/raid1/www/Hosts/bankrupt/TCRAP_Public/171106.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
Monday, November 6, 2017, Vol. 20, No. 220
Headlines
A U S T R A L I A
BULK CONVERTORS: Second Creditors' Meeting Set for Nov. 10
DESIRED LIFE: First Creditors' Meeting Set for Nov. 10
GATE CIVIL: First Creditors' Meeting Slated for Nov. 13
HOBART STEELFIXERS: Second Creditors' Meeting Set for Nov. 9
NATIONAL DAIRY: Director Admits He Was in Control Before Collapse
ONSITE RENTAL: S&P Alters Outlook to Stable; Affirms B- CCR
SUN GROWTH: First Creditors' Meeting Set for Nov. 15
UNSTUCK BRICK: First Creditors' Meeting Scheduled for Nov. 10
* Australian Auto ABS and RMBS Delinquencies Fall in August 2017
* S&P Raises Ratings on 25 Tranches of Australian RMBS Deals
C H I N A
SUNAC CHINA: Fitch Cuts Senior Unsecured Rating to B+
SUNAC CHINA: Consent Solicitation No Impact on Moody's B2 CFR
I N D I A
AASU EXIM: ICRA Moves B+ Rating to Not Cooperating Category
ABHIJEET MADC: NCLT Admits Alchemist Asset's Insolvency Petition
ASSAM COMPANY: NCLT Orders Insolvency Resolution Process
B. S. AGRICULTURE: ICRA Moves B/A4 Rating to Not Cooperating
B.S. INDUSTRIES: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
B. V. COTSPIN: ICRA Lowers Rating on INR21.15cr LT Loan to D
BG TRANSPORT: Ind-Ra Migrates BB- Rating to Non-Cooperating
EKTA DAIRY: CRISIL Cuts Rating on INR9MM Cash Loan to 'B+'
GIE JEWELS: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
GOEL BUILDERS: CRISIL Assigns 'B+' Rating to INR30MM LT Loan
HATIMI STEELS: CRISIL Reaffirms B+ Rating on INR36.5MM Cash Loan
JAIPAN INDUSTRIES: Ind-Ra Migrates BB- Rating to Non-Cooperating
KEROS STONE: CRISIL Assigns B+ Rating to INR6.09MM LT Loan
MANOJ KUMAR: CRISIL Assigns 'B' Rating to INR5MM Whse Receipts
MEL FLOORINGS: CRISIL Assigns 'B' Rating to INR5MM Term Loan
MIL STEEL: ICRA Lowers Rating on INR10.55cr Term Loan to 'D'
MINAKSHI COTEX: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
NILACHAL SPINNING: CRISIL Assigns B+ Rating to INR4MM Cash Loan
OPGS POWER: ICRA Lowers Rating on INR1497.40cr Loan to 'D'
PARWANI BUILDERS: CRISIL Assigns B+ Rating to INR6MM Cash Loan
PD CORPORATION: ICRA Moves D Rating to Not Cooperating Category
PERTINENT INFRA: ICRA Reaffirms B+ Rating on INR11.90cr LT Loan
PIANO PRESITEL: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
PRATIBHA INDUSTRIES: CRISIL Reaffirms D Rating on INR108.83M Loan
RKC INFRABUILT: ICRA Lowers Rating on INR36.3cr Term Loan to D
ROOP RAM: CRISIL Raises Rating on INR14MM LT Loan From 'C'
ROYAL TYRES: ICRA Lowers Rating on INR6.21cr Loan to 'D'
S&J GRANULATE: ICRA Cuts Rating on INR5.0cr Loan to 'D'
SAHIB PESTICIDES: CRISIL Reaffirms B+ Rating on INR5MM Loan
SANGAT PRINTERS: Ind-Ra Moves BB- Rating to Non-Cooperating
SHILPI CONSTRUCTION-GIRIDIH: CRISIL Rates INR5MM Cash Loan at B+
SHIVA DALL: CRISIL Reaffirms B+ Rating on INR12MM Cash Loan
SHRID METAL: CRISIL Reaffirms B- Rating on INR4.50MM Cash Loan
SIGMA CHEMTRADE: Ind-Ra Moves BB+ Rating to Non-Cooperating
SONAPUR HERBAL: ICRA Moves D Rating to Not Cooperating Category
SPUNWEB NONWOVEN: ICRA Assigns B+ Rating to INR8.04cr Term Loan
SRI K VENKAT: Ind-Ra Moves BB- Issuer Rating to Non-Cooperating
SRI VENKATA: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
STAARLIGHT DESIGNS: CRISIL Reaffirms B+ Rating on INR3MM Loan
TRIPATHI HOSPITAL: CRISIL Reaffirms B+ Rating on INR20MM Loan
WEST BENGAL INFRASTRUCTURE: Ind-Ra Withdraws WD Bond Rating
I N D O N E S I A
BANK BRISYARIAH: Fitch Publishes BB+ LT IDR; Outlook Stable
J A P A N
TAKATA CORP: $741M in MDL Settlements Win Final US Court Approval
N E W Z E A L A N D
HANOVER FINANCE: No Sign of Hotchin Lawsuit After Court Ruling
S I N G A P O R E
SWIBER HOLDINGS: Pins Business Revival Hopes on FLNG Sector
S O U T H K O R E A
SK E&S: Moody's Revises Outlook to Stable; Affirms Ba1 Rating
- - - - -
=================
A U S T R A L I A
=================
BULK CONVERTORS: Second Creditors' Meeting Set for Nov. 10
----------------------------------------------------------
A second meeting of creditors in the proceedings of Bulk
Convertors Australia Pty Ltd has been set for Nov. 10, 2017, at
10:00 a.m., at Level 7, 114 William Street, in Melbourne,
Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 9, 2017, at 4:00 p.m.
Andrew Schwarz and Jon Howarth of AS Advisory were appointed as
administrators of Bulk Convertors on Oct. 9, 2017.
DESIRED LIFE: First Creditors' Meeting Set for Nov. 10
------------------------------------------------------
A first meeting of the creditors in the proceedings of Desired
Life Pty Ltd will be held at the Conference Room, Plaza Level,
BGC Centre, 28 The Esplanade, in Perth, WA, on Nov. 10, 2017, at
10:00 a.m.
Dino Travaglini and Jeremy Joseph Nipps of Cor Cordis were
appointed as administrators of Desired Life on Oct. 31, 2017.
GATE CIVIL: First Creditors' Meeting Slated for Nov. 13
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Gate Civil
Pty Ltd will be held at the offices of HLB Mann Judd (Insolvency
WA), Level 3, 35 Outram Street, in West Perth, West Australia, on
Nov. 13, 2017, at 10:00 a.m.
Kimberley Stuart Wallman at HLB Mann Jud was appointed as
administrator of Gate Civil on Nov. 2, 2017.
HOBART STEELFIXERS: Second Creditors' Meeting Set for Nov. 9
------------------------------------------------------------
A second meeting of creditors in the proceedings of Hobart
Steelfixers Pty. Ltd. has been set for Nov. 9, 2017, at
3:00 p.m., at the offices of Barry Hamilton & Associates
Level 1, 63 Salamanca Place, in Hobart, Tasmania.
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. 8, 2017, at 4:00 p.m.
Barry Kenneth Hamilton of Barry Hamilton was appointed as
administrator of Hobart Steelfixers on Oct. 5, 2017.
NATIONAL DAIRY: Director Admits He Was in Control Before Collapse
-----------------------------------------------------------------
ABC News reports that the former director of a failed Victorian
dairy business has admitted he controlled the company prior to
its collapse, despite earlier claiming he was only the company's
seed funder and adviser.
Antonio "Tony" Esposito made the admission under questioning by a
barrister acting for the liquidators of his former company,
National Dairy Products (NDP), according to ABC News.
ABC News relates that a series of internal company emails were
presented to Mr. Esposito in court that showed he was actively
involved in setting the price the company would pay suppliers for
milk, as well as advising what order creditors should be paid
when the company began to experience cash-flow problems.
NDP was placed into administration last year owing Victorian
dairy farmers and other creditors more than AUD8 million.
Last month, the court heard that money transferred from company
accounts in the months prior to its collapse was allegedly used
by Mr. Esposito and his fiancee for cosmetic surgery and a
AUD50,000 holiday at Crown Towers, the report says.
According to ABC News, a number of the farmers owed money by NDP
were in the Supreme Court on Nov. 2 to hear that company funds
were also used to pay for Mr. Esposito's 50th birthday
celebrations.
Mr. Esposito told the court the transfers from the NDP bank
account were for loan repayments owed to him, the report relates.
National Dairy Products was placed into liquidation in November
last year by Violetta Esposito, who replaced her fiance as
director of the company just prior to him being temporarily
declared bankrupt, the report recalls.
ABC News notes that the decision to fold the company came after a
number of the company's key milk suppliers decided to walk away
from their agreement with the company because they had not been
paid.
On Nov. 2, Mr. Esposito denied he had ignored three emails from
the company's CEO, Darryl Cardona, warning him the company was
likely to be trading while insolvent, the report discloses.
ABC News relates that Mr. Esposito told the court he viewed
Mr. Cardona's warnings as only his opinion, and said he was
unable to recall what he did in response to the warnings sent to
him by Mr. Cardona in late 2015 and early 2016.
The report says Barrister Carl Moller, acting for liquidators
Glen Kanevsky and Salvatore Algeri, asked Mr. Esposito whether
there were any conditions attached to the AUD5 million loan his
company AE Brighton Holdings had provided to National Dairy
Products as seed funding.
According to the report, Mr. Esposito said the only condition was
that it was to be an interest-free loan. However, Mr Moller then
presented Mr Esposito with a minute from an April 2016 company
meeting, which stated that interest was to be paid at "a
commercial rate".
The report relates that Mr. Esposito said he had forgotten about
the interest and accepted that he was mistaken.
He also accepted he had been paid as a consultant to the company,
despite earlier saying that the role was unpaid.
The liquidators of the company now have six months to decide
whether or not to examine Mr. Esposito again, ABC News adds.
About National Dairy
National Dairy Products (NDP) is a milk brokering company based
in Victoria, Australia.
Salvatore Algeri and Glen Kanevsky of Deloitte were appointed as
administrators of National Dairy on Nov. 17, 2016.
As reported in the Troubled Company Reporter-Asia Pacific on
Feb. 24, 2017, The Weekly Times said that unsecured creditors of
National Dairy Products have voted to place the milk supply
company into liquidation. Messrs. Kanevsky and Algeri were
appointed liquidators of the milk company.
ONSITE RENTAL: S&P Alters Outlook to Stable; Affirms B- CCR
-----------------------------------------------------------
S&P Global Ratings said that it had revised its rating outlook to
stable from negative on holding company Onsite Rental Group Pty
Ltd. (Onsite Rental), and affirmed the 'B-' corporate credit
rating on Onsite Rental. S&P also withdrew the 'B-' issue rating
on the term loan issued by Onsite Rental.
S&P said, "At the same time, we assigned our 'B-' corporate
credit rating on Onsite Rental Group Operations Pty Ltd. (Onsite
Rental Operations). Onsite Rental Operations is the operating
company of Onsite Rental group, an Australian equipment services
provider. The rating outlook is stable.
"We also assigned a 'B-' issue rating on Onsite Rental
Operations' new, senior secured, term loan B due in 2022. The
recovery rating on the term loan is '3', indicating our
expectation for meaningful recovery of around 60% in the event of
a payment default.
"This rating action reflects our view this transaction has
improved Onsite Rental Operations' financial flexibility given
that it has removed the company's previous debt covenant
pressures. The company is now able to invest in new equipment to
capitalize on improving operating conditions in the equipment
hire market. We expect Onsite Rental Operations' EBITDA to grow
modestly in 2018 on the back of improving trading conditions and
benefits from its acquisition of the equipment hire division of
Global Construction Services Ltd. (GCS Hire)."
The recent rebound in commodity prices and increasing
infrastructure projects on the east coast of Australia have
raised prospects for equipment rental demand. In addition, it has
lifted the revenue outlook for capital goods companies such as
Onsite Rental Operations over the next 12 to 24 months.
However, competition is still intense in the fragmented industry
and some surplus equipment remains, despite some tightening over
the past few months. S&P therefore believes equipment rental
companies have restricted ability to significantly increase
pricing and EBITDA margins over the next 12 months. However,
companies' equipment utilization rates should improve, supporting
modest revenue and earnings growth.
Onsite Rental Operations' exposure to the infrastructure sector
has somewhat shielded the company from reducing demand for work
in the resources sector. That said, the scale of some greenfield
resources projects (such as those for liquefied natural gas
[LNG]) is so large that it's not easy to find sizable projects in
other sectors to replace revenue lost from the completion of LNG
projects. Therefore, S&P expects the recovery in Onsite Rental
Operations' earnings to be gradual. Onsite Rental Operations is
the second-largest business-to-business player in Australia in
the general equipment rental category, behind Coates Hire. It has
a relatively diversified end-market exposure to LNG, resources
(in particular iron ore); nonresidential and residential
construction and maintenance; and other sectors. Despite Onsite
Rental Operations' position in Australia, S&P considers the
company to be among the smaller equipment rental companies that
it rates globally.
S&P said, "We view this recapitalization as opportunistic, and
not as a distressed exchange. We believe in the absence of this
transaction the company would not have faced a conventional
default over the next 12 to 24 months. This recapitalization has
occurred well before the maturity (2021) of the previous term
loan B (TLB)."
The new capital structure in Onsite Rental Operations consists of
a first-lien senior secured term loan A maturing on March 30,
2022 and first-lien senior secured debtors' receivables facility;
both of which rank ahead of a US$114.5 million (around A$148
million) senior secured TLB maturing on Sept. 30, 2022. After the
capital restructure, the group is now 92.5% held by the former
TLB and revolving credit facility (RCF) creditors and 7.5% held
by existing shareholders including Next Capital, an Australian
private equity firm.
Onsite Rental Operations' holding company has a loan (payment in
kind [PIK]), of which 92.5% held by the former TLB and RCF
creditors and 7.5% held by existing shareholders including Next
Capital. However, this loan is not supported or cross guaranteed
by Onsite Rental Operations. On a consolidated basis and
including the holding company loan as debt, the group's
(including both the operating and holding company) FFO to debt
would be 8%-9% in 2018, and debt to EBITDA would be about 6.4x in
2018, before improving thereafter.
The stable outlook reflects Onsite Rental Operations new capital
structure, which removes covenant pressure and improves its
financial flexibility. S&P expects the company to grow its
contract book and earnings on the back of improved operating
conditions and recent GCS Hire acquisition. S&P forecasts Onsite
Rental Operations' debt to EBITDA will be low 3.0x. In addition,
S&P expects the company to maintain adequate liquidity.
The consolidated group's debt to EBITDA will be about 6.5x if S&P
includes the holding company loan.
A downgrade could occur if Onsite Rental Operations' liquidity
position weakens because of sustained negative free operating
cash flows, such that S&P considers the company's capital
structure to be unsustainable. This scenario could occur amid a
reversal of improved industry trading conditions in the equipment
rental industry, which could stem from weaker demand from the
resources sector without an offsetting impact from increasing
work from other sectors such as infrastructure.
The rating could also be under pressure if covenant pressure re-
emerges because of decreasing fleet value.
An upgrade is less likely due to Onsite Rental Operations'
relatively small scale. However, S&P could consider an upgrade if
it materially improves its scale while maintaining more-
conservative financial management, such as simplifying its
ownership, governance, and capital structure.
SUN GROWTH: First Creditors' Meeting Set for Nov. 15
----------------------------------------------------
A first meeting of the creditors in the proceedings of Sun Growth
Pty Ltd will be held at the offices of PKF Melbourne, Level 13,
440 Collins Street, in Melbourne, on Nov. 15, 2017, at 11:00 a.m.
Petr Vrsecky and Glenn J. Franklin of PKF Melbourne were
appointed as administrators of Sun Growth on Nov. 2, 2017.
UNSTUCK BRICK: First Creditors' Meeting Scheduled for Nov. 10
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of Unstuck
Brick Cleaning Pty Ltd will be held at the offices of Hall
Chadwick Chartered Accountants, Level 40, 2 Park Street, in
Sydney, New South Wales, on Nov. 10, 2017, at 10:00 a.m.
David Allan Ingram and Richard Albarran of Hall Chadwick
Chartered Accountants were appointed as administrators of Unstuck
Brick on Nov. 1, 2017.
* Australian Auto ABS and RMBS Delinquencies Fall in August 2017
----------------------------------------------------------------
Moody's Investors Service says that delinquencies for Australian
auto loan asset-backed securities (ABS) and prime residential
mortgage-backed securities (RMBS) fell in August 2017 from
July 2017.
Specifically, 30+ day delinquencies for Australian auto loan ABS
transactions fell to 1.60% in August 2017 from 1.64% in July
2017, but rose from 1.42% in August 2016.
Delinquencies for prime RMBS transactions fell to 1.55% in August
2017 from 1.60% in July 2017, but rose from 1.49% in August 2016.
"Looking ahead, Moody's expect that delinquencies for Australian
auto loan ABS and prime RMBS will rise for the remainder of
2017," says Alena Chen, a Moody's Vice President and Senior
Analyst.
"Weaker economic conditions in states reliant on the mining
industry, rising underemployment, weak wage growth and less
favorable housing market conditions will drive delinquencies
higher," adds Chen.
Chen was speaking on the release of the latest edition of Moody's
monthly Global Structured Finance Collateral Performance Review
report.
Moody's points out that housing affordability for a new borrower
- as measured by the proportion of household income needed to
meet mortgage repayments - deteriorated on average across
Australia over the year to September 2017.
With housing affordability deteriorating on average, housing
market imbalances and the large buildup of household debt
continue to pose risks to the performance of Australian RMBS.
High debt levels make households more vulnerable to economic or
housing market shocks, and make meeting mortgage repayments more
difficult, increasing the risk of delinquencies and defaults.
The housing market in Sydney has shown signs of cooling since the
introduction of regulatory measures to curb the origination of
interest-only loans and housing investment loans.
However, with prices in other cities such as Melbourne continuing
to increase, the long term efficacy of regulatory measures in
moderating price appreciation remains to be seen.
Moody's report on housing affordability is titled "Deteriorating
housing affordability continues to pose risks despite improvement
in Sydney". The report can be accessed by subscribers through the
link provided at the end of this press release.
ABOUT MOODY'S GLOBAL STRUCTURED FINANCE COLLATERAL PERFORMANCE
REVIEW REPORT
Moody's Global Structured Finance Collateral Performance Review
Report is updated monthly and covers the collateral performance
of various structured finance sectors located globally.
The report features typical aggregate performance metrics, such
as delinquencies and losses, as well as sector-specific metrics
that include residential and commercial property prices, loans in
special servicing, refinancing profiles, average weighted-average
rating factor levels, senior over-collateralization levels,
payment rates, and excess spread. The underlying data is also
included. The metrics are accompanied by sector commentary and
outlooks, and projected losses by vintage where applicable.
The Australian data focus on:
- Australian Auto ABS
- Australian Prime RMBS
- Australian Home Prices
* S&P Raises Ratings on 25 Tranches of Australian RMBS Deals
------------------------------------------------------------
S&P Global Ratings raised its ratings on 25 tranches of
Australian residential mortgage-backed securitization (RMBS)
transactions sponsored by five Australian nonbank originators. At
the same time, S&P affirmed its ratings on 55 tranches.
The rating actions follow S&P's periodic review of 19
securitization transactions sponsored by five Australian nonbank
originators. S&P has excluded transactions in this sponsor group
that are more likely to call in the near term, warehouse-style
facilities, and those that have recently undergone a review.
Coinciding with this review is the release of "Australian RMBS
Sponsored By Nonbanks: Stable Performance Supports Rating
Stability," published Nov. 3, 2017.
The rating actions reflect:
-- The relatively stable portfolio collateral quality for the
group of transactions, given their weighted-average loan-to-
value ratio of around 63.7% and weighted-average seasoning
levels of approximately 6.6 years, this demonstrates an
established repayment history for the majority of borrowers.
-- The senior notes in the portfolio benefit from high levels of
credit support, provided in most instances by mezzanine and
junior rated notes.
-- The increased credit support to the notes since transaction
close is driven in most instances by the transactions'
ability to pay sequentially, before meeting their step-down
conditions and reverting to a pro-rata pay structure. Most of
the transactions reviewed are currently paying on a pro-rata
basis.
-- The transactions benefit from lenders' mortgage insurance
(LMI). LMI covers an average of 80% of all loans for the
transactions analyzed, with the remainder being uninsured.
S&P's analysis has given credit to the presence of LMI in the
pools.
-- Increased subordination since close has enhanced the ability
of the senior, mezzanine, and junior rated notes for the
majority of tranches reviewed to pass S&P's stressed cash-
flow modeling at their respective rating levels. There are
two rated tranches that do not have the benefit of
subordination and rely on excess spread. These tranches also
pass our cash-flow analysis at their respective rating
levels.
-- S&P's cash-flow analysis considers variables that could
affect cash flow, the portfolio performance of the
transaction, and outlook, as well as the current and
potential future payment mechanism. S&P's cash-flow analysis
demonstrates the timely payment of interest and ultimate
payment of principal for the rated notes at their respective
rating levels after the application of the appropriate rating
stresses outlined in the criteria.
-- The prepayment rate for nonbank originators was 15.64% as of
June 2017, compared with 17.35% for nonbank financial
institutions, 18.28% for regional banks, 19.73% for the major
banks, and 24.46% for the other banks categories. In S&P's
cash-flow analyses it run scenarios based on a range of
different prepayment behaviors to test the sensitivity of the
transactions to changes in this variable.
-- The Standard & Poor's Performance Index (SPIN) for nonbank
originators is 0.76% as of August 2017, compared with 1.10%
for Australian prime RMBS. The SPIN is a weighted-average
performance index of all Australian RMBS transactions rated
by S&P Global Ratings that are more than 30 days in arrears.
-- S&P's analytical review considers the credit quality and
cash-flow mechanics of each transaction taken from collateral
data as of June 2017. All originators in this review have
been categorized as 'CA1,' in line with S&P's "Methodology
For Assessing Mortgage Insurance And Similar Guarantees And
Supports In Structured And Public Sector Finance And Covered
Bonds" criteria, published on Dec. 7, 2014, with the
exception of the loans insured by Prime Insurance Group Ltd.
in the Avoca Series 2014-1 RMBS transaction, which are
classified 'CA4'.
S&P will continue to monitor quantitative and qualitative
variables as part of its surveillance and future rating review.
A List of Affected Ratings can be viewed at:
http://bit.ly/2isQWD6
=========
C H I N A
=========
SUNAC CHINA: Fitch Cuts Senior Unsecured Rating to B+
-----------------------------------------------------
Fitch Ratings has affirmed Sunac China Holdings Limited's Long-
Term Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a
Negative Outlook. At the same time, Fitch has downgraded Sunac's
senior unsecured rating and the ratings of its outstanding US
dollar notes to 'B+' from 'BB-'. The Rating Watch Negative (RWN)
on all the ratings, in place since July 2017, has been resolved.
Sunac's ratings have been removed from RWN following the
confirmation of the final payment of CNY14.2 billion for its 91%
stake in 13 Wanda City projects, which was scheduled to be made
on 17 October 2017, with Fitch expecting the title transfer for
the remaining five Wanda City projects to Sunac to be completed
soon.
Sunac's IDR affirmation reflects Fitch's expectation for leverage
will stay above 50% in 2017, but possibly fall below this level
in 2018. Sunac's management has publicly committed to
deleveraging and there is no pressure for Sunac to continue
aggressive land banking, considering its ample land bank of over
100 million square metres (sq m) of gross floor area (GFA) that
allows for over five years of development. Sunac has not made any
large land acquisitions since the Wanda City acquisition.
However, the still-high leverage warrants keeping Sunac on
Negative Outlook.
The downgrade of Sunac's senior unsecured rating and the ratings
on its outstanding US dollar notes reflects the subordination of
Sunac's offshore bonds to its onshore debt. Prior-ranking onshore
debt increased to 92.6% of total debt at end-1H17, from 54.4% in
2015. Fitch estimates the liquidation value is short of the
company's CNY191 billion in total debt. The outstanding US dollar
notes, which Fitch consider to be the lowest-ranking debt, are
too far down in priority to receive any significant payment
during liquidation. Fitch's liquidation value analysis deducts
customer deposits from inventory and takes into account the Wanda
project acquisition at the acquired value, although the impact on
the liquidation value may differ based on the entities' financial
statements. Final financial statements for the full year 2017 are
not likely to alter the recovery analysis result.
KEY RATING DRIVERS
Wanda City Completion on Target: Sunac's acquisition of 13 Wanda
City projects from Dalian Wanda Commercial Property Co. Ltd.
(BBB/RWN) has been completed, with Sunac confirming that full
payment had been made and the transfer of the remaining five
Wanda City projects is near completion. The acquisition has
significantly increased Sunac's attributable land bank to over
100 million sq m, from 68 million sq m at end-1H17. The
additional land parcels were acquired at a low cost, but Fitch
believe the required capex commitment will affect Sunac's
financial profile. Sunac will provide shareholders with details
about the Wanda City projects towards year-end.
Still High Leverage: Sunac's leverage was 63.4% before the Wanda
City project acquisition and Fitch expect it to remain above 50%
for the remainder of 2017, despite the company cutting back on
land acquisitions in 2H17. Sunac has sufficient land bank to slow
its land acquisition and leverage may fall below 50% in 2018 if
management sticks to its announced commitment to deleverage.
Fitch believe this is possible as Sunac has over five years of
land bank and will therefore not be in a hurry to replenish its
land bank. The still-high leverage warrants keeping Sunac on
Negative Outlook.
Greater Geographical Diversification: Sunac's geographical
diversification has improved, with concentration in the Pan Bohai
Rim, Yangtze River Delta and Chengdu/Chongqing regions dropping
to 66% in 1H17, from 95% in 2015. Concentration will fall further
following the Wanda City acquisition, as only five of the 13
projects are located in these markets, namely the projects in
Hefei, Wuxi, Ji'nan, Chengdu and Chongqing. Geographical
diversification is increasingly important, as each local
government is implementing restrictive home-purchase policies
differently and more geographically concentrated homebuilders,
who lack the flexibility provided by having a number of cities
located in areas with lower restrictions, are experiencing
greater difficulty in generating consistent sales growth.
Strong Contracted Sales: Sunac reported contracted sales of CNY43
billion in September 2017, which is comparable with the
contracted sales of the top-three largest Chinese homebuilders;
China Vanke Co., Ltd. (BBB+/Stable), Country Garden Holdings Co.
Ltd. (BBB-/Stable) and China Evergrande Group (B+/Stable). The
contracted sales do not include the majority of Sunac's newly
acquired Wanda City projects, as most have only recently been
transferred with another five projects still awaiting transfer.
The continued fall in Sunac's average selling price against
higher sales value suggests the company has the flexibility to
generate sales from a greater geographical and product spread,
making it more likely for Sunac to improve operational cash flow
for deleveraging.
Consent Solicitation Neutral to Ratings: Sunac announced on 1
November 2017 that it is soliciting bondholder consent to align
the terms of its 8.75% USD400 million bond due 2019 with its
newly issued 7.95% USD600 million bond due 2022. This would
provide more flexibility in its business, investments in joint
ventures and minority-owned entities and asset sales. Fitch does
not expect to change its view on Sunac solely due to the adoption
of the proposed amendments.
DERIVATION SUMMARY
Sunac's homebuilding business scale, geographical
diversification, project execution record and churn rate are
comparable with 'BBB-' rated homebuilders, such as Country
Garden, and comparable with or superior to 'BB' rated
homebuilders, such as Beijing Capital Development Holding (Group)
Co., Ltd. (BBB-/Negative, standalone: BB/Negative) and Guangzhou
R&F Properties Co. Ltd. (BB/RWN). However, Sunac has a more
volatile financial profile than these peers and is more
comparable with lower-rated issuers, such as Greenland Holding
Group Company Limited (BB/Negative, standalone BB-/Negative) and
China Evergrande, even though its 2016 leverage is lower than for
these two peers. No Country Ceiling, parent/subsidiary or
operating environment aspects affect the rating.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch rating case for the issuer
include:
- Minimal land acquisition in 2H17 other than the 13 Wanda City
projects
- Replenishment land bank at the rate of 1.1x attributable
contracted sales GFA to maintain land bank life of five years
- Consolidated revenue at 60%-70% of attributable sales between
2017 and 2019
- Capex of CNY3 billion a year, mainly for Wanda City projects
- Contracted GFA to expand at 30% in 2018 and 10% in 2019
- Average selling prices to stay below the current level of
CNY17,740 per sq m between 2017 and 2019
RATING SENSITIVITIES
The current rating is on Negative Outlook. Fitch does not
anticipate developments that would lead to a rating upgrade.
However, developments that may lead to the Outlook being changed
to Stable include:
- net debt/adjusted inventory sustained below 50% (1H17: 63%)
- attributable contracted sales/adjusted inventory sustained
above 0.8x (1H17: 0.7x)
- EBITDA margin, excluding the effect of revaluation of
acquisitions, sustained above 18% (1H17:27%)
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- net debt/adjusted inventory above 50% for a sustained period
- attributable contracted sales/adjusted inventory below 0.8x
for a sustained period
- EBITDA margin, excluding the effect of revaluation of
acquisitions, below 18% for a sustained period (1H17:26.7%)
LIQUIDITY
Sufficient Liquidity: Fitch expects Sunac to maintain sufficient
liquidity for its operation and debt repayment, as contracted
sales are likely to show strong triple-digit growth in 4Q17 to
reach more than CNY100 billion. Fitch expects the Sunac's cash at
2017 year end will be higher than the CNY70.7 billion available
cash at end-1H17 (excluding restricted cash)
FULL LIST OF RATING ACTIONS
Sunac China Holdings Limited
-- Long-Term Foreign-Currency IDR affirmed at 'BB-'; Outlook
Negative and Rating Watch Negative Resolved
-- Senior unsecured rating downgraded to 'B+' from 'BB-'; Rating
Watch Negative Resolved
-- USD400 million 6.875% senior notes due 2020 downgraded to
'B+' from 'BB-'; Rating Watch Negative Resolved
-- USD400 million 8.75% senior notes due 2019 downgraded to 'B+'
from 'BB-'; Rating Watch Negative Resolved
-- USD600 million 7.95% senior notes due 2022 downgraded to 'B+'
from 'BB-'; Rating Watch Negative Resolved
SUNAC CHINA: Consent Solicitation No Impact on Moody's B2 CFR
-------------------------------------------------------------
Moody's Investors Service says that Sunac China Holdings
Limited's consent solicitation will not immediately affect its B2
corporate family rating, B3 senior unsecured rating or on the
negative outlook on the ratings.
Sunac is seeking consent from the holders of the company's 8.75%
USD senior notes due 2019 to amend the terms of the notes to
conform with its notes issued in 2017. The terms that it seeks to
amend include changes to permitted investments, the fixed charge
coverage ratio, subsidiary/joint venture guarantees, and merger
and sale of assets.
"The proposed amendments, if consented to by the noteholders,
will loosen the restrictions on Sunac's ability to raise debt,"
says Franco Leung, a Moody's Vice President and Senior Credit
Officer.
"Sunac's high financial risk and debt leverage have been factored
into its current ratings," adds Leung.
Sunac reported a material increase in reported debt to RMB181.3
billion at June 30, 2017 from RMB112.8 billion at the end of
2016.
But Moody's forecasts that Sunac's debt leverage - as measured by
revenue to adjusted debt and including adjustments for its shares
in joint ventures and associates - will trend towards 40% over
the next 12-18 months from around 31% in 2016.
The improvement in Sunac's debt leverage will come from the
recognition of its current strong contracted sales and reduced
appetite for land replenishment.
The company's B2 corporate family rating remains supported by
strong sales execution and liquidity, and despite its high debt
leverage. Its cash balance increased to RMB92.4 billion at June
30, 2017 from RMB69.8 billion at the end of 2016, while its
cash/short-term debt stood at 133% at June 30, 2017.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Listed on the Hong Kong Stock Exchange on October 7, 2010, Sunac
China Holdings Limited is an integrated residential and
commercial property developer, with projects in China's main
economic regions such as the Beijing region, North China region,
Shanghai region, Southwestern China region, Southeastern China
region, Guangzhou-Shenzhen region, Central China region and
Hainan region.
At June 30, 2017, its gross land bank totaled 99.5 million square
meters, and its attributable land bank totaled approximately 68.4
million square meters.
This publication does not announce a credit rating action. For
any credit ratings referenced in this publication.
=========
I N D I A
=========
AASU EXIM: ICRA Moves B+ Rating to Not Cooperating Category
-----------------------------------------------------------
ICRA Limited (ICRA) has moved the ratings for the INR5.31-crore
bank facilities and INR0.69 crore unallocated limit of Aasu Exim
Private Limited to the 'Issuer Not Cooperating' category. The
rating is now denoted as "[ICRA]B+ (Stable)/[ICRA]A4 ISSUER NOT
COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term 4.56 [ICRA]B+ (Stable); ISSUER NOT
Loans COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund-based-Overdraft 0.15 [ICRA]B+ (Stable); ISSUER NOT
Fund-based-
Unallocated Limit 0.69 [ICRA]B+ (Stable); ISSUER NOT
Non Fund-based-
Letter of Credit 0.60 [ICRA]A4; ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Rationale
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with KIPL, ICRA has been trying to seek information from the
company to undertake a surveillance of ratings; but despite
multiple requests, the company's management has remained non-
cooperative. In the absence of the requisite information, ICRA's
Rating Committee has taken a rating view based on the best
available information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B+ (Stable)/[ICRA]A4;
ISSUER NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Key rating drivers
Credit strengths
* Extensive experience of promoters in the textile industry:
AEPL's key promoter, Mr. Raj Kumar Kaushik, has experience of
more than two decades in the textile industry. The extensive
experience of the promoters has facilitated the company to
establish strong relationship with customers as well as
suppliers.
Credit weaknesses
* High client and supplier concentration risk: While comfort is
drawn from the company's established relationship with reputed
customers and suppliers, its operation remain exposed to high
customers concentration risk with the top 10 customers
contributing more than 78% of the total sales and a single
supplier contributing more than 62% of the total purchases in
FY2015.
* Small scale of operations limiting economies of scale and
flexibility in pricing: The company has a small scale of
operations and has witnessed muted revenue growth over the last
five-year period. This limits the economics of scale benefits and
flexibility in pricing.
* Leveraged capital structure, coupled with modest coverage
indicators: AEPL's capital structure remains weak as reflected by
a high gearing of 2.20 times as on March 31, 2016 given its
modest networth base of the company. The coverage indicators have
also remained at a modest level as reflected by NCA/Total Debt of
14% and Total Debt/OPBDITA of 5.33 time in FY2016.
* Intense competition, given the low complexity of work involved:
The company faces stiff competition due to fragmented nature of
the industry, which limits its pricing flexibility and bargaining
power with customers, thereby putting pressure on its revenues
and margins.
Incorporated in 1984, Aasu Exim Private Limited ('AEPL' or 'the
company') is engaged in manufacturing of grey fabric since FY
2011 and manufactures knitted furnishing, sportswear and designer
wear fabrics. AEPL supplies fabrics to major textile houses based
in South and Western parts of the country. The company has ~300
MT knitting capacity at Bhiwandi and intends to increase it to
500 MT over the medium term. The company is managed by Mr. Raj
Kumar Kaushik who has over two decades of experience in the
textiles industry.
ABHIJEET MADC: NCLT Admits Alchemist Asset's Insolvency Petition
----------------------------------------------------------------
Financial Express reports that the Mumbai bench of the National
Company Law Tribunal (NCLT) has admitted an insolvency petition
against Abhijeet MADC Nagpur Energy (AMNEPL). The petition was
filed by Alchemist Asset Reconstruction Company (ARC) under the
Insolvency and Bankruptcy Code (IBC), the report says. The
tribunal has appointed Vinod Kumar Kothari as the interim
resolution professional (IRP) in the company which owes the ARC
INR959 crore, FE discloses.
FE, citing final order of the tribunal, relates that INR728 crore
was disbursed by Axis Bank, State Bank of Hyderabad, Bank of
Maharashtra and UCO Bank from July 2, 2009 to April 30, 2013.
Meanwhile, the Maharashtra Airport Development Company owns 26%
of the company.
"The operations of the corporate debtor (Abhijeet MADC) have
become like open and shut, commenced on August 1, 2011 and
suspended in January 2014," the order, as cited by FE, said.
According to the report, lenders had referred the company to the
corporate debt restructuring (CDR) cell and the proposal was
approved on March 28, 2013. However, Abhijeet MADC failed to
repay the loan even after the debt was restructured and was
subsequently classified a non-performing asset (NPA) by UCO Bank,
State Bank of Hyderabad, Axis Bank and Bank of Maharashtra.
AMNEPL is a special purpose vehicle promoted by Abhijeet Power,
Abhijeet Infrastructure and Maharashtra Airport Development
Company. The company had developed a 271 MW power plant in
Nagpur.
ASSAM COMPANY: NCLT Orders Insolvency Resolution Process
--------------------------------------------------------
The Economic Times reports that the National Company Law Tribunal
has ordered corporate insolvency resolution process against Assam
Company India for defaulting INR596 crore in payments to Srei
Infrastructure.
ET relates that the company, which is into multifaceted
activities from tea plantation to oil & gas exploration, had
guaranteed a INR100 crore loan taken by one Gujarat Hydrocarbon &
Power SEZ Ltd in Janaury 2011, is facing the bankruptcy
proceedings for failing to honour the guarantee.
Assam Company, promoted by Aditya Jajodia, had agreed to repay
the debt with interest and penalty as a guarantor in the event of
default by the principle borrower. The overdue amount on the loan
account has grown to INR596 crore.
The ordered was passed by NCLT's Guawahati bench last month, the
report notes.
"We have issued the public notice inviting claims. In the
meantime, we will be proceeding for appointment of valuers to
value the assets of the company," the report quotes Vinod
Kothari, who has been appointed as the interim resolution
professional, as saying.
"Our primary concern at this point is to protect the cashflows
and assets of the company. Once the claims and the valuations are
received, we will be preparing an information memorandum based on
which potential resolution plans can be prepared," he said.
It can be noted that the law also has provisions to protect a
guarantor in such cases. "Even if the corporate debtor (Assam
Company) has shed off his assets in satisfaction of the debt
which he reportedly owed to financial creditor (Srei Infra) as
being the guarantor to the loan aforesaid, the corporate debtor
has the avenue to get his money from assets of the principal
debtor," ET quotes Justice PK Saikia as saying in his judgement
on October 26.
So far, NCLT has ordered insolvency resolution process in nearly
400 cases ever since India developed a new Bankruptcy Code to
resolve insolvency cases in a time bound fashion, ET says.
Assam Company India Limited is an India-based company engaged in
tea cultivation and manufacturing. The Company's segments include
Plantations, Oil and Gas, Special Economic Zone (SEZ) and Others.
The Company's geographical segments include within India and
outside India. The Company has approximately 14 tea estates and
over three oil blocks, in the State of Assam. The Company's tea
estates are located in Doom Dooma, Tinsukia, Dibrugarh, Moran,
Jorhat and Nagaon. The Company's oil and gas blocks are Amguri
and AAONN-2005/1 in Assam and AA-ON/7 in Assam and Nagaland.
B. S. AGRICULTURE: ICRA Moves B/A4 Rating to Not Cooperating
------------------------------------------------------------
ICRA Limited (ICRA) has moved the ratings for the INR7.00 crore
bank facilities of B. S. Agriculture Industries (India) (BSA) to
the 'Issuer Not Cooperating' category. The rating is now denoted
as: "[ICRA] B(Stable)/A4; ISSUER NOT COOPERATING"
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 5.50 [ICRA]B(Stable)/A4; ISSUER
NOT COOPERATING; Rating
moved to the 'Issuer not
Cooperating' category
Non-Fund-based Limits 1.50 [ICRA]B(Stable)/A4; ISSUER
NOT COOPERATING; Rating
moved to the 'Issuer not
Cooperating' category
Rationale
The rating is based on limited or no updated information on the
entity's performance since the time it was last rated in Mar,
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 BSA, ICRA has been trying to seek information from
the entity so as to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Experience of promoters: The promoters have long experience in
the manufacturing of pump sets and diesel engines.
Credit weaknesses
* Partnership constitution of firm: The firm is exposed to risks
associated with the partnership constitution of the firm like
withdrawal of capital, dissolution of firm etc.
BSA, incorporated in 1968 by Mr. Baldev Singh Matharoo
manufactures pump sets, diesel engines, centrifugal water pumps,
generating sets and other agricultural equipment. The firm has
manufacturing units in Ludhiana (Punjab) and Agra (Uttar Pradesh)
and also one branch office in Patna (Bihar). Exports are made
through the Ludhiana unit to Egypt, Bangladesh, Australia, South
Africa etc. while domestic sales are catered to by the Agra unit.
For FY2015, the firm reported a net profit of INR0.79 crore on an
operating income of INR31.9 crore, as compared to a net profit of
INR0.68 crore on an operating income of INR28.6 crore for the
previous year. The firm, on a provisional basis, reported an
operating income of ~Rs 38 crore for FY2016.
B.S. INDUSTRIES: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan
---------------------------------------------------------------
CRISIL's rating of the long term bank facilities of B.S.
Industries continues to reflect the firm's weak business risk
profile driven by large working capital requirements,
susceptibility of its margins to volatility in raw material
prices and adverse regulations. The firm's financial risk profile
is also weak, marked by weak debt protection metrics and moderate
gearing. These rating weaknesses are partially offset by the
extensive experience of B.S. Industries' partners in the cotton
industry, and the funding support that the firm receives from
them in the form of unsecured loans.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 0.38 CRISIL B+/Stable (Reaffirmed)
Term Loan 0.50 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital intensity of operations: B. S. Industries'
operations are working-capital-intensive, marked by the firm's
high gross current asset (GCA) days: The cotton ginning industry
is inherently working-capital-intensive, as operations involve
large inventory. Raw cotton, the primary raw material used in the
cotton ginning industry, is only available during the crop
season, from October to June; entities operating in the industry
therefore have to procure the subsequent year's raw material
requirement in the crop season.
* Operating margin susceptible to raw material price fluctuations
and changes in government policy: B. S. Industries' operating
margin is vulnerable to volatility in raw material prices. The
firm maintains large inventory of around 4-5 months, whereas the
prices of cotton are highly volatile. Also, B. S. Industries'
does not have any long-term contracts with its customers, which
could fix the selling rate, and its operating margin is exposed
to volatility in raw cotton (kapas) prices.
Strength
* Promoters' extensive industry experience : Members of the Tayal
family, which controls B. S. Industries' have experience of over
five decades in the cotton ginning industry through other family-
promoted entities such as Minakshi Cotex) and Shri Raj Rajeshwar
Cotton Corporation
Outlook: Stable
CRISIL believes that B. S. Industries will continue to benefit
from its partners' extensive industry experience and financial
support over the medium term. The outlook may be revised to
'Positive' if the firm ramps up its accruals significantly, with
improvement in revenues and profitability while prudently
managing its working capital. Conversely, the outlook may be
revised to 'Negative' if the firm's working capital management
deteriorates or its liquidity weakens significantly, most likely
because of lower-than-expected cash accruals, or the firm
undertakes any large debt-funded capital expenditure (capex)
programme, further weakening its capital structure.
B. S. Industries was set up in 2007 as a partnership firm by the
Tayal family of Madhya Pradesh. The firm is engaged in cotton
ginning and pressing through its processing facility in Lasur,
Aurangabad (Maharashtra) with a capacity of producing 18,000
cotton bales per year.
B. V. COTSPIN: ICRA Lowers Rating on INR21.15cr LT Loan to D
------------------------------------------------------------
ICRA Limited (ICRA) has revised the long term rating for INR21.15
crore bank facilities of B. V. Cotspin Industries (BVCI) from
[ICRA]B+(stable) to [ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term fund 21.15 [ICRA]D, Downgraded from
based limits [ICRA]B+(Stable)
Rationale
The revision in rating factors in the delays in debt obligations,
on account of constrained liquidity position owing to high
repayment obligations and high working capital requirements
emanating from elongated receivables.
Key rating drivers
Credit strengths
* Presence of the firm in major cotton producing regions of
Gujarat: BVCI is located in Kadi, Mehsana district of Gujarat,
which is a near to major cotton producing area resulting in easy
availability of kapas.
Credit weaknesses
* Continuous delay in debt servicing along with overdrawals from
cash credit account: There have been continuous delay in term
loan repayment obligation and overdrawal of cash credit account
during the period July 2017 to September 2017owing to constrained
liquidity position given the high repayments and high working
capital requirements owing to increased 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: BVCI has a weak financial profile
characterized by high gearing of 4.28 times as on February 2017
end and stretched coverage indicators with an interest coverage
ratio of 0.98 times, NCA/total debt ratio of 0% for 11M
FY2017(based on provisional financials)
Established in 2012, B. V. Cotspin Industries (BVCSI) is a
partnership firm with Mr. Babu Patel, Mr. Piyush Patel and Mr.
Bhavin Patel along with their family members as partners. The
firm gins and presses raw cotton to produce cotton bales and
cottonseeds. The commercial production of the firm commenced in
November 2013. BVCSI possesses 54 cotton ginning machines, with
an installed capacity of manufacturing 300-350 bales per 12
hours.
BG TRANSPORT: Ind-Ra Migrates BB- Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated B.G. Transport
Company's (BGTC) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR59.87 mil. Term loan migrated to non-cooperating category
with IND BB-(ISSUER NOT COOPERATING) rating;
-- INR13.5 mil. Fund-based working capital limits migrated to
non-cooperating category with IND BB-(ISSUER NOT COOPERATING)
rating; and
-- INR1 mil. Non-fund-based working capital limits migrated to
non-cooperating category with IND A4+(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
October 7, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
BGTC was incorporated in 2011 as a partnership firm by Gujral
Group. The entity started its commercial operations in 2012. It
is primarily involved in the transportation business.
EKTA DAIRY: CRISIL Cuts Rating on INR9MM Cash Loan to 'B+'
----------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term
facilities of Ekta Dairy Private Limited (EDPL) to 'CRISIL
B+/Stable' from 'CRISIL BB/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL B+/Stable (Downgraded
from 'CRISIL BB/Stable')
Proposed Cash 3.5 CRISIL B+/Stable (Downgraded
Credit Limit from 'CRISIL BB/Stable')
The downgrade reflects deterioration in EDPL's business risk
profile during fiscal 2017. Revenue declined significantly to
INR44.1 crore (40%) in fiscal 2017 from INR73.1 crore in fiscal
2016. Sales were adversely impacted by demonetisation as majority
of EDPL's customers were cash based. The sales continue to remain
low as the company has achieved around INR2 crore sales during
the six months ended September 2017. Business risk profile should
remain at similar levels over the medium term, driven by high
competition.
The rating reflects EDPL's modest scale of operations in the
highly-competitive dairy industry and high volatility in
operating margin. This weakness is partially offset by above
average financial risk profile because of moderate debt
protection metrics and low gearing, and extensive experience of
its promoters.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Modest scale of operations'with
sales of INR44.07 crore for fiscal 2017'restricts the bargaining
power of EDPL and prevents it from enjoying economies of scale.
Strengths
* Above average financial risk profile: The gearing is low at 1.2
times as on March 31, 2017 and modest debt kept debt protection
metrics moderate, as reflected in interest coverage and net cash
accrual to total debt ratios of 2.5 times and 0.15 time,
respectively, for fiscal 2017.
* Extensive experience of the promoters: Benefits from the
promoters near two decades of experience in the industry and
established relationships with suppliers and customers should
support business. Further, the addition of ghee and skimmed milk
powder to the product portfolio expands operations.
Outlook: Stable
CRISIL believes EDPL will benefit from the extensive experience
of its promoters. The outlook maybe revised to 'Positive' if
revenue and profitability increase and working capital management
is efficient. The outlook may be revised to 'Negative' if low
cash accrual, stretch in working capital requirement, or any
large debt-funded capital expenditure weakens financial risk
profile, particularly liquidity.
Incorporated in 2007 and promoted by Mr. Narendra Kumar Sacchan,
EDPL processes milk and its byproducts. The company's plant,
located in Fatehpur (Uttar Pradesh), processes 0.25 million
litres of milk per day. EDPL also does jobwork for Gujarat Co-
operative Milk Marketing Federation Ltd and other companies.
GIE JEWELS: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Gie Jewels'
(GIE) Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND
BB+(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR25.23 mil. Term loan migrated to non-cooperating category
with IND BB+(ISSUER NOT COOPERATING) rating; and
-- INR100 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB+(ISSUER NOT COOPERATING)/IND
A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 10, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 2011, GIE is a partnership concern that
manufactures ornaments and jewellery from gold, silver and
semiprecious stones.
GOEL BUILDERS: CRISIL Assigns 'B+' Rating to INR30MM LT Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term facility of Goel Builders (GB).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 30 CRISIL B+/Stable
The rating reflects exposure to risks inherent in the real estate
industry, and project and geographical concentration in revenue
profile.These weaknesses get partially offset by
extensive experience of the partners.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility to inherent cyclicality in industry: GB is
susceptible to risks pertaining to the real estate sector such as
long gestation period of projects. Any time or cost overrun or
delay in obtaining necessary approvals could affect the
realisations and profitability of project. The demand for
commercial projects is affected by the level of interest rates
and overall economic activity. Low customer interest in on-going
project, or any delay in its implementation could constrain the
credit risk profile.
* High geographic and project concentration: As the project is in
Lucknow, any slowdown in the real estate market therein will
impact the demand for the project. Further, the firm also remains
exposed to project concentration risk as well since any adverse
happening in the marketing or construction of the above project
can significantly impede business risk profile
Strengths
* Extensive experience of the partners: The partners have
significant experience in the industry which should help in the
timely completion of the on-going project. The partners have
previously constructed three residential complexes successfully.
Outlook: Stable
CRISIL believes GB will continue to benefit from the healthy
booking progress and advantageous location of the project. The
outlook may be revised to 'Positive' if speedy execution of the
project and improved receipt of customer advances generates
substantial cash accrual. The outlook may be revised to
'Negative' if cash flow from operations is significantly low,
either because of subdued response to project or low customer
advances or if delay in completion weakens financial risk
profile, particularly liquidity.
GB is a partnership firm established in January 1985. Till 2017,
the firm manufactured pipes and pipe fittings used in the
construction business and is currently constructing a mall in
Faizabad, Lucknow-Crown Mall. Mr. Naresh Kumar Agarwal and Mr.
Amit Agarwal manage operations. The mall is scheduled to commence
operations from October 2019 onwards.
HATIMI STEELS: CRISIL Reaffirms B+ Rating on INR36.5MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of Hatimi Steels (HS).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 36.5 CRISIL B+/Stable (Reaffirmed)
Letter of Credit 13.5 CRISIL A4 (Reaffirmed)
The ratings continue to reflect HS's modest scale of operations,
and exposure to risks related to intense competition in the ship-
breaking industry and to changes in government regulations. These
weaknesses are partially offset by the extensive experience of
the proprietor.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: The firm's scale of operations
varies with the vessel broken and sold. Revenue of INR50 crore in
fiscal 2017 reflects small scale of operations.
* Exposure to risks related to a cyclical and fragmented
industry: The ship-breaking industry is cyclical and viability of
the business is inversely correlated with the international
freight index. The firm has to compete with small players during
periods of limited availability of vessels. Domestic players also
face competition from ship breakers in China, Bangladesh, and
Pakistan.
Strength
* Experience of proprietor: Benefits from the proprietor's
experience of over two decades and healthy relations with
suppliers and customers will continue to support the business.
Outlook: Stable
CRISIL believes HS will continue to benefit from experience of
the proprietor. The outlook may be revised to 'Positive' if
substantial increase in topline and profitability, backed by rise
in ship-breaking activity, strengthens financial risk profile and
liquidity. Conversely, the outlook may be revised to 'Negative'
if inability to recover the cost of ship purchase because of
sharp fall in steel scrap prices or adverse movement in foreign
exchange rates weakens financial risk profile and liquidity.
HS, a proprietorship concern set up in 1999 by Mr. Amit Jain,
undertakes shipbreaking projects at its yard in Alang (Gujarat).
JAIPAN INDUSTRIES: Ind-Ra Migrates BB- Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Jaipan
Industries Limited's (JIL) Long-Term Issuer Rating at 'IND BB-'.
The Outlook is Stable. The rating action reflects the company's
stable financial performance during FY16 and FY17.
The ratings have also been migrated to the non-cooperating
category. The issuer did not participate in the surveillance
exercise despite continuous requests and follow ups by the
agency. Thus, the rating is on the basis of best available
information. 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:
-- INR70 mil. Fund-based facilities affirmed and migrated to
non-cooperating category with IND BB-(ISSUER NOT
COOPERATING)/Stable rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information
KEY RATING DRIVERS
JIL's interest coverage (operating EBITDA/gross interest
expenses) was stable at 1.6x in FY16 and FY17. Revenue marginally
decreased to INR196.2 million in FY17 (FY16: INR210.1 million).
EBITDA margins remained volatile between 3.3% and 7% over FY14-
FY17 (FY17: 6.7%, FY16: 3.3%). However, net financial leverage
(total adjusted net debt/operating EBITDA) improved to 2.9x in
FY17 (FY16: 3.8x). Ind-Ra is unable to determine the
sustainability of the same in absence of any discussion with
management regarding the company's capex and other future plans.
JIL did not participate in the surveillance exercise and has not
provided information such as working capital utilisation,
sanction letters, future projections and management
representation certifying timely debt service.
RATING SENSITIVITIES
Positive: A substantial increase in revenue while maintaining the
current credit metrics could lead to a positive rating action.
Negative: A sustained decline in revenue and/or operating
profitability leading to deterioration in the credit metrics
could lead to a negative rating action.
COMPANY PROFILE
JIL was originally set up in 1981 as Jyoti Kitchen Appliance, a
proprietorship concern, promoted by Mr. J N Agrawal. The firm was
reconstituted as a public limited company under its current name
in 1997. JIL is listed on the Bombay Stock Exchange. The company
manufactures and markets various home appliances and non-stick
cookware under the brand name Jaipan. JIL's manufacturing
facilities are in Mumbai and Silvassa (Dadra and Nagar Haveli);
the company also outsources manufacturing of some of its
products.
KEROS STONE: CRISIL Assigns B+ Rating to INR6.09MM LT Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Keros Stone LLP (KSL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Cash
Credit Limit .04 CRISIL B+/Stable
Long Term Loan 6.09 CRISIL B+/Stable
Bank Guarantee 1.07 CRISIL A4
Cash Credit 3.00 CRISIL B+/Stable
The ratings reflect exposure to risks related to timely
stabilisation and commensurate ramp-up in sales during its early
stage of operations. The ratings also factor in expectation of an
average financial risk profile because of debt-funded project.
These weaknesses are partly offset by partners' extensive
experience and funding support, and strategic location of its
plant, ensuring easy availability of raw material and labour.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to timely project implementation and stabilization:
Though commercial operations have begun on 17th, October 2017,
KSL remains exposed to commensurate ramp-up in sales during the
early stages of its proposed project. The same will remain
critical and hence closely monitored.
* Average financial risk profile: Financial risk profile may
remain average on account of debt-funded capital expenditure.
Gearing is expected to be at 2.5 times in fiscal 2018.
Strengths
* Partners' extensive experience: Benefits from the extensive
experience the partners, who have been associated with group
companies for close to decade, should continue to support the
business risk profile in its early stage of operations.
* Strategic location of plant: Manufacturing facility of KSL is
at Morbi (Gujarat) which is tile manufacturing hub which ensures
easy availability of raw materials and labour.
Outlook: Stable
CRISIL believes KSL will benefit from the partners' extensive
experience and funding support, along with strategic location of
its plant. The outlook may be revised to 'Positive' if timely
implementation and stabilisation of the project leads to
anticipated revenue, profitability, and cash accrual during the
early stage of operations. The outlook may be revised to
'Negative' if delay in stabilisation of the project leads to
lower revenue, cash accrual, or stretch in working capital cycle
weakens the financial risk profile, especially liquidity.
Incorporated in September 2016, KSL is establishing a green field
project for manufacturing of artificial marble tile of various
sizes. Its manufacturing facility is located in Morbi district of
Gujarat with an installed capacity of 7500 MT/annum.
Company is promoted by Manojkumar Govindbhai Rangpariya, Kailash
Kanjibhai Desai, Sureshbhai Keshavjibhai Charola and Deepak
Dhanjibhai Detroja possessing extensive industry experience.
MANOJ KUMAR: CRISIL Assigns 'B' Rating to INR5MM Whse Receipts
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facilities of Manoj Kumar Vipin Kumar (MKVK).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Warehouse Receipts 5 CRISIL B/Stable
Working Capital
Demand Loan 3 CRISIL B/Stable
The rating reflects the firm's weak financial risk profile
because of high total outside liabilities to tangible networth
(TOLTNW) ratio, modest scale of operations in an intensely
competitive segment, and large working capital requirement. These
weaknesses are partially offset by the extensive experience of
its promoters and established customer relationship.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: TOLTNW ratio was high at 10.81
times as on March 31, 2017, while debt protection metrics were
weak, with interest coverage ratio of 1.49 times in fiscal 2017.
Financial risk profile will remain weak over the medium term
because of continued low operating margin and sizeable working
capital debt.
* Modest scale of operations in intensely competitive segment:
With net sales of INR21.46 crore in fiscal 2017, scale remains
small in the intensely competitive agricultural commodities
trading business.
* Working capital-intensive operations: Gross current assets were
273 days as on March 31, 2017, due to large inventory of 254
days. Receivables level, however, was low at 24 days. Operations
are expected to remain working capital intensive over the medium
term as well.
Strength
* Extensive experience of promoters and established customer
relationship: Presence of more than a decade in the food grain
trading segment has enabled the promoters to develop established
relationship with suppliers and customers.
Outlook: Stable
CRISIL believes MKVK will continue to benefit over the medium
term from the extensive experience of its promoters. The outlook
may be revised to 'Positive' if substantial growth in cash
accrual or fund infusion by promoters strengthens financial risk
profile. The outlook may be revised to 'Negative' if stretch in
working capital cycle or lower-than-expected cash accrual further
weakens financial risk profile, especially liquidity.
Set up as a partnership firm in 2009 in Bikaner by Mr. Manoj
Kumar Gupta, Mr. Vipin Kumar Goyal, and Mr. Mahaveer Prasad, MKVK
trades in food grains such as chana, guar gum, soyabean, castor
seed, barley, and moong.
MEL FLOORINGS: CRISIL Assigns 'B' Rating to INR5MM Term Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable/CRISIL A4'
ratings to the bank facilities of MEL Floorings Pvt Ltd (MEL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Inland/Import Letter
of Credit 3.70 CRISIL A4
Cash Credit 0.75 CRISIL B/Stable
Cash Term Loan 5.00 CRISIL B/Stable
The ratings reflect MEL's modest scale of operations in the
intensely competitive granite processing industry, and below-
average financial risk profile. These weaknesses are partially
offset by experience of the promoter.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition: Small scale
of operations, with revenue of around INR4 crore in fiscal 2017,
amid intense competition limits pricing power with customers and
suppliers, thereby constraining profitability.
* Below-average financial risk profile: The financial risk
profile has been below average, driven by high gearing, low net
worth, and weak debt protection metrics.
Strengths
* Experience of promoter: Benefits derived from the promoter's
experience of over a decade and healthy relations with suppliers
and customers should continue to support the business.
Outlook: Stable
CRISIL believes MEL will continue to benefit from experience of
the promoter. The outlook may be revised to 'Positive' if
substantial increase in operating income, profitability, and
equity infusion strengthens financial risk profile. Conversely,
the outlook may be revised to 'Negative' if lower-than-expected
cash accrual or stretch in working capital cycle weakens
financial risk profile.
MEL, is engaged in processing of granite. Mr. Sunil George Oommen
and family are the promoters.
MIL STEEL: ICRA Lowers Rating on INR10.55cr Term Loan to 'D'
------------------------------------------------------------
ICRA Limited (ICRA) has revised the long-term rating assigned to
the INR4.10 crore fund based facilities and INR10.55 crore term
loan facilities of MIL Steel and Power Limited from [ICRA]B+ to
[ICRA]D. ICRA has also revised the short-term rating for the
INR2.00 crore non-fund based facilities of MSPL to [ICRA]D from
[ICRA]A4. These apart, ICRA has also revised the ratings for the
INR2.08 crore of Long term/short term unallocated facilities
to[ICRA]D/[ICRA]D from [ICRA]B+/[ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: Fund 4.10 Revised to [ICRA]D from
Based facilities [ICRA]B+ (Stable)
Long term: Term 10.55 Revised to [ICRA]D from
loan [ICRA]B+ (Stable)
Short-term, Non- 2.00 Revised to [ICRA]D from
fund based [ICRA]B+ (Stable)
facilities
Long term/short 2.08 Revised to [ICRA]D from
term unallocated [ICRA]B+ (Stable)/[ICRA]A4
facilities
Rationale
The rating revision considers the delay in principal repayment
for the month of September on account of constrained liquidity
position. High repayment obligations coupled with stretched
working capital requirements on the back of increased receivable
outstanding has resulted in stressed liquidity profile. The
ratings further take into account the weak demand scenario for
the end user industry. ICRA, however, takes note of the extensive
experience of the company in steel industry and established
operation of the Meenakshi group. Going forward, the company's
ability to demonstrate a track record of timely debt servicing,
driven by a sustained improvement in its liquidity position, will
be the key rating sensitivity
Key rating drivers
Credit Weaknesses
* Delay in debt servicing on the back of high repayments and
interest cost: There has been delay in the principal repayment
for the month of September. Elevated debt levels along with high
interest cost associated resulted in delay in debt servicing.
* Weak liquidity position: The Company's liquidity position has
been constrained by high working-capital intensity on account of
high receivables.
* Intense competition from the highly fragmented and commoditised
Steel market keeps margins under pressure: Operating in a highly
fragmented industry, MSPL is exposed to intense competition from
a number of established and small billet manufacturers both
domestically and from low cost exporting countries, thereby
limiting price flexibility.
Credit Strengths
* Long-standing experience of company in the steel industry;
established network of suppliers and customers: MSPL is engaged
in the manufacture of MS Billets, largely catering to localised
demand from TMT and structural products players in the region.
Over the years, the company has developed strong relationship
with domestic suppliers and customers which has supported the
operations to a large extent.
MIL Steel and Power Limited, the erstwhile Kanishk Ferrous and
Energy Limited is engaged in the manufacture of MS Billets,
largely catering to localised demand from TMT and structural
products players in the region. MSPL was acquired by Meenakshi
(India) Limited (MIL) Group from OPG group on April 01, 2013, for
a total consideration of INR7.02 crore and derives its revenue
from manufacturing, derivatives trading and scrap trading
businesses. MSPL's restarted its operations from FY2014 and has
stabilised its operations following commissioning of its
continuous casting machine in its facility in place and securing
stable power purchase agreements.
MINAKSHI COTEX: CRISIL Reaffirms B+ Rating on INR10MM Cash Loan
---------------------------------------------------------------
CRISIL's rating on the bank facilities of Minakshi Cotex
(Minakshi) continues to reflect the firm's weak financial risk
profile, marked by weak debt protection metrics and moderate
gearing, its working capital intensive nature of operations, and
susceptibility to volatility in raw material prices and to
adverse regulatory changes. These rating weaknesses are partially
offset by the extensive experience of Minakshi's partners in the
cotton ginning industry, and funding support from partners in the
form of unsecured loans.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: As on March 31, 2017, gearing was
moderate, at 1.9 times; due to moderately high working capital
requirement vis-a-vis low cash accrual.
* Working capital-intensive operations: Operations are working
capital intensive as reflected in the moderately high gross
current assets of 130 days2015. The cotton-ginning industry is
inherently working capital intensive as operations involve large
inventory. Kapas, the industry's major raw material, is available
only during the crop season, from October to June, and players
have to procure the next year's raw material requirement during
this period. Furthermore, cotton is procured with a limited
credit period, resulting in large working capital requirement,
which is funded mainly through bank debt and interest-bearing
unsecured loans.
* Susceptibility to raw material price fluctuations and
unfavorable regulatory changes: Margins are vulnerable to
volatility in raw material prices. The firm maintains inventory
of 2-3 months, whereas the prices of cotton are highly volatile.
The firm does not have any long-term contract with its customers
and, hence, its margins are exposed to volatility in raw cotton
prices. In the absence of a clearly defined hedging policy,
operating margin will remain vulnerable to volatile raw material
prices over the medium term
Strength
* Financial support and extensive experience of promoters in the
cotton industry: The promoters have experience of more than five
decades in the cotton-ginning industry through other family-
promoted entities. The family has promoted a number of entities
engaged in the same business, which enables the firm to benefit
from other established business operations. They have sound
experience and are actively involved in the functional areas of
the business.
Outlook: Stable
CRISIL believes that Minakshi will continue to benefit over the
medium term from its promoters' extensive industry experience and
funding support. The outlook may be revised to 'Positive' if
there is substantial and sustained growth in the firm's revenues
and profitability from the current level, or if there is an
improvement in its capital structure, most likely through fresh
capital infusion. Conversely, the outlook may be revised to
'Negative' if Minakshi's liquidity weakens significantly, most
likely because of substantially less-than-expected cash accruals
or large working capital requirements.
Minakshi was set up in 2003 as a partnership firm by the Tayal
family of Madhya Pradesh. The firm has two units in Georai and
Khamgaon (Maharashtra), where it undertakes cotton ginning and
pressing
NILACHAL SPINNING: CRISIL Assigns B+ Rating to INR4MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
rating to the bank facilities of Nilachal Spinning Mills Private
Limited (NSL). The ratings reflect the extensive experience of
the promoters in the textile industry and its established
relationship with customers and suppliers. These strengths are
partially offset by NSL's modest scale of operations and exposure
of its operating profitability to fluctuation in raw material
prices and forex rates.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Term Loan 2.31 CRISIL B+/Stable
Long Term Loan 1.94 CRISIL B+/Stable
Bank Guarantee 0.75 CRISIL A4
Cash Credit 4.00 CRISIL B+/Stable
Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of the promoters: NSM benefits from the
promoters' extensive industry experience. The firm is managed by
Mr.Dilip Singhania, Mr.Radhe Shyam Singhania and their family
members. The promoter family has been associated with the cotton
industry for over four decades. Over this period, the management
has developed extensive experience with suppliers and customers.
CRISIL believes that NSL shall continue to benefit over the
medium term from the extensive experience of its promoters.
Weaknesses
* Modest scale of operations: Although the promoters have been in
the business for over three decades, NSM's scale of operations
has remained modest, as reflected in revenue of INR29 crore
during fiscal 2017. The modest scale of operations limits its
ability to benefit from economies of scale which are available to
players with larger volumes.
* Profitability is susceptible to volatility in raw material
prices and too fluctuation in forex rates: NSM is a relatively
moderate player in the fragmented market, leading to low
bargaining power with suppliers and customers. Raw material
prices form 60-70 percent of the cost structure. Any significant
increase in raw material prices will affect the profitability due
to intense competition. NSM has also started exporting its
products; however does not hedge its forex exposure, exposing its
profitability to volatility in forex rates
Outlook: Stable
CRISIL believes that NSM shall continue to benefit over the
medium term from the extensive experience of its management. The
outlook may be revised to 'Positive' in case of significant
improvement in scale of operations and profitability, leading to
better than expected cash accrual. Conversely, the outlook may be
revised to 'Negative' in case of decline in revenues or
profitability or in case of higher than expected capex resulting
in weakening if its financial risk profile.
NSM was incorporated in 2005. The Coimbatore based company is
engaged in the manufacture of cotton yarn and fabric. The company
has been promoted by Mr.Dilip Singhania and Mr.Radhe Shyam
Singhania.
NSM reported a net loss of around 0.94 crore on operating income
of INR29.07 crore for fiscal 2017 against profit after tax(PAT)
of INR0.10 crore on operating income of INR21.14 crore for fiscal
2016.
OPGS POWER: ICRA Lowers Rating on INR1497.40cr Loan to 'D'
----------------------------------------------------------
ICRA Limited (ICRA) has downgraded the long-term rating from
[ICRA]BB+ to [ICRA]D and the short-term rating from [ICRA]A4+ to
[ICRA]D outstanding on the bank limits of OPGS Power Gujarat
Private Limited (OPGPL) aggregating to INR2,062.40 crore.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 1,497.40 [ICRA]D; downgraded from
[ICRA]BB+ (Negative)
Fund based limits 135.00 [ICRA]D; downgraded from
Cash Credit [ICRA]BB+ (Negative)
Non-fund based 430.00 [ICRA]D; downgraded from
Limits-LC/BG [ICRA]A4+
Rationale
The revision in the ratings takes into account the delays in debt
servicing because of stretched liquidity position of the company.
The financial position of the company has deteriorated in FY 2017
owing to the delays in securing recognition under the 'Group
Captive Policy' in Gujarat for its thermal power project which in
turn has impacted tariff attractiveness of the project & as a
result, the company is required to bear part of open access
charges (i.e. cross subsidy surcharge & additional surcharge).
The company's gearing level & debt coverage metrics thus remain
adversely impacted as on March 2017 due to the losses incurred
post-commissioning, also given the high capital cost & debt
funded nature of the project.
The ratings are, further constrained by the exposure to
international coal prices and currency exchange rates as the
company is currently using imported coal for its fuel
requirements in the absence of any firm fuel tie-up with domestic
sources. The ratings also factor the high capital cost incurred
by the company (of about INR6.75 crore/MW) due to delays in
commissioning of the project which dampens the project economics.
ICRA notes that the company has restructured the project debt
under the 5/25 scheme wherein its debt repayments have a
ballooning schedule over a longer tenure. The reduction in debt
obligations in the initial years is expected to support the cash
flow position of the company.
Key rating drivers
Credit strengths
* Ramp up of operations of Unit-II post-commissioning in February
2016, albeit with delays and cost overruns: The company achieved
Commercial Operation Date (COD) of Unit-I in February 2015 and
COD of Unit-II was achieved in February 2016 due to delays in
setting up of required evacuation infrastructure. Nonetheless,
post-commissioning of both units, the plant has been able to ramp
up operations and reported 66% PLF in FY2017
* PPAs signed for 180 MW capacity (net of auxiliary) across 50
customers which reduces dependence on a single customer: The
company has so far tied-up short-to-medium term PPAs with about
50 customers for 180 MW of power capacity (net of auxiliary) and
is in discussions with industrial customers in nearby states of
Maharashtra and Madhya Pradesh to tie-up PPAs for the remaining
capacity. The tariffs are at a discount to the prevailing HT
(high-tension) tariff rates in the respective states
* Established track record of the group in execution and
operation of coal based power plants: OPGPL is a Special Purpose
Vehicle (SPV) promoted by OPG Group which has substantial
experience in the power and steel sectors
Credit weaknesses
* High capital costs (INR6.75 crore/MW) owing to sizeable delays
in project completion: OPGPL's project had seen considerable
delays in the initial years, owing to delayed receipt of
environmental clearances and litigation over the same. There was
also a delay in achieving financial closure for enhancement in
project scope and cost.
* Company yet to be recognised under the 'Group Captive Policy'
in Gujarat: The company had setup the project under the Group
Captive Policy as per which OPGPL has to sell 51% of its power
output to captive consumers who would hold, in aggregate, more
than 26% of the voting rights in OPGPL. However, the Gujarat
Government is yet to recognise the project under the Group
Captive Policy owing to dispute on the different face value of
shares being offered to captive consumers and the promoters. As a
result, the company's customers have to bear the cross-subsidy
surcharge (Rs. 1.45/unit) and additional surcharge (Rs.
0.44/unit) applicable in Gujarat, which is currently being partly
reimbursed by the company.
* Significant exposure towards volatile international coal
prices: The company is currently using Indonesian coal to meet
its fuel requirements. With the increase in international coal
prices in the past year, the company's cost of generation has
increased.
* Profitability to remain exposed to forex rate movements in the
absence of a firm hedging policy: Company's profitability remain
exposed to the movement in the international coal prices and the
currency exchange rates. The company had received LOA from South
Eastern Coalfields Limited for 10.32 lakh tonnes per annum of F-
grade coal, but the same is yet to be converted to FSA despite
the plant being commissioned. Also, power surplus position in the
state of Gujarat could lead to reduction in tariffs going forward
and impact the company's margins
OPGS Power Gujarat Private Limited (OPGPL) was incorporated in
April 2007 as a Special Purpose Vehicle (SPV) promoted by OPG
Group which has substantial experience in the power and steel
sectors. The company had initially planned to setup a 270 MW (2 x
135 MW) coal based power plant but subsequently revised its plant
capacity to 300 MW (2 x 150 MW). The plant is based in Kutch,
Gujarat and had a scheduled Commercial Operation Date (COD) of
February 2013; however, the project witnessed delays due to
litigation over the CRZ (Coastal Regulatory Zone) clearance
granted to it and subsequently due to delay in setting up of
evacuation infrastructure. The first unit achieved COD in
February 2015 and the second unit achieved COD in February 2016.
The total cost incurred for the project is INR2,026 crore, funded
through INR1,497 crore of debt and INR529 crore of equity.
PARWANI BUILDERS: CRISIL Assigns B+ Rating to INR6MM Cash Loan
--------------------------------------------------------------
CRISL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Parwani Builders Private Limited
(PBPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable
The rating reflects PBPL's modest scale of operations in the
intensely competitive civil construction industry, large working
capital requirement, and exposure to risks related to tender-
based business. These weaknesses are partially offset by the
experience of promoters and moderate financial risk profile.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and intense competition: Small scale
of operations, with revenue of INR7.5 crore in fiscal 2017, amid
intense competition limits pricing power with suppliers and
customers, thereby constraining profitability.
* Large working capital requirement: Gross current assets were
511 days as on March 31, 2017, due to high inventory of 369 days.
* Exposure to risks related to tender-based business: Business
risk profile may remain constrained over the medium term as the
business is entirely dependent on wining tenders.
Strengths
* Experience of promoters: Benefits derived from the promoters'
experience of over a decade and healthy relations with customers
and suppliers should continue to support the business.
* Moderate financial risk profile: Networth was moderate at
INR9.02 crore while gearing was comfortable at 0.45 time as on
March 31, 2017. Interest coverage ratio was adequate at 4.57
times in fiscal 2017.
Outlook: Stable
CRISIL believes PBPL will continue to benefit over the medium
term from the experience of promoters. The outlook may be revised
to 'Positive' if substantial increase in revenue, profitability,
and cash accrual improves liquidity. Conversely, the outlook may
be revised to 'Negative' if low cash accrual, stretched working
capital cycle, or large, debt-funded capital expenditure weakens
financial risk profile particularly liquidity.
Established in 2003 and based in Pune, PBPL undertakes civil
construction works related to irrigation and railways. Mr. Ajay
Parwani and Mr. Alok Parwani are the promoters.
PD CORPORATION: ICRA Moves D Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA Limited (ICRA) has downgraded the ratings to [ICRA]D and has
also moved the ratings to the 'Issuer Not Cooperating' category
for bank facilities of PD Corporation Private Limited. The
ratings are now denoted as "[ICRA]D/[ICRA]D ISSUER NOT
COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Term Loan 12.12 [ICRA]D ISSUER NOT
COOPERATING; downgraded
from [ICRA]B+ and rating
moved to the 'Issuer Not
Cooperating' category
Fund Based Cash Credit 10.50 [ICRA]D ISSUER NOT
COOPERATING; downgraded
from [ICRA]B+ and rating
moved to the 'Issuer Not
Cooperating' category
Non Fund Based Bank 0.60 [ICRA]D ISSUER NOT
Guarantee COOPERATING; downgraded
from [ICRA]B+ and rating
moved to the 'Issuer Not
Cooperating' category
Rationale
The rating downgrade follows the delays in debt servicing by PD
Corporation Private Limited (PDCPL) to the lender(s), as
confirmed by them to ICRA. The liquidity profile is strained on
account of decrease in scale of operations. ICRA has limited
information on the entity's performance since the time it was
last rated in May 2016.
As part of its process and in accordance with its rating
agreement with PD Corporation Private Limited, 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
* Locational advantage: The location of the company's
manufacturing facility in Surat is favourable owing to proximity
to raw material suppliers and customers.
Credit weaknesses
* Delays in repayment of debt obligations: The account is
irregular.
* Weak financial profile: The financial profile of the company
remains weak as marked by moderate capital structure (gearing of
2.38 times), average coverage indicators (Total Debt/OPBDITA of
3.49 times, NCA/Total Debt of 14% and Interest coverage of 2.25
times), stretched receivables (debtor days of 182) and moderate
scale of current operations (Operating Income of INR49.93 crore)
for FY2016.
* Intense competition: The profitability of the company remains
vulnerable to pricing pressure caused due to the presence of a
large number of players in the textile embroidery space
* Vulnerability to raw material price fluctuations: The
profitability also remains vulnerable to fluctuation in prices of
its key raw materials such as fabric, embroidery threads, sequins
etc.
PD Corporation Private Limited (PDCPL), incorporated in August
2011, commenced commercial operations in January 2013 and is
engaged in the manufacture of embroidered fabrics as well as
carrying out embroidery on a job work basis. The facility is
located in the textile hub of Surat, Gujarat and is equipped with
87 embroidery machines with a total capacity of carrying out 32
crore stitches per annum.
PERTINENT INFRA: ICRA Reaffirms B+ Rating on INR11.90cr LT Loan
---------------------------------------------------------------
ICRA Limited (ICRA) has reaffirmed the long-term rating at
[ICRA]B+ the INR15.00 crore1 long term fund based facilities of
Pertinent Infra and Energy Limited. The outlook on the long term
is revised from Stable to Negative.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term-Fund
Based 11.90 [ICRA]B+ reaffirmed Outlook
revised to Negative
Long term-
Unallocated 3.10 [ICRA]B+ reaffirmed Outlook
revised to Negative
Rationale
The outlook revision reflects significant deterioration in
liquidity position as well as stretched cash flows of the company
in the backdrop of delays in payment from Maharashtra State
Electricity Distribution Company Limited (MSEDCL) with payment
outstanding of over six to eight months as on Jul-17. ICRA also
take note of possible cash flow mismatches in near to medium term
given thin accruals and sizeable repayment obligations. ICRA
expects credit profile of PIEL could weaken further over next two
quarters in absence of regularization of payment from state
discom.
The rating continues to reflect the long standing experience of
the promoters in the wind energy sector and financial flexibility
provided by the other group businesses. The rating however remain
constrained by stretched debtor cycle, small scale of operations,
weak capital structure with high gearing & weak debt coverage
indicators and exposure to plant utilization and counter party
risks. ICRA expect timely financial support from group entities
as well as promoters in case of any financial exigencies.
Key rating drivers
Credit strengths
* Long standing experience of the promoters: The promoters of the
company have over three decades of experience in wind energy
sector with the group company - Priyadarshini Polysacks Limited,
being in wind mill energy generation since 2006.
* Financial flexibility provided by the promoters: The company
derives significant support from the promoters in the form of
unsecured loans which remains critical for the company, given the
sizeable repayment obligations and stretched cash flows owing to
significantly delayed payments from MSEDCL. Further healthy
performance of the group businesses in PP sack manufacturing also
provides financial flexibility to the company in case of cash
flow mismatch.
Credit weaknesses
* Small scale of operations; exposed to plant utilization and
counter party risks: PIEL operates only two windmills in
Maharashtra having a capacity of 3 MW which exposes the company
to the risks pertaining to small scale of operations due to
limited source of cash flows. It also exposes the company to
counter party risk as evident from the stretched receivable cycle
due to delayed payments from MSEDCL which is impacting the cash
flow position of the company.
* Weak capital structure with high gearing and weak debt coverage
indicators; Stretched liquidity position due to delayed payments
from the key client: High debt levels for windmill installation
on a limited net worth base have resulted in stretched capital
structure of the company. The gearing of the company stood at
3.1x as on March-2017. The coverage indicators are weak with
Debt/OPBDITA at 3.9x and interest coverage at 2.4x in FY2017.
Working capital intensity also increased significantly in FY2017
owing to stretched receivable cycles with over 50% of debtors
more than 180 days majorly contributed by MSEDCL Sangli and
MSEDCL Satara.
Sensitivity
* Further deterioration in working capital cycle
* Debt funded capacity expansion
PIEL was formerly known as Maharashtra Prestressed Pipes Limited
and it used to sell PP woven bags on consignment basis which were
produced by the flagship company of the group PPL. However this
business was discontinued in 2011-12. The company was renamed in
2011 as Pertinent Infra & Energy Limited and since then is
engaged in Wind power generation business and operates two
windmills of 1.5 MW each in Satara and Sangli (Maharashtra).
In FY2017, on a provisional basis, the company reported a PAT of
INR0.3 crore on an operating income of INR2.9 crore, as compared
to PAT of INR0.2 crore on an operating income of INR2.8 crore in
the previous year.
PIANO PRESITEL: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Piano Presitel's
(Piano) Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise, despite
continuous requests and follow ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND
BB(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR41.7 mil. Long-term loan migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING) rating; and
-- INR120 mil. Fund-based facilities migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
November 3, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Set up in 1982, Piano is engaged in the manufacture and supply of
various varieties of auto parts such as washers, clips and allied
stainless steel components. The company has a manufacturing
facility in Thane, Mumbai.
PRATIBHA INDUSTRIES: CRISIL Reaffirms D Rating on INR108.83M Loan
-----------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL D/CRISIL D' ratings on
the bank loan facilities of Pratibha Industries Ltd (PIL). The
ratings continue to reflect delays by PIL in meeting its debt
obligation on account of severe liquidity crunch due to stretched
working capital cycle. The ratings are based on publicly
available information and brief interaction with the company.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Short Term Loan 2.74 CRISIL D (Reaffirmed)
Term Loan 108.83 CRISIL D (Reaffirmed)
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of PIL; its wholly owned subsidiaries
Prime Infrapark Pvt Ltd, Muktangan Developers Pvt Ltd, Pratibha
Holding (Singapore) Pte Ltd, and Pratibha Infra Lanka (Pvt) Ltd;
and majority owned subsidiary Bhopal Sanchi Highways Pvt Ltd.
Key Rating Drivers & Detailed Description
* Delay in debt servicing: PIL has delayed obligation on its term
loan, and there have been instances of invocation of bank
guarantee and devolvement of letter of credit, due to severely
stretched working capital cycle. The lenders have approved
strategic debt restructuring (SDR) for the company. In
consultation with the SDR committee, the company is in talks with
various strategic investors. It is likely to clear the dues once
a strategic investor is finalised and puts in the mutually agreed
funds to revive the business and clear past overdues.
Weakness
* Weak financial risk profile: The financial risk profile remains
weak due to large debt and weak debt protection metrics. The
group has large working capital requirement, and faces risks
associated with execution of infrastructure projects. CRISIL
believes gearing will remain high on account of large term debt
and sizeable working capital requirement. Successful
implementation of the SDR scheme, and improvement in capital
structure are key monitorables.
Strength
* Extensive experience of the promoters in the construction
industry: The promoters have experience of more than two decades
in urban infrastructure and specialised projects, including
tunnelling, airports, car parks, high-rise buildings, flyovers,
and bridges. The group has efficient project management skills,
backed by a trained and skilled labour force, necessary
equipment, and good sub-contracting management systems, in
addition to onsite decision-making capabilities.
CRISIL believes increased government spending on infrastructure
sector augurs well for the company in the near term. However,
ability to improve operating efficiency and strengthen business
risk profile will be a key rating sensitivity factor.
PIL, set up by Mr. Ajit Kulkarni in 1982, undertakes
infrastructure development with a focus on water supply and
environment engineering projects, and urban infrastructure
projects. In the urban infrastructure segment, it builds and
modernises airports and railway stations, and constructs roads,
high-rise buildings, mass housing projects, and shopping malls.
In the water supply segment, it lays water pipelines; constructs
sewerage treatment plants, water reservoirs, and water storage
systems; and undertakes tunnelling projects.
RKC INFRABUILT: ICRA Lowers Rating on INR36.3cr Term Loan to D
--------------------------------------------------------------
ICRA Limited (ICRA) has revised the long-term rating for the
INR36.30 crore bank facilities of RKC Infrabuilt (Tarapur-
Khambhat) Road Project Private Limited (RKC-TK) to [ICRA]D from
[ICRA]BB+ (Stable).
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term Loan 36.30 [ICRA]D; Revised from
[ICRA]BB+(Stable)
Rationale
The rating revision takes into account delays in servicing the
debt obligations by the company owing to the cashflow mismatches
arising out of delayed annuity receipts. The unfavourable
revision in repayment schedule leading to reduction in the time
gap (7 days presently compared to 175 days earlier ) between the
annuity receipt date and its aligned term loan repayment date
coupled with absence of the DSRA/escrow requirement led to delays
in debt servicing. Further, the rating also takes into account,
company's exposure to risks related to O&M and major maintenance
since receipt of the entire annuity quantum depends on ensuring
100% lane availability and vulnerability of profitability to the
higher-than-estimated increase in the operating and maintenance
expenses.
The rating, takes note of the vast experience of the promoter in
road construction projects in Gujarat and the annuity based
nature of the project with R&BD, GoG which results in predictable
revenues irrespective of the traffic on the route.
Key rating drivers
Credit Strength
* Longstanding experience of promoters in the road construction
segment: The promoters of RKC-TK have been involved in road
construction and quarry crushing business for more than two
decades through RKC-TK's holding companies -S I Quarry Works Pvt
Ltd (SIQ) and RKC Infrabuilt Private Limited (RKC).
* Annuity based nature of the project: Irrespective of the actual
traffic movement on the road, the RKC-SH is expected to receive a
fixed annuity payment of INR4.16 crore from the Road &Building
Department, Government of Gujarat semi-annually up to December
2025. There is neither a risk of reduced receipt in case of low
traffic flow on the route nor an advantage in the event of high
traffic flow.
Credit Concerns
* Delays in debt servicing obligations: The repayment due dates
were revised resulting in reduced time gap (~7 days) between the
annuity receipt date and its aligned term loan repayment date
compared to from earlier gap of 175 days. The reduction in time
gap, followed by subsequent delays in annuity receipts beyond 7
days coupled with absence of DSRA/Escrow mechanism led to
cashflows mismatches leading to delays in debt servicing
obligations to bank by the company.
* Exposure to receipt of full annuity depending upon the full
lane availability made by the company: RKC-SH will have to
maintain adequate lane availability as continual receipt of
annuities is contingent upon the company ensuring 100% lane-
availability. Thus, the ability of RKC-SH to maintain the
specified driving quality of the carriageway; safety standards
and adherence to maintenance schedule would be important to
protect the annuity, which is the main stream for debt servicing.
* Vulnerability of profit to higher-than-estimated operating and
maintenance expenses: The company's profitability remains
vulnerable to risks related to higher than estimated operation
and maintenance expense. Also any unanticipated major maintenance
expense may adversely affect the profitability.
Incorporated in 2011 as a wholly-owned subsidiary of S I Quarry
Works Private Limited and RKC Infrabuilt Private Limited, RKC
Infrabuilt (Tarapur Khambat) Road Project Private Limited (RKC-
TK) is a special purpose vehicle (SPV) which has constructed,
improved and widened along the stretch from Tarapur to Khambhat.
The project entailed construction on the existing two-lane State
Highway 16 covering a distance of 26.90 km in Gujarat on a
design, built, finance, operate and transfer (DBFOT) basis and to
thereafter maintain it for a period of 12 years.
The entire project was executed before the projected timeline at
a total cost of INR49.00 crore. The highway is made available for
public use from November 2, 2013.
ROOP RAM: CRISIL Raises Rating on INR14MM LT Loan From 'C'
----------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Roop Ram Educare Pvt Ltd (RREPL) to 'CRISIL
B/Stable' from 'CRISIL C' and reaffirmed the short-term rating at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 1 CRISIL A4 (Reaffirmed)
Proposed Long Term 14 CRISIL B/Stable (Upgraded
Bank Loan Facility from 'CRISIL C')
Term Loan 5 CRISIL B/Stable (Upgraded
from 'CRISIL C')
The upgrade reflects improvement in the business and financial
risk profiles of the company. During fiscal 2017, the revenue
improved by 16% to reach INR31.8 crore from previous year's
INR27.4 crore, backed by increase in the student intake (600 in
fiscal 2017 against 426 in fiscal 2016). During the year, led by
moderate accretion to reserves of INR0.40 crore, the gearing also
improved to 3.31 times as on March 31, 2017 from 7.79 times a
year earlier. The revenue profile will continue to improve,
supported by healthy student intake over the medium term.
The ratings reflect small scale of operations, exposure to
intense competition from other established schools and regulatory
risks associated with educational institutions. These weaknesses
are partially offset by strong potential demand for education in
India.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations and exposure to competition from
established schools in the vicinity: Moderate scale of operations
reflected in revenue of INR31.8 crore in fiscal 2017 and exposure
to competition from well-known schools, such as Pathways World
School further restrict the growth prospects. Moreover, inflow of
students largely depends on ability to offer quality education,
which requires constant improvement in infrastructural facilities
and retention of the best faculty. Intense competition also leads
to shortage of qualified and experienced teachers. Hence,
sustained inflow of students and maintenance of the operating
margin will remain key rating sensitivity factors.
* Vulnerability to regulatory risks associated with educational
institutions: Courses offered by schools should comply with
specific operational and infrastructural norms set by regulatory
bodies, pushing for regular investments in workforce and
infrastructure. Setting up new institutes or addition of seats
requires approvals, which also need to be renewed periodically.
Strength
* Strong potential demand for education in India: Inefficiency
in the public education system and growing awareness regarding
quality education has increased the preference for private
institutions, mainly those in the higher education and
professional streams. The private sector would attract three-
fourths of total expected investment in the education sector,
over the next five years.
Outlook: Stable
CRISIL believes RREPL will maintain its established position in
the education sector over the medium term, driven by the
extensive experience of its promoters. The outlook may be revised
to 'Positive' in case of an increase in revenue and profitability
supported by healthy occupancy resulting in healthy cash
generation. The outlook may be revised to 'Negative' if there is
large debt-funded capital expenditure, or a decline in student
strength resulting in lower profitability, thus weakening of the
financial risk profile, particularly liquidity.
RREPL was started in 2007 by Mr. Anand Singh Mann and his family
members. The company operates Lancers International School at
Gurugram, Haryana. The school follows the International
Baccalaureate and the University of Cambridge International
Examinations syllabus, and has classes from kindergarten to
standard 12.
ROYAL TYRES: ICRA Lowers Rating on INR6.21cr Loan to 'D'
--------------------------------------------------------
ICRA Limited (ICRA) has downgraded the long-term rating from
[ICRA]B to [ICRA]D for the INR6.61-crore fund-based facilities
and the INR2.29-crore unallocated limits of Royal Tyres Private
Limited. ICRA has also downgraded the short-term rating from
[ICRA]A4 to [ICRA]D for the INR0.80-crore fund-based facilities,
INR0.30-crore non-fund-based facilities and INR2.29-crore
unallocated limits of RTPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash 0.40 [ICRA]D; downgraded
Credit from [ICRA]B (Stable)
Fund-based-Term 6.21 [ICRA]D; downgraded
Loan from [ICRA]B (Stable)
Fund-based- 0.80 [ICRA]D; downgraded
Packing credit from [ICRA]A4
Non-fund-based- 0.30 [ICRA]D; downgraded
Bank guarantee from [ICRA]A4
and Letter of
Credit
Long-term and 2.29 [ICRA]D; downgraded
Short-term- from [ICRA]B (Stable)
Unallocated limits and [ICRA]A4
Rationale
The ratings downgrade reflect the delay in debt servicing by RTPL
on account of severe liquidity pressures arising from continuous
decline in revenues over the last five years, mainly on account
of the weak demand in the export market primarily from European
countries. The ratings also factor in the stretched capital
structure and deteriorated coverage indicators which resulted
from the completion of the debt-funded capital expenditure in
FY2016. However, the ratings continue to factor in the
significant experience of the promoters spanning four decades in
the business of rubber compounding and manufacturing solid tyres.
Key rating drivers
Credit strengths
* Longstanding experience of the promoters in the solid tyre
industry spanning three decades: RTPL was founded in 1972 as
Royal Rubber & Plastic products by Mr. M Mani, which was later
incorporated as a company in 1992. The promoters of the company
have vast experience spanning three decades in the rubber
compounding and manufacture of Rubber Molded products & Solid
tyres. They are assisted by Mr. Sendil Kumaran, executive
director, a former Customs Officer and a Foreign Trade
Professional, with strong grounding in Commercial functions and
International Sales & Marketing.
Credit weaknesses
* Unfavorable export demand prospects: The company sells in both
domestic and export markets. There has been a decline in off-take
from its existing export customers due to the slowdown in the
European economies. As a result, the exports declined drastically
over the last three years. The company also faced difficulties in
acquiring new export customers during the year. Weak order-book
position coupled with recently set-up enhanced production
facility resulted in lower-than anticipated capacity utilization
leading to under-absorption of overheads.
* Stretched liquidity position leading to delays in debt
servicing: The financial profile of the company weakened on
account of the significant increase in the debt position of the
company owing to the term loan availed for the capacity expansion
project. This has resulted in significant repayment obligations
where the repayment commenced from April 2016. Owing to stretched
liquidity position, the company delayed in debt servicing in the
past three months.
Incorporated in 1992, Royal Tyres Private Limited is engaged in
the manufacturing of solid tyres catering to various end user
industries including automobile, logistics, railway and airport.
Solid tyres are used as consumables in these industries where it
primarily finds application as tyres of the fork lifters. The
company has two manufacturing facilities in Chennai (Ambathur and
Sriperumbdur) with a capacity to manufacture around 40,000 solid
tyres a year and it caters to both export and domestic markets.
Royal Tyres was founded in 1972 as Royal Rubber & Plastic
products by Mr. M Mani, which was later incorporated as a company
in 1992. The firm was engaged in Rubber compounding (mixing)
during the initial years. Later, the company became a rubber
product supplier to leading automobile giants like Leyland group.
In 1985, the company ventured into solid tyre manufacturing,
mainly press on tyres (metal to rubber bonded).
In FY2016, RTPL achieved a net profit of INR0.1 crore on a total
operating income of INR4.7 crore as compared to net profit of
INR0.1 crore on a total operating income of INR5.6 crore during
the previous financial year.
S&J GRANULATE: ICRA Cuts Rating on INR5.0cr Loan to 'D'
-------------------------------------------------------
ICRA Limited (ICRA) has downgraded the long-term rating to
[ICRA]D from [ICRA]BB- for the INR5.00 crore NCD facility of S&J
Granulate Solutions Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 5.00 [ICRA]D; Downgraded from
Debentures [ICRA]BB-(Stable)
Rationale
The revision in ratings follows recent adverse comments from
S&J's banker, which indicated instances of delays in timely
servicing of its bank facilities in recent past. This is mainly
due stretched liquidity position owing to working capital
intensive nature of business. ICRA also takes a note of the
company's stretched capital structure and vulnerability of
profitability to foreign exchange rate on accounts of imports.
Going forward, the company's ability to demonstrate a track
record of timely debt servicing, driven by a sustained
improvement in its liquidity position, will be the key rating
sensitivity.
Key rating drivers
Credit strengths
* Steady growth in operating income driven by favourable demand
for its key products in domestic market: The operating income has
witnessed a considerable growth as represented by the CAGR of
~70% between the period of FY2013-FY2017. The operating income
has witnessed a growth of ~24% from INR68.93 crore in FY2013 to
INR85.28 crore in FY2017, backed by an increasing demand of
rubber granules from the consuming industry. Rubber granules are
the key products of the company, which is used to manufacture
cushioning materials for play grounds and other public areas
popular for children and senior citizens. It is also used in the
manufacturing of rubber moulded products like carpet padding,
flooring materials, mats and sidewalks. With the increase in
number of luxurious township projects and infrastructure
development projects, the demand outlook for rubber granules seem
to be positive.
* Forward and backward integrated of operations strengthen the
sourcing capabilities and render support to profit margins: The
company has backward integrated its operations into in-house
chopping of radial tyres, which will reduce the impurities such
as stones in the raw materials, as well as strengthens its raw
material sourcing capabilities. Further, it also plans to forward
integrate its operations via addition of advanced rasper machines
for manufacturing rubber granules upto 0.2 MM (presently it
manufactures upto 0.8MM), steel cleanser machines to achieve
almost 99% purity within steel wire and colour machines to
manufacture coloured rubber granules. The forward and backward
integration via the ongoing capex of INR23.00 crore shall improve
the profitability in the near to medium term.
Credit weaknesses
* Instances of delays in debt servicing on bank loans owing to
strained liquidity position: The company's operations remained
working capital intensive as indicated by NWC/OI of 47% in
FY2017. This is attributable to high inventory levels and slow
realisation of payments from customers along with tight payable
terms with its creditors. This has led to instances of delays in
debt servicing of its term loan facility for bank. Further, the
near term scheduled repayment of INR10.28 crore in FY2018 is
likely to keep cash flow position under stress.
* Debt funded capital expenditure has led to leveraged capital
structure and weak coverage indicators: The company had
undertaken a capex of INR23.00 crore to forward and backward
integrate its operations. Of the aforementioned capex, the
company has completed project worth INR16.00 crore in FY2017. The
same has been funded through INR13.00 crore loans from NBFCs,
while the balance through internal accruals and promoters
funding. The debt funded capex has led to stretched capital
structure as represented by gearing level of 4.06 times as on
March 31, 2017. The balance capex of INR7.00 crore, for
infrastructure development and setting up of additional shed
within the factory unit, is scheduled to be incurred in FY2018.
This is expected to be funded, by the promoters, through an
infusion of unsecured loans. Due to the same, the capital
structure is expected to remain stretched for the near to medium
term.
* Vulnerability of profit margins to foreign exchange rate
movement on account of imports: The raw materials for the company
i.e. used / worn out tyres are imports from Europe and the Middle
East, thereby, exposing it to foreign exchange fluctuation risks.
However, the risk is mitigated, to certain extent, by passing on
the currency fluctuation impact to its customers.
Incorporated in 2010, S&J Granulate Solutions Private Limited
(S&J) is engaged in the business of recycling used/worn out
tyres. The company imports used rubber tyres and through
processing/recycling, separates rubber granules, steel wire and
nylon fibre from tyres. The company's manufacturing facility is
located at Lavachha along the Vapi Silvassa Road in Gujarat. The
company is promoted by the Jiwarajka and Agarwal families.
S&J has recorded an operating profit of INR14.27 crore and net
profit of INR4.52 crore on an operating income of INR85.28 crore
for the year ending March 31, 2017, as per the provisional
statement. This is against an operating profit of INR8.77 crore
and net profit of INR1.28 crore on an operating income of
INR68.93 crore for the year ended March 31, 2016, as per the
audited statement.
SAHIB PESTICIDES: CRISIL Reaffirms B+ Rating on INR5MM Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the long-term bank facility of Sahib Pesticides (SP).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect SP's modest scale of operations,
large working capital requirement, and average financial risk
profile. These weaknesses are partially offset by experience of
the proprietor.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations, and large working capital
requirement: Scale of operations has been small, with turnover of
INR26.6 crore in fiscal 2017, in the intensely competitive agro
chemical industry. Gross current assets were 206 days as on
March 31, 2017, due to sizeable receivables and inventory of 100
days and 83 days, respectively.
* Average financial risk profile: Networth was small at INR2.11
crore as on March 31, 2017, with high gearing of 4.26 times.
Interest coverage and net cash accrual to total debt ratios were
1.98 times and 0.1 time, respectively, in fiscal 2017.
Strength
* Experience of proprietor: Benefits from the proprietor's
experience of three decades and healthy relations with customers
and suppliers should continue to support the business.
Outlook: Stable
CRISIL believes SP will continue to benefit over the medium term
from experience of the proprietor. The outlook may be revised to
'Positive' if significant increase in revenue and profitability
strengthens financial risk profile. Conversely, the outlook may
be revised to 'Negative' if sharp decline in profitability or
revenue, leading to lower-than-expected cash accrual, or stretch
in working capital cycle weakens financial risk profile.
Established in 2006 as a proprietorship firm by Mr. Subhash
Khurana, SP manufactures insecticides and fungicides at its
facility in Karnal, Haryana. It commenced operations from 2009.
SANGAT PRINTERS: Ind-Ra Moves BB- Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sangat Printers
Private Limited's (SPPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR45 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB-(ISSUER NOT COOPERATING)/IND
A4+(ISSUER NOT COOPERATING) rating;
-- INR1 mil. Proposed fund-based working capital limit migrated
to non-cooperating category with Provisional IND BB-(ISSUER
NOT COOPERATING)/Provisional IND A4+(ISSUER NOT COOPERATING)
rating; and
-- INR16 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
November 4, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SPPL was incorporated in 1994 by Mr. Sarabjit Singh and Ms.
Malveen Kaur. It is engaged in printing of food packaging
materials, magazines, banners, and cartons. The company has two
servicing facilities in Haryana and one each in Delhi and
Hyderabad.
SHILPI CONSTRUCTION-GIRIDIH: CRISIL Rates INR5MM Cash Loan at B+
----------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Shilpi Construction-Giridih
(Shilpi).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7 CRISIL A4
Cash Credit 5 CRISIL B+/Stable
The ratings reflect Shilpi's modest scale of and working capital
intensive operations and exposure to intense competition in the
civil construction industry. The ratings also reflect Shilpi's
modest financial risk profile and moderate debt protection
metrics. These weaknesses are partially offset by the extensive
experience of the partners and moderate revenue visibility.
Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of the partners: Benefits from the
partners' three decade-long experience in the industry and
established relationships with raw material suppliers and
principals should support business.
Weakness
* Exposure to intense competition and tender-based operations:
Shilpi will remain exposed to intense competition in the civil
construction industry. As almost all revenue accrues from tender-
based projects, the ability to successfully bid for them will
continue to be critical.
* Modest scale of operations: Scale of operations should continue
to be modest over the medium term. Revenue was INR17.5 crore in
fiscal 2017 and orders worth INR80 crore are to be executed over
the next 18-24 months. Networth was INR4.44 crore as on March 31,
2017.
Outlook: Stable
CRISIL believes Shilpi will continue to benefit from the
extensive experience of its partners. The outlook may be revised
to 'Positive' if increase in scale of operations and stable
profitability result in high cash accrual or if capital infusion
strengthens capital structure. The outlook may be revised to
'Negative', if any debt-funded capital expenditure or inability
to execute projects on time or aggressive bidding exerts pressure
on margins.
Incorporated in 1984, Shilpi is based in Giridhi, Jharkhand and
promoted by Mrs. Sunita Sharma and family. The firm undertakes
construction for water treatment and water supply projects in
Giridhi and nearby areas.
SHIVA DALL: CRISIL Reaffirms B+ Rating on INR12MM Cash Loan
-----------------------------------------------------------
CRISIL Ratings has been consistently following up with Shiva Dall
Industries (SDI) for obtaining information through letters and
emails dated September 19, 2017 and October 9, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 12.00 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan .95 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Shiva Dall Industries. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for Shiva Dall Industries is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower.
Based on the last available information, CRISIL has reaffirmed
the rating at 'CRISIL B+/Stable'.
Set up in 2009, by Mr. Ashok Kumar Lalwani, SDI processes pulses
such as matar dal, chana dal and rahar dal. The manufacturing
facility at Raipur has capacity to process 50 tonnes of pulses
per day.
SHRID METAL: CRISIL Reaffirms B- Rating on INR4.50MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank loan
facilities of Shrid Metal Technologies Pvt Ltd (SMTPL) at 'CRISIL
B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL A4 (Reaffirmed)
Bill Discounting 0.58 CRISIL A4 (Reaffirmed)
Cash Credit 4.50 CRISIL B-/Stable (Reaffirmed)
The ratings continue to reflect operating losses due to limited
capacity utilization and weak financial risk profile. These
rating weaknesses are partially offset by the experience of
promoters in the engineering industry and their funding support.
Key Rating Drivers & Detailed Description
Weakness
* Operating losses due to limited capacity utilisation: With low
capacity utilisation, the breakeven revenue has not yet been
achieved, leading to operating losses.
* Weak financial risk profile: Networth remains negative with
continued net losses in fiscal 2017. Debt protection metrics are
stressed with negative interest coverage and net cash accrual to
debt ratios in fiscal 2017.
Strengths
* Promoters' experience and funding support: The promoters' five
years of experience through SMTPL and their funding support
continues to benefit the in sustaining the operations of the
company.
Outlook: Stable
CRISIL believes that SMTPL will continue to benefit over the
medium term from its promoters' industry experience and continued
funding support. The outlook may be revised to 'Positive' if the
financial risk profile improves, especially liquidity, driven by
higher cash accrual as well as infusion of large funds by the
promoters. Conversely, the outlook may be revised to 'Negative'
if further pressure on liquidity on account of higher cash losses
or a stretch in its working capital cycle, impacts the company's
ability to service debt.
SMTPL, incorporated in 2012, manufactures machined and forged
components, which find application in the defence, food-
processing, pharmaceuticals, and automobile industries. The
manufacturing facility is located in Pune, Maharashtra with an
installed capacity of 700 tonnes per month (tpm). The company is
promoted by Mr. Shriyash Kulkarni and his family.
SIGMA CHEMTRADE: Ind-Ra Moves BB+ Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sigma Chemtrade
Pvt. Ltd.'s (SCPL) Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The ratings will
now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR12.5 mil. Fund-based working capital limit migrated to
non-cooperating category with IND BB+(ISSUER NOT COOPERATING)
rating; and
-- INR130 mil. Non-fund-based working capital limits migrated to
non-cooperating category with IND A4+(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
October 27, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
SCPL, set up in 2007 in Indore (Madhya Pradesh), is engaged in
the trading of polymers and plastic raw materials such as high-
density polyethylene, low-density polyethylene, polypropylene and
chemicals. The company imports polymers and plastic raw materials
from countries such as the UAE and Malaysia. The company sells
imported raw materials in the domestic market.
Moreover, SCPL is a consignment agent of Finolex Industries
Limited ('IND AA'/ Stable) for polyvinyl chloride resin and NOCIL
Limited for rubber chemicals in Madhya Pradesh. SCPL receives
commission for the consignment work.
Mr. Sanjay Goyal, Mr. Vijay Goyal and Mrs. Nina Goyal are the
main promoters of the company.
SONAPUR HERBAL: ICRA Moves D Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA Limited (ICRA) has moved the rating for the INR16.00 crore
bank facilities of Sonapur Herbal Centre Pvt Ltd to the 'Issuer
Not Cooperating' category. The rating is now denoted as: "[ICRA]D
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based limits 14.18 [ICRA]D; ISSUER NOT CO-
OPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Untied limits 1.82 [ICRA]D; ISSUER NOT CO-
OPERATING; 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 29, 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 Sonapur Herbal Centre Pvt Ltd, ICRA has been
trying to seek information from the company so as to monitor its
performance, but despite repeated requests by ICRA, the company'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 01, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
Key Rating Drivers
Credit Strength
* Locational advantage: Continued funding support from the
promoters in the form of equity as well as interest free
unsecured loans
Credit Challenge
* Unsatisfactory track record in timely servicing of debt
obligations: Unsatisfactory track record in timely servicing of
debt obligations. Significant delay witnessed in the
implementation of the ongoing project, leading to time as well as
major cost overrun
Incorporated in 2000, SHCPL currently owns and operates a 20-room
resort, "Spring Valley Resort" at Sonapur, Assam. The company is
in the process of converting the existing resort into a four-star
hotel-cum-resort with 60 rooms/cottages (including the existing
20 cottages). Currently, the resort also operates a multi-cuisine
dining-cum-restobar, coffee shop, spa-cum-saloon, conference
room, banquet hall and swimming pool, all within the same
premises.
SPUNWEB NONWOVEN: ICRA Assigns B+ Rating to INR8.04cr Term Loan
---------------------------------------------------------------
ICRA Limited (ICRA) assigns the long-term rating of [ICRA]B+ to
the INR14.54 crore fund-based facilities of Spunweb Nonwoven Pvt.
Ltd. ICRA has reaffirmed the short-term rating at [ICRA]A4 to the
INR0.45 crore non-fund based facility. ICRA has also reaffirmed
the long-term rating at [ICRA]B+ and reaffirmed the short-term
rating at [ICRA]A4 to the INR0.06 crore unallocated limits of
SNPL. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-
Cash Credit 6.50 [ICRA]B+ assigned/outstanding
Fund-based-
Term Loan 8.04 [ICRA]B+ outstanding
Non-Fund Based-
Bank Guarantee 0.45 [ICRA]A4 outstanding
Unallocated Limit 0.06 [ICRA]B+/[ICRA]A4 outstanding
Rationale
The upgrade in the long-term rating takes into account the
stabilisation of operations and achievement of estimated
operating parameters. Nonetheless, the ratings continue to remain
constrained by the company's relatively moderate scale of
operations, its high gearing and stretched working capital
intensity. The ratings also take into consideration the
vulnerability of profitability to any adverse fluctuations in raw
material prices, low bargaining power with suppliers amid intense
competitive pressure in the technical textile industry.
The ratings, however, continue to favourably factor in the long
experience of the promoters for more than a decade in the non-
woven textile segment. ICRA notes the stable demand outlook for
non-woven fabric due to its multiple applications across various
industries.
Key rating drivers
Credit strengths
* Past experience of the management in non-woven textile segment:
SNPL was promoted by Mr. Dilip Kagathara and family, who have
past experience in the non-woven textile business through their
previous association with Karam Multipack Private Limited,
engaged in the same business sector.
* Multiple applications of non-woven fabric: The company
manufactures non-woven fabric ranging from 8 GSM2 to 200 GSM. Due
to the various characteristics of non-woven fabric like
absorbency, liquid repellence, resilience, stretch, softness,
bacterial barrier, etc., it has varied applications in health
care and hygiene products, surgical products, agro commodities
packaging, apparel, etc.
Credit weaknesses
* Average financial risk profile: SNPL commenced commercial
production from September, 2016 and recorded an operating income
of INR12.11 crore in FY2017, reflecting a modest scale of
operations. The operating profitability stood at 14.05% as per
provisional financials while the net margins before depreciation
and tax stood at 9.63% in FY2017. The company had an adverse
capital structure as reflected by high gearing of 3.61 times as
on March 31, 2017 due to debt funded capex and high working
capital requirements. Thus the coverage indicators also remained
moderate with interest coverage ratio of 2.89 times and NCA/Debt
of 10% in FY2017. The working capital intensity stood high at 58%
in FY2017, because of high inventory and receivables by the end
of FY2017.
* Vulnerability of profitability to fluctuations in raw material
prices; limited bargaining power with suppliers: The key raw
material required for manufacturing non-woven fabric is
polypropylene (PP), which is a crude oil derivative. The company
procures its raw material from distributors of Indian Oil
Corporation Ltd. (IOCL), Reliance Industries Ltd. (RIL),
ExxonMobil, while also importing the same from Singapore. Due to
its relatively small scale of operations, the SNPL's bargaining
power with suppliers remains low. Moreover, it maintains a high
inventory of ~120 days, which exposes its profitability to the
risk of any adverse price fluctuations of the raw material.
* Margins subject to pressure from intense competition: The
domestic non-woven industry remains highly fragmented and
dominated by the unorganised sector due to low capital
requirements and low techno intensive to establish. Thus,
relatively modest scale players like SNPL faces stiff competition
that leads to pricing pressure.
Incorporated in August 2015, Spunweb Nonwoven Private Limited
(SNPL) is engaged in manufacturing Polypropylene (PP) non-woven
fabric that finds application in healthcare products, packaging
for agro commodities, automotive and medical products, etc.
SNPL's The plant is located in the Morbi region of Gujarat, with
an installed capacity of 4800 MTPA, wherein it manufactures
fabric ranging from 8-200 GSM with a width of 3.2 meters.
In FY2017, the company reported a net profit (before depreciation
and tax) of INR1.17 crore on an operating income of INR12.11
crore.
SRI K VENKAT: Ind-Ra Moves BB- Issuer Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sri K.Venkat
Narasimha Reddy's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR60 mil. Fund-based Limits migrated to non-cooperating
category with IND BB-(ISSUER NOT COOPERATING) rating; and
-- INR80 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 25, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1998, Sri K.Venkat Narasimha Reddy is a
proprietorship firm engaged in the construction of roads and
other civil works.
SRI VENKATA: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sri Venkata Siva
Parvathi Spinning Mills Pvt. Ltd.'s Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the rating exercise, despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The rating
will now appear as 'IND BB+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR417.03 mil. Long-term loans migrated to non-cooperating
category with IND BB+(ISSUER NOT COOPERATING) rating;
-- INR457 mil. Fund-based facilities migrated to non-cooperating
category with IND BB+(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating; and
-- INR113.3 mil. Non-fund-based facilities migrated to non-
cooperating category with IND A4+(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 12, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2003, Sri Venkata Siva Parvathi Spinning Mills
manufactures cotton yarn with installed capacity of 56,064
spindles in Guntur, Andhra Pradesh.
STAARLIGHT DESIGNS: CRISIL Reaffirms B+ Rating on INR3MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Staarlight
Designs (SD) for obtaining information through letters and emails
dated September 15, 2017 and October 09, 2017 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 0.35 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Export Packing 3.00 CRISIL B+/Stable (Issuer Not
Credit Cooperating; Rating
Reaffirmed)
Foreign Demand 2.60 CRISIL A4 (Issuer Not
Bill Purchase Cooperating; Rating
Reaffirmed)
Long Term Loan .75 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term 3.30 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Staarlight Designs. This
restricts CRISIL's ability to take a forward looking view on the
credit quality of the entity. CRISIL believes that the
information available for Staarlight Designs is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BB' rating category or lower. Based on
the last available information, CRISIL has reaffirmed the rating
at 'CRISIL B+/Stable/CRISIL A4'.
Established in 1999, SD manufactures and exports knitted garments
to companies in Europe. The firm has its manufacturing facility
at Tirupur (Tamil Nadu) and is promoted by Mr. B.M Ravichandran
and Mr. M. Karuppusamy.
TRIPATHI HOSPITAL: CRISIL Reaffirms B+ Rating on INR20MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Tripathi
Hospital Private Limited (THPL) for obtaining information through
letters and emails dated September 18, 2017 and October 09, 2017
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 20 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Tripathi Hospital Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for Tripathi Hospital Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' rating category or lower. Based on the last available
information, CRISIL has reaffirmed the rating at 'CRISIL
B+/Stable'.
THPL, incorporated in November 2001, provides medical services in
the fields of orthopaedics and gynaecology/obstetrics. It was
originally established as a partnership firm in 2000 and was
reconstituted as a private limited company in 2001. The company
is managed by Mr. B K Tripathi and his wife Ms. Nidhi Tripathi.
It has a 100- bed hospital at Noida in Uttar Pradesh.
WEST BENGAL INFRASTRUCTURE: Ind-Ra Withdraws WD Bond Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn West Bengal
Infrastructure Development Finance Corporation Ltd's (WBIDFC)
bond rating as follows:
-- INR10,000 mil. Bond, with INE740F08363 ISIN, issued on
October 9, 2007, with 9.30% Coupon Rates, due on October 8,
2017, withdrawn with WD rating.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the rating, based on the
receipt of a no-dues certificate from the WBIDFC stating that the
bonds have been repaid in full in October 2017.
COMPANY PROFILE
WBIDFC is wholly owned by the government of West bengal. The
company was established in May 1997 to provide for the
development of infrastructure in West Bengal. It is registered
with the Reserve Bank of India as a non-banking finance company.
It functions as an extended arm of the government in financing
infrastructure projects.
=================
I N D O N E S I A
=================
BANK BRISYARIAH: Fitch Publishes BB+ LT IDR; Outlook Stable
-----------------------------------------------------------
Fitch Ratings has published Indonesia-based PT Bank BRISyariah's
(BRIS) Long-Term Issuer Default Rating at 'BB+' with a Stable
Outlook.
KEY RATING DRIVERS
BRIS's rating reflects Fitch's expectation that the bank would
benefit from extraordinary support from its parent, PT Bank
Rakyat Indonesia (Persero) Tbk (BRI; BBB-/Stable), if needed.
Fitch views BRIS as a strategically important subsidiary that has
a key role in expanding BRI's sharia business in Indonesia.
BRI's support is manifested in its majority ownership of the
bank, name association between the two, and the two entities'
common branding and operational alignment in key areas. BRI has
significant ability to support BRIS, as the latter accounted for
only 3% and 2% of its parent's consolidated assets and equity,
respectively, at end-1H17.
BRIS is a small bank with market share of 0.4% of Indonesia's
banking system assets at end-1H17. BRIS targets the micro and
small- and medium-sized enterprise segments and it is the fourth-
largest sharia-compliant bank in Indonesia by total assets as of
end-1H17.
RATING SENSITIVITIES
BRIS's rating is sensitive to changes in its parent's rating. Any
significant dilution in ownership or perceived weakening of
support from BRI would be negative for the subsidiary's rating.
However, Fitch sees this prospect as remote in the foreseeable
future given the subsidiary's importance to the parent's sharia
business.
Evidence of a significant increase in BRIS's contribution to BRI
in terms of revenue, profit, franchise or other synergies could
lead to positive rating action.
=========
J A P A N
=========
TAKATA CORP: $741M in MDL Settlements Win Final US Court Approval
----------------------------------------------------------------
Nathan Hale at Law360 reports that a federal judge in Florida, in
the U.S., granted final approval for $741 million in settlements
reached by Toyota, BMW, Subaru and Mazda to resolve consumer
class actions over dangerously defective Takata Corp. air bags,
including an award of $166 million in attorneys' fees for class
counsel. U.S. District Court Judge Federico A. Moreno issued the
orders, along with dismissals of the classes' economic loss
claims against the four automakers, one week after holding a
final fairness hearing in Miami.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore,
Korea, China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the
U.S., amid recall costs and lawsuits over its defective airbags.
Takata and its Japanese subsidiaries commenced proceedings under
the Civil Rehabilitation Act in Japan in the Tokyo District Court
on June 25, 2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case
No.17-11375) on June 25, 2017. Together with the bankruptcy
filings, Takata announced it has reached a deal to sell all its
global assets and operations to Key Safety Systems (KSS) for
US$1.588 billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and
Lazard is serving as investment banker to Takata. Ernst & Young
LLP is tax advisor. Prime Clerk is the claims and noticing
agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of
the Chapter 11 Debtors, obtained an order of the Ontario Superior
Court of Justice (Commercial List) granting, among other things,
a stay of proceedings against the Chapter 11 Debtors pursuant to
Part IV of the Companies' Creditors Arrangement Act. The
Canadian Court appointed FTI Consulting Canada Inc. as
information officer. TK Holdings, as the foreign representative,
is represented by McCarthy Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and
Tyson Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New
York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in Washington, D.C., as its bankruptcy counsel. The
Committee has also tapped Chuo Sogo Law Office PC as Japan
counsel.
The Official Committee of Tort Claimants selected Pachulski Stang
Ziehl & Jones LLP as counsel. Gilbert LLP will evaluate of the
insurance policies. Sakura Kyodo Law Offices will serve as
special counsel.
Roger Frankel, the legal representative for future personal
injury claimants of TK Holdings Inc., et al., tapped Frankel
Wyron LLP and Ashby & Geddes PA to serve as co-counsel.
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
====================
N E W Z E A L A N D
====================
HANOVER FINANCE: No Sign of Hotchin Lawsuit After Court Ruling
--------------------------------------------------------------
Paul McBeth at BusinessDesk reports that former Hanover Finance
principal Mark Hotchin hasn't filed a new claim against former
trustee New Zealand Guardian Trust in the 19 months since the
Supreme Court ruled he could pursue the firm for a contribution
to an NZ$18 million payment to investors.
In a split decision in March 2016, the Supreme Court overturned
Guardian Trust's bid to avoid being drawn into the Financial
Markets Authority's suit against the former Hanover directors and
promoters that ultimately saw them cut a deal, and included an
unspecified amount from their insurer and broker, BusinessDesk
recalls. The deal was settled just before it was to go to court
with the directors denying any admission of liability and
excluded Hanover shareholder Eric Watson, the report relates.
At the time, Mr. Hotchin's lawyer Nathan Gedye QC said his client
intended to pursue the claim but Guardian Trust's parent
Complectus told BusinessDesk no new claim had emerged and no
settlement had been reached.
"There are no current claims against the Complectus group in
connection with Mark Hotchin or Hanover Finance," a spokeswoman
said in an emailed statement, BusinessDesk relays. "We do not
believe that any further claims are likely."
According to BusinessDesk, Mr. Hotchin's successful argument was
that Guardian Trust failed in its duty overseeing Hanover and
should have acted sooner to limit investor losses, where some
NZ$300 million of debentures were swapped for shares of Allied
Farmers but became virtually worthless when the benefits of a
merged loan book didn't materialise. At the time of the judgment,
Justice Susan Glazebrook, who upheld the appeal, said it was hard
to reconcile Mr. Hotchin's pursuit of the claim requiring him to
accept liability with statements in the settlement that he wasn't
liable.
"The suspicion must be that this may be a cynical attempt to
force a settlement with Guardian Trust," BusinessDesk quotes
Justice Glazebrook as saying. "If this is the case, the courts
should not be a party to what would be a misuse of the court
processes."
BusinessDesk notes that the FMA cut the deal with Hanover three
years after first filing a civil suit for NZ$35 million, seen as
having a better chance of success than criminal charges, saying
it was a better outcome than waiting for the court case and
possible appeals to be concluded. The regulator froze
Mr. Hotchin's assets for almost five years, the report says.
Complectus operates the Perpetual Guardian supervisory business,
which was the brainchild of Andrew Barnes who bought Perpetual
Trust from Pyne Gould Corp in 2013, BusinessDesk discloses. That
acquisition included the liability attached the firm's
supervision of failed lender Capital + Merchant Finance. The
failed lender's receivers sued Perpetual Trust and law firm Stace
Hammond for NZ$94 million, however, a deal was cut on the eve of
that court hearing.
Perpetual's latest accounts show the NZ$5 million settlement was
fully covered by the firm's insurer.
After Perpetual, Complectus bought Guardian Trust, Covenant
Trustee Services, Foundation Corporate Trust and New Zealand
Trustee Services and now oversees more than NZ$130 billion of
assets, BusinessDesk discloses.
The trustee firm planned a NZ$150 million initial public offering
last year, but pulled the pin citing turbulent financial markets.
However, during that process it prepared "comprehensive financial
forecasts" for the 2017 and 2018 years, and the latest accounts
show "profitability for the year to June 2017 comfortably
exceeded this forecast," the spokeswoman, as cited by
BusinessDesk, said.
About Hanover Finance
Hanover Finance Limited -- http://www.hanover.co.nz/-- was
New Zealand's third-largest privately-owned finance company with
total assets of NZ$796 million at December 31, 2007. The company
was established in 1984 to provide finance to the rural sector
and began lending to property developers and investors in 1995.
The loan portfolio has been gradually downsized since 2006 as a
result of a more cautious approach to lending in the face of
retail funding constraints.
Hanover Finance's investors in December 2008 voted in favor of
the company's Debt Restructure Proposals, including a plan to
fully repay NZ$552.6 million principal it owes over five years.
However, Hanover Finance said in November 2009 it is no longer
likely to fully repay investors under a debt restructuring plan
due to a deterioration in the commercial property development
market, a TCR-AP report on Nov. 12, 2009, said.
In December 2009, investors agreed to swap their Hanover
interests for shares in Allied Farmers Ltd.
The Serious Fraud Office commenced an investigation into the
affairs of Hanover Finance Ltd in September 2010 after
considering complaints received from the Securities Commission,
Allied Farmers and others.
The Financial Markets Authority, on March 30, 2012, filed civil
proceedings against directors and promoters of Hanover Finance
Ltd, Hanover Capital Ltd, and United Finance Ltd. Proceedings
under the Securities Act have been filed against Mark Hotchin,
Eric Watson, Greg Muir, Sir Tipene O'Regan, Bruce Gordon and
Dennis Broit. They relate to statements made in the
December 2007 prospectuses, subsequent advertising, and the
March 2008 prospectus extension certificate.
SFO on April 30, 2013, said it has completed its investigation
of Hanover Finance, bringing to an end its investigations into
the 2007/08 finance company collapses. That process, which saw
SFO investigate 15 separate companies, resulted in criminal
prosecutions in relation to nine companies. Overall, 23
individuals have faced charges laid by SFO.
=================
S I N G A P O R E
=================
SWIBER HOLDINGS: Pins Business Revival Hopes on FLNG Sector
-----------------------------------------------------------
Seatrade Maritime News reports that Swiber Holdings is pinning
its hopes of a rebirth on the Floating LNG (FLNG) sector.
In what Swiber described as something that "could a step towards
reviving it as a going concern" it has inked a non-binding term
sheet to Interlink Power & Energy Holdings in Australia, the
report states.
According to Seatrade, the move by Swiber, which is under
judicial management, to acquire Interlink is part of a plan to
enter the power sector and in particular the FLNG segment.
Interlink provides bridging power for up to five years through
its Rapid Deployable Rental Power Solution using mobile dual fuel
turbines.
Seatrade says Swiber was looking to enter FLNG before it
spectacularly filed for liquidation in July last year, then
reversing that decision to be placed under judicial management in
October 2016.
A year on the proposed acquisition of Interlink is dependent on
the restructuring of all Swiber's debts and liabilities, an
injection of SGD200 million from new investors, and approvals
from creditors, shareholders and judicial authorities, Seatrade
relates.
"As part of the restructuring process, the judicial managers and
Swiber management have been working on a business model and
investment framework that we believe will bring strategic value
to Swiber's stakeholders and provide a sustainable business going
forward," the report quotes Bob Yap, head of advisory for KPMG
Singapore, judicial managers for Swiber, as saying.
"It is clear that Swiber, notwithstanding its present problems,
continues to retain a strong reputation in the global market for
its engineering and execution capabilities. We believe that the
acquisition of Interlink along with Swiber's expertise will
enable Swiber to provide a comprehensive solution for the supply
of both short-term and long-term power, from land based to
floating LNG power plants."
About Swiber Holdings
Swiber Holdings Limited (SGX:BGK) -- http://www.swiber.com/-- is
a Singapore-based investment holding company. The Company,
through its subsidiaries, is engaged in offshore marine
engineering; vessel owning and chartering, and provision of
corporate services. The Company is an integrated offshore
construction and support services provider for shallow water oil
and gas field development. It offers a range of engineering,
procurement, installation and construction (EPIC) services,
complemented by its in-house marine support and engineering
capabilities, to support the offshore field development and
production activities of its clientele base across the Asia
Pacific, Middle East, Latin America and West Africa regions. It
operates approximately 10 construction vessels. The Company's
subsidiaries include Swiber Offshore Construction Pte. Ltd.,
Swiber Offshore Marine Pte. Ltd., Swiber Corporate Pte. Ltd.,
Resolute Offshore Pte. Ltd. and Swiber Capital Pte. Ltd.
As reported in the Troubled Company Reporter-Asia Pacific on
Aug. 2, 2016, Reuters said Swiber Holdings Ltd has applied to
place itself under judicial management instead of liquidation.
According to Reuters, Swiber shocked markets in July 2016 by
filing for liquidation, as it faced hundreds of millions of
dollars in debt and a decline in orders, becoming the largest
local company to fall victim to the slump in oil prices.
Bob Yap Cheng Ghee, Tay Puay Cheng and Ong Pang Thye of KPMG
Services Pte Ltd. have been appointed as the joint and several
interim judicial managers of Swiber Holdings Limited and Swiber
Offshore Construction.
Swiber had $1.43 billion of liabilities and $1.99 billion of
assets on March 31, 2016, before it sought court protection in
late July, Bloomberg News reported citing the company's last
published accounts.
====================
S O U T H K O R E A
====================
SK E&S: Moody's Revises Outlook to Stable; Affirms Ba1 Rating
-------------------------------------------------------------
Moody's Investors Service has revised to stable from negative the
outlook on the Baa2 issuer and Ba1 preferred stock ratings of SK
E&S Co. Ltd.
At the same time, Moody's has affirmed the Baa2 issuer and Ba1
preferred stock ratings.
RATINGS RATIONALE
"The change in outlook reflects a material reduction in the ramp-
up risk associated with SK E&S' new power and co-generation
plants, which started commercial operations in February-April
2017, and cash proceeds of KRW678 billion from the issuance of
new shares, which will improve its credit metrics," says Mic
Kang, a Moody's Vice President and Senior Analyst.
SK E&S' lower exposure to execution risk, given the solid
operational track record of the new plants -- Paju with a total
capacity of 1,800 megawatts (MW) and the Wirye co-generation
plant with a capacity of 447 MW -- over the last 6-9 months and
the absence of major expansionary plans will bolster the
company's credit quality to a level consistent with a Baa2
rating.
SK E&S will benefit from a larger operational scale with its
total power and co-generation capacity growing to 3.7 gigawatts
(GW) from 1.5 GW at end-2016 and the greater diversification of
its asset portfolio into the power, co-generation and gas retail
businesses. SK E&S will continue to generate incremental cash
flows from the new power plants. Moody's expects that the new
plants in Paju and Wirye will together contribute around KRW150-
KRW250 billion of operating profit annually, compared with the
company's total operating profit of KRW155 billion recorded in
2016.
Moody's projects the new plants will maintain high capacity
utilization rates of 75%-85% over at least the next 1-2 years,
despite the commissioning of new coal and nuclear reactors by
Korea Electric Power Corporation's (Aa2 stable) power generation
subsidiaries and renewable developments under the Korean
government's (Aa2 stable) initiatives to gradually reduce
reliance on energy sources with high carbon emissions and a risk
of catastrophe.
SK E&S' new power plants will maintain its strong cost
competitiveness in feedstock, which stems from the company's
direct import of liquefied natural gas (LNG) from overseas
suppliers at competitive prices.
On October 31, 2017, SK E&S announced that it will issue new
shares (10% of its total shares) to two Korea-based investment
funds. The company will receive the cash proceeds in November, a
portion of which will be in turn used to repay debt. This debt
has mainly funded the capital expenditure needed to build the new
power plants and for investments in gas fields overseas.
Moody's projects that the reflection of the full-year operations
of the new power and co-generation plants, as well as the cash
proceeds from the share issuance, will improve SK E&S' funds from
operation (FFO)/debt to 15%-17% for 2018-2019 from 6% for 2016
and estimated around 13% for 2017.
SK E&S' issuer rating reflects its standalone credit profile,
which is consistent with the parameters of a Baa3 rating, and
also incorporates a one-notch uplift, based on Moody's
expectation for extraordinary parental support from SK Holdings.
Moody's believes that SK Holdings Co Ltd, a holding company of SK
Group, will maintain a strong willingness to support SK E&S, in
case of need, owing to SK E&S' growing strategic importance as a
core subsidiary in the group's LNG value chain - spanning from
the sourcing of LNG to power and heat generation - and the high
reputational risk that could arise from a distress of the
subsidiary.
SK Holdings' willingness to support SK E&S is further evidenced
by the former's provision of a performance guarantee for SK E&S'
commitment to use the Freeport liquefaction facility in the US
for 20 years starting in 2019.
Moody's expects that SK Holdings will maintain an adequate
ability to provide support to SK E&S, if and when needed, over at
least the next 1-2 years, given the presence of its solid core
associates - SK Telecom Co., Ltd. (A3 stable) and SK Innovation
Co. Ltd. (Baa1 stable) - its well-diversified business portfolio
and its strong access to the domestic capital markets.
The stable ratings outlook reflects Moody's expectation that SK
E&S' credit metrics will strongly recover from the moderate to
weak levels seen in 2016-17 over the next 12-18 months, owing to
incremental cash flows from the new plants, the cash proceeds
from the issuance of new shares, and the absence of any major
expansionary capital expenditure.
Moody's could upgrade SK E&S' ratings if its FFO/debt comfortably
stays above 22-24% and/or debt/capitalization registers below
53%-55%, through the implementation of further material
deleveraging measures.
Conversely, Moody's could downgrade SK E&S' ratings if its
FFO/debt falls below 12%-14% or debt/capitalization exceeds 60%-
62% on a sustained basis, against the backdrop of the deployment
of material expansionary capital expenditure beyond Moody's
expectations, and/or a significant structural weakening in
industry fundamentals.
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
SK E&S Co. Ltd. is a major private independent power producer
operating gas-fired power and co-generation plants in Gwangyang,
Paju, Hanam and Wirye with a total capacity of 3.7 gigawatts as
of June 30, 2017, or around 3% of Korea's (Aa2 stable) total
power generation. It is also the largest retail gas distribution
company in Korea, with around 22% market share by sales volume.
At June 30, 2017, SK E&S was 100% owned by SK Holdings Co Ltd.,
which is in turn the holding company of SK Group.
*********
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 ***