/raid1/www/Hosts/bankrupt/TCRAP_Public/171127.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 27, 2017, Vol. 20, No. 235
Headlines
A U S T R A L I A
COOMBS BAREI: Second Creditors' Meeting Set for Dec. 4
LENNOD PTY: First Creditors' Meeting Slated for Dec. 5
OSTWALD BROS: Second Creditors' Meeting Set for Dec. 1
OSTWALD CONSTRUCTION: Second Creditors' Meeting Set for Dec. 1
STARGROUP LIMITED: First Creditors' Meeting Set for Dec. 1
SOUTHSIDE FITNESS: First Creditors' Meeting Set for Dec. 4
C H I N A
CHINA HONGQIAO: S&P Affirms 'B' CCR on Published Results
TIMES PROPERTY: Moody's Assigns B2 Rating to Proposed USD Notes
H O N G K O N G
NOBLE GROUP: Shares Sink, Transfers Stock to Departing Staff
I N D I A
ADITYA AUTO: CARE Lowers Rating on INR8.80cr LT Loan to B+
AIR CARNIVAL: NCLT Orders Corporate Insolvency Process
ANNAI POWER: Ind-Ra Assigns 'BB' Issuer Rating, Outlook Stable
BHUPINDER SINGH: Ind-Ra Moves BB- Rating to Non-Cooperating
BNAZRUM AGRO: CRISIL Reaffirms D Rating on INR17MM Packing Loan
CAVIER BATHFITTINGS: CRISIL Reaffirms B+ Rating on INR6MM Loan
CMAX METALS: CRISIL Reaffirms B+ Rating on INR3.5MM LT Loan
COMMERCIAL AUTO: Ind-Ra Lowers B+ Issuer Rating, Outlook Stable
EARTHCON BUILDTECH: CARE Lowers Rating on INR9cr LT Loan to D
EARTHCON CONSTRUCTIONS: CARE Lowers Rating on INR70cr Loan to D
ELECTROSTEEL STEELS: Losses Widen to INR297cr in Qtr Ended June
ESSAR STEEL: Lenders, Creditors Claims Reach INR77,700 crore
GOODWEAR FASHIONS: Ind-Ra Affirms 'BB' LT Issuer Ratings
GRACIA METALS: CRISIL Withdraws B+ Rating on INR2.5MM Cash Loan
GRAVIT ENGINEERING: CRISIL Lowers Rating on INR5MM Loan to B-
MULTITECH AUTO: Ind-Ra Moves BB+ Issuer Rating to Non-Cooperating
PAVANPUTRASHEETGRAH: CARE Moves B Rating to Not Cooperating
POLYPLASTICS AUTO: CRISIL Withdraws B Rating on INR8.3MM Loan
PRITIKA AUTOCAST: CRISIL Withdraws C Rating on INR21MM Cash Loan
RIDLEY IFMR 2016: Ind-Ra Corrects May 3 Release
ROYALCARE SUPER: CRISIL Assigns B+ Rating to INR9.75MM Loan
SAMBHAV EXIM: CARE Lowers Rating on INR10cr LT Loan to D
SARA SPINTEX: CARE Revises Rating From CARE D Not Cooperating
SEFTECH INDIA: CRISIL Assigns B+ Rating to INR5MM LT Loan
SHEELU EXPORTS: CRISIL Cuts Rating on INR.50MM Loan to 'B-'
SHREE RAM: CRISIL Reaffirms B Rating on INR6.0MM Cash Loan
SONAI CONSTRUCTIONS: Ind-Ra Migrates B+ Rating to Non-Cooperating
SUPERLIGHT AAC: CARE Assigns B+ Rating to INR13.55cr LT Loan
SURYA PRAKAAS: CRISIL Lowers Rating on INR4.25MM Cash Loan to D
TULIP ATTIRE: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
VARDHAMAN NAGARI: CRISIL Reaffirms B+ Rating on INR10MM Loan
VENKETESH UDYOG: Ind-Ra Moves B- Issuer Rating to Non-Cooperating
VIJAYALAKSHMI SPINTEX: CARE Cuts Rating on INR24.39cr Loan to B+
VSN LABORATORIES: CARE Assigns B+ Rating to INR6.30cr LT Loan
I N D O N E S I A
JASA MARGA: S&P Assigns 'BB+' Long-Term CCR; Outlook Stable
M A L A Y S I A
SIME DARBY: Fitch Lowers Long-Term IDR to BB+; Off RWN
S I N G A P O R E
EZION HOLDINGS: Court Dismisses Bondholder's Originating Summons
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A U S T R A L I A
=================
COOMBS BAREI: Second Creditors' Meeting Set for Dec. 4
------------------------------------------------------
A second meeting of creditors in the proceedings of Coombs Barei
Constructions Pty Ltd has been set for Dec. 4, 2017, at
10:00 a.m. at the meeting Hall, behind Adelaide Town Hall, 25
Pirie Street, in Adelaide, SA.
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 Dec. 1, at 4:00 p.m.
Stephen James Duncan of Duncan Powell was appointed as
administrator of Coombs Barei on Oct. 30, 2017.
LENNOD PTY: First Creditors' Meeting Slated for Dec. 5
------------------------------------------------------
A first meeting of the creditors in the proceedings of Lennod Pty
Ltd will be held at Suite 601, Level 6, 20 Queen Street, in
Melbourne, Victoria, on Dec. 5, 2017, at 11:00 a.m.
Andrew Poulter of IRT Advisory was appointed as administrator of
Lennod Pty on Nov. 23, 2017.
OSTWALD BROS: Second Creditors' Meeting Set for Dec. 1
------------------------------------------------------
A second meeting of creditors in the proceedings of Ostwald Bros.
Civil Pty Ltd has been set for Dec. 1, 2017, at 3:00 p.m. at the
offices of Christie Conference Centre, Level 2, 320 Adelaide
Street, in Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 29, 2017, at 5:00 p.m.
Derrick Craig Vickers of PricewaterhouseCoopers was appointed as
administrator of Ostwald Bros. Civil Pty Ltd on Aug. 25, 2017.
OSTWALD CONSTRUCTION: Second Creditors' Meeting Set for Dec. 1
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Ostwald
Construction Materials Pty Ltd has been set for Dec. 1, 2017, at
10:00 a.m. at Empire Theatre, Church Theatre, 56 Neil Street, in
Toowoomba, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 29, 2017, at 5:00 p.m.
Derrick Craig Vickers of PricewaterhouseCoopers was appointed as
administrator of Ostwald Bros. Civil Pty Ltd on Aug. 25, 2017.
STARGROUP LIMITED: First Creditors' Meeting Set for Dec. 1
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Stargroup
Limited, Stargroup Investments Limited, Star Payment Systems Pty
Ltd, and StarATM Pty Ltd will be held at Level 1, 140 St Georges
Terrace, in Perth, West Australia, on Dec. 1, 2017, at 11:30 a.m.
Simon Theobald, Melissa Humann and Stephen Longley of PPB
Advisory were appointed as administrators of Stargroup Limited on
Nov. 21, 2017.
SOUTHSIDE FITNESS: First Creditors' Meeting Set for Dec. 4
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Southside
Fitness (NSW) Pty Ltd will be held at the offices of Nicols +
Brien, Level 2, 70 Market Street, in Wollongong, New South Wales
on Dec. 4, 2017, at 11:00 a.m.
Ryan Bradbury of Nicols + Brien was appointed as administrator of
Southside Fitness on Nov. 22, 2017.
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C H I N A
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CHINA HONGQIAO: S&P Affirms 'B' CCR on Published Results
--------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term corporate credit
rating on China Hongqiao Group Ltd. (Hongqiao). The outlook is
stable. S&P said, "We also affirmed our 'B-' long-term issue
rating on the company's outstanding senior unsecured notes. We
removed all the ratings from CreditWatch, where they were placed
with negative implications on March 24, 2017."
S&P said, "We affirmed the ratings and removed them from
CreditWatch after Hongqiao published its 2016 annual report and
financial statements with an unqualified auditor's opinion. At
the same time, the company also published a report refuting the
allegations of accounting irregularities from a short-seller
research firm.
"We expect Hongqiao's financial position to improve due to
favorable aluminum prices and the company's lower capital
spending. We also anticipate that Hongqiao will have the
financial resources to refinance its short-term maturities,
thanks to an increase in funding from a number of Chinese banks.
"In our view, the support from Chinese banks would help to
restore investor confidence in Hongqiao and reduce the potential
negative impact of any further campaign by short-seller firms."
On Oct. 25, 2017, Hongqiao published a clarification report
related to short-seller Emerson Analytics Co. Ltd.'s allegations
as well as the audit findings of Ernst & Young. The clarification
report is based on BT Risk Assurance's report on the agreed-upon
procedures. The BT Risk Assurance report concludes that there is
no misstatement of Hongqiao's cost, profit, and cash data, and
there is no undisclosed connected-party transactions. On Oct. 27,
Hongqiao published its 2016 financial statements with unqualified
auditor's opinion. Hongqiao's shares resumed trading on Oct. 30.
S&P said, "We expect the Chinese aluminum market to see a more
favorable supply and demand equation in the next one to two
years, with the government strictly enforcing capacity reduction
for the industry. As such, we forecast Hongqiao's operating cash
flow to improve, benefiting from favorable aluminum prices.
Hongqiao closed 2.68 million tons of primary aluminum capacity in
the third quarter this year. However, it remains the world's
largest aluminum producer, with capacity of 6.6 million tons.
With its domestic aluminum capacity expansion coming to an end,
we anticipate that Hongqiao will gradually cut capital spending
and reduce leverage. We also expect the company to continue to
maintain its cost advantage over its peers.
"We believe Hongqiao will maintain strong relationship with
domestic banks, which will provide funding for its refinancing
needs. The company's total credit facilities increased to around
Chinese renminbi (RMB) 49.6 billion as of June 30, 2017, from
RMB19.0 billion at the end of 2016. Specifically, CITIC Bank
granted the company RMB20.0 billion credit facilities in end-
June, 2017.
"The stable outlook on Hongqiao reflects our view that the
Chinese aluminum industry will see a more favorable supply and
demand equation in the next one to two years, supported by
supply-side reforms. We expect Hongqiao to maintain its large
operational scale and cost advantage in the aluminum industry. We
forecast the company to improve its leverage owing to higher
operating cash flow and lower capital expenditure. We also expect
Hongqiao to have financial resources to meet its refinancing
needs.
"We could lower the ratings on Hongqiao if the company's
liquidity deteriorates substantially such that there is a
material liquidity deficit. We could also downgrade the company
if its financial metrics significantly fall below our
expectation, likely due to lower aluminum prices than our
forecast, a cost overrun, or higher-than-expected debt to fund
expansion. An indication of such deterioration will be the ratio
of FFO to debt falling below 20% for a sustained period."
S&P could upgrade Hongqiao in the next 12 months if:
-- The company improves its liquidity position. This could occur
if it reduces it lumpy near term maturities by refinancing
them with longer tenor facilities;
-- Its financial performance improves significantly such that
its FFO-to-debt ratio exceeds 30% for a sustained period; or
-- Hongqiao develops a track record of financial reporting and
communication to the market in a timely and transparent
manner.
TIMES PROPERTY: Moody's Assigns B2 Rating to Proposed USD Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the USD
senior unsecured notes proposed by Times Property Holdings
Limited (B1 positive).
Times Property plans to use the proposed note proceeds mainly to
refinance existing indebtedness.
RATINGS RATIONALE
"The proposed note issuance will not have a material impact on
Times Property's credit metrics because the proceeds will be
mainly used for refinancing," says Danny Chan, a Moody's Analyst,
and also the Lead Analyst for Times Property.
In addition, the proposed issuance will lengthen the company's
debt maturity profile and reduce its average financing cost, as
it uses the proceeds to refinance its existing high cost
borrowings.
Times Property's B1 corporate family rating (CFR) reflects its
steadily growing operating scale, established brand and robust
track record in Guangdong Province.
The company's rating also takes into account its stable profit
margins and strong liquidity profile.
However, Times Property's B1 CFR is tempered by its (1)
geographic concentration in Guangdong Province; and (2) exposure
to the financing and execution risks associated with its fast
growth business strategy.
Times Property's liquidity position is strong. Its cash balance
of RMB13.1 billion at the end of June 2017 well covered its debt
of RMB2.4 billion maturing over the next 12 months.
The senior unsecured rating on the proposed notes is one notch
lower than the company's CFR because of the risk of structural
and legal subordination.
This risk reflects Moody's expectation that the majority of
claims will be at the operating subsidiaries level, and will have
priority over claims at the holding company in a bankruptcy
scenario.
In addition, the holding company lacks significant mitigating
factors for structural subordination, reducing the expected
recovery rate for claims at the holding company.
The positive outlook on Times Property's CFR reflects Moody's
expectation that the company will improve its debt leverage,
supported by strong revenue growth and a stable gross profit
margin over the next 12-18 months.
Moody's expects the company's debt leverage -- as measured by
revenue/adjusted debt -- will gradually improve through strong
revenue growth to around 75%-80% in the next 12-18 months. This
is based upon the company's strong 32% contracted sales growth
year-on-year in the first 10 months of 2017 to RMB31.6 billion,
which will in turn support revenue growth over the next 1-2
years.
The company also maintained its reported gross profit margin at
26.4% in 1H 2017, largely unchanged from 2016, and a level that
should support homebuilding EBIT/interest above 3x in the next 1-
2 years.
Upward rating pressure could emerge if (1) Times Property shows a
record of stable growth in sales and operating scale, and
maintains its strong cash position with cash/short-term debt of
2x; and (2) the company's revenue/adjusted debt exceeds 75%-80%
and adjusted EBIT/interest exceeds 3x on a sustained basis.
On the other hand, the rating outlook could return to stable if
Times Property shows (1) volatility in its contracted sales and
revenue; (2) higher-than-expected land acquisitions; or (3) a
reduced likelihood of its credit metrics reaching levels
appropriate for a rating upgrade over the medium term.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Times Property Holdings Limited is a property developer based in
Guangdong Province, focused on meeting end-user demand for mass-
market housing. At the end of June 2017, it had 62 property
projects across eight cities in Guangdong Province and Changsha
city in Hunan Province. Its land bank totaled around 14.5 million
square meters as of the same date.
================
H O N G K O N G
================
NOBLE GROUP: Shares Sink, Transfers Stock to Departing Staff
------------------------------------------------------------
Jasmine Ng at Bloomberg News reports that Noble Group Ltd.'s
stock sell-off deepened as the trader pressed on with an effort
to restructure its debt burden amid concerns it will default and,
separately, transferred a block of shares to employees who are
leaving the company as it disposes of North American energy
assets.
According to Bloomberg, the shares sank as much as 9.2 percent to
16.8 Singapore cents, the lowest since 1999, and traded at 16.9
cents at 2:11 p.m., on Nov. 24. Bloomberg says the stock has lost
18 percent since Nov. 24's close, dropping for a seventh week.
The market capitalization, which once topped $10 billion, has
collapsed to just $167 million.
Noble Group, which held talks with creditors this week in a bid
to agree the restructuring of $3.5 billion in bonds and loans,
has been offloading assets to raise funds amid a liquidity
squeeze, Bloomberg relates. Among units sold off were the gas-
and-power unit, which was bought by Mercuria Energy Group Ltd.,
and in a deal that's yet to close, its prized oil-liquids
business to Vitol Group. The protracted stock rout has
eviscerated the value of remaining equity holders, including
founder Richard Elman, as well as China's sovereign wealth fund.
"The stock price speaks for itself -- the market clearly sees
little prospect of the group surviving in a form that will
realize any value for existing shareholders," Bloomberg quotes
Ric Spooner, chief market analyst at CMC Markets in Sydney, as
saying. "Once a stock reaches these depths, relatively small
moves can be amplified in terms of their percentage of the
remaining value."
After the close on Nov. 23, Hong Kong-based Noble Group said it
was transferring a total of 14,688,625 treasury shares to the
staff from the two units, according to a statement cite by
Bloomberg. The stock, handed over in relation to awards a 2014
restricted share plan, was valued at $2.01 million.
According to Bloomberg, Noble Group has asked its main creditors
to agree on a unified response to this week's opening
restructuring proposal, according to a person familiar with the
matter. Bloomberg relates that the company held talks with
creditors holding stakes in a revolving credit facility, and
three bonds due in 2018, 2020 and 2022, the person said, asking
not to be named because the meetings are private.
Noble Group's bonds due in March have gained in the past two
days, bringing this week's advance to 1.6 cents to reach 46.8
cents on the dollar, the highest level in two weeks, according to
Bloomberg-compiled prices. The notes due in 2020 have risen about
1 cent this week to 40.8 cents.
Still, as Noble Group's troubles deepened earlier this month,
Fitch Ratings Inc. said a default "appears probable," cutting the
credit rating deeper into junk territory, Bloomberg relays. "It
is unclear how Noble will address these maturities without a
change to its capital structure," Fitch said, referring to the
bond repayment due in March, revolving credit facility in May and
further bond deadlines.
About Noble Group
Hong Kong-based Noble Group Limited (SGX:N21) --
http://www.thisisnoble.com/-- engages in supply of agricultural,
industrial and energy products. The Company supplies agricultural
and energy products, metals, minerals and ores. Agriculture
products include grains, oilseeds and sugar to palm oil, coffee,
and cocoa. Energy business includes coal, gas and liquid energy
products. In metals, minerals and ores (MMO), it supplies iron
ore, aluminum, special ores and alloys. The Company operates
nearly in 140 locations. It supplies growth demand markets in
Asia and Middle East. Alcoa World Alumina and Chemicals is the
subsidiary of this company.
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 22, 2017, Fitch Ratings downgraded Hong Kong-based
commodities trader Noble Group Limited's Long-Term Foreign-
Currency Issuer Default Rating (IDR), senior unsecured rating and
the ratings on all its outstanding senior unsecured notes to 'CC'
from 'CCC'. The Recovery Rating is 'RR4'. The downgrade follows
Noble's Nov. 15, 2017 announcement that it has commenced
discussions with stakeholders on its capital structure.
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I N D I A
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ADITYA AUTO: CARE Lowers Rating on INR8.80cr LT Loan to B+
----------------------------------------------------------
CARE Ratings has been seeking information from Aditya Auto
Industries to monitor the rating(s) vide e-mail communications/
letters dated September 8, 2017, August 10, 2017, June 27, 2017,
June 19, 2017, May 31, 2017 and numerous phone calls. However,
despite CARE's repeated requests, the firm has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE
is unable to express opinion on the rating. In line with the
extant SEBI guidelines CARE's rating on Aditya Auto Industries'
bank facilities will now be denoted as CARE B+; ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 8.80 CARE B+; ISSUER NOT
Facilities COOPERATING; Revised
from CARE BB-
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s). The ratings have been revised by taking into
account non-availability of information and no due-diligence
conducted.
Detailed description of the key rating drivers
At the time of last rating in August 30, 2016 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Leveraged capital structure: The capital structure of the firm
stood leveraged on account of high dependence on working capital
borrowings.
High inventory holding period: AAI has working capital intensive
nature of operations mainly on account of high inventory period.
The firm maintains inventory mainly in the form of raw materials
for 120 days for smooth production process. Suppliers allow
around 45 days of credit period to AAI, while the firm also
grants a credit period of around 25 days.
Volatility in prices of raw material and finished goods The
finished goods as well as raw material prices of machine
components are highly volatile in nature and depend on the
fortunes of steel & iron industry. Since the raw material cost is
the major cost driver and any southward movement in the price of
finished goods with no decline in raw material price is likely to
result in adverse performance. Moreover, with no long-term
agreement for procurement of raw materials, price volatility of
the same may affect profitability.
Key Rating Strengths
Experienced proprietor: The operations of (AAI) are currently
managed by Ms Neetu Rajput. Ms Neetu Rajput has an experience of
more than a decade in the manufacturing of sheet metal components
and plastic moulding components through her association with AAI.
Concentrated though reputed customer base: The firm has
established good relationship with Original Equipment
Manufacturers (OEM's) such as LG Electronics India Private
Limited. In light of the satisfactory work, it has managed to get
repeat orders from its clients. A reputed client base assures
timely payment and lends comfort to the revenue realization.
However, the firm's sales are concentrated to one single client
and in the event of change in procurement policy of these players
the business of the client will be adversely impacted.
Growing scale of operations coupled with moderate profitability
margins: AAI has been growing continuously and the growth was
attributable to increase in quantity sold to new and existing
customers. The PBILDT margin of the firm stood moderate. However,
high financial charges and depreciation cost restricted the net
profitability of the firm. Debt coverage indicators of the firm
have remained satisfactory levels owing to moderate PBILDT
margins.
Greater Noida-based (Uttar Pradesh) AAI, a proprietorship
concern, was established in 2003 by Ms. Neetu Rajput. AAI is
engaged in the manufacturing of sheet metal components and
plastic moulding components. The firm majorly procures the raw
material from LG Electronics India Private Limited and Bhushan
Steels Limited. The firm also imports some of the raw material
from Korea and any shortfall is met through suppliers located in
the local area. AAI has agreement with LG Electronics India
Private Limited for supply of sheet metal components and plastic
molding components. The firm also sells the products to local
traders.
AIR CARNIVAL: NCLT Orders Corporate Insolvency Process
------------------------------------------------------
Business Standard The National Company Law Tribunal (NCLT),
Chennai, has ordered a Corporate Insolvency Resolution Process
(CIRP) on Coimbatore-based Air Carnival Pvt Ltd based on a
petition filed by a former director of the airline for allegedly
defaulting payments of salary and other reimbursements to the
tune of INR48,41,818, including interest.
The petition was filed by Murali Sundaram, who said that he was
appointed as director, operations, of the company in December
2015, Business Standard relates.
He alleged that remuneration wasn't paid by the company from
August 2016 - worth INR30,00,000 - and it didn't reimburse
INR11,46,628 incurred as travel expenses, the report says.
Air Carnival Private Limited (ACPL), based in Coimbatore, Tamil
Nadu, operates an airline under the brand Air Carnival, which
covers four sectors in Tamil Nadu and Andhra Pradesh.
ANNAI POWER: Ind-Ra Assigns 'BB' Issuer Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Annai Power
Private Limited (APPL) a Long-Term Issuer Rating of 'IND BB'. The
Outlook is Stable. The instrument-wise rating action is:
-- INR118.5 mil. Term loans due on September 2026 assigned with
IND BB/Stable
KEY RATING DRIVERS
The ratings are constrained by the significant unleased portion
of APPL's total property. Out of the total land of 25.74 acres,
APPL has leased only 34% till October 2017. This will lead to
substantial cash flow mismatches during FY18-FY19.
The company was a debt-free till FY17. It raised a debt of INR120
million during June 2017 for procuring four properties in
Aruppukottai, Tuticorin district, which are yet to be leased. The
debt has to be repaid in 96 monthly instalments, which will lead
to a monthly cash outflow of INR4.5 million in FY18 and INR7.2
million in FY19 excluding interest. APPL has rented out a total
space of 8.82 acres at a lock-in period of eight years. The
company receives a fixed rental of INR2 million plus tax per
month. It services its debt primarily using the rental income
earned from the leased units, as they contribute 95% to the total
revenue, and the rest from the income generated from power
generation. Thus, any delays in receiving the rental income will
stress debt servicing.
The ratings factor in the customer concentration risks associated
with the ongoing lease agreement for APPL's rented properties and
power purchase agreement (PPA) for its wind capacity. This is
because Naga Limited ('IND BBB'/Stable) is the sole customer to
APPL. However, Ind-Ra draws comfort from the counterparty's
strong credit profile. Naga holds 26% shares in APPL. The PPA
agreement will be renewed every year.
APPL has moderate revenue visibility stemming from short-term
PPAs and medium-term lease agreements.
The company generates 225kWh wind power. The operating
performance has been consistent with an average plant load factor
of 12% during FY14-FY17 and 24% for 1HFY18. The highest power
generation takes place during June-November due to strong monsoon
winds.
RATING SENSITIVITIES
Positive: Successful revenue generation from other properties
without any stress in the liquidity position and an average debt
service coverage ratio of above 1.5x on a sustained basis will be
positive for the ratings.
Negative: Any lease cancellation or any delay in the payment from
the customer leading to stress in liquidity and cash flow leading
a debt service coverage ratio of below 1.1x on a sustained basis
could be negative for the ratings.
COMPANY PROFILE
APPL was incorporated June 2003, is engaged in generating power
and leasing commercial properties.
BHUPINDER SINGH: Ind-Ra Moves BB- Rating to Non-Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Bhupinder
Singh'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 ratings will now appear as 'IND
BB-(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR64 mil. Fund-based limits migrated to non-cooperating
category with IND BB-(ISSUER NOT COOPERATING) rating;
-- INR2.14 mil. Non-fund-based limits migrated to non-
cooperating category with IND A4+(ISSUER NOT COOPERATING)
rating; and
-- INR44.31 mil. Term loans migrated to non-cooperating category
with IND BB-(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Oct. 3, 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 2011, Bhupinder Singh is a partnership firm that
provides LPG transportation services to major oil companies such
as Bharat Petroleum Corporation Limited, Indian Oil Corporation
Limited ('IND AAA'/Stable) and Hindustan Petroleum Corporation
Limited ('IND AAA'/Stable) in the eastern region of India. Its
head office is in Haldia, West Bengal. Its partners are Mr.
Bhupinder Singh Gujral and Mrs Tejinder Kaur.
BNAZRUM AGRO: CRISIL Reaffirms D Rating on INR17MM Packing Loan
---------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Bnazrum Agro Exports Private Limited (BAEPL) at 'CRISIL D/CRISIL
D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 9 CRISIL D (Reaffirmed)
Long Term Loan 7 CRISIL D (Reaffirmed)
Overdraft 1 CRISIL D (Reaffirmed)
Packing Credit 17 CRISIL D (Reaffirmed)
Proposed Working
Capital Facility 1 CRISIL D (Reaffirmed)
The ratings continue to reflect instances of delay by BAEPL in
servicing its debt obligations; the delays have been on account
of weak liquidity. The weak liquidity is primarily due to large
working capital requirement.
The ratings also reflect BAEPL's modest scale of operations and
exposure to cyclical availability of gherkins. However the
company benefits from the established market position in gherkin
cultivation industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Scale of operations is small with
revenues of INR43.3 crore in fiscal 2017. The small scale of
operations exposes the company to competitive pressures leading
to limited bargaining power with customers, which not only
constrains profitability but also leads to stretched receivables.
Although revenues are expected to improve over the medium term,
BAEPL will remain a small player in the gherkins industry.
* Exposure to cyclical availability of gherkins: Revenue is
exposed to cyclical availability of gherkins. Gherkin cultivation
is exposed to risks inherent in agriculture, such as
vulnerability to unstable climatic conditions, crop diseases,
pest attacks, low yield, limited availability of fertilisers and
knowledge about cultivation methods.
Strength
* Established market position in gherkin cultivation: BAEPL has
been processing gherkins for more than a decade. The company has
access to over 6000 acres of contract farms in Tamil Nadu, Andhra
Pradesh, and Karnataka. Gherkins are cultivated over three
seasons in a year. The average yield from farms is 4 tonne per
acre. BAEPL supports contract farmers by supplying seeds and
fertilisers, offering cash advances and appointing field officers
to oversee and provide technical support. These techniques help
the company to retain farmers and increase yield.
Incorporated in 1998, BAEPL is located in Dindigul, Tamil Nadu
and processes and exports gherkins. Mr. K S M Mohammed Saleem
manages the operations.
CAVIER BATHFITTINGS: CRISIL Reaffirms B+ Rating on INR6MM Loan
--------------------------------------------------------------
CRISIL's ratings on the bank facilities of Cavier Bathfittings
Ltd (CBFL) continue to reflect the modest scale of operations in
the highly competitive bath fittings industry, and its large
working capital requirement. These weaknesses are partially
offset by its promoter's extensive industry experience.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 3 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amid intense competition: The bath
fittings industry is marked by intense competition with many
small and large players. An unorganized market benefits from
selling similar level of product, with production at lower cost
on account of low quality sales mix. CBFL registered sales of
INR13.2 Cr. for fiscal 2017. The modest scale of operations in
the fragmented industry should constrain CBFL's business risk
profile over the medium term.
* Working capital intensive operations: CBFL has large working
capital requirement, marked by gross current assets (GCAs) of 334
days as on March 31, 2017, driven by large inventory requirement
and moderate debtors. The company maintains inventory of 240-250
days on account of variety of designs manufactured, additionally,
debtors in the industry usually range from 85-90 days, and are
likely to remain at similar levels over medium term. The working
capital requirements are however partly supported through credit
of 75-80 days from suppliers. Reliance on external borrowings for
working capital requirements is expected to remain high, amid
small cash accrual over the medium term.
Strength
* Established track record of promoters in the bath fittings
industry: The promoters have over three decades of experience in
the industry. This experience has helped the company establish
strong relationships with suppliers and customers. CBFL sells its
entire output through its network of 15-18 distributors across
India. CBFL also has two direct sales offices at Mumbai and
Bengaluru for catering to direct orders from large real estate
customers. Nearly 60% of sales come from Gujarat and Maharashtra
region. Benefits from the experience of promoters are expected to
continue.
Outlook: Stable
CRISIL believes CBFL will continue to benefit from its promoter's
experience in the bath fittings industry. The outlook may be
revised to 'Positive' if revenue and operating profitability are
higher than expected, or if working capital cycle improves,
resulting in a better capital structure. The outlook may be
revised to 'Negative' if operating margin is lower than expected,
or if the company undertakes considerable debt-funded expansion,
or if its working capital management weakens, hitting its
financial risk profile.
CBFL, promoted by Mr. Vrundavan Ajudia and based in Jamnagar,
Gujarat, was incorporated in 2008. It manufactures premium bath
fittings.
CMAX METALS: CRISIL Reaffirms B+ Rating on INR3.5MM LT Loan
-----------------------------------------------------------
CRISIL has reaffirmed its rating on the long term bank facilities
of CMAX Metals India Private Limited (CMAX) at 'CRISIL B+/Stable'
Amount
Facilities (INR Mln Ratings
---------- -------- -------
Cash Credit 1.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 3.5 CRISIL B+/Stable (Reaffirmed)
The rating reflects the CMAX's weak business risk profile driven
by lack of pricing power and modest scale of operations in an
intensely competitive industry and initial stage of business..
These weaknesses are partially offset by extensive experience of
promoters in the precision sheet metal components industry and
their funding support and moderate financial risk profile on
account of absence of any significant debt and debt funded capex
plans over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak business risk profile driven by lack of pricing power and
uncertainty with respect to labour conditions: CMAX's scale of
operations have remained modest, with revenue of about Rs. 4.4
cr in 2016-17, The industry is marked by in highly fragmentation
among many small to medium size players. CRISIL believes that
adding new customers and their established relations with the
suppliers, the revenues of CMAX will improve to around Rs.5-6 cr
over the medium term.
* Modest scale of operations in an intensely competitive industry
and initial stage of business: On account of highly fragmented
industry situation, the company was not able to ramp up its
operations. The operating margin remained in the range of 16-17
per cent ending 2016-17. CRISIL believes that going forward, with
the new customers added and there established presence in the
industry the operating income will ramp up to over the medium
term.
Strengths
* Extensive experience of promoters in the precision sheet metal
components industry and their funding support: In 2015-16 new
directors were added to the Company's shareholding, Mr.
Chandrasekhar K, Mr. Haricharan MP and Mr. Guruswamy. CMAX
benefits from the extensive experience of the old as well as new
promoters, their understanding of the dynamics of the local
market, and established relationships of the new prmoters with
suppliers and customers. CRISIL believes that CMAX will benefit
from the experience of its new promoters and will achieve steady
revenue growth over the medium term.
* Moderate Financial risk profile on account of absence of any
significant debt: Networth is small and debt protection metrics
average. Financial risk profile will remain weak over the medium
term due to modest cash accrual and significant dependence on
external borrowing.
Outlook: Stable
CRISIL believes that CMAX will benefit from the extensive
experience of its promoters' in the supply of sheet metal
components industry. The outlook may be revised to 'Positive' if
there is substantial improvement in the company's scale of
operations and cash accruals. Conversely, the outlook may be
revised to 'Negative' if there is deterioration in its financial
risk profile either on account of lower than expected
profitability, larger than expected working capital requirements
or a large debt funded capex.
Incorporated in 2011, CMAX is engaged in the business of
manufacturing precision sheet metal components applicable for
telecommunication, electrical controls, computer peripherals,
electrical, electronics and medical equipment. The company has
its manufacturing facility in Bangalore.
COMMERCIAL AUTO: Ind-Ra Lowers B+ Issuer Rating, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Commercial
Auto Products Pvt. Ltd.'s (CAPPL) Long-Term Issuer Rating to
'IND B+' from 'IND BB-'. The Outlook is Stable. The instrument-
wise rating actions are:
-- INR100 mil. (increased from INR65 mil.) Fund-based limits
long-term rating downgraded; short-term rating assigned with
IND B+/Stable/IND A4 rating; and
-- INR21 mil. Non-fund-based limits withdrawn (repaid in full)
with WD rating.
KEY RATING DRIVERS
The downgrade reflects a sustained deterioration in CAPPL's
credit metrics, despite an improvement in revenue to INR221
million in FY17 (FY16: INR192 million) owing to an increase in
sales volume. However, the scale of operations continued to
remain small.
Interest coverage (operating EBITDA/gross interest expenses)
deteriorated to 1.1x in FY17 (FY16: 1.4x) and net leverage (net
debt/operating EBITDA) to 7.2x (5.9x) on the back of a decline in
EBITDA margins to 8% (9.7%). The reduction in the margins was on
the back of an increase in raw material prices.
The ratings continue to factor in the company's moderate
liquidity position with 94.3% average maximum use of working
capital limits during the 12 months ended October 2017.
The ratings, however, continue to draw comfort from the
promoter's more than three decades of experience in manufacturing
of radiators and its association with companies such as Mahindra
& Mahindra Limited ('IND AAA'/Stable), International Tractors
Limited and Escorts Ltd ('IND A'/Stable).
RATING SENSITIVITIES
Positive: An improvement in the operating profitability along
with an improvement in the overall credit metrics could be
positive for the ratings.
Negative: Deterioration in the operating profitability leading to
a substantial deterioration in the overall credit metrics could
be negative for the ratings.
COMPANY PROFILE
Incorporated in August 1985, CAPPL is an automobile radiator
manufacturer. It manufactures aluminium, copper and brass
radiators. The company mainly supplies to tractor companies, with
concentration in north India.
EARTHCON BUILDTECH: CARE Lowers Rating on INR9cr LT Loan to D
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Earthcon Buildtech Private Limited (EBPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9 CARE D Revised from
Facilities CARE B+; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
EBPL takes into consideration the delays in interest servicing by
the company on account of stretched liquidity position due to
stagnation in collections of customer advances.
Detailed description of the key rating drivers
Delays in Interest Servicing: EBPL has delayed in servicing the
interest due on the outstanding debt of the company due to
stretch in its liquidity position. The default accrues to the
slowdown in the collections efficiency due to subdued industry
scenario.
Subdued Industry Scenario: The real estate sector is moving
towards a more rational regime with the implementation of the
transformational reforms viz. demonetization, introduction of the
REIT's, Real Estate Regulator Bill and FDI relaxations.
Residential sales were positively impacted by flexibility in
pricing and payment schedules, especially for projects with
quality construction, appropriate sizes and prime locations. The
introduction of the RERA Act, will also move the sector towards
transparent and credible measures with sustenance for organized
players. Moreover, the expected renewed interest by the banks in
funding the developers is likely to result in the timely
completion of the projects.
As per market sentiments the India Real Estate Market may not
witness a sharp reversal in the year 2017, but its long term the
growth prospects remain strong. Currently, the sector continues
to remain troubled with issues of high unsold inventory, delayed
delivery of projects causing financial stress on developers. The
only segment that showed some signs of a rebound was the
affordable housing category in the peripheries of the major
markets. Thus, the broader market opinion is that while the long
term story for residential market remains strong; the short term
is expected to be sluggish.
Incorporated in 2011, Earthcon Buildtech Private Limited (EBPL)
is promoted by Earthcon Constructions Private Limited, Mr. Aqueel
Ur Rehman Khan, Mr. Arshad Khan and Mr. Anees Ahmad Khan. EBPL is
currently undertaking a commercial project to set up a retail
mall 'City Mall' in Nainital City, Uttarakhand. The 'City Mall'
is a commercial project with a total of 39 units including shops,
multiplexes, food courts and restaurants coupled with parking
facilities. EBPL proposes to lease out some shops and
multiplexes. EBPL is a part of Earthcon group engaged in the real
estate and construction business. The group has executed various
projects in Noida (Uttar Pradesh), Nanital (Uttarakhand) and
nearby areas like Moradabad (Uttar Pradesh).
EARTHCON CONSTRUCTIONS: CARE Lowers Rating on INR70cr Loan to D
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Earthcon Constructions Private Limited (ECPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 70 CARE D Revised from
Facilities CARE B+; Stable
Detailed Rationale & Key Rating Drivers
The revision in rating assigned to the bank facilities of ECPL
takes into consideration the delays in interest servicing by the
company on account of stretched liquidity position due to
stagnation in collections of customer advances.
Detailed description of the key rating drivers
Delays in Interest Servicing: ECPL has delayed in servicing the
interest due on the outstanding debt of the company due to
stretch in its liquidity position. The default accrues to the
slowdown in the collections efficiencydue to subdued industry
scenario.
Subdued Industry Scenario The real estate sector is moving
towards a more rational regime with the implementation of the
transformational reforms viz. demonetization, introduction of the
REIT's, Real Estate Regulator Bill and FDI relaxations.
Residential sales were positively impacted by flexibility in
pricing and payment schedules, especially for projects with
quality construction, appropriate sizes and prime locations. The
introduction of the RERA Act, will also move the sector towards
transparent and credible measures with sustenance for organized
players. Moreover, the expected renewed interest by the banks in
funding the developers is likely to result in the timely
completion of the projects.
As per market sentiments the India Real Estate Market may not
witness a sharp reversal in the year 2017, but its long term the
growth prospects remain strong. Currently, the sector continues
to remain troubled with issues of high unsold inventory, delayed
delivery of projects causing financial stress on developers. The
only segment that showed some signs of a rebound was the
affordable housing category in the peripheries of the major
markets. Thus, the broader market opinion is that while the long
term story for residential market remains strong; the short term
is expected to be sluggish.
ECPL was incorporated in February 2005 and is promoted by Mr.
Shadab Khan (Chairman & Managing Director) who has over two
decades of experience in the field of construction & real estate
development. ECPL is engaged in real estate development and
construction of residential group housing projects and has
delivered 8 projects since its incorporation and is currently
developing an affordable housing project namely Urban Village in
two phases involving development of 11.45 lakh square feet of
saleable area comprising of 878 flats with a projected cost of
INR279 crore. The project is located in Lucknow (Uttar Pradesh)
and is expected to complete by Sep-2019.
ELECTROSTEEL STEELS: Losses Widen to INR297cr in Qtr Ended June
---------------------------------------------------------------
The Economic Times reports that Electrosteel Steels, that is
undergoing insolvency resolution, reported a quarterly increase
in losses for the quarter ending September, which is when the
company started the resolution process with a court-appointed
resolution practitioner.
Losses at the company widened by 23% to INR297 crore from INR242
crore in the quarter ending June. Total expenses, however, slid
too by 4% at INR1,085 crore, the report discloses.
ET relates that while total income from operations suffered a
marginal hit by 1.4% at INR762 crore, net of GST, "other income"
declined by almost 86%.
The Jharkhand-based company that has an integrated steel plant as
well as a ductile iron (DI) pipe facility had a net debt of
INR11,710 crore at the end of the year 2016-17 and was referred
to the Kolkata bench of the NCLT by the State Bank of India,
according to ET.
The company was admitted by the tribunal for corporate insolvency
resolution on July 21, when the board was suspended and Dhaivat
Anjaria of PricewaterhouseCoopers was appointed as the interim
resolution professional, ET discloses.
Electrosteel Steels Limited is an India-based company, which is
engaged in basic iron and steel business. The Company is engaged
in selling thermo mechanically treated (TMT) bars, billets,
ductile iron (DI) pipes, pig iron and wire rod. The Company is
engaged in setting up a 2.51 million ton per annum (MTPA)
capacity Greenfield Integrated Steel and DI Pipes Plant in the
district of Bokaro, Jharkhand. It produces TMT bars in Fe500,
Fe500D and Fe500D corrosion resistance steel (CRS) variants. It
manufactures DI pipes in sizes ranging from 100 millimeters (mm)
to 1,200 mm. Its billets offer applications, such as general
engineering, structural, rerolling and high tensile applications.
Its wire rods have applications in engineering, construction,
power and automobile sectors. It consists of a sinter plant,
pellet plant, coke oven, blast furnace, basic oxygen furnace,
billet caster, wire rod mill, bar mill and power plant.
ESSAR STEEL: Lenders, Creditors Claims Reach INR77,700 crore
------------------------------------------------------------
Financial Express reports that financial claims received by the
resolution professional (RP) for Essar Steel from lenders,
operational creditors and employees have crossed INR77,770 crore.
Of this, the RP had till October 18 acknowledged INR50,000 crore,
according to a statement on the company's website.
According to FE, the biggest chunk of claims - INR54,851 crore -
was made by 49 financial creditors while operational creditors
had sought INR22,914 crore. Employees of the company were looking
to get INR20 crore. Among banks, State Bank of India (SBI) had
claimed an amount of INR13,652.8 crore while IDBI Bank was
looking to recover for INR5,177.7 crore. Among others that had
put in a claim are Canara Bank, Standard Chartered Bank, HDFC and
Axis Bank. Edelweiss Asset Reconstruction Company was looking to
recover INR5,527 crore, FE discloses.
In August, the National Company Law Tribunal (NCLT) had appointed
Satish Kumar Gupta as the interim resolution professional for
Essar Steel, according to FE. The steelmaker was among the 12
companies that the Reserve Bank of India (RBI) had asked banks to
refer to the bankruptcy court. On June 13, the central bank had
asked banks to refer 12 large stressed accounts - with loans
close to INR2.4 lakh crore - to the NCLT.
Last month, Mr. Gupta had sought resolution plans from potential
investors by October 23. "The RP under Section 25(2)(h) of the
Insolvency and Bankruptcy Code hereby invites all prospective
lenders, investors and any other persons who meet the eligibility
criteria to put forward resolution plans in respect of the
Corporate Debtor," the public notice had said, FE relays.
Essar Steel, which has a steel-making capacity of 9.7 million
tonnes per annum, owes more than INR45,000 crore to lenders, of
which INR31,671 crore was classified by banks as non-performing
assets as of March 31, 2016, the report notes. SBI leads a
consortium of 22 lenders that accounts for 93% of the company's
debt.
According to FE, Essar Steel also owes Standard Chartered Bank
close to INR3,500 crore; Essar Steel's Mauritius-based subsidiary
had taken a loan from SCB guaranteed by Essar Steel's promoters.
On July 4, Essar had moved the Gujarat High Court against its
inclusion in the list of 12 defaulters to be referred to the
NCLT, FE recalls. The report says the company's counsel had
argued in the court that its restructuring proposal was at an
advanced stage and that the financial and operational
improvements since March 2016 had not been taken into account by
the RBI.
However, the court had dismissed Essar Steel's appeal on July 17,
the report notes. Once cases are admitted by the NCLT, lenders
need to set up a committee of creditors to come up with a
resolution plan. If the committee is unable to find a solution
within 180 days - this can be extended to 270 days - the
borrowing entity will go into liquidation, FE states.
About Essar Steel
Incorporated in 1976, Essar Steel India Ltd. is a part of the
Essar Group and is having 10 MTPA integrated steel manufacturing
facilities at Hazira, Gujarat and iron ore beneficiation and
pelletisation facilities in Paradeep, Odisha (12 mtpa) and Vizag,
Andhra Pradesh (8 mtpa). The company also owns and operates two
iron ore slurry pipelines -- one each in Odisha (Dabuna to
Paradip) and Andhra Pradesh (Kirandul-Vizag), which transport the
iron ore slurry from the beneficiation plant (located near the
iron ore mines in Dabuna and Kirandul) to the pellet plant
(located near the Paradip and Vizag ports). A large portion of
the iron ore pellets produced are intended for captive
consumption by ESIL's steel plant at Hazira for cost
optimization.
The National Company Law Tribunal (NCLT), Ahmedabad, admitted
Essar Steel's insolvency case on Aug. 2, 2017. State Bank of
India's suggested interim resolution professional (IRP) Satish
Kumar Gupta, of Alvarez and Marsal India, has been appointed as
IRP.
Essar Steel owes more than INR45,000 crore to lenders, of which
INR31,671 crore had already been declared as non-performing as of
March 31, 2016, The Economic Times disclosed. The SBI-led
consortium of 22 creditors accounts for 93% of this amount. Essar
Steel owes $ 450.67 million to SCB in debt.
Both petitions filed by State Bank of India (SBI) and Standard
Chartered Bank (SCB) for initiating insolvency proceeding under
Insolvency & Bankruptcy Code (IBC) against the steel major Essar
Steel Ltd have been admitted by NCLT on Aug. 2, according to ET.
GOODWEAR FASHIONS: Ind-Ra Affirms 'BB' LT Issuer Ratings
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Goodwear
Fashions Pvt. Ltd.'s (GFPL) Long-Term Issuer Rating at 'IND BB'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR88 mil. Fund-based limits affirmed IND BB/Stable/IND A4+
rating;
-- INR29.4 mil. (increased from INR13.6 mil.) Term loan due on
October 2022 affirmed IND BB/Stable rating; and
-- INR1 mil. Non-fund-based limits affirmed IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects GFPL's continued small scale of
operations and moderate credit metrics. Revenue grew to INR337
million in FY17 (FY16: INR289 million) on account of an increase
in sales volume, driven by an increase in domestic demand.
However, operating EBITDA margins declined to 9.7% in FY17 (FY16:
11.0%) owing to an increase in overhead expenses. Interest
coverage (operating EBITDA/ gross interest expense) improved to
2.3x in FY17 (FY16: 2.1x) on the back of a decline in interest
cost, while net leverage (gross debt/ operating EBITDA) remained
stable at 2.8x (2.8x).
The ratings continue to factor in GFPL's moderate liquidity
position as reflected by 97.7% average utilisation of working
capital limits over the 12 months ended October 2017.
However, the ratings remain supported by the company's directors'
more than two decades of experience in the garment industry.
RATING SENSITIVITIES
Positive: Growth in the revenue and EBITDA margins will be
positive for the ratings.
Negative: Any deterioration in the liquidity profile will be
negative for the ratings.
COMPANY PROFILE
Incorporated in 1988, GFPL manufactures high-end woven and
knitted interlinings with an installed capacity of around 800,000
metres per month. It is owned and managed by Ved Paul Kapoor and
Vishal Kapoor.
GRACIA METALS: CRISIL Withdraws B+ Rating on INR2.5MM Cash Loan
---------------------------------------------------------------
CRISIL has withdrawn its ratings on the bank loan facilities of
Gracia Metals Private Limited (GMPL) based on the no objection
certificate from the banker and a withdrawal request from GMPL.
The rating action is in line with CRISIL's policy on withdrawal
of bank loan ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2.5 CRISIL B+/Stable (Withdrawn)
Letter Of Guarantee .5 CRISIL A4 (Withdrawn)
Letter of Credit 1.0 CRISIL A4 (Withdrawn)
Term Loan 1.5 CRISIL B+/Stable (Withdrawn)
Term Loan 1.0 CRISIL B+/Stable (Withdrawn)
Incorporated in May 2013, GMPL was by Jain family. The company is
engaged in manufacturing of electric, power and industrial
cables. The company's manufacturing facilities are located at
Talasari (Maharashtra).
GRAVIT ENGINEERING: CRISIL Lowers Rating on INR5MM Loan to B-
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Gravit Engineering Works (GEW; part of the Gravit group) to
'CRISIL B-/Stable' from 'CRISIL B/Stable', and reaffirmed the
short-term rating at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Cash Credit 5 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects consistent decline in revenue to INR2.42
crore in fiscal 2017 from INR4.47 crore during fiscal 2015.
Gearing weakened to about 2.6 times as on March 31, 2017, from
0.78 time as on March 31, 2016, due to large working capital
requirement and stretched liquidity.
The ratings reflect the group's modest scale of operations, large
working capital requirement, and weak financial risk profile.
These weaknesses are partially offset by promoters' extensive
experience in the civil construction industry.
Analytical Approach
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of GEW and Gravit Onsite JV India (GOI).
This is because both the firms, together referred to as the
Gravit group, are promoted by the same family and have common
management, and derive considerable operational and business
synergies from each other.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of about INR2.42 crore
during fiscal 2017, scale remains small and will continue to be
so over the medium term.
* Large working capital requirement: Gross current assets were
over 800 days as on March 2017.
* Weak financial risk profile: Networth declined to about INR2
crore as of March 2017 from INR3.2 crore as of March 2016 due to
capital withdrawal. Also, debt protection metrics were weak, with
interest coverage ratio of about 1.4 times for fiscal 2017.
Metrics are likely to remain subdued over the medium term.
Strength
* Extensive experience of promoters: The promoters have been in
the construction business for close to three decades.
Outlook: Stable
CRISIL believes the Gravit group will benefit over the medium
term from its promoters' extensive experience. The outlook may be
revised to 'Positive' if sustained increase in scale of
operations and profitability, while managing working capital
requirement efficiently, leads to a better financial risk
profile. The outlook may be revised to 'Negative' if financial
risk profile weakens further because of decline in revenue and
margins, large, debt-funded capital expenditure, or inefficient
working capital management.
Established as a proprietorship firm by Mr. Ashok Gandhi and
based in Mumbai, GEW is engaged in rehabilitation of pipes and
mainly caters to MCGM.
Established in 2013, GOI is in the same business as GEW and is a
joint venture of Mr. Ashok Gandhi and Onsite India Pvt Ltd in a
76: 24 ratio.
MULTITECH AUTO: Ind-Ra Moves BB+ Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Multitech Auto
Private Limited's (MAPL) 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:
-- INR55 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB+(ISSUER NOT COOPERATING)
rating; and
-- INR75 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
Aug. 16, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Jamshedpur-based MAPL was incorporated in 1995. It manufactures
automobile parts for Tata Motors Limited. It set-up a new
subsidiary, M/s Mal Metalliks Pvt. Ltd., in Jamshedpur for
manufacturing bright steel bars with an installed capacity of
3,000MTPA. In 2009, the subsidiary unit began production of
casting components as a part of backward integration with a
capacity of 6,000MTPA. The group is managed by Mr. Atul Dua, Mr.
Surendra Gadia and Mr. Dinesh Kumar Parik.
PAVANPUTRASHEETGRAH: CARE Moves B Rating to Not Cooperating
-----------------------------------------------------------
CARE Ratings has been seeking information from
PavanputraSheetgrah Private Limited to monitor the rating(s) vide
e-mail communications/ letters dated September 20, 2017, and
numerous phone calls. However, despite CARE's repeated requests,
the firm has not provided the requisite information for
monitoring the ratings. In the absence of minimum information
required for the purpose of rating, CARE is unable to express
opinion on the rating. In line with the extant SEBI guidelines
CARE's rating on PavanputraSheetgrah Private Limited's bank
facilities will now be denoted as CARE B; ISSUER NOT COOPERATING.
CARE gave these ratings:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.00 CARE B; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in September 30, 2016 the following
were the rating strengths and weaknesses.
Key Rating Weaknesses
Nascent stage of business operations: PavanputraSheetgrah Private
Limited (PSPL) started with its commercial production during
February 2016 and has a relatively short track record of
operations as compared with other established players.
Furthermore, post project implementation risk in the form of
stabilization of the warehousing / cold storage facilities to
achieve the envisaged scale of business is associated with the
space to be leased out in the light of competitive nature of
industry.
Project execution and stabilization risk: The company was
established to provide warehousing / cold storage facilities
which were to be funded by term loan of INR1.85 crore and balance
in the form of promoter's contribution in the form of capital and
unsecured loans. The execution of the project within the
envisaged time and cost parameters remains a risk for the
company. Also, the stabilization of operations is crucial from
the credit perspective. Due to working capital intensive nature
of operations, the capital structure of the company is expected
to remain leveraged due to high dependence on working capital
borrowing coupled with low capital base.Further in the absence of
any information from the client regarding the same CARE is unable
to express its opinion.
Weak financial risk profile: The profitability margins of the
company marked by PBILDT margin stood moderate. However, due to
high interest and depreciation burden the company incurred net
loss. The capital structure of the company stood leveraged on
account of low net worth base and debt funded capital
expenditure. Further, coverage indicators of the company also
remained weak. Competitive nature of the industry PSPL would be
operates in a competitive industry wherein there is presence of a
large number of players in the unorganized and organized sectors.
There are number of small and regional players catering to the
same market which has limited the bargaining power of the company
and has exerted pressure on its margins.
Key Rating Strengths
Experienced management: The company is being managed by Mr.
Arvind Kumar along with other family members. Mr.Arvind Kumar
Gupta, Mr. Ashok Kumar and Mr. Anupam Kumar have an experience of
around a decade in this industry through their association with
Bajrang Cold Storage. Further they are supported by MrSudhir
Kumar, MBA by qualification. All the directors collectively look
after the operations of the company.
Favorable scenario for cold storage: The warehousing and cold
chain industry is emerging as a fast-growing business sector in
India, with developments in the food processing sector, organized
retail and government initiatives driving growth. Further with
rapid growth of organized retail and manufacturing sector, the
need for warehousing is increasing. Along with the growth of the
processed food market, will come the need for a better cold chain
industry. The same is expected to benefit PSPL. The government is
taking steps to set up cold chain infrastructure and has
introduced schemes such as capital investment subsidy from the
National Horticulture Board (NHB), the National Horticulture
Mission (NHM) and the Ministry of Food Processing Industries
(MoFPI). Apart from subsides, like credit-linked capital subsidy
scheme for construction of cold storages and godowns, the
government is also providing consultancy services to help
connecting farmers to market & to avoid heavy losses & wastes of
food products.
PavanputraSheetgrah Private Limited (PSPL) was incorporated in
2015 and started commercial operation in February 2016. PSPL was
promoted by Mr. Arvind Kumar along with other family members. The
main objective of setting up PSPL was for the construction,
management and operation of a cold storage. The cold storage is
located at Hathras, Uttar Pradesh with storage capacity of 4000
metric ton per annum as on March 31, 2016. The company 'has a
group concern "Bajrang cold Storage" which engaged in the
business of cold storage.
POLYPLASTICS AUTO: CRISIL Withdraws B Rating on INR8.3MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with
Polyplastics Auto Components Private Limited (PACL) for obtaining
information through letters dated November 9, 2016 and December
14, 2016 among others, apart from telephonic communication.
However, the issuer remains non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Withdrawn)
Proposed Long Term 0.7 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Withdrawn)
Term Loan 8.3 CRISIL B/Stable (Issuer Not
Cooperating; Rating
Withdrawn)
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 they are arrived at without any
management interaction and are based on best available or limited
or dated information on the company.
Detailed Rationale
CRISIL has withdrawn its rating on the long-term bank facilities
of PACL. The rating has been withdrawn after receipt of client
request along with no objection certificate from its banker,
State Bank of India. The rating action is in line with CRISIL's
policy on withdrawal of its bank loan ratings.
Analytical Approach
For arriving at its rating, CRISIL has combined the business and
financial risk profiles of PACL with Polyplastics Industries
(India) Pvt Ltd (PIPL), Polyplastics Uttar Bharat Pvt Ltd (PUPL),
United Precision Engineering Co (UPEC), and Euro American Plastic
Products Pvt Ltd (EAPL). This is because all these entities,
collectively referred to as the Polyplastic group, have
significant inter-group operational linkages and are under a
common management.
Incorporated in 2010, PACL is a 100% subsidiary of PPI. The
company has set up a facility at Chennai to manufacture various
automotive components such as grills, garnishes, covers, hubcaps,
and emblems. The Polyplastic group has plants in Yamuna Nagar,
Bawal (both in Haryana), Bhiwadi (Rajasthan), Chennai (Tamil
Nadu), and Pune (Maharashtra). The group's main company, PIPL,
supplies auto components to original equipment manufacturers.
PUPL and EAPL supply plastic auto components to PIPL. UPEC makes
dies and moulds for group companies only. PACL, based in Chennai,
supplies its products exclusively to Renault Nissan Automotive
India Pvt Ltd.
PRITIKA AUTOCAST: CRISIL Withdraws C Rating on INR21MM Cash Loan
----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Pritika
Autocast Limited (PAPL) for obtaining information through letters
dated November 6, 2017, apart from telephonic communication.
However, the issuer remains non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Issuer Not
Cooperating; Rating
Withdrawal)
Cash Credit 21 CRISIL C (Issuer Not
Cooperating; Rating
Withdrawal)
Letter of Credit 1.5 CRISIL A4 (Issuer Not
Cooperating; Rating
Withdrawal)
Term Loan 1.41 CRISIL C (Issuer Not
Cooperating; Rating
Withdrawal)
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 they are arrived at without any
management interaction and are based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
has failed to receive any information on either the financial
performance or strategic intent of PAPL. 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
PAPL 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 C/CRISIL A4'.
CRISIL has withdrawn its rating on the long-term bank facilities
of NCPL on the request of the company and after receiving no-
objection certificates from the bankers. The rating action is in
line with CRISIL's policy on withdrawal of its ratings on bank
loan facilities
The Pritika group was promoted by Mr. Raminder Singh Nibber and
his son, Mr. Harpreet Singh Nibber. Incorporated in 1996, Pritika
Industries Limited (PIL) is engaged in machining of automotive
and tractor parts in Mohali (Punjab). It was started as a
partnership firm in 1973 with a machine shop and was
reconstituted as a company in 1996 to ensure adequate sanctioning
of bank lines. Incorporated in 1997, Nibber Castings Private
Limited (NCPL) has a foundry unit at Mohali, and is engaged in
the casting of automotive and tractor parts. Pritika Autocast Ltd
(PAPL), incorporated in 2005-06 (refers to financial year,
April 1 to March 31), manufactures automotive and tractor
components at its facility in Bathri (Punjab); it is an
integrated unit, capable of both casting and machining.
RIDLEY IFMR 2016: Ind-Ra Corrects May 3 Release
-----------------------------------------------
This announcement corrects the version published on May 3, 2017
to correctly state the date of issuance as November 30, 2016. An
amended version is:
India Ratings and Research (Ind-Ra) has assigned Ridley IFMR
Capital 2016 (an ABS transaction) these final ratings:
-- INR752.79 mil. Series A1 pass-through certificates (PTCs),
issued on Nov. 30, 2016, due on September 19, 2018,
(amortised from INR958.43), assigned with IND A-(SO)/Negative
rating;
-- INR132.19 mil. Series A2 PTCs issued on Nov. 30, 2016, due
on Sept. 19, 2018, assigned with IND B+(SO)/Negative
rating;
The microfinance loan pool assigned to the trust is originated by
Disha Microfin Private Limited (Disha).
KEY RATING DRIVERS
The Outlook revision is primarily driven by a rise in loans
delinquent by over zero days past due (0+dpd) on account of
demonetisation. As of March 2017, 0+dpd delinquency was 20.4%
(November 2016: 0.0%) of the original pool principal outstanding
(POS) and 24.3% (November 2016: 0.0%) of the current POS. Ind-Ra
has mostly observed higher 0+dpd delinquencies from Disha-
originated loans that were disbursed across Maharashtra, Madhya
Pradesh, Gujarat and Karnataka. The states accounted for 82.0% of
the initial pool principal outstanding at closing. Gross
collection efficiency (current collections, including overdue
collections) declined to about 53.7% in March 2017 from 72.5% in
the first month since the closing (i.e. December 2016).
The final ratings are based on the origination, servicing,
collection and recovery expertise of Disha, the legal and
financial structure of the transaction, and the credit
enhancement (CE) provided in the transaction. The final rating of
Series A1 PTCs addresses the timely payment of interest on
monthly payment dates and the ultimate payment of principal by
the final maturity date of Sept. 19, 2018, in accordance with
transaction documentation.
The final rating of Series A2 PTCs addresses the timely payment
of interest on monthly payment dates only after the complete
redemption of Series A1 PTCs and the ultimate payment of
principal by the final maturity date of Sept. 19, 2018, in
accordance with transaction documentation.
The transaction benefits from the internal CE on account of
excess interest spread, subordination and over-collateralisation.
The levels of over-collateralisation available to Series A1 and
Series A2 PTCs at transaction closing are 13% and 1% of the
initial POS, respectively. Total excess cash flow or internal CE
available to Series A1 and A2 PTCs at transaction closing is
30.09% and 15.14%, respectively, of the initial POS. The
transaction benefits from an external CE of 4.0% of the initial
POS (4.9% of future POS) in the form of fixed deposits with RBL
Bank in the name of the originator, with a lien marked in favour
of the trustee. The collateral pool assigned to the trust at par
had an initial POS of INR1,101.65 million (current POS of
INR923.13 million as of March 2017), as of the pool cut-off date
of 11 November 2016.
The external CE will be used in case of a shortfall in a) the
complete redemption of all Series of PTCs on the final maturity
date, b) the monthly interest payment to Series A1 investors c)
the monthly interest payment of Series A2 investors after the
complete redemption of Series A1 investors and d) any shortfall
in Series A2 maximum payout on the Series A2 final maturity date.
RATING SENSITIVITIES
As part of its analysis, Ind-Ra built a pool cash flow model
based on the transaction's financial structure. The agency
analysed historical data to determine the base values of key
variables that would influence the level of expected losses in
this transaction. The base values of the default rate, recovery
rate, time to recovery, collection efficiency, prepayment rate
and pool yield were stressed to assess whether the level of CE
was sufficient for the current rating levels.
Ind-Ra also conducted rating sensitivity tests. If the
assumptions about the base case default rate worsen by 30%, the
model-implied rating sensitivity suggests that the ratings of
Series A1 will not be impacted while that of Series A2 PTCs will
be downgraded by two notches.
COMPANY PROFILE
Incorporated in 1995, Disha is registered with the Reserve Bank
of India (RBI) as a non-banking financial company - microfinance
institution. In September 2015, it received in-principle approval
from the RBI to start operations as a small-finance bank. Disha
acquired Future Financial Services Pvt Ltd in October 2016. It is
a part of Fincare group, which comprises Disha, Future Financial
Services Pvt. Ltd, Lok Management Services Pvt. Ltd., India
Finserve Advisors Pvt. Ltd. and Fincare Business Services Pvt.
Ltd.
ROYALCARE SUPER: CRISIL Assigns B+ Rating to INR9.75MM Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
rating to the bank facilities of Royalcare Super Speciality
Hospital Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4.35 CRISIL A4
Cash Credit 9.75 CRISIL B+/Stable
The rating reflects the hospital's nascent stages of operations,
risks related to implementation of phase 2 and stabilisation
risk. These weaknesses are partially offset by the extensive
experience of the promoter in the healthcare industry.
Key Rating Drivers & Detailed Description
Weakness
* Nascent Stage of operations and risks related to implementation
of phase 2: The hospital is in nascent stages of its operations
as it started operations in November 2016. The construction of
the second phase of the hospital is underway. It is expected to
be completed by March 2018, post which bed capacity will increase
to 550 beds from current level of 250 beds.
* Stabilisation Risk: The phase 2 of the hospital, which is
likely to be operational from April 2018, will remain exposed to
risks related to stabilisation of operations, and demand related
risks.
Strength
* Extensive experience of the promoters in the healthcare
industry: The hospital is headed by Dr K Madeswaran (founder and
chairman), one of the leading Neuro-Surgeon of Coimbatore. He is
assisted by Dr K Chockalingam MD, DM (Cardiology), and an eminent
cardiologist of Coimbatore. Both promoters are seasoned doctors
with extensive experience in the healthcare industry.
Outlook: Stable
CRISIL believes RSSHL will benefit over the medium term from
benefits derived from experience of promoters in the healthcare
industry. The outlook may be revised to 'Positive' in case
successful implementation of phase 2 and stabilisation of
operations lead to higher-than-expected revenue and operating
profitability. Conversely, the outlook may be revised to
'Negative' if time or cost overrun in ongoing constructions or
delays in stabilising operations leads to weaker-than-expected
financial risk profile.
RSSHL is a 250 bedded multi-specialty hospital that provides
tertiary healthcare services. The hospital is a closely held
public-limited entity, based in Coimbatore, and promoted by Dr K
Madeswaran and Dr K Chockalingam.
SAMBHAV EXIM: CARE Lowers Rating on INR10cr LT Loan to D
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sambhav Exim (SBE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10 CARE D Revised from
Facilities CARE B; Stable
Long-term/Short- 6 CARE D Revised from CARE B/
term Bank CARE A4; Stable
Facilities
Detailed Rationale & Key Rating Drivers
Ongoing delays in Debt servicing
The revision in the rating assigned to the bank facilities of
Sambhav Exim is primarily due to irregularity in servicing its
debt obligations.
Established in September, 2015, Ahmedabad (Gujarat) based Sambhav
Exim (SBE) is a partnership firm managed by two partners viz. Mr.
Vijaykumar P. Shah and Mr. AnkitKumar P. Shah. SBE is setting up
a plant in Ularia, Ahmedabad to manufacture woven sack bags, BOPP
woven bags and flexible pouches with a proposed manufacturing
capacity of 3,600 metric tons of packaging material per annum.
The products manufactured by SBE are used in various industries
such as agriculture, chemical, fertilizers, food etc. Both the
partners have over a decade of experience in packaging industry.
SARA SPINTEX: CARE Revises Rating From CARE D Not Cooperating
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sara Spintex India Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 36.36 CARE D Revised from
Facilities CARE D; Issuer not
co-operating
Short term bank 2.00 CARE D Revised from
Facilities CARE D; Issuer not
co-operating
In the absence of minimum information required for the purpose of
rating, CARE was unable to express an opinion on the
ratings of Sara Spintex India Private Limited (SSPL) and in line
with the extant SEBI guidelines, CARE revised the rating of
bank facilities of the company to 'CARE D; ISSUER NOT
COOPERATING*'. However, the company has now submitted the
requisite information to CARE. CARE has carried out a full review
of the rating and rating stands at 'CARE D'.
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SSPL continue to
be constraint on account of irregularity in repayment of
installments and interest of term loan. The ability of the
company to regularize the payments is the key rating sensitivity.
SSIPL was incorporated in the year March 2011; however, commenced
with the commercial production from April 2013. The company is
engaged in business of manufacturing of cotton yarn of various
types like ring spurn yarns, slub yarn and core spun yarn. The
company has an installed capacity of around 860 tons per annum as
on March 31, 2017 at its facility located in Yavatmal District of
Maharashtra.
SEFTECH INDIA: CRISIL Assigns B+ Rating to INR5MM LT Loan
---------------------------------------------------------
CRISIL Ratings has assigned the rating of 'CRISIL
B+/Stable/CRISIL A4' to the short term facilities of Seftech
India Private Limited. (SIPL; a part of Seftech group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Bank Guarantee 20 CRISIL A4
Proposed Long Term Bank
Loan Facility 5 CRISIL B+/Stable
The rating reflects SIPL's working capital intensive operations
and significant exposure to group entities. These rating
weaknesses are partially offset by promoter's extensive
experience in EPC (Engineering, Procurement and Commissioning)
business.
Analytical Approach
To arrive at the rating, CRISIL has combined the business and
financial risk profile of SIPL, Enseft Bituminous Product Pvt.
Ltd. (EBPPL) and Seftech Phosphate Pvt. Ltd. (SPPL). This is
because all the entities, together referred to as the Seftech
group, are under a common management, and have significant
operational linkages among them.
Key Rating Drivers & Detailed Description
Weakness
* Large working capital requirements: The group has working
capital intensive operations as indicated by high gross current
asset of 153 days as on March, 2017.
* Significant exposure to group concerns: Seftech group has
extended around Rs.112 crore as on March, 2017 to group concerns
in the form of loans and advances. Any further exposure to group
companies, may weaken liquidity and will remain a key rating
sensitivity factor.
Strength
* Extensive experience of promoters in EPC business: Seftech
group benefits from the extensive experience of its promoters,
who have been in the EPC industry for over four decades. Over the
years, the promoters has successfully executed projects across
different industries in the African markets.
Outlook: Stable
CRISIL believes that Seftech group will continue to benefit from
the extensive experience of promoters in EPC industry. The
outlook may change to positive if substantial improvement in
revenues and operating margins or decline in exposure to group
companies improves the financial risk profile. The outlook may be
revised to 'Negative' if low cash accrual, large working capital
requirement or debt-funded capital expenditure, weakens the
financial risk profile, especially liquidity.
Incorporated in 1975, SIPL is a part of Seftech group and is
engaged in undertaking EPC projects. The group is promoted by Mr.
Ranjeet Chaturvedi and is based out of Mumbai, Maharashtra.
SPPL is a wholly owned subsidiary of SIPL and is engaged in
mining activities.
SHEELU EXPORTS: CRISIL Cuts Rating on INR.50MM Loan to 'B-'
-----------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long term bank
facilities of Sheelu Exports (SE) to 'CRISIL B-/Stable' from
'CRISIL B+/Stable, while reaffirming the short term rating at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Packing Credit 9.5 CRISIL A4 (Reaffirmed)
Proposed Export
Packing Credit .25 CRISIL A4 (Reaffirmed)
SME Care Loan .50 CRISIL B-/Stable
(Downgraded from
'CRISIL B+/Stable')
The downgrade reflects CRISIL's belief that SE's business and
financial risk profile would deteriorate over the medium term on
account of lower revenues and profitability. SE's revenues are
expected to decline substantially in fiscal 2018 owing to intense
competition in the export market resulting in a lower order book.
This would result in decline in cash accruals and would in turn
weaken the company's financial risk profile. Moreover, the
partners have withdrawn INR1.64 crores from capital during fiscal
2017 resulting in weakening of gearing. The quantum of withdrawal
over the medium term would remain key rating sensitivity factor.
The rating reflects a weak financial risk profile marked by high
gearing and weak debt protection metrics and a modest scale of
operations in the intensely competitive human-hair export
industry. The rating also reflects the working capital-intensive
operations. These rating weaknesses are partially offset by the
extensive industry experience of SE's partners and its
established customer relationships.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: SE has a below-average financial
risk profile, marked by a small net worth estimated at INR3.9
crore as on March 31, 2017. The firm's gearing has also been
aggressive, at 2.47 times as on the same date. SE's debt
protection metrics are weak with interest coverage and NCATD
ratios estimated to be around 2.75 times and negative 0.07 times,
respectively for 2016-17.
* Modest scale of operations and susceptibility to intense
industry competition: SE's scale of operations is modest, with
revenue estimated at about INR37.7 crores for fiscal 2017; the
revenues are expected to decline further in fiscal 2018. SE's
operations have remained modest due to the intense competition.
Moreover, in the current year, the revenues are expected to
decline further owing to intense competition in the export
segment from other geographies.
* Working capital-intensive operations: SE's operations are
working capital intensive, with gross current assets (GCAs)
between 185 and 225 days over the three years ended 2016-17. The
GCAs are expected to remain in same range over the medium term.
High GCAs are mainly on account a large inventory and debtors of
around 122 and 68 days as on March 31, 2017.
Strength
* Promoters' extensive experience in human hair export industry:
SE's partners have extensive experience of more than 12 years in
the business or processing and conditioning human hair. The firm
has been associated with majority of its customers for more than
a decade.
Outlook: Stable
CRISIL believes that SE's credit risk profile would be under
pressure over the medium term. The outlook may be revised to
'Stable' if a substantial increase in scale of operations with
sustained profitability margins strengthens the business and
financial risk profile. Conversely, the rating may be downgraded
in case of a steep decline in revenue or profitability margins,
or significant deterioration in capital structure caused most
likely by large, debt-funded capital expenditure or a stretch in
working capital cycle.
SE was established in 2001 as a proprietorship concern and was
reconstituted as a partnership firm in 2007. The firm exports
processed human hair. It currently has two partners, Mr. K
Srinivasa Rao and Ms K Sita Devi.
SHREE RAM: CRISIL Reaffirms B Rating on INR6.0MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Shree Ram Cotex (SRC) at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.00 CRISIL B/Stable (Reaffirmed)
Term Loan 2.75 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect the firm's below-average
financial risk profile because of small networth, high total
outside liabilities to adjusted networth (TOLANW) ratio, and
subdued debt protection metrics; nascent stage of operations, and
vulnerability to fluctuations in raw material prices. These
weaknesses are partially offset by the extensive experience of
its promoters in the cotton industry and established relationship
with customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Networth was small at
INR2.7 crore as on March 31, 2017, due to low initial paid-up
capital and minimum accretion to reserves; while TOLANW ratio
high at 3.9 times. Debt protection metrics were subdued, with
interest coverage and net cash accrual to adjusted debt ratios of
1.76 times and 0.06 time, respectively, for fiscal 2017.
* Start-up phase and vulnerability to fluctuations in raw
material prices: The firm commenced operations in January 2016
with installed capacity of 7000 tonne per annum and is expected
to operate at 40-50% of capacity over the medium term. Operating
profitability was modest at 4.2% in fiscal 2017 and is expected
to fluctuate on account of low value addition, and exposure to
volatility in cotton prices, and intense competition.
Strength
* Extensive experience of promoters and established relationship
with customers: Presence of over two decades in the cotton
ginning segment has enabled the promoters to establish strong
relationship with suppliers and customers. Hence, despite dip in
turnover due to industry slowdown, margin has remained steady.
Outlook: Stable
CRISIL believes SRC will benefit over the medium term from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' if higher-than expected accrual and effective
working capital management strengthen financial risk profile. The
outlook may be revised to 'Negative' if lower-than-expected
accrual or stretch in working capital cycle further weakens
financial risk profile.
Established in 2015 as a partnership firm, SRC gins and presses
cotton at its facility in Wardha (Maharashtra). Its day to day
operations are looked after by Mr. Sanjay Goyal and Mr. Dilip
Goyal.
SONAI CONSTRUCTIONS: Ind-Ra Migrates B+ Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sonai
Constructions Private Limited's Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise, despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating action is:
-- INR120 mil. Fund-based limits migrated to non-cooperating
category with IND B+(ISSUER NOT COOPERATING)/IND A4(ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Nov. 21, 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 1999, Sonai Constructions is a civil construction
contractor.
SUPERLIGHT AAC: CARE Assigns B+ Rating to INR13.55cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Superlight AAC Blocks Industry, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facility 13.55 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Superlight AAC
Blocks Industry is constrained by its small scale of operation,
short track record, competitive nature of the industry, high
working capital intensity, exposure to vagaries of nature and
constitution being partnership firm. However, the aforesaid
constraints are partially offset by its experienced partners,
locational advantage and proximity to raw material sources and
high growth prospects of the industry.
The ability of the firm to grow its scale of operations and
improve its profit margins and ability to manage working capital
effectively would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management: Mr. Surendra Kumar Mittal (Partner) along
with Mr. Raj Kamal Sarawagi (Partner) looks after overall
operation of the firm. Mr. Surendra Kumar Mittal who has 19 years
and Mr. Raj Kamal Sarawagi who has 34 years of experience in the
similar line of business and is ably supported by a team of
experienced professionals who have rich experience in the same
line of business.
Close proximity to raw material sources and favourable industry
scenario: Superlight AAC Blocks Industry' plant is located in
Kamrup District of Assam. The most of raw materials requirement
is met from the nearby states. The firm is able to save
simultaneously on transportation cost and AAC Blocks
manufacturing cost. Further, India is largest manufacturer AAC
Blocks after china. Demand prospects for the industry are
expected to remain good in near to medium term.
Stable demand outlook of AAC Blocks: AAC Blocks are certified
green building materials and also eco-friendly, non-toxic,
reusable, renewable and recyclable. Currently, AAC blocks are in
high demand due to its low cost, load bearing capacity,
earthquake resistance etc. It is an excellent substitute of
traditional bricks and most favourable building materials in
construction industry.
Key Rating Weaknesses
Constitution as a partnership firm: Superlite AAC Blocks
Industry, being a partnership firm, is exposed to inherent risk
of the partner's capital being withdrawn at time of personal
contingency and firm being dissolved upon the death/insolvency of
the proprietor. Furthermore, proprietorship entities have
restricted access to external borrowing as credit worthiness of
proprietor would be the key factors affecting credit decision for
the lenders.
Short track record and small scale of operation: Superlite AAC
Blocks Industry has commenced operations from April 2016 and thus
has very short track record of operations. The firm has achieved
sale during its completed year of operation is INR25.19 crore.
Furthermore, the firm has achieved a turnover of INR17.13 crore
for H1FY18.
Competitive nature of the industry: AAC Blocks are an eco-
friendly and sustainable construction building material made
using non-polluting manufacturing process. It makes productive
use of recycled industrial waste (fly ash). Currently, AAC Blocks
are most preferable building material for green field projects.
AAC Blocks market in India is highly competitive and dominated by
a handful of large players, which have established considerable
manufacturing capability to meet the current demands.
High working capital intensity and exposure to vagaries of
nature: For Manufacturing of AAC Blocks requires various types of
materials like fly ash, water, cement, lime and aluminum. AAC
Blocks manufacturing is a working capital intensive nature of
business as the AAC Blocks manufacturers have to stock AAC Blocks
in large quantity. Also, AAC Blocks manufacturing is highly
dependent on the availability of raw materials, thus exposing the
fate of the firm's operation to vagaries of nature. Accordingly,
the working capital intensity remains high leading to higher
stress on the financial risk profile of the AAC Blocks
manufacturing units. Average monthly working capital utilization
remained around 70% during last twelve months ended October,
2017.
Superlite AAC Blocks Industry established in 2014, commenced
operation from April 2016. The firm is engaged in manufacturing
of different types of AAC blocks which requires in construction
activities. The Manufacturing unit of the firm located at Vill-
Sarutari, Sonapur Byrnihat, Dist-Kamrup (Assam) with an installed
capacity of 118098 metric tons per annum. The firm procures its
raw materials from domestic suppliers and imports 15% of its raw
material from Bhutan. The firm sells its products through dealers
and distributors which cover several states like West Bengal,
Assam, Meghalaya, Manipur, Mizoram, Arunachal Pradesh etc. The
firm has diversified customers. The firm's major export
destination is Bhutan. Mr. Surendra Kumar Mittal (Partner) and
Mr. Raj Kamal Sarawagi (Partner) has 19 years and 34 years of
experience respectively in the similar line of business, looks
after the day to day operation of the firm. They are further
supported by a team of experienced professionals.
SURYA PRAKAAS: CRISIL Lowers Rating on INR4.25MM Cash Loan to D
---------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Surya Prakaas Foundry (SPF) to 'CRISIL D/CRISIL D' from
'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 4.25 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Inland/Import 0.50 CRISIL D (Downgraded from
Letter of Credit 'CRISIL A4')
Long Term Loan 0.40 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Proposed Long Term 0.35 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B+/Stable')
The downgrade reflects the firm's delay in servicing debt because
of weak liquidity. SPF has a modest scale of operations and large
working capital requirement. However, it continues to benefit
from the extensive experience of its promoter in the castings
industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Scale remains modest, reflected in
estimated revenue of INR14 crore for fiscal 2017. Low entry
barriers due to small capital and technological requirement, and
limited differentiation, has led to intense competition in the
castings segment. SPF's scale will remain subdued over the medium
term.
* Delay in servicing of term loans: The firm has delayed meeting
obligation on term loan by 7-10 days because of constrained
liquidity due to working capital-intensive operations driven by
stretched receivables.
Strength
* Extensive industry experience of proprietor: Presence of over
three decades in the castings industry has enabled the proprietor
to establish healthy relationships with suppliers and key
customer Neyveli Lignite Corporation Ltd (NLC).
Established in 2003 as a proprietorship concern by Mr. M
Kanagarajan, SPF manufactures steel castings at its unit in
Coimbatore (Tamil Nadu), which has installed capacity of 2400
tonne per annum.
TULIP ATTIRE: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Tulip Attire
Private Limited's (TAPL) 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 action is:
-- INR340 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
June 4, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in August 2011 by Anjan Ray and his family, TAPL is
engaged in garment manufacturing wherein it procures fabrics and
outsources processing. The company also trades fabrics both in
the domestic and overseas markets. TAPL started operations in
August 2012.
VARDHAMAN NAGARI: CRISIL Reaffirms B+ Rating on INR10MM Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the long-term bank facility of Vardhaman Nagari Sahakari
Patsanstha Ltd (Vardhaman Nagari). The rating continues to
reflect the society's modest capitalisation and exposure to risks
inherent in the cooperative credit societies sector. These
weaknesses are partially offset by its established track record
in the region it operates in.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Overdraft
Facility 10 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Modest capitalisation and high gearing: On account of its
inherent limitations, Vardhaman Nagari is modestly capitalised,
with small networth of INR14 crore as on June 30, 2017, against
advances of INR152 crore. Any material decline in asset quality
will put significant pressure on its capitalisation. Every member
is required to contribute 10% of the loan amount towards the
share capital. In addition, internal accrual is low. Gearing is
expected to remain high around 14 times over the medium term.
* Exposure to risks inherent in the cooperative credit societies
sector: Co-operative credit societies are currently not under the
ambit of the Reserve Bank of India (RBI), and therefore, are not
subject to prudential norms of RBI, unlike other deposit-raising
entities such as banks and non-banking financial companies.
Several credit societies raise deposits repayable on demand,
though only from their members. RBI has, in its Financial
Stability Report of June 2011, observed that there are gaps in
regulation of cooperative credit societies. If RBI brings
cooperative credit institutions under its ambit, the societies
could be subject to stricter prudential norms on capital
adequacy, asset classification, and income recognition.
Furthermore, cooperative credit societies continue to face the
risk of political events that can impact their businesses.
Vardhaman Nagari will remain exposed to risks inherent in the
cooperative credit societies sector.
Strength
* Established track record in operating geography: Vardhaman
Nagari was formed in 1993, and has developed a healthy
understanding of the cooperative credit sector, and set up
effective systems and processes.
Outlook: Stable
CRISIL believes Vardhaman Nagari will continue to benefit from
the extensive experience of its founders in the management of
cooperative credit societies. The outlook may be revised to
'Positive' if the society substantially scales up and diversifies
operations, and improves profitability, and consequently, its
capital position. The outlook may be revised to 'Negative' if
there is a significant decline in profitability, or weakening of
asset quality or liquidity.
Vardhaman Nagari is an Aurangabad-based credit cooperative
society. It has fifteen branches in and around Aurangabad. It
offers deposit products to its members and lends to commercial as
well as retail borrowers with a sizeable presence in renovation
and repair loans. Operations are managed by chairman Dr Shantilal
Tajmal Singi. As on June 30, 2017, the society had a deposit base
of INR192 crore and a loan book of INR152 crore.
For the quarter ended June 30, 2017, the society had a net profit
of INR1.1 crore and total income of INR6.3 crore.
VENKETESH UDYOG: Ind-Ra Moves B- Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Venketesh
Udyog's Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND B-
(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR100 mil. Fund-based limits migrated to non-cooperating
category with IND B-(ISSUER NOT COOPERATING) rating; and
-- INR50 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
Oct. 14, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Venketesh Udyog was established in 1984 by Bankat Garodia as a
proprietorship concern in Ranchi, Jharkhand. The firm is engaged
in the trading of steel and pipes.
VIJAYALAKSHMI SPINTEX: CARE Cuts Rating on INR24.39cr Loan to B+
----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Vijayalakshmi Spintex Limited (VSL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 24.39 CARE B+; ISSUER NOT
Facilities COOPERATING; Revised
from CARE BB-
Long-term/Short- 1.50 CARE B+/CARE A4; ISSUER
term Bank NOT COOPERATING; Revised
Facilities from CARE BB-/CARE A4
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from VSL to monitor the
rating(s) vide numerous e-mail communications and phone calls
from Dec. 18,2016 to Nov. 3, 2017. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant SEBI
guidelines CARE's rating on Vijayalakshmi Spintex Ltd.'s bank
facilities will now be denoted as CARE B+/CARE A4; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised on account of non-receipt of
monthly No Default Statement for the last three months ending
October 2017 and CARE is not able to conduct appropriate due
diligence.
Detailed description of the key rating drivers
At the time of last rating on Oct. 10, 2016 the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced promoters with long track record of operations: VSL
is promoted by Mr. A. Narahari Rao, who has more than four and
half decades of experience in various industries. As the Managing
Director, he looks after the overall management of the company.
Integrated nature of operations coupled which includes ginning
and spinning facilities: VSL has integrated operations which
include cotton ginning and spinning facilities. In house ginning
capacity enables the company to have control on quality of cotton
being used for yarn production and also results in reduced cost
of
transportation which gives the company an added advantage over
its competitors. The company has locational advantage with its
manufacturing facilities being located at Guntur district which
is one of the prominent cotton growing belts in Andhra Pradesh
and hence availability of raw material is not an issue.
Increasing trend in operating income during FY13-FY16: The
operating income of VSL has witnessed growth at a CAGR of 22.35%
during FY13-FY16. The operating income grew to INR101.52 crore
during FY16 (Prov.) from INR55.43 crore in FY13. Cotton yarn
contributes around 59% of the revenue in FY16 (Prov.) with 39% of
the revenue coming from sales of raw cotton.
Subsidies under Technology Upgradation Fund (TUF) and incentives
from Andhra Pradesh state government under Industries Investment
Promotion Policy (IIPP); however receivables pertaining to same
exist: VSL's majority of the term loans are covered under TUF
scheme which entitles the company to get interest subsidy on term
loans. Government of India (GoI) has extended TUF till 2017, and
the company would continue to benefit from the same, as majority
of its term loans are covered under TUF scheme.
Key Rating Weaknesses
Volatility in raw material prices: The domestic prices of cotton
are governed by various factors like international prices, the
government regulations in the domestic market, the effect of
monsoons etc; besides demand supply conditions in the market.
Consequently, the cotton prices are highly volatile and given the
time lag between purchase and sales, any adverse fluctuation in
the prices can adversely affect the PBILDT margin of the company.
Thin and volatile profit margins: The profitability margins of
VSL have improved marginally during FY16 (Prov.) albeit decline
in FY15 and FY14. The margin of the company also remains thin due
to part trading nature of operations.
Leveraged capital structure despite improvement over the years:
The capital structure of VSL is leveraged with an overall gearing
ratio of 1.81x as on March 31, 2016 (Prov.) The overall gearing
ratio has improved over the years from 2.38x as on March 31, 2013
on account of improved net worth of the company backed by
accretion of profits made to net worth.
Working capital intensive nature of operations: Cotton, key raw
material being seasonal in nature, is available during the months
of October to April, on account of which VSL has to maintain high
levels of inventory for better capacity utilization.
Incorporated in 1995, VSL is engaged in the manufacturing and
trading of cotton yarn with its ginning and spinning facilities
located in Nalgonda District, Andhra Pradesh. VSL is engaged in
the spinning of cotton yarn and commenced its operations in 1997
with an installed capacity of 12,096 spindles which was upgraded
to 19,152 spindles in 2011. During FY13, the company further
added 8,332 spindles and presently the company has an installed
capacity of 27,986 spindles with auto coners and combers and a
ginning unit. VSL produces cotton yarn in counts ranging from 16s
to 40s. The installed capacity of ginning unit is 350 bales per
day and
that of spinning unit is 13 tonnes per day.
VSL also has a cotton seed oil mill wherein it manufactures
cotton seed oil and oil cake. The company is also engaged in job
works for Cotton Corporation of India on a contract basis.
VSN LABORATORIES: CARE Assigns B+ Rating to INR6.30cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of VSN
Laboratories Private Limited (VSN), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 6.30 CARE B+; Stable
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of VSN Laboratories
Private Limited (VSN) are tempered by small size of networth and
limited operational track record of the company with fluctuating
raw material prices and highly regulated, fragmented and
competitive bulk drug industry. The rating, is however,
underpinned by the vast experience of the promoters in the
pharmaceutical Industry. The rating also factors in moderate
financial risk profile of the company and comfortable operating
cycle days during FY17 (refers to the period of April 1 to
March 31).
Going forward, ability of the company to increase scale of
operations and improve its capital structure and debt coverage
indicators remains the key rating sensitivities.
Detailed Description of the key rating drivers
Key Rating Weaknesses
Limited track record of the company and small scale of operations
The scale of operations has increased significantly during FY17
as compared to FY16, but however still remained relatively small
as compared to other industry peers marked by total operating
income of INR8.46 crore during FY17 and low net worth base of
INR3.59 crore as on March 31, 2017.
Leverage capital structure and debt coverage indicators Debt
equity and overall gearing ratio of the company stood at 1.40x
and 1.90x respectively as on March 31, 2017 with company's total
debt being INR6.82 crore out of which INR5 crore by a way of term
loan and INR1.82 crore as bank overdraft to support the working
capital requirements of the company. However, both remained
moderate during FY17.Total debt/GCA of the company remained high
at 14.62x as on March 31, 2017 due to high amount of debt and
lower amount of cash accruals and PBILDT interest coverage ratio
of the company remain moderately comfortable at 1.58x as on
March 31, 2017.
Fluctuation in raw material prices and highly regulated nature of
the pharma industry The major raw materials of the company
include pharma chemicals and liquids. Prices of these raw
materials are highly volatile which in turn may affect the
profitability margins of the company. All the products and
companies in the pharmaceutical industry are regulated by several
policies and bodies in terms of pricing, quality control, safety
and health standards, and several other certifications and
control standards. Any policy changes or regulations by the
regulatory bodies may hamper the business of the companies
prevailing in the industry.
Highly fragmented and competitive bulk drug industry: Indian
pharmaceutical industry is highly fragmented with presence of
more than thousands of players in APIs and formulations. It
manufactures about 60,000 generic brands across 60 different
therapeutic categories, about 1,500 bulk drugs and almost the
entire range of formulations. The industry is highly fragmented
with around 20,000 players, of which, around 250 in the organized
sector primarily in formulations control over 70% of the total
domestic market. Also, pharmaceutical industry is highly
regulated and regulations are in place for drug quality,
manufacturing process, patents and prices of products. Increasing
regulation, increased sensitivity towards product performance and
pricing pressure are the key challenges faced by the
pharmaceutical industry.
Key Rating Strengths
Vast experience of the promoters in the pharmaceutical Industry:
VSN is promoted by Mr. V. Nageswara Rao, the managing director of
the company. He is a graduate with around two decades of
experience in production and plant administration with reputed
pharmaceutical companies. Mrs. V. Padmavathi is a graduate has
around one decades of experience in cotton business. Both the
directors are actively involved in the day-to-day operations of
the company. Moreover, the promoters are assisted in the day to
day activities of the company by staff having rich experience in
the pharmaceuticals industry.
Successful completion of the project and achieved reasonable
revenue: During the initial assignment of rating in June, 2016
the company was in nascent stage of operations with project
stabilization risks. However as on date, the company had
completed the project and also started their commercial
operations in the month of March 31, 2016 and achieved TOI of
INR0.49 crore and INR8.46 crore during FY16 and FY17
respectively.
Growth in total operating income and comfortable profit margins:
With FY16 being initial year with one month of commercial
operations company achieved TOI of INR0.48 crore in FY16, the
same further increased to INR8.46 crore in FY17 at the back of
increased amount of sales of the company. Out of the total sales,
around 50% of total income was from sales being done to Synergen
Pharma India Private Limited, Archimedes Labs, Kensol Labs
Private Limited and Mylan Laboratories Limited. Despite of the
company being in its initial years of operations, PBILDT margin
of the company remained comfortable at 14.91%. However PAT margin
of the company stood at 1.68% during FY17 due to higher level of
depreciation and interest cost of the company.
Comfortable working capital cycle days With average credit period
provided by the company to reputed pharma companies being 30
days, average collection days of the company stood comfortable at
23 days during FY17.Average creditor days of the company stood at
6 days with majority of the purchases of the company being
against payment and few purchases against average credit of
around 0-7 days.Inventory days of the company stood at 19 days
during FY17.With inventory days of 19 days and collection days of
23 days coupled with average creditors of 6 days during FY17,
working capital cycle days stood at 36 days during FY17.
VSN Laboratories Private Limited (VSN) was incorporated on June
1, 2009 by Mr. V. Nageswara Rao along with his wife Mrs. V.
Padmavathi for the manufacturing of Active Pharmaceutical
Ingredients (APIs). The company was originally registered as
Lucid Life Sciences Private Limited and subsequently the name of
the company was changed to current nomenclature i.e. VSN on
December 18th, 2009. The company started with its trial runs in
the month of February 2016; however, the commercial production
was commenced on May 02, 2016 with a total installed capacity of
240 kilograms per annum at its manufacturing unit located in
Krishna District of Andhra Pradesh. The facilities of VSN are
incorporated as per Current Good Manufacturing Practices (cGMP)
standards. VSN is manufacturing APIs with drugs portfolio like
pantaprazole, triazole alcohol and omeprazole and others. These
are used for the treatment of gastroesophageal reflux diseases,
seasonal allergies, nausea, cholesterol, hypertension, etc.
The company sources raw materials required for manufacturing of
APIs from vendors based in Hyderabad and Mumbai. VSN is supplying
APIs to variety of domestic formulators (mainly private
pharmaceutical companies). VSN also has on site well equipped
Research and Development (R&D) Centre which is continuously
involved in process development, trouble shooting and process
optimization of the drugs.
=================
I N D O N E S I A
=================
JASA MARGA: S&P Assigns 'BB+' Long-Term CCR; Outlook Stable
-----------------------------------------------------------
S&P Global Ratings said it has assigned its 'BB+' long-term
corporate credit rating to PT Jasa Marga (Persero) Tbk. (JM). The
outlook is stable. S&P also assigned its 'BB+' long-term issue
rating to the proposed senior unsecured notes issued by JM. The
issue rating is subject to its review of the final issuance
documentation. JM is a state-owned toll road developer and
operator in Indonesia.
The rating on JM reflects the weakening we expect in its
financial position over the next few years, due to planned heavy
capex to meet its growth target. S&P said, "We regard JM's robust
operating cash flows, supported by an established regulatory
framework with timely tariff adjustments, as a key credit
strength. In our view, JM also benefits from potential
extraordinary government support, given its continued dominant
role for the toll road sector in Indonesia and the government's
priority on building road infrastructure. The company is exposed
to execution risk in its aim to double its network over 2017-
2019, although land acquisition costs borne by the government and
cost overrun risks borne by contractors significantly mitigate
such risk.
"We expect JM's financial position will weaken from the current
healthy levels over 2017-2019. We estimate JM's debt will more
than double to about Indonesian rupiah (IDR) 48 trillion by 2019,
compared with 2016. This is because the company has earmarked
total capex of about IDR48 trillion, predominantly to double the
operating length of its toll network to 1,260km by 2019. Under
the National Medium Term Development plan (2015-2019), JM is
responsible for 600km of toll road development of the total
1,000km target. We estimate funds from operations (FFO)-to-debt
ratio to be 5.5%-7.5% and FFO cash interest coverage to weaken to
slightly below 2x in 2019 from 9.5% and 2.9x, respectively, in
2016. This is due to debt-funded capital spending, which will
keep escalating by an average of IDR5 trillion each year over the
period from IDR6 trillion cash capital spending in 2016.
The favorable toll regulatory framework in Indonesia, with a long
concession period of 40 years on average and an established track
record of timely tariff adjustments, is JM's main strength. JM
has an unbroken record of tariff adjustments every two years for
all its operating toll roads, based on regional inflation. We
believe this provides strong predictability and stability to JM's
operating cash flows. S&P expects JM's toll concession agreements
to be profitable and commercially feasible, else S&P anticipates
that the government will provide viability gap funding.
S&P said, "We believe that with JM's leading market position,
including more than a 60% share of operating toll road length and
80% of the traffic, is sustainable. The company continues to
demonstrate high win rates in new concessions awarded on a
competitive bid basis; securing nearly 60% of 1,000km. Traffic
volume has been growing steadily, along with population and car
ownership growth. Passenger cars account for 85%-90% of JM's
traffic, providing resilience against economic cycles. Most toll
revenues come from well-seasoned strategic arteries in Greater
Jakarta, which is the most populous and economically affluent
area in Indonesia. We view the displacement risk from competing
modes of transportation (the first mass rapid transit network in
Jakarta and light rail transit to Greater Jakarta suburbs, to be
operational in 2019) and free roads as limited, owing to heavy
traffic congestion. That said, given that many of the new routes
are connecting to the existing ones, especially on the island of
Java, JM will be exposed to traffic disruption risk if one major
section happens to be congested or disrupted.
"We think that as a strategic leading toll road developer and
operator in Indonesia's road sector, JM will benefit from
extraordinary support from the government. The government's
National Strategic Plan gives prominence to development of road
infrastructure, where JM plays a central role. The government has
a golden share, and retains the exclusive right to appoint the
company's board and senior management team. It has strong
influence over the company's strategies and business plans. The
government has been the controlling shareholder with a steady 70%
stake since the company's IPO, and we do not expect the
government will dilute its stake over the next two years, at
least.
"We believe JM is exposed to execution risks under its plan to
double its toll road network within three years. Such rapid
growth contrasts with cumulative growth of only 10% over the past
10 years. Conditions for acquiring land--although improving--can
still lead to delays. However, JM is outsourcing most projects to
experienced state-owned companies, which are incentivized to
complete projects on time since they also take minority stakes in
some of JM's toll subsidiaries. In our view, cost overrun risks
are manageable. Land acquisition cost is the government's
responsibility for concessions awarded from 2016, and
construction cost is fixed under turnkey projects. Nevertheless,
the weaker credit profiles of some contractors remain a risk."
JM is exposed to high country risk in Indonesia, with all its
toll assets and revenues derived in the country. Land acquisition
and right of way have proven to be challenging in Indonesia, even
though there is a marked improvement under the current
administration. JM remains exposed to regulatory review for
tariff changes by the government because the tariff adjustments
are not automatic. Still, JM's operating stability on the back of
a good regulatory track record of inflation-based tariff
adjustment and growing traffic partially offsets the high country
risk. This compares favorably to peers like PLN, which is exposed
to a weaker and adhoc tariff framework in power sector in
Indonesia.
S&P said, "The stable outlook on JM reflects our expectation that
the company will appropriately manage the execution risks linked
to its planned heavy capex. We also expect continuing timely
tariff adjustments and ramp up in new projects to support
stability in operating cash flows. We estimate the ratio of FFO
to cash interest coverage will weaken to slightly below 2x in
2019.
"We could downgrade JM if we saw material weakening in its
financial strength or its liquidity comes under pressure. FFO
cash interest coverage falling below 1.5x with limited prospect
for immediate recovery, due to inflexible capital spending,
unanticipated significant delays in project execution, or
delays/further build in land receivables could indicate such
weakening."
S&P could also lower our rating on JM under any of the scenarios:
1) if S&P was to reassess the regulatory framework to be less
favorable, say due to observed delays in toll tariff
adjustments;
2) if S&P lowers the sovereign rating on Indonesia; or
3) in a less likely scenario of significant weakening in
government support as indicated by reduction in ownership or
control and weakening importance or market share of JM in the
toll road sector.
While it is less likely in the next 12-18 months, S&P could raise
its rating on JM if it improved its financial strength despite
high capex requirements in the next two years. The company's
deleveraging of its balance sheet after a high capital spending
phase, as indicated by FFO cash interest coverage comfortably
above 2x on a sustainable basis, could point to such improvement.
This could happen because of 1) stronger-than-expected operating
cash flows resulting from higher revenue growth and improved
margins; or, 2) higher-than-expected non-debt funding supporting
liquidity and balance sheet, and disciplined and well executed
capital spending.
S&P said, "We could also raise the rating on JM if we raised our
sovereign rating on Indonesia, while our view of its link and
role with the government and JM's own creditworthiness remains
unchanged."
===============
M A L A Y S I A
===============
SIME DARBY: Fitch Lowers Long-Term IDR to BB+; Off RWN
------------------------------------------------------
Fitch Ratings has downgraded Malaysia-based Sime Darby Berhad's
(Sime Darby) Long-Term Foreign- and Local-Currency Issuer Default
Ratings (IDR) to 'BB+' from 'BBB+'. The Outlook on the ratings is
Stable. The agency has also downgraded Sime Darby's senior
unsecured rating to 'BB+' from 'BBB+'. Simultaneously, the
ratings have all been removed from Rating Watch Negative (RWN),
which was in place since 2 March 2017.
The resolution of the RWN on Sime Darby's ratings and their
downgrade follows shareholder and regulatory approval for the
demerger of its plantation and property businesses. These
businesses, especially Sime Darby Plantation Berhad (SDP,
BBB+/Stable), were a key driver of Sime Darby's cash flows and
earnings, contributing around 70% of consolidated EBITDA in the
financial year ending June 2016 (FY16).
Sime Darby is now significantly smaller in scale with lower
business diversity. In addition, its remaining businesses, mainly
motors and industrial equipment dealerships, do not benefit from
robust market positions similar to that of SDP, which is the
world's largest producer of certified-sustainable palm oil. They
also have materially lower profit margins and are more prone to
economic cycle volatility in its view than the plantation
business. While Sime Darby's business profile has weakened
significantly, its leverage profile - following restructuring
within the group - remains largely unchanged in its estimate.
KEY RATING DRIVERS
Moderate Diversification Benefit for Motors: Sime Darby's motors
division (66% of FY17 revenue) is the second-largest BMW dealer
globally and currently represents 29 brands, ranging from luxury
to mass-market brands as well as trucking names. However, luxury
and super-luxury cars comprise more than 75% of total sales by
value. The division is present in 10 countries in Asia-Pacific.
However, China (including HK and Macau) and Malaysia dominate
earnings, accounting for more than 70% of FY17 EBIT. While Sime
Darby enjoys some geographical diversification, Fitch believes
the benefits are partly offset by a lack of meaningful share in
any market and concentration in luxury brand sales.
Apart from the retail and distribution of cars, Sime Darby is
also involved in car assembly at its Inokom plant in Malaysia.
The assembly operations have higher margins than the retail and
distribution operations. The number of vehicles assembled by Sime
Darby increased by 19% in FY17, and the company is seeking to
expand its assembly operations by increasing the number of models
and volume of cars built, as well as adding the assembly of
engines.
Volatile Industrial Equipment Business: Sime Darby's industrial
division (33% of FY17 revenue) is one of the world's largest
dealers of machinery made by Caterpillar Inc. (A/Negative). It
offers a variety of services from sales of new machines, engines
or used equipment to rental and a range of product support
services. The industrial division is mainly exposed to the mining
sector in Australia - profit after direct expenses in Australia
formed around 60% of total profit in FY17 - and its earnings have
declined over FY14-17, mainly due to cooling demand for coking
coal.
Coking coal prices have increased since 2H16 and Sime Darby's
order book jumped 23% in FY17. These factors bode well for
industrial sales and EBITDA, and Fitch has assumed sustained
growth over the next three years. However, Fitch believes the
division does not materially enhance Sime Darby's credit profile
because of its volatility.
Other Businesses Small: Sime Darby's remaining operations (around
1% of FY17 revenue) are dominated by logistics, which comprises
of port and water operations in Shandong Province, China. Sime
Darby Logistics operates the largest multi-purpose port in the
Yellow River Delta. Sime Darby also has a joint venture with
Australia's Ramsay Health Care Ltd to manage hospitals in
Malaysia and Indonesia. In addition, Sime Darby has a 30% stake
in Tesco Stores (Malaysia), which has over 60 hypermarkets and
convenience stores. Fitch views favourably Sime Darby's intent to
gradually rationalise its exposure to these other businesses.
This may also result in cash inflows from asset sales.
Gradual Deleveraging: Fitch estimates Sime Darby's FFO-adjusted
net leverage to be around 3x in FY18. In addition to existing
bank debt, the leverage estimate takes into account
capitalisation of Sime Darby's substantial operating lease
expenses. Fitch forecasts leverage to decline to below 2.5x by
FY20, based on a sustained increase in EBITDA. While motors
EBITDA should continue to grow steadily, Fitch expects higher
commodity prices to drive a recovery for the industrial division.
Fitch also assumes lower capex, as Sime Darby narrows its
business focus, and a decrease in cash dividend outflow from
FY19. These assumptions lead to an estimate for positive FCF from
FY19.
DERIVATION SUMMARY
Sime Darby's ratings can be compared with rated auto dealers in
Asia such as China Grand Automotive Services Co., Ltd (China
Grand Auto, BB-/Stable) and PT Mitra Pinasthika Mustika Tbk (MPM,
BB-/Stable).
China Grand Auto is the largest auto dealership in China, with
more than 750 outlets in 28 provinces covering more than 50
brands. Fitch views China Grand Auto's operating profile as
slightly better than Sime Darby's, given its dominant position in
a key market and more brand variety. Sime Darby's benefits from
presence in multiple markets are offset by its focus on the
luxury segment, while its industrial equipment business does not
add much strength to its business profile, in its view. However,
China Grand Auto's rating is constrained by its high leverage,
which is estimated to remain at more than 2x higher than Sime
Darby's over the next three years.
MPM is the sole distributor of Honda motorcycles in the East
Java, Indonesia, in addition to being a dealer for Nissan and
Datsun cars in Indonesia. While its leverage is estimated to be
similar to Sime Darby's over the next three years, it is
significantly smaller in scale with revenue at less than one-
fifth of Sime Darby's. In addition, Sime Darby has better brand
and geographical diversification. These factors justify a two-
notch rating differential between Sime Darby and MPM.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case include
- Average revenue growth of 4% annually from FY18 (FY17: 6%)
- Operating EBITDA margin to improve to 6% in FY19, from 3%
in FY17, and remain stable thereafter
- Capex of MYR1.7 billion in FY18, and around MYR800 million
on average annually thereafter
- Cash dividend outflow at around 50% of net income from FY19
RATING SENSITIVITIES
Fitch does not expect a positive rating action in the medium
term, as Fitch believes Sime Darby's operating profile is
consistent with a 'BB' category rating.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
-Inability to improve FFO-adjusted net leverage to below 3.0x
by FY20
-Negative FCF generation on a sustained basis
LIQUIDITY
Manageable Liquidity: Sime Darby had MYR3.2 billion of debt,
excluding perpetual sukuk, at FYE17, 98% of which was unsecured.
Of the total, around MYR1.95 billion was working-capital-related
debt and the current portion of long-term loans. By comparison,
Sime Darby had cash and cash equivalents of around MYR2.1
billion. Fitch expects the working-capital-related debt to be
rolled-over. Sime Darby also has robust banking relationships and
proven access to diverse sources of funding, which mitigate
residual liquidity risks.
=================
S I N G A P O R E
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EZION HOLDINGS: Court Dismisses Bondholder's Originating Summons
----------------------------------------------------------------
Ann Williams at The Business Times reports that Ezion Holdings,
which had asked creditors for support to push back debt
deadlines, said on Nov. 24 an originating summons taken out by a
substantial bond holder has been dismissed by Singapore's High
Court.
According to BT, bond holder Ravi Murarka who owns a substantial
share of the liftboat operator's tranche of SGD120 million bonds
backed by DBS Bank, served Ezion a redemption notice in
September, citing the bond clause that he can demand to be paid
back in full "in the event that the shares of the issuer cease to
be listed or traded."
The report relates that Mr. Murarka's case was the first time
that any bond holder had filed a summons against a Singapore
issuer to protect his rights as a bond holder.
He sought a court declaration that Ezion's shares had ceased to
be traded on the Singapore Exchange, within the meaning of that
clause, after Ezion suspended trading of its shares on Aug 14
this year to discuss a debt reorganisation plan with lenders. Its
shares are still suspended, the report says.
In a pre-market SGX filing on Nov. 24, Ezion said the High Court
had granted the company's striking-out application at a hearing
on Nov. 23, BT relays. "Accordingly, the originating summons
against the company has been dismissed," said the company.
Earlier this month, in a landslide vote, Ezion won bondholders'
approval for its proposed refinancing of six series of notes and
perpetual securities totalling SGD575 million, BT says. The DBS-
backed bonds were not part of the restructuring.
BT notes that the successful refinancing of the SGD575 million
securities was key to unlocking a US$100 million working capital
line from the group's senior lenders so that Ezion can mobilise
its fleet for work.
According to the report, Ezion chief executive Chew Thiam Keng
said last month that 70 per cent of the company's bonds are held
by private banking clients, and the rest with insurers and funds.
He said that Ezion still needs support from two other key
stakeholder groups - bank lenders and shareholders, the report
adds.
About Ezion Holdings
Singapore-based Ezion Holdings Limited --
http://www.ezionholdings.com/-- engages in investment
holding and provision of management services. The Company, along
with its subsidiaries, specializes in the development, ownership
and chartering of offshore assets to support the offshore energy
markets. Its segments include Production and maintenance support,
which is engaged in owning, chartering and management of rigs and
vessels involved in the production and maintenance phase of the
oil and gas industry; Exploration and development support, which
is engaged in owning, chartering and management of rigs and
vessels involved in the exploration and development phase of the
oil and gas industry, and Others, which includes assets or
investments involved in renewable energy and other oil and gas
related industry. The Company owns a fleet of multipurpose self-
propelled service rigs. It owns a fleet of service rigs in
Southeast Asia for use in offshore oil and gas industry, and
offshore wind farm industry.
*********
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.
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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
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thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***