted debt and interest coverage
ratios were at 0.38 time and 4.45 times, respectively, for fiscal
2017.
Outlook: Stable
CRISIL believes PPBL will continue to benefit from the promoter's
experience. The outlook may be revised to 'Positive' if improving
scale of operations and expanding geographical reach strengthens
business risk profile. Conversely, the outlook may be revised to
'Negative' if financial risk profile weakens because of low
profitability or substantial increase in working capital
requirement.
Incorporated in 1980, Delhi-based PPBL is promoted by Mr. D S
Pal. The company operates in the real estate development and
hospitality sector. It owns Hotel Palm Greens and some service
apartments in Delhi.
PASUPALA FOODS: CRISIL Assigns B+ Rating to INR7.5MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
bank facilities of Pasupala Foods Private Limited (PFPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.5 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 3.5 CRISIL B+/Stable
Rating reflects modest scale and working capital intensive
operations. Rating also factors in below average financial risk
profile of the company marked by modest net worth, high gearing
and below average debt protection metrics. These rating
weaknesses are partially offset by the extensive industry
experience of promoters.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale and working capital intensive operations: PFPL's
scale of operations remain modest as reflected in revenues of
around INR26 crore in Fiscal 2017. Modest scale of operations
limits company's bargaining power with its suppliers and
customers furthermore the masala and pickle industry is mostly
unorganized with the presence of many small players which exposes
the company to pricing pressure limiting its operating margins.
Company's operations are working capital intensive as reflected
in GCA of 126 days as on March 31 2017. GCA days are high mainly
on account of high inventory and moderate debtors.
* Below average financial risk profile: PFPL's financial risk
profile is below average marked by modest net worth, high gearing
and below average debt protection metrics. Net worth was INR1.6
crore against total debt outstanding of INR8.12 crore resulting
in gearing of 4.9 times as on March 31 2017. Gearing is high on
account of company's dependency on short term debt so as to fund
its working capital requirements. Gearing is expected to come
down with steady increase in accretion to reserves and infusion
of funds by promoters so as to partially fund the capital
expenditure however it should remain high over the medium term.
Strengths
* Extensive industry experience of promoters: The Company is
promoted by Mr. P. Sri Rami Reddy and his family members. Mr.
Reddy and other 6 directors of the company has extensive
experience in distribution of FMCG products in Andhra Pradesh and
Telangana. From 2002-2008 the promoters were involved in
distribution of Masalas, FMCG products and kitchen ware mainly in
Vijayawada, Prakasam, East Godavari, West Godavari and Krishna
District of Andhra Pradesh.
Outlook: Stable
CRISIL believes PFPL will continue to benefit over the medium
term from the promoters' extensive industry experience. The
outlook may be revised to 'Positive' in case of substantial
improvement in scale of operations and profitability or
significant infusion of funds by promoters to improve the capital
structure. Conversely, the outlook may be revised to 'Negative'
if the financial risk profile weakens owing to decline in
profitability, stretch in working capital cycle, or any large
debt-funded capital expenditure.
Incorporated in 2009, PFPL is engaged in preparing, packing and
distribution of Spices, Pickles, papads and other instant masalas
under the brand name 'Matha'. The company is promoted by Mr. P.
Sri Rami Reddy and his family members. Manufacturing/Processing
facility is located in Anantapur District of Andhra Pradesh.
PHI LEARNING: CRISIL Assigns 'B' Rating to INR8MM Cash Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank loan facility of PHI Learning Private Limited
(PHI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit/
Overdraft facility 8 CRISIL B/Stable
The rating reflects the company's weak financial risk profile
because of operating loss, further its business risk profile has
also been subdued due to continuous decline in revenue in past 3
years owing to revocation of reprinting rights by key principal.
The weaknesses are partially offset by funding support from the
promoter in the form of unsecured loans, their extensive
experience and long track record in the publishing business.
Analytical Approach
Unsecured loans from the promoter have been treated as neither
debt nor equity as they carry minimal interest rate and will
remain in the business over medium term.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: Company's financial risk profile
has weakened on account of losses incurred in last two years.
Networth eroded from over INR24 crore as on March 31, 2014 to
INR13.5 crore as on March 31, 2017. Debt protection metrics had
been very subdued due to operating and cash level losses incurred
in recent past.
* Declining revenue and operating loss: The revocation of reprint
rights by Pearson PLC in May 2016 led to decline in revenue and
in operating loss for fiscals 2016 and 2017. Improvement in
revenue and demonstration of profitability remains critical to
reinstate the business risk profile.
* Large working capital requirement: Gross current assets were at
682 days as on March 31, 2017, due to large inventory and sizable
receivables with universities and retailers.
Strength
* Extensive industry experience of the promoter: The promoter has
experience of over five decades and is renowned in the field of
publishing. They have established many titles in higher education
space in India and their experience and track record will benefit
the company in reviving its business. The promoters have been
supporting the business operations by infusing unsecured loans
which has enabled the company to manage its operations amid
business pressures.
Outlook: Stable
CRISIL believes PHI will continue to benefit from the extensive
experience of its management. The outlook may be revised to
'Positive' if revenue and profitability increases and financial
risk profile is strengthened. The outlook may be revised to
'Negative' if persistent losses along with sizable working
capital requirements further weaken financial risk profile and
liquidity.
Established in 1963, PHI is an academic publisher. The company is
promoted by Mr. Asoke K Ghosh, and is based in New Delhi.
PORWAL GINNING: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Porwal Ginning And Pressing Private Limited (PGPPL)
at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
Term Loan 2.65 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect a small scale in the intensely
competitive cotton industry, below-average financial risk profile
and susceptibility to volatility in cotton prices and government
regulations. These weaknesses are partially offset by promoters'
extensive experience and funding support.
Analytical Approach
Unsecured loans of INR2.50 crore from the promoters as on
March 31, 2017, have been considered as neither debt nor equity
as they carry lower interest rates and are subordinated to the
bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale in the fragmented cotton industry: Revenue jumped
to INR20.7 crore in fiscal 2017 from INR8.6 crore in fiscal 2016;
however, revenue remained modest.
Furthermore, the cotton spinning industry in Maharashtra is
intensely fragmented, with several spinning units with large
capacities.
* Below-average financial risk profile: The financial risk
profile is constrained by networth at INR1.7 crore and gearing of
3.59 times as on March 31, 2017.
* Large working capital requirement: Gross current assets were
high at 139 days, driven by inventory and debtors at around 110
days and 32 days, respectively, as on March 31, 2017.
Strength
* Promoters' experience and funding support: PGPPL will continue
to benefit from its promoters' experience of around a decade in
the cotton industry, which has helped to build a strong clientele
and supplier network. Moreover, the promoters have supported the
company by the means of unsecured loans as and when required.
Outlook: Stable
CRISIL believes PGPPL will benefit over the medium term from the
promoters' extensive experience of its promoters and their
funding support. The outlook may be revised to 'Positive' if
significant increase in scale and profitability results in
sizeable cash accrual, strengthening the financial risk profile.
The outlook may be revised to 'Negative' if financial risk
profile, particularly liquidity, weakens further due to decline
in scale and profitability, stretch in working capital cycle, or
large, debt-funded capital expenditure.
Incorporated in 2012 in Manwath, Maharashtra, and promoted by Mr.
Jaiprakash Porwal and Mr. Vijay Porwal, PGPPL gins cotton and
presses cotton seed to extract oil.
RATNAGIRI CERAMICS: ICRA Withdraws B Rating on INR7.22cr Loan
-------------------------------------------------------------
ICRA has withdrawn the long-term rating of [ICRA]B and short-term
rating of [ICRA]A4 for the INR13.0 crore bank limits of Ratnagiri
Ceramics Private Limited (RCPL) at the request of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 0.11 [ICRA]B; withdrawn
Cash Credit 7.22 [ICRA]B; withdrawn
Non Fund Based-
Long Term 0.32 [ICRA]B; withdrawn
Unallocated 0.85 [ICRA]B; withdrawn
Non Fund Based-
Short Term 4.50 [ICRA]A4; withdrawn
Rationale
The rating is withdrawn in accordance with ICRA's policy on
withdrawal and as requested by the company.
Ratnagiri Ceramics Private Limited (RCPL), incorporated in 1999
by Mr. Sanjeev Bhaskar and his family members. Earlier, the
promoters were involved in the business of refractories under
companies namely 'Ishwar Industries Limited', 'Bhaskar Stoneware
Pipes', 'Bhaskar Stoneware Pipes Madras' and 'Amarnath'. In 1999,
Mr Sanjeev Bhaskar diversified his business and ventured into
tiles business and started manufacturing of designer printed
tiles from December 2000. RCPL has a capacity to manufacture
around 10,000 square meters per month.
RENGANAYAGI VARATHARAJ: CRISIL Cuts Rating on INR20MM Loan to D
---------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility of Renganayagi Varatharaj College of Engineering (RVCE)
to 'CRISIL D' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 20 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The downgrade reflects delays in servicing loan owing to cash
flow mismatches.
The rating also reflects RVCE's weak capital structure. These
weaknesses are partially offset by the promoters' extensive
entrepreneurial experience.
Key Rating Drivers & Detailed Description
Weakness
* Weak capital structure: The capital structure remains weak
owing to losses
Strength
* Promoters' experience: The promoters have experience of nearly
a decade in the education industry and of around 2 decades in the
fireworks industry.
RVCE is an engineering college in Sivakasi, Tamil Nadu, managed
by the KRTA Varatharaj Educational Trust. The college is
affiliated to Anna University of Technology, Tirunelveli, and
accredited to All-India Council for Technical Education. The
college is managed by chairman Mr. V Kesavan, secretary Mr. V
Ragavan, and correspondent, Ms Brindha J Ragavan.
SALGUTI INDUSTRIES: ICRA Raises Rating on INR34.99cr Loan to B-
---------------------------------------------------------------
ICRA has upgraded the long-term rating to [ICRA]B- from [ICRA]D
to INR34.99 crore fund based limits, INR0.15 crore non-fund based
limit and INR14.33 crore unallocated limit of Salguti Industries
Limited. ICRA has also upgraded the short-term rating to [ICRA]A4
from [ICRA]D assigned to INR7.93 crore short term non-fund based
limits of SIL. The outlook on long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term fund
Based 34.99 [ICRA]B-(Stable); upgraded
from [ICRA]D
Long Term-Non
Fund Based 0.15 [ICRA]B-(Stable); upgraded
from [ICRA]D
Short Term-Non
Fund Based 7.93 [ICRA]A4; upgraded from
[ICRA]D
Long Term-
Unallocated 14.33 [ICRA]B-(Stable); upgraded
from [ICRA]D
Rationale
The rating upgrade takes into account regularisation of debt
servicing in the past six months on account of timely receipt of
payments from major clients of SIL. The assigned ratings also
factor in over two decades of experience of the promoters in the
manufacturing of poly-woven sacks industry; and established
relationship with major customers such as Coromandel
International Limited & Nagarjuna Fertilisers & Chemicals
Limited. The ratings are however constrained by weak financial
profile characterised by net losses of INR0.14 crore incurred
during FY2017, high gearing of 4.88 times as on March 31, 2017,
weak coverage ratios with debt-service-coverage-ratio (DSCR) of
0.74 times during FY 2017 and high working capital intensity of
the company at 40% for FY2017 as reflected from high utilization
of CC limits on account of high inventory and debtor levels. The
rating also considers high customer concentration with top three
customers accounting for more than 57% of the total sales in
FY2017 and high dependence of woven sack business on fertilizer
and cement industry. The ratings are further constrained by
moderate capacity utilisation levels of the textile division with
~55% utilization over past two years impacting the business
returns and resulting in net losses for the company.
Going forward, the ability of the company to improve its
profitability and managing its working capital requirements would
remain key rating sensitivities from credit perspective. Timely
divestment of textile division would be a key rating monitorable.
Key rating drivers
Credit strengths
* Long experience of promoters in poly-woven sack business:
Salguti Industries Limited (SIL) was engaged in the manufacturing
of poly woven sacks for packaging of fertilizers, cement, and
food grains etc. In the year 2005, SIL diversified into textiles
segments and is engaged in the manufacturing of cotton grey
fabric for garments, bed linen and furnishings.
* Established relationship with major customers: Major customers
in the woven sacks segment are fertilizer companies. SIL's
supplies sacks primarily to Coromandel International Limited
(CIL, associated for more than 25 years). The company has also
increased its customer base in fertilizer segment and is catering
to players like Indian Potash Limited (IPL), Indian Farmers
Fertiliser Cooperative Limited, Nagarjuna Fertilisers & Chemicals
Limited and few other small players. The company is also focusing
on Cement industry and is catering to players like Vasavadatta
Cement (a unit of Kesoram Industries Limited), Kalburgi Cement
Private Limited (brand Bharathi cement).
Credit weaknesses
* Weak financial profile: The financial risk profile is weak as
characterised by net losses of INR0.14 crore incurred during
FY2017, high gearing of 4.88 times as on March 31, 2017, weak
coverage ratios as indicated by DSCR of 0.74 times, NCA/Total
debt of 5.40% and interest coverage of 1.49 times during FY 2017.
The shortfall in term loan repayments is funded through unsecured
loan from director and related parties.
* Weak liquidity position: The liquidity position of company is
weak as reflected by 98% of average utilization of working
capital limits during the last one year owing to high inventories
and debtor days. CIL follows the policy of zero inventories and
hence order received from CIL has to be delivered within 2-3 days
resulting in higher inventory for SIL.
* High Customer concentration: The top three customers are CIL,
Indo Count Industries Limited and Kesoram Industries Limited and
they accounted for more than 57% of sales in FY2017 with CIL
alone accounting for 40% of the sales. However, long relationship
with CIL mitigates the risk to certain extent. In plastic
division majority of revenue are derived from fertilizer and
cement industry.
Salguti Industries Limited (SIL) was incorporated in 1984 and is
engaged in the manufacturing of poly woven sacks for packaging of
fertilizers, cement, food grains etc. In year 2005, SIL
diversified into textiles segments and is engaged in the
manufacturing of cotton grey fabric for garments, bed linen and
furnishings. The manufacturing facilities for packaging division
are located at Bollaram, Medak District and Rajapur,
Mahaboobnagar District of Telangana and for textile division at
Jadcherla, Telangana. Currently, the installed capacity of poly
woven sacks is 10400 MT/annum and of textile unit is at 1100
MT/annum.
SEAGULL TRUST II: Ind-Ra Rates Series A2 PTCs B+(SO)/Stable
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Seagull Trust II
(an ABS transaction) the following final ratings:
-- INR2,711.6 mil. Series A1 pass-through certificates (PTCs),
issued on September 22, 2017 due on February 2019 assigned
with IND AA+(SO)/Stable rating;
-- INR301.3 mil. Series A2 PTCs, issued on September 22, 2017,
due on February 2019, assigned with IND B+(SO)/Stable rating.
The nature of underlying loans securing the Series A1 and Series
A2 PTCs is similar to that of the microfinance loans disbursed
under the joint liability group structure. The underlying loans
are of an unsecured nature with loan tenors in the range of 12-24
months. Credit underwriting is based on the income generation
ability of the borrowers. L&T Finance Limited (LTFL; originator,
seller or servicer) internally classifies these loans as
microloans, as all loan features may not necessarily fall in the
requirements for microfinance loans as defined in the Reserve
Bank of India guidelines for microfinance institutions. The
microloan pool to be assigned to the trust has been originated by
LTFL.
KEY RATING DRIVERS
Transaction Rating Support Drivers: The final ratings are based
on the origination, servicing, collection and recovery
capabilities of LTFL, the legal and financial structure of the
transaction and the credit enhancement (CE) provided in the
transaction. The agency is of the opinion that the issuer's
origination and servicing capabilities are of an acceptable
standard.
The rating of Series A1 PTCs is supported by the robust and
exhaustive quality of the originator's specific portfolio and
pool data, the superior credit quality of the pool compared with
the overall portfolio of the originator and the financial
strength of LTFL. The superior pool credit quality includes nil
overdue loans across the life of the pool until the pool cut-off
date, a significantly high pool collection efficiency of above
99% even in times of extreme stress such as demonetisation, a
significantly high weighted average (WA) seasoning of 9.6 months
and a WA amortisation of 39.2%. While about 75% of the average
peak defaults have been observed in LTFL's microloan portfolio at
a seasoning level of 9-10 months, the proposed securitised pool
has remained non-delinquent until date. Additionally, Ind-Ra
derives comfort from the significant ability of the servicer to
perform pool collections on a steady state basis even in the
times of severe economic downturn or idiosyncratic events such as
demonetisation.
Transaction Structure: The final rating of Series A1 PTCs
addresses the timely payment of interest on monthly payment dates
and the ultimate payment of principal by the final maturity date
of February 2019, in accordance with transaction documentation.
The final rating of Series A2 PTCs addresses the timely payment
of interest on monthly payment dates, only after the complete
redemption of Series A1 PTCs and the ultimate payment of
principal by the final maturity date of February 2019, in
accordance with transaction documentation.
Availability of Credit Support: The transaction benefits from an
internal CE on account of excess interest spread and
subordination. The level of subordination available to Series A1
PTCs is 10% of the initial pool principal outstanding (POS). The
total excess cash flow or internal CE, including subordination
and excess interest spread, available to Series A1 and A2 PTCs is
20.2% and 9% of the initial POS, respectively. The transaction
also benefits from an external CE of 6.5% of the initial POS in
the form of fixed deposits with IDFC Bank Limited in the name of
the originator with a lien marked in favour of the trustee.
Additionally, the total excess interest spread of the pool shall
be trapped in an escrow account, if the 0+days past due is
greater than 5.0% of the initial POS during the transaction tenor
and shall lead to accelerated payment of the Series A1 PTC
principal.
The external CE will be used in case of a shortfall in a) the
complete redemption of both PTCs on the final maturity date, b)
the monthly interest payment to Series A1 investors c) the
monthly interest payment of Series A2 investors after the
complete redemption of Series A1 investors.
Key Pool Characteristics: The collateral pool assigned to the
trust had an aggregate outstanding principal balance of
INR3,012.9 million as of the pool cut-off date of 31 August 2017.
The pool comprising 181,572 loans has a WA seasoning of 9.6
months and a WA amortisation of 39.2%. The WA balance tenor
remaining for the pool is around 14.4 months. Also, the WA
internal rate of return is 24%. The pool is concentrated close to
88% of POS in only two states: Tamil Nadu (66.4%) and Kerala
(22.0%). However, in the past, the average collection efficiency
of the meeting centres in these states was greater than 99%.
Originator's Servicing, Underwriting & Collection Capabilities:
LTFL provides microloans for income-generating purposes to joint
liability groups, comprising women, typically in groups of 5-16
and in the age limit of 20-60 years. The loans are sourced
directly by in-house 3,000 front line officers, who also engaged
in collection activities. The loan amount provided depends on the
cycle of the loan, the income-generating capacity of the borrower
and the total household annual income of the borrower, which
typically exceeds INR0.1 million for loan eligibility. The key
features of the credit underwriting process include an assessment
of credit worthiness and leverage of borrowers and a mandatory
requirement of Aadhar Card by borrower (as a part of Know Your
Customer norms). Moreover, business concentration of microloans
in any district is capped at below 2% of the district population
and in any state at below 25% of the product portfolio.
Key Assumptions: Ind-Ra has derived a base case net default rate
after adjusting for seasoning and amortisation in the range of
3%-4%. The agency has analysed the characteristics of the pool
and established its base case assumptions through four key
performance variables, namely default rate, recovery rate,
recovery timeline and prepayment rate, which collectively affect
the credit risk in a transaction. Ind-Ra considers both long-term
historical average of the key performance variables of the old
static pools and the performance of the latest static pools.
The current pool comprises microloans, which are unsecured in
nature. As the chances of recovery from these loans are less
likely, Ind-Ra has not assumed any recovery rate from the
underlying loans. Also, considering that the WA balance tenor of
the microloans in the pool is only 14.4 months, Ind-Ra does not
perceive significant prepayment risk in the pool.
Ind-Ra stressed the above variables for the rating level as per
'Rating Criteria for Indian Asset-Backed Securitisations'.
RATING SENSITIVITIES
As part of its analysis, Ind-Ra built a pool cash flow model
based on the transaction's financial structure. The agency
analysed historical data to determine the base values of key
variables that would influence the level of expected losses in
this transaction. The base values of the default rate and
recovery rate, time to recovery, collection efficiency,
prepayment rate and pool yield were stressed to assess whether
the level of CE was sufficient for the current rating levels.
Ind-Ra also conducted rating sensitivity tests. If the
assumptions of both base case default rate worsened by 20%, the
model-implied rating sensitivity suggests that the rating of
Series A1 PTCs will be downgraded by two notches to 'IND AA-(SO)'
and the rating of Series A2 PTCs will be not be impacted.
A new issue report for this transaction will be available shortly
on Ind-Ra's website, www.indiaratings.co.in.
COMPANY PROFILE
LTFL was established as Family Credit Ltd. (erstwhile Apeejay
Finance Group Ltd.) in 1993. LTFL is a registered non-banking
financial corporation. Its registered office is in Kolkata. L&T
Finance Holdings Limited (LTFHL) is a subsidiary of Larsen &
Toubro Limited, which is the flagship holding company for the
financial services business of the L&T Group. LTFL, which is
recognised as a systemically important non-deposit taking non-
banking financial corporation, is a wholly owned subsidiary of
LTFHL.
LTFHL completed the amalgamation of its wholly owned subsidiaries
LTFL and L&T Fincorp Ltd. with Family Credit in February 2017.
Family Credit was subsequently renamed L&T Finance Limited.
In June 2017, the total microloan book of LTFL stood at INR38.12
billion, up 57% yoy.
LTFL classifies any loan as a non-performing asset (NPA) if it is
overdue for over 90 days. As of June 2017, gross NPA and net NPA
of the rural finance business segment (36% of which comprises
microloans) were 11.35% and 7.62%, respectively.
SHARDA ROAD: CRISIL Reaffirms B+ Rating on INR1MM Cash Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of Sharda Road Lines (SRL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 6 CRISIL A4 (Reaffirmed)
Cash Credit 1 CRISIL B+/Stable (Reaffirmed)
Proposed Bank
Guarantee 1 CRISIL B+/Stable (Reaffirmed)
The ratings reflect SRL's modest scale of operations in the
intensely competitive logistics and transportation industry, and
below-average financial risk profile. These weaknesses are
partially offset by experience of the proprietor.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition: Small scale
of operations, with operating income of INR9.57 crore in fiscal
2017, amid intense competition not only limits pricing power with
suppliers and customers but also restricts the ability to bid for
large tenders. Hence, business risk profile may remain
constrained over the medium term.
* Below-average financial risk profile: Modest networth of
INR1.48 crore as on March 31, 2017, weakens the financial risk
profile. However, gearing and debt protection metrics have been
comfortable.
Strength
* Proprietor's experience: Benefits from the proprietor's
experience of over four decades and healthy relations with
customers and suppliers should continue to support the business.
Outlook: Stable
CRISIL believes SRL will continue to benefit over the medium term
from the proprietor's experience. The outlook may be revised to
'Positive' if significant increase in scale of operations and
profitability, leading to higher-than-expected cash accrual,
strengthens financial risk profile. Conversely, the outlook may
be revised to 'Negative' if significant stretch in working
capital cycle or large, debt-funded capital expenditure weakens
financial risk profile.
Bhopal-based SRL was established in 1982 as a proprietorship firm
by Mr. Kamlesh Mittal. The firm provides services of handling and
transporting (logistics) of food grains. It applies for
government tenders through online and offline modes and mainly
executes orders of government departments.
SHRI RAMALINGA: Ind-Ra Downgrades LT Issuer Rating to 'BB-'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shri Ramalinga
Textiles' (RT) Long-Term Issuer Rating to 'IND BB-' from 'IND
BB(ISSUER NOT COOPERATING)'. The Outlook is Stable. The
instrument-wise rating actions are:
-- INR150 mil. (reduced from INR194) mil. Fund-based working
capital limit Long-term rating downgraded; Short-term rating
affirmed with IND BB-/Stable/IND A4+ rating.
-- INR44 mil. Non-fund-based working capital limit assigned with
IND A4+ rating.
KEY RATING DRIVERS
The downgrade reflects RT's continued weak credit metrics due to
an increase in the total debt (FY17: INR1,173 million; FY16:
INR984 million) to meet working capital requirements. Higher debt
led to a rise in gross interest expenses (FY17: INR54 million;
FY16: INR17 million). Credit metrics remained weak despite an
increase in absolute EBITDA (FY17: INR59 million; FY16: INR26
million). In FY17, gross interest coverage (operating
EBITDA/gross interest expense) was 1.1x (FY16: 1.5x) and net
leverage (total debt/operating EBTIDA) was 18.8x (FY16: 33.8x).
The ratings reflect a tight liquidity and the partnership nature
of business. Its average maximum utilisation of the fund-based
working capital limits was 99% over the 12 months ended September
2017.
However, the ratings are supported by an increase in revenue to
INR1,059 million in FY17 from INR1,011 million FY16 and EBITDA
margin to 5.5% from 2.6% over the period. Revenue growth was
driven by a rise in realisation. The scale of operations remains
moderate. The improvement in EBITDA margin was due to a decrease
in raw material costs. Moreover, the ratings continue to be
supported by the promoter's 21 years of experience in the yarn
manufacturing business.
RATING SENSITIVITIES
Negative: A decline in revenue and EBITDA margin leading to
continued weak credit metrics on a sustained basis could lead to
a negative rating action.
Positive: An increase in revenue and EBITDA margin leading to an
improvement in credit metrics on a sustained basis could be
positive for the ratings.
COMPANY PROFILE
RT was established in October 2014 after it was carved out of
another group entity Shri Govindaraja Textiles Private Limited.
RT manufactures cotton yarn, polyester yarn, polyester cotton and
polyester viscose-blended yarn and has an installed capacity of
37,092 spindles.blended yarn and has an installed capacity of
37,092 spindles.
SHYAM PLASTIC: CRISIL Reaffirms 'B' Rating on INR4.5MM Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable/CRISIL A4'
ratings on the bank facilities of Shyam Plastic Industries (SPI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.5 CRISIL B/Stable (Reaffirmed)
Letter of Credit 3 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 0.4 CRISIL B/Stable (Reaffirmed)
Term Loan 2.1 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect its small scale of operations in
the highly fragmented footwear industry, average financial risk
profile because of small networth, and working capital-intensive
operations. These weaknesses are partially offset by the
extensive experience of management and established relationship
with key customers.
Analytical Approach
Unsecured loans of INR2.22 crore as on March 31, 2017, have been
treated as neither debt nor equity as these bear lower interest
rate and are expected to remain in business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Average financial risk profile: Networth was small at INR5.27
crore as on March 31, 2017, which, along with modest scale,
constrains financial flexibility. Gearing remained moderate at
about 1.4 times.
* Working capital-intensive operations: Gross current assets were
around 130 days as on March 31, 2017, due to moderate inventory
and receivables. Also, ramp up in scale led to fully utilised
bank limit.
* Improving, though modest, scale of operations: Despite
increasing to INR37.9 crore for fiscal 2017 from INR27.71 crore
in fiscal 2016, scale remains small due to intense competition in
the footwear industry, which has low entry barrier; this also
leads to low product differentiation. Sustained scaleability
while maintaining profitability remains critical. Operating
margins have declined slightly with increase in revenue.
Strengths
* Extensive experience of promoters and established relationship
with customers: The promoters have been in the footwear segment
for more than three decades through group entity, Shyam Footetech
Pvt Ltd, This, along with steady client association, has enabled
the firm to scale up operations. Also, half of total revenue
comes from key customers such as Bata, Lakhani, and Paragon.
Promoters have also extended unsecured loans to support
liquidity.
Outlook: Stable
CRISIL believes SPI will continue benefit over the medium term
from its promoters' extensive experience and association with
reputed customers. The outlook may be revised to 'Positive' if a
significant and sustained increase in scale of operations, while
maintaining moderate profitability, leads to higher cash accrual.
The outlook may be revised to 'Negative' if low revenue and cash
accrual, stretch in working capital cycle, or any unanticipated
capital expenditure weakens financial risk profile.
Set up in 2009 as a partnership firm by Mr. Radheshyam Singhal,
SPI manufactures footwear (men's shoes, sports shoes, and
chappals) at its facility in Bahadurgarh, Haryana, that has
capacity of around 2 lakh pair per month.
In fiscal 2017, profit after tax (PAT) was INR0.41 crore on total
sales of INR37.91 crore, against a PAT of INR0.42 crore on total
sales of INR27.71 crore in fiscal 2016.
SILK WOVEN: ICRA Reaffirms B- Rating on INR6.50cr Loan
------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B- on the
INR6.50-crore fund-based limit of Silk Woven Sack Private
Limited. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limit 6.50 [ICRA]B-(Stable); Reaffirmed
Rationale
The rating reaffirmation factors in the extensive experience of
the promoters in manufacturing of woven sacks and Government
support through interest and capital subsidies during initial
year of operation.
The rating, however, continues to be constrained by the company's
limited track record of operations and its weak financial
profile, as is evident from the net losses, weak debt coverage
indicators and a stretched capital structure. Furthermore, the
ratings are also constrained by the highly fragmented nature of
the industry, due to a large number of manufacturers, coupled
with low entry barriers, leading to stiff competition that
pressurises pricing and margins.
Going forward, the profitability margins of the company will
continue to remain vulnerable to the movement in raw material
prices. The company's ability to service its debt and interest
obligations in a timely manner, scale up its operations, improve
its profitability and effectively manage its working capital
would be some of the key rating sensitivities, especially in the
light of the high debt repayment obligations in the near term.
Key rating drivers
Credit strengths
* Experience of key promoters in manufacturing of woven sacks:
SWSPL was incorporated in 2014 and the promoters have an
extensive experience in manufacturing of woven sacks.
* Fiscal benefits in terms of interest subsidy and Government
capital subsidy for units engaged in woven sacks industry: The
company is eligible to avail of interest subsidy of 6% on term
loan of plant and machinery and 15% capital subsidy under the
Technology Upgradation Fund scheme of the Central Government.
Credit weaknesses
* Limited track record of firm's operations: The company started
its operations from June 2015 and, therefore, there is limited
track record of the firm's operations.
* Weak financial profile characterised by net losses, weak debt
coverage indicators and a stretched capital structure: The
financial profile of the company remains weak as is evident from
its net losses of INR0.51 crore, weak debt coverage indicators
with DSCR of 0.70 times and stretched capital structure as is
evident from a high gearing of 3.60 times in FY2017.
* Intense competition and fragmented nature of industry: The
plastic poly woven sack industry remains highly fragmented with
many players operating predominantly in the small and medium
scale sector leading to intense competition and pricing pressure.
In the FIBC segment, the company faces competition from
established players in the export market as well as from cheaper
Chinese exporters.
Silk Woven Sacks Pvt. Ltd was established in 2014. Its factory is
located at Rajkot, Gujarat. SWSPL is promoted by Mr. Darshan
Jivani and three other directors and it manufactures
polypropylene (PP) woven fabric. The company is equipped with 50
looms with an annual installed capacity of 2500 MT.
SKI HIMALAYAS: Ind-Ra Affirms 'BB+' Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Ski Himalayas
Ropeway Private Limited (SHRPL) Long-Term Issuer Rating at 'IND
BB+'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR71.45 mil. (reduced from INR101 mil.) Term loan issued on
January 2019 affirmed with IND BB+/Stable rating;
-- INR1.5 mil. Fund-based working capital limit assigned with
IND BB+/Stable/IND A4+ rating; and
-- INR5.6 mil. Non-fund-based working capital limits assigned
with IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects the company's continued small scale of
operations and moderate credit metrics. As per FY17 provisional
financials, revenue increased to INR102.57 million (FY16:
INR94.55 million) on account of rise in number of tourists.
EBITDA interest coverage (operating EBITDA/gross interest
expense) improved to 3.61x in FY17P (FY16: 3.05x) and net
financial leverage (adjusted net debt/operating EBITDA) of 1.63x
(2.41x) due to an improvement in EBITDA and a reduction in debt.
SHRPL had unutilised working capital limits.
The ratings remain supported by SHRPL's strong operating EBITDA
margin of 74.10% in FY17 (FY16: 68.25%) and extensive experience
of promoters' in the industry.
RATING SENSITIVITIES
Positive: A yoy growth in the top line, while sustaining the
operating margins will be positive for the ratings.
Negative: Any decline in the operating profitability leading to
deterioration in the credit metrics and/or any debt-funded capex
leading to deterioration in the liquidity profile will lead to a
negative rating action.
COMPANY PROFILE
SHRPL undertakes tourism ropeway projects and installs aerial
passenger ropeways on a build and operate basis. The company runs
ropeway and passenger transportation systems which have been
commissioned at Solang, District Kullu, Himachal Pradesh on the
south western ridge of the Phatru mountains, along with famous
Solang ski slopes.
SONEX TV: CRISIL Reaffirms B+ Rating on INR11MM Cash Loan
---------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of Sonex TV Appliances Private
Limited (STAPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL A4 (Reaffirmed)
Cash Credit 11 CRISIL B+/Stable (Reaffirmed)
Letter of Credit 3.5 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 2.5 CRISIL B+/Stable (Reaffirmed)
The ratings reflect STAPL's below average financial risk profile
and modest scale of operations in competitive consumer
electronics product industry. These rating weaknesses are
partially offset by the promoter's extensive experience in
consumer electronic distributorship business.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Networth has been modest
at INR3.13 crore as on March 31, 2017, due to low accretion to
reserve and absence of any equity infusion. The debt protection
indicators continue to remain weak with interest coverage of
about 1.08 and NCATD of 0.01 times during FY17. The TOL/TNW ratio
also deteriorated to 6.58 times as on March 31, 2017 compared to
previous year.
* Modest scale of operations and intense competition: Small scale
of operations, with operating income of INR79.7 crore in fiscal
2017, amid intense competition limits pricing power with
suppliers and customers, thereby constraining profitability.
Strength
* Experience of promoters: Benefits from the promoters'
experience of around three decades and healthy relations with
suppliers and customers should continue to support the business.
Outlook: Stable
CRISIL believes STAPL will continue to benefit over the medium
term from the experience of promoters. The outlook may be revised
to 'Positive' if substantial increase in scale of operations and
profitability along with healthy capital structure strengthens
financial risk profile. Conversely, the outlook may be revised to
'Negative' if steep decline in profitability or stretch in
working capital cycle weakens financial risk profile.
Kolkata-based STAPL, established as a partnership firm in 1992,
was reconstituted as a private-limited company in 2000. It
distributes various consumer electronic products in West Bengal.
Mr. Arun Poddar and Mr. Chandra Lal Chowdhury are the promoters.
SOUTH INDIA: CRISIL Assigns B+ Rating to INR5.4MM LT Loan
---------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of South India Warehouse Corporation
(SIWC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 5.4 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 1.6 CRISIL B+/Stable
The rating reflects the firm's below-average financial risk
profile because of small networth, and modest scale of operations
in a highly fragmented industry. These weaknesses are partially
offset by the extensive experience of the partners.
Analytical Approach
Unsecured loans of INR1.8 crore (as of March 2017) from the
partners has been treated as neither debt nor equity as these are
expected to remain in business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: With revenue of INR1.5 crore in
fiscal 2017, scale remains small in the intensely competitive
warehousing industry.
* Below-average financial risk profile: Networth was small at
INR2.59 crore as on March 31, 2017 constraining financial risk
profile. However, unsecured loans of INR1.8 cr from partners
partially supports capital structure.
Strength
* Extensive experience of proprietor: SIWC's proprietor and his
family have been in the agro trading and warehousing business for
around eight decades.
Outlook: Stable
CRISIL believes SIWC will benefit over the medium term from the
extensive experience of its proprietor and advantageous location
of unit. The outlook may be revised to 'Positive' if a
significant and sustained improvement in revenue and
profitability leads to higher accrual, or if significant equity
infusion leads to a better financial risk profile. The outlook
may be revised to 'Negative' if lower-than-expected operating
income or accrual, or any debt-funded capital expenditure further
weakens financial risk profile, particularly liquidity.
Set up in April 2010 in Bijapur, Karnataka, as a partnership
firm, SIWC provides warehousing services for agricultural
commodities, primarily food grains and pulses. Mr. Mahaveer
Poraval oversees the firm's operations.
SRI SIDDIRAMESHWAR: ICRA Reaffirms B Rating on INR45cr Loan
-----------------------------------------------------------
ICRA has reaffirmed the long-term rating at [ICRA]B to the
INR45.00-crore cash credit and INR0.22-crore term loans
facilities of Sri Siddirameshwar Agro Industries Private Limited
(SSAIPL). ICRA has also reaffirmed the ratings of [ICRA]B/A4 to
INR6.78-crore unallocated limits of SSAIPL. The outlook on the
long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 45.00 [ICRA]B (Stable); Reaffirmed
Fund-based-Term
Loan 0.22 [ICRA]B (Stable); Reaffirmed
Unallocated 6.78 [ICRA]B (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The rating reaffirmation factors in SSAIPL's weak financial
profile characterized by high gearing of 8.33 times, and weak
coverage indicators with interest coverage at 1.27 times and
NCA/Debt at 2% for FY2017. The rating also factors in revenue
degrowth of ~30% and high working capital intensity in FY2017.
The ratings are further constrained by low capacity utilization
in FY2017, and highly fragmented and competitive nature of the
rice-milling industry which limit the firm's ability to pass on
the hike in input costs to the customers. ICRA notes that the
performance of the industry depends on the government's minimum
support price (MSP) policy and also the agro-climatic risks which
impact the availability of paddy. ICRA has taken into account the
abolition of FCI (Food Corporation of India) levy system from
October 2015 which resulted in increased availability of rice in
the open market, pushing down realizations. The ratings, however,
take comfort from the long track record of the promoters in the
rice mill business and the strategic location of mill which
results in easy availability of paddy.
Going forward, the ability of the company to efficiently manage
its working capital requirements and increase revenues will
remain the key rating sensitivity from credit perspective.
Key rating drivers
Credit Strengths
* Significant experience of the management: The management has
more than 10 years of experience in the rice milling industry. It
has been involved in milling of raw and boiled rice and selling
under the brand name "KCP Gold" and has an established
relationship with customers.
* Favorable location of the unit: The mill is located in
Nizamabad, Telangana, a major paddy growing region. All the paddy
requirements are met locally through direct purchases from
farmers and from traders in some months.
* Favorable demand prospects for rice: Demand prospects of the
industry are expected to remain good as rice is a staple food
grain and India is the world's second largest producer and
consumer of rice.
Credit Weaknesses
* Revenue de-growth of ~30% in FY2017: The operating income of
the company has decreased from INR114.39 crore to INR79.94 crore
owing to decrease in sales volume of rice and SSAIPL's exit from
the solvent extraction business in FY2017. The capacity
utilization has remained low at 15% during FY2017.
* Weak financial profile: The firm's financial profile is
characterised by high gearing of 8.33 times as on March 31, 2017
and stretched coverage indicators with an interest coverage ratio
of 1.27 times and NCA/total debt ratio of 2% for FY 2017.
* High working capital intensity: The working capital intensity
of the company has been high at 93% in FY2017 owing to high
inventory holdings. The inventory days increased to 254 days as
on March 31, 2017 from 123 days as on March 31, 2016 owing to
high procurement during the end of the year.
* Highly competitive nature of industry: Rice milling industry is
highly competitive with presence of a large number of organised
and unorganised players impacting the margins
* Industry susceptible to agro-climatic risks: The rice-milling
industry is susceptible to agro-climatic risks, which can affect
the availability of the paddy in adverse weather conditions.
Incorporated in the year 2009, Sri Siddirameshwar Agro Industries
Private Limited (SSAIPL) is engaged in trading and milling of
paddy and produces raw rice, steamed rice and boiled rice. The
rice mill is located at Kaloor village of Nizamabad district,
Telangana. The installed production capacity of the rice mill is
20 tons per hour. SSAIPL sells its rice in the retail market
under the brand name 'KCP'. SSAIPL had also previously ventured
into trading, processing and refining of soya and sunflower seeds
which was discontinued in FY2017.
SVG GRANITES: Ind-Ra Affirms 'B' Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed SVG Granites
Limited's (SVGGL) Long-Term Issuer Rating at 'IND B'. The Outlook
is Stable. Instrument-wise rating actions are:
-- INR110 mil. Fund-based working capital limits affirmed with
IND B/Stable rating; and
-- INR32.5 mil. Non-fund-based limits affirmed with IND A4
rating.
KEY RATING DRIVERS
The affirmation reflects SVGGL's continued tight liquidity
profile with instances of overutilisation during the 12 months
ended September 2017, which were however regularised within 15
days.
The ratings remain constrained by the company's small scale of
operations and moderate credit metrics. Revenue was INR287
million in FY17 (FY16: INR299 million), EBITDA interest coverage
(operating EBITDA/gross interest expenses) was 2.0x (2.1x) and
net financial leverage (Ind-Ra-adjusted net debt/operating
EBITDAR) was 4.3x (3.4x). FY17 figures are provisional in nature.
The ratings, however, remain supported by SVGGL's promoters' over
a decade of experience in the granite manufacturing business.
RATING SENSITIVITIES
Positive: An improvement in the liquidity profile would lead to a
positive rating action.
Negative: Deterioration in the liquidity profile would lead to a
negative rating action.
COMPANY PROFILE
SVGGL was incorporated in October 2005 as a private limited
company and was converted into a limited company in 2007. Its
registered office is in Secunderabad, Telangana. The company
processes rough granite blocks to derive granite slabs of various
dimensions and exports the same. The company is headed by Kishan
Agarwal, Kiran Agarwal and Naman Agarwal.
VIBHAV FARMS: CRISIL Assigns 'D' Rating to INR4.57MM Loan
---------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL D' rating to the bank
loan facilities of Vibhav Farms (VF).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital
Term Loan 1.11 CRISIL D
Proposed Long Term
Bank Loan Facility 0.82 CRISIL D
Long Term Loan 4.57 CRISIL D
Open Cash Credit 2.50 CRISIL D
The rating reflects delays by VF in servicing its debt
obligations; the delays have been caused by the firm's weak
liquidity. The rating factors in its modest scale of operations
in the fragmented poultry industry, its working capital intensive
nature of operations and its below-average financial risk profile
marked by high gearing, modest debt protection metrics and small
networth. These rating weaknesses are partially offset by the
extensive experience of VF's promoters in the poultry industry.
Analytical Approach
The firm is estimated to have unsecured loan of INR0.57 crores as
on March, 2017 which has been treated as debt as it is not
subordinated to bank debt, is interest bearing and not certain to
remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Delays in servicing term loan due to weak liquidity: VF is
delaying in servicing of term loans due to its weak liquidity.
The firm has been generating insufficient net cash accruals to
meet its debt obligations.
* Modest scale of operations in a fragmented industry: The firm's
business risk profile is constrained by modest scale of
operations as reflected in is estimated revenues of INR9.7 Crores
in 2016-17 (refers to financial year, April 1 to March 31). The
firm's inability to scale up operations significantly is driven
by the fragmented nature of industry due to low capital intensity
and entry barriers which facilitate entry of the unorganized
sector.
* Vulnerability to risks inherent in poultry industry and intense
competition: The poultry farming industry is driven by regional
demand and supply factors, due to the constraint on
transportation, the product being perishable. Also, the industry
is highly fragmented with large number of unorganised players on
account of low entry barriers due to low capital intensity.
* Working-capital-intensive operations: The operations of the
firm are working capital intensive, reflected in Gross Current
Assets of 125-190 days in the past three years ending March,
2017. The high GCA is on account the high inventory requirements.
The inventory of the firm is estimated at around 200 days as on
March 31, 2017 driven by birds and stock of poultry feeds, etc.
* Below-average financial risk profile: VF has below-average
financial risk profile marked by high gearing of 2.3 times and
modest networth of INR2.3 crores as on March, 2017. The debt
protection metrics are modest with net cash accruals to total
debt (NCATD) and interest coverage ratio of 0.13 times and 2.14
times for 2016-17.
Strength
* Promoter's extensive industry in the poultry industry: VF is
promoted and managed by Mr. Y Pavan Reddy who has more than one
decade of experience in the poultry business. Supported by the
promoters' experience in this industry, the firm has established
healthy relationship with its key customers thereby resulting in
a decent offtake.
Established in 2013 and based in Hyderabad (Telangana), VF is
engaged in the poultry business and produces hatching eggs. The
firm's poultry farms are located in Medak district, Telangana and
promoted and managed by Mr. Y Pavan Kumar Reddy.
VIJAYA KRISHNA: ICRA Moves B Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA has moved the ratings for INR10.50 crore bank facilities of
Vijaya Krishna Agro Food Processing Private Limited (VKAFPPL) to
the 'Issuer Not Cooperating' category. The rating is now denoted
as: "[ICRA]B(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term fund 10.50 [ICRA]B(Stable)ISSUER NOT
Based COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in March, 2016.The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with VKAFPPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No:SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Significant experience of the promoters in fruit processing
industry: The promoters have over fifteen years of experience in
the fruit processing industry leads to established relationship
with major customers.
* Favorable location of the firm: The company is located in major
raw material growing area leads to better availability of raw
materials and reduces freight costs.
Credit weaknesses
* Highly competitive nature of industry: Intense competition in
the fruit pulp industry owing to highly fragmented export market.
* Industry susceptible to agro-climatic risks: The fruit
processing industry is susceptible to agro-climatic risks, which
can affect the availability of the raw material in adverse
weather conditions
Vijaya Krishna Agro Food Processing Private Limited (VKAFPPL) was
incorporated in 2014 and is promoted by Mr. G. Vijay Kumar & his
family members. The company is currently setting up a 7 MTPH
(metric ton per hour) fruit processing plant in Vijaywada, Andhra
Pradesh for processing of mango and guava to manufacture fruit
pulp and their aseptic packaging.
VIJETA PROJECTS: ICRA Lowers Rating on INR194.5cr Loan to 'D'
-------------------------------------------------------------
ICRA has revised the long-term rating assigned to the INR80.0-
crore1 fund-based bank facilities of Vijeta Projects &
Infrastructures Ltd. (VPIL) from [ICRA]BB- to [ICRA]D. ICRA has
also revised the short-term rating for the INR194.5-crore non-
fund based bank facilities of VPIL from [ICRA]A4 to [ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based
Facilities 80.0 [ICRA]D; Revised from
[ICRA]BB-(Stable)
Non-fund Based
Facilities 194.5 [ICRA]D; Revised from
[ICRA]A4
Rationale
The revision of VPIL's ratings takes into account the
irregularities in debt servicing by the company in the past. As
per the banker's feedback received by ICRA, there was a
devolvement of VPIL's bank guarantee in the recent past and the
amount had remained unpaid for more than 30 days.
Key rating drivers
Credit weaknesses
* Irregularities in debt servicing in the past: There has been
devolvement of non-fund based facility and the amount was paid
after 30 days.
* Weak liquidity position: The company's liquidity position has
been constrained by high working-capital intensity on account of
high receivables and work-in-progress inventory.
* Delays in ongoing projects: There have been delays in the
execution of ongoing projects, primarily due to challenges in
land acquisition, political issues, and Naxalism-related issues
in Bihar and Jharkhand.
Credit strengths
* Established track record of the company and extensive
experience of the promoters in the construction sector: The
company has over two-decades of experience in executing
construction projects across segments like civil construction,
irrigation, roads and highways, railways etc.
* Sizeable order book position: The company has orders worth over
INR1,200 crore in hand. However, some projects are slow
moving/stuck and provide limited revenue visibility for the short
term.
Promoted in 1990 by the Singh family, VPIL is a closely-held
public limited company involved in executing infrastructure
projects across sectors like irrigation, roadways, railway
infrastructure, mining, etc. The company primarily works for
various government and semi-government bodies (Central Public
Works Department, Jharkhand State Mineral Development
Corporation, Department of Water Resources, National Buildings
Construction Corporation etc.) in Bihar and Jharkhand. In
addition, VPIL also works for reputed private sector clients like
L&T, Tata Power Ltd. etc.
WINMAX CERAMIC: ICRA Reaffirms 'B' Rating on INR6cr Cash Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B to the
INR11.00-crore fund-based facilities of Winmax Ceramic Private
Limited. ICRA has also reaffirmed the short-term rating at
[ICRA]A4 to the INR1.50-crore bank guarantee of WCPL. The outlook
on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash
Credit 6.00 [ICRA]B (Stable); Reaffirmed
Fund-based Term
Loan 5.00 [ICRA]B (Stable); Reaffirmed
Non-fund Based
Bank Guarantee 1.50 [ICRA]A4; Reaffirmed
Rationale
The reaffirmation of ratings factor in the company's modest scale
of operations and its average financial risk profile
characterised by an aggressive capital structure and weak
coverage indicators. Furthermore, the ratings factor in the
highly fragmented nature of the tiles industry, which result in
intense competition. The ratings are also constrained by the
cyclical nature of the real estate industry, which is the main
end-user sector; and the exposure of WCPL's profitability to the
volatility in raw material and gas prices.
The ratings, however, continue to favourably factor in the
experience of the promoters in the ceramic industry and its
proximity to raw material procurement, by virtue of its presence
in Morbi (Gujarat).
Key rating drivers
Credit strengths
* Extensive experience of the management in the ceramic industry:
The promoters have an extensive experience, of close to a decade,
vide their association with other companies in the ceramic
industry.
* Locational advantage: The manufacturing facility of the company
is located in the ceramic tiles manufacturing hub of Morbi
(Gujarat), which provides easy access to quality raw materials
like body clay, feldspar and glazed frit in Gujarat and
Rajasthan.
Credit weaknesses
* Average financial risk profile: The financial profile of the
company remains average as reflected by its modest scale of
operations, high gearing, weak coverage indicators and the high
working capital intensive operations. It reported an operating
income of INR13.59 crore and a net loss of INR0.50 crore in
FY2016. The higher absolute profits in FY2017, owing to 24%
growth in the operating income to INR15.39 crore, led to a net
profit of INR0.16 crore. The capital structure continued to
remain leveraged with a gearing of 2.39 times as on March 31,
2017 (compared to 2.85 times on March 31, 2016). The coverage
indicators remained weak with the interest coverage ratio of 2.44
times and the total debt/OPBDITA of 4.66 times in FY2017. The
working capital intensity remains high with a NWC/OI of 50% in
FY2017, owing to stretched receivables.
* Margins subject to pressure from intense competition and
cyclicality of the real estate industry: The tile manufacturing
industry remains highly fragmented with competition from the
organised as well as unorganised segments, apart from imports.
The large number of players in the unorganised segment, most of
whom are located in Gujarat and operate with low cost structures,
create a pressure on the prices. Further, the real estate
industry accounts for over 70% of total ceramic tile consumption,
and accordingly, the demand for tiles remains exposed to the
cyclicality in the sector. Coupled with the rising pressure of
input costs (fuel prices), this adversely impact the
profitability. More so in case of WCPL as its lack of presence in
higher value added products leads to limited profitability
margins.
* Vulnerability of profitability to fluctuations in raw material,
and power and fuel costs: Despite the locational advantage for
raw material procurement, the company has limited control over
the prices of other key inputs such as natural gas/coal, and
thus, its margins remain exposed to adverse movement in gas/coal
prices.
Incorporated in June, 2013, Winmax Ceramic Private Limited (WCPL)
commenced its operations for manufacturing ceramic wall tiles
from July, 2013. In June, 2015 it changed its product profile to
manufacture vitrified parking tiles owing to intense competition
in the ceramic wall tiles segment and better profitability in the
vitrified parking tiles segment. The plant, at present, has an
installed capacity of manufacturing ~8,000 boxes of vitrified
parking tiles per day.
In FY2017, the company reported a net profit of INR0.16 crore on
an operating income of INR15.39 crore, as compared to a net loss
of INR0.50 crore on an operating income of INR13.64 crore in the
previous year.
* INDIA: KGS Organises Panel Discussion on Insolvency Code
----------------------------------------------------------
The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy
law of India, which seeks to consolidate the existing framework
by creating a single law for insolvency and bankruptcy. The
Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha
in December 2015. It was passed by Lok Sabha on May 5, 2016.
The code is established to resolve the various issues pertaining
to Stressed Assets, Rate of recovery, Cost and Time taken in the
whole procedure, ease of doing business index, etc.
However, even the current code faces few challenges such as:
* Expiration of Tenure of IRP Professional
* No Timeline for Disposal of Appeals
* Absence of Information Utilities
* Shortage of NCLT benches
* Shortage of Skilled Professionals
* Lack of Consensus among Lenders
* High Cost of Bankruptcy Resolution Process
* Non Co-operative Management
* Dilution of rights of Secured Creditors
To elaborate more on such issues KGS organised a panel discussion
on 'Insolvency & Bankruptcy Code'.
Eminent speakers at the panel discussion included:
Mr. K G Somani, Managing Partner, KG Somani & Co. said, "The law
is curated in a similar fashion as for other progressive
countries like U.S., Singapore and others. Initial issues may
take some time to settle, central government seems to ensure that
infrastructure is provided which is the major concern today.
Insolvency & Bankruptcy Code seems to be a game changer for
India; we should be among the top nations of the world as far as
recovery is concerned."
According to Ms. Tripti Shinghal, CEO, KGS Advisors LLP
(Moderator) said that the biggest takeaway from the act is that
the unsecured creditors have not only been noticed but they have
also been given preference over government dues, which is
happening for the first time.
After the costs of insolvency resolution (including any interim
finance), secured debt together with workmen dues for the
preceding 24 months rank highest in priority. Central and State
Government dues stand below the claims of secured creditors,
workmen dues, employee dues and other unsecured financial
creditors.
Mr. Gagan Ghai, CEO Crest Capital is of the opinion that the role
of valuer is very critical next to IRP or IP and it has to be
dealt with utmost professional integrity as well as open eyes and
ears. Best industry practices need to be followed amidst
limitation of information and management team being available to
valuer. Practical defendable values need to be evaluated to
assist in preparing a pragmatic resolution plan and very small
unsaid details on visit need to be noted to frame such valuations
as many times as possible because even small clues may lead to
big outcomes for the company by being little investigative at the
time of visit.
Mr. M L Rajora, Partner, ASA Legal said, "First 180 days are
spent in revival of the company and upon failure the insolvency
process will start. The name of code suggests that the code is
for insolvency and bankruptcy ignoring revival process involved
in it. As such to allay the fear and apprehension the name should
be changed to 'The Rehabilitation, Insolvency & Bankruptcy Code'.
NCLT New Delhi dismissed an application filled under section 10
by a Borrower M/s Unigreen Global with a penalty of rupees ten
lacs to discourage the parties from abusing the process of IBC
2016."
Mr. Rao, Financial Advisor, SCOPE mentioned that the code brings
in more visibility & transparency which creates better investment
environment and should further reflect on improvement of ease of
doing business index of India.
Whereas Mr. Vijender Sharma, Member Central Council ICMA opined
that capacity building of IPs, bankers, corporate and NCLT for
successful implementation of IB code is required to meet the
clear vision of Govt. of India for ease of doing business in
India.
According to Mr. R P Tak, Ex - CMD CCI - IBC is a good initiative
by the government and was the need of the hour.
Around 11 acts have been merged and 2 acts have been repealed
since this act came into force, therefore it has taken care of
all the stakeholders including unsecured creditors, and the
aspects that was missing until now. Of course certain drawbacks
are noticed like misuse of litigation, leading to delay in time
bound resolution of 270 days and ultimately forcing the company
into liquidation, which should not be the objective.
Rehabilitation process cannot be sorted out or resolved without
the cooperation or active participation by the promoters. The
role of committee of creditors needs to be more elaborated upon,
because it is converged from board meetings to Committee of
Creditors meetings as the Insolvency Resolution Professional was
appointed as per the Code.
Mr. Achal Gupta, Ex-CMD, IFCI Ltd. said, "Given the stringent
timelines in IBC 2016, we can expect faster resolution of
stressed assets and if resolution is not possible after due
process, the liquidation will also be effected quickly. However
it will be largely dependent on proper and effective
implementation of the code."
Mr. Girish Gupta, Ex- Financial Executive - Cairn Energy was of
the opinion that the IBC is a time bound plan. The endeavour of
the corporate debtor/promoter should quickly come up with a
resolution plan for the growing concern. The powers of the Board
stand suspended and the code should clearly lay out the do's and
don'ts for all the board members. As the bank and financial
institution are having a serious payment default from the
corporate debtor, the code should allow to place adequate
controls on all related party payments and if required, hold all
promoters/KMP remuneration till such time a resolution plan is
approved. Alternatively a limited can be placed on the
remuneration of KMPs for the services being offered by them
whilst the Company operates as a growing concern and preparing a
resolution plan.
Whereas Mr. Pradip Bhandhari, Founder - Jan Ki Baat commented
that the Bankruptcy code is a forward looking step to improve
ease of doing business in India. However care and caution is
needed while implementing its provisions. Creditors and debtors
need to be more educated to avoid multiple interpretations of the
various clauses. Infrastructure of NCLT needs to be upgraded to
dispose the insolvency petition timely. The rehabilitative nature
of the code is an important aspect that should not be overlooked.
The discussion is a part of a newly curated webcast focussed on
technical topics. It will be launched on KGS's social media
available for anyone to watch - Students, Professionals, Business
persons etc. KGS shall ensure dedicated, transparent and ethical
discussion for all its stakeholders ensuring value creation.
About KGS
K G Somani & Co (KGS) is a 3rd generation Chartered Accountant
firm, practicing in India for over 5 decades. Our Managing
Partner, Mr. K G Somani is the Ex-President of Institute of
Chartered Accountants of India and has represented India on the
Council of International Federation of Accountants. KGS is
registered with PCAOB and World Bank, RBI and has association
with various large Financial Institutions, Banks, Power Companies
and Corporations, based in and outside India across various
platforms. KGS is a member firm with TGS Global; and have our
counterpart across countries.
KGS has a distinctive platform providing advisory services to
SMEs/Start-ups in India as well as foreign companies looking to
establish presence in India. The range of services are tailor-
made for the unique requirements within the wide array of
Accounting, Auditing, Taxation, Legal, Business advisory, Market
research, Human resource management and B2B Handling services
etc.
====================
N E W Z E A L A N D
====================
CAVALIER CORP: Expects Earnings to Improve After Restructuring
--------------------------------------------------------------
Tina Morrison at BusinessDesk reports that Cavalier Corp, the
struggling New Zealand carpet maker, expects earnings to improve
this financial year and next as it reaps the benefits from
restructuring its manufacturing operations, a lower wool price
and reducing debt.
The Auckland-based company posted a loss of NZ$2.1 million in the
2017 financial year from a profit of NZ$3.1 million in 2016,
weighed down by a 40 percent jump in restructuring costs to
NZ$6.3 million as it shut down factories and laid off staff to
consolidate operations, BusinessDesk discloses. Stripping out
one-time items such as the restructuring costs, Cavalier's
normalised earnings deteriorated to a loss of NZ$1.9 million from
positive earnings of NZ$6.3 million a year earlier, the report
says.
"It has been a tough year for Cavalier," BusinessDesk quotes
chief executive Paul Alston as saying in his address to
shareholders at the annual meeting in Auckland on Oct. 31. "While
the full-year result was well down on expectations, the business
did achieve much in FY 2017 and it is my sincere belief that we
are now on a strong course to recovery, based on the work we have
done and also the opportunities and market conditions before us."
Cavalier's earnings were hurt by the restructuring of its
operations in the past year, and while the process of getting its
plants up to capacity was challenging, the company is now
producing the required volumes and efficiency is improving,
Mr. Alston said, BusinessDesk relays. The business was also hurt
by the largest single drop in wool price in many years, which had
an immediate effect on the company's scouring and wool buying
operations while the benefits to its carpet making operations
wouldn't flow through until the 2018 and 2019 years, the report
states.
"All of these challenges hit us in a perfect storm," BusinessDesk
quotes Mr. Alston as saying. "Now that the cost of the
manufacturing consolidation is behind us we will work solidly to
reduce debt. This will be an outcome of reducing inventory,
having a lower cost of raw materials (especially wool) flowing
through to cash flow and having a lean capital spend year. This
will ultimately enable us to expand and grow the business," he
said, noting that new products were performing well.
"We see the performance of the business steadily improving in
FY18 with even greater positive impacts being realised in FY19,"
Mr. Alston said.
Still, chair Sarah Haydon said uncertainty remained about the
company's forecasts and the board doesn't expect to be able to
give meaningful earnings guidance until after the first half
results at the earliest, BusinessDesk relays.
According to BusinessDesk, the company's directors recognised in
the 2017 annual accounts that there was "material uncertainty"
around the 2018 outcome.
"The uncertainty is around our ability to forecast the future
with accuracy, not our ability to continue in business,"
Ms. Haydon said, noting assumptions had to be made around
economic and market conditions, manufacturing performance, wool
prices and sales and margins.
"Four months into the year we are making progress," BusinessDesk
quotes Ms. Haydon as saying. "A level of uncertainty in our
forecast of sales and margin will however remain until we can
demonstrate a track record of profitable outcomes.
"We certainly expect a better normalised earnings outcome than in
FY17," she said. "As soon as we are in a position to confirm an
ongoing improvement in underlying performance with our debt
firmly under control, we will look to resume dividend payments."
BusinessDesk notes that Cavalier is in the process of refreshing
its strategic plan and said it would be assessing all its non-
core carpet assets and activities to ensure it has the optimum
operating structure.
Alston noted that the political climate in New Zealand has
changed considerably in the last few weeks with a new Labour-led
government.
"We welcome a new focus on NZ jobs and retaining NZ expertise as
well as the focus that 'Made in NZ' by New Zealanders is
important," Mr. Alston, as cited by BusinessDesk, said. Alston
said he also welcomed the opportunity to put "quality New
Zealand-made carpets" in all government controlled entities,
referencing a policy campaign by Labour's coalition partner New
Zealand First.
Cavalier shares last traded at 36 cents, having dropped 54% this
year, the report notes.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***