/raid1/www/Hosts/bankrupt/TCRAP_Public/180103.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, January 3, 2018, Vol. 21, No. 002
Headlines
A U S T R A L I A
LIFESTYLE EYECARE: First Creditors' Meeting Set for Jan. 10
TRIBUTE INDUSTRIAL: First Creditors' Meeting Set for Jan. 12
C H I N A
BIOSTAR PHARMACEUTICALS: Melissa Fan Chen Fills Board Vacancy
CHINA COMMERCIAL: Accuses Sorghum of Contract Breach
JINHUA TEXTILE: Jinzhong City to Revive Mill as Culture Zone
I N D I A
ADITYA RICE: ICRA Reaffirms B+ Rating on INR5.20cr Loan
AGRA OIL: ICRA Reaffirms B+ Rating on INR11.10cr Loan
AQUAFINE MICRONS: CRISIL Assigns B+ Rating to INR5.77MM Loan
BRAHMAPUTRA BIOCHEM: Ind-Ra Corrects December 27 Release
G SONS: CRISIL Assigns B+ Rating to INR5.75MM Cash Loan
GOLDEN RETREATS: CARE Assigns B+ Rating to INR8.35cr Loan
GUJARAT NRE: Faces Liquidation as Creditors Junk Resolution Plan
JRJ SEA: CRISIL Assigns B+ Rating to INR3MM Demand Loan
K.S. FIBER: ICRA Removes Rating From 'Not Cooperating Category'
KALYAN VAIJINATHRAO: CARE Assigns B+ Rating to INR6.39cr Loan
KHODAL COTTON: ICRA Moves B+ Rating to Not Cooperating Rating
KRIFOR INDUSTRIES: ICRA Ups Rating on INR26.26cr Loan to B+
KRISHNAPATNAM PORT: Ind-Ra Withdraws Bank Facility Ratings
LB COTTON: CRISIL Raises Rating on INR5MM Cash Loan to B+
LENORA VITRIFIED: ICRA Assigns B+ Rating to INR20.20cr Term Loan
NARSINGH THAKUR: CARE Assigns B Rating to INR3.60cr LT Loan
NINERICH INFOTECH: CRISIL Assigns B Rating to INR4MM Overdraft
P.M. INDUSTRIES: CARE Moves D Rating to Not Cooperating Category
PATIL & COMPANY: CARE Hikes Rating on INR10cr LT Loan to B
PATWARI ELECTRICALS: CARE Reaffirms B+ Rating on INR11cr Loan
PEPSU ROAD: ICRA Reaffirms B+ Rating on INR25cr Cash Loan
RITA INTERNATIONAL: Ind-Ra Migrates B Rating to Not-Cooperating
ROMAX STEELS: CRISIL Assigns B+ Rating to INR5MM Cash Loan
S.A. PLYWOOD: CRISIL Reaffirms D Rating on INR12.50MM Loan
SHRI KALYANIKA: CARE Assigns B- Rating to INR10cr LT Loan
SONI SOYA: CARE Hikes Rating on INR9.77cr LT Loan to BB-
SREE JEYASOUNDHARAM: ICRA Reaffirms C Rating on INR23.07cr Loan
SREE RANI: CRISIL Assigns B Rating to INR10MM Cash Loan
SREE SATYANARAYANA: CRISIL Reaffirms B+ Rating on INR25MM Loan
SRI SAI BABA: ICRA Ups Rating on INR12cr Cash Loan to B+
SURAT WOVENSACKS: ICRA Hikes Rating on INR8.60cr Loan to B+
SV POWER: Ind-Ra Alters Outlook to Neg & Affirms BB- Loans Rating
TEJAS INTERNATIONAL: CRISIL Assigns B Rating to INR34MM Loan
VASISHT MARKETING: CRISIL Assigns B+ Rating to INR5.6MM LT Loan
VENKATESH ASSOCIATES: CARE Raises Rating on INR20cr Loan to BB-
VIJAY STONE: ICRA Reaffirms B Rating on INR4.94cr Loan
VINCI GLOBAL: CARE Assigns 'B' Rating to INR4cr LT Loan
VISWATEJA COTTON: ICRA Withdraws B Rating on INR3cr LT Loan
VITRA INDIA: CARE Revises Rating on INR4.63cr Loan to B+
N E W Z E A L A N D
CALLACTIVE LTD: To Be Removed From Companies Office Register
HONEY SPECIALTIES: Placed in Voluntary Receivership
S I N G A P O R E
K1 VENTURES: Unit Placed Under Members' Voluntary Liquidation
MARCO POLO: FY2017 Net Loss Widens to SGD312.7MM
MARCO POLO: Court OKs Indonesian Yard Unit Restructuring
- - - - -
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A U S T R A L I A
=================
LIFESTYLE EYECARE: First Creditors' Meeting Set for Jan. 10
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Lifestyle
Eyecare & Eyewear Pty Ltd will be held at Level 27, 259 George
Street, in Sydney, NSW, at Jan. 10, 2018, at 11:00 a.m.
Trent Andrew Devine and Peter John Moore of Jirsch Sutherland were
appointed as administrators of Lifestyle Eyecare on Dec. 29, 2017.
TRIBUTE INDUSTRIAL: First Creditors' Meeting Set for Jan. 12
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Tribute
Industrial Parks Pty Ltd will be held at the offices of BRI
Ferrier Western Australia, Unit 3, 99-101 Francis Street, in
Northbridge, Western Australia, on Jan. 12, 2018, at 10:30AM
Giovanni Maurizio Carrello of BRI Ferrier Western Australia was
appointed as administrators of Tribute Industrial on Jan. 2, 2018.
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C H I N A
=========
BIOSTAR PHARMACEUTICALS: Melissa Fan Chen Fills Board Vacancy
-------------------------------------------------------------
The Board of Directors of Biostar Pharmaceuticals, Inc., has
appointed Melissa Fan Chen to fill the vacancy following Leung
King Fai's departure as an independent member of the Board and the
Chair of the Board's Audit Committee. The Board determined that
Ms. Chen as an "independent" director as that term is defined
under the Nasdaq Marketplace Rules and the federal securities
laws. In addition, the Board appointed Ms. Chen to serve as the
Chair of the Audit Committee. Following the foregoing
appointment, the Board again consists of five members: Ronghua
Wang (Chairman), Melissa Fan Chen, Haipeng Wu, Zhanxiang Ma and
Qinghua Liu, all but one of whom (Ronghua Wang) are "independent"
Board members.
Presently, Ms. Chen is employed at West Park Capital, a FINRA
registered broker-dealer and investment banking firm; Ms. Chen has
been employed there since September 2016. From May 2010 to
December 2016, Ms. Chen held the title of Board secretary and
executive officer of China Ginseng Holdings, Inc. From May 2012
to September 2015, Ms. Chen worked as director of Asian/US Equity
markets at Halcyon Cabot Partners, LLC. From September 2015 to
February 2016, she worked as a private placement specialist at
Olympus Securities LLC. From February 2016 to September 2016, she
was employed as an equity market/due diligence analyst at Legend
Securities, Inc. Ms. Chen holds Series 7 and 63 licenses. She
also holds undergraduate (BA) and graduate (MA) degrees in
Accounting from Queens College of the City University of New York.
According to the Company, "There is no arrangement or
understanding between Ms. Chen and any other persons pursuant to
which she was appointed as discussed above. Nor are there any
family relationships between Ms. Chen and any executive officers
and directors. Further, there are no transactions involving the
Company which transaction would be reportable pursuant to Item
404(a) of Regulation S-K promulgated under the Securities Act of
1933, as amended."
About Biostar Pharmaceuticals
Based in Xianyang, China, Biostar Pharmaceuticals, Inc., through
its wholly owned subsidiary and controlled affiliate in China --
http://www.biostarpharmaceuticals.com/-- develops, manufactures,
and markets pharmaceutical and health supplement products for a
variety of diseases and conditions.
Biostar incurred a net loss of $5.69 million in 2016 and a net
loss of $25.11 million in 2015.
As of Sept. 30, 2017, the Company had $41.42 million in total
assets, $5.27 million in total liabilities, all current, and
$36.14 million in total stockholders' equity.
Mazars CPA Limited, Certified Public Accountants, in Hong Kong,
issued a "going concern" qualification on the consolidated
financial statements for the year ended Dec. 31, 2016, stating
that the Company had experienced a substantial decrease in sales
volume which resulting a net loss for the year ended Dec. 31,
2016. Also, part of the Company's buildings and land use rights
are subject to litigation between an independent third party and
the Company's chief executive officer, and the title of these
buildings and land use rights has been seized by the PRC Courts so
that the Company cannot be sold without the Court's permission.
In addition, the Company already violated its financial covenants
included in its short-term bank loans. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
CHINA COMMERCIAL: Accuses Sorghum of Contract Breach
----------------------------------------------------
China Commercial Credit, Inc., delivered a notice to Sorghum
Investment Holdings Ltd. on Dec. 21, 2017, notifying Sorghum that
certain recent actions of Sorghum constitute a breach of Sorghum's
covenants under the Share Exchange Agreement dated
Aug. 9, 2017 by and among the Company, Sorghum and shareholders of
Sorghum, as disclosed in a Form 8-K filed with the Securities and
Exchange Commission. Specifically, China Commercial believes that
Sorghum is in breach of Section 6.9 (a) and Section 6.11 (b) of
the Agreement, which require Sorghum to use commercially
reasonable efforts and to cooperate fully with the other parties
to consummate the transactions contemplated by the Agreement and
to make its directors, officers and employees available in
connection with responding in a timely manner to SEC comments.
According to the terms of the Agreement, the Company is entitled
to terminate the Agreement if the breach is not cured within 20
days after the Notice is provided to Sorghum. As of Dec. 27, 2017,
the Company is actively seeking to communicate with Sorghum with
regard to the next steps and the Agreement is not terminated.
However, there is no assurance that the parties will reach an
agreement to proceed with the necessary filings in order to close
the transactions contemplated by the Agreement or that the
transaction contemplated by the Agreement will close.
About China Commercial Credit
Founded in 2008, China Commercial Credit --
http://www.chinacommercialcredit.com/-- provides business loans
and loan guarantee services to small-to-medium enterprises,
farmers and individuals in China's Jiangsu Province. Due to recent
legislation and banking reform in China, these SMEs, farmers and
individuals -- which historically had been excluded from borrowing
funds from State-owned and commercial banks -- are now able to
borrow money at competitive rates from microfinance lenders. The
company is headquartered in Jiangsu Province, China.
China Commercial's independent accounting firm Marcum Bernstein &
Pinchuk LLP, in Shanghai, China, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2016, citing that the Company has accumulated
deficit that raises substantial doubt about its ability to
continue as a going concern.
China Commercial reported a net loss of US$1.98 million on US$1.29
million of total interest and fee income for the year ended Dec.
31, 2016, compared with a net loss of US$61.26 million on US$2.98
million of total interest income for the year ended Dec. 31, 2015.
The Company's balance sheet as of Sept. 30, 2017, showed US$7.71
million in total assets, US$8.48 million in total liabilities and
a total shareholders' deficit of US$774,251.
JINHUA TEXTILE: Jinzhong City to Revive Mill as Culture Zone
------------------------------------------------------------
Xinhua News Agency reports that the government of Jinzhong City in
north China's Shanxi Province is cooperating with enterprises to
revive its century-old Jinhua Textile Mill by turning it into a
culture zone.
Qin Yanru, an official with Jinzhong Cultural Affairs Bureau, said
that the local government has raised more than
CNY300 million (US$46 million) to renovate the plant and introduce
craftsmen as well as traditional workshops to this piece of
industrial heritage, the news agency relates.
According to Xinhua, Qin said that the renovations and
reinforcements of the plant's Western-style office building,
workshops, warehouses and gates were almost completed.
It will also become an industrial cluster for research institutes
and cultural companies to revive Chinese traditional craftsmanship
such as painted sculpture, murals, colored glaze and wood carving,
Xinhua relays. It will also hold exhibitions and cultivate talent.
Once the largest textile plant in Shanxi, Jinhua Textile Mill was
listed as a county-level protection site owing to its historical
role and fine combination of Chinese and Western elements in its
architecture, Xinhua notes.
The plant was set up in 1919 by a group of politicians and
merchants from Shanxi who wanted to revitalize the national
industry. It was put into production in 1924 and went bankrupt in
2009, Xinhua discloses.
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I N D I A
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ADITYA RICE: ICRA Reaffirms B+ Rating on INR5.20cr Loan
-------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating at [ICRA]B on the
INR5.00 crore working capital limits, INR2.80 crore term loans and
INR5.20 crore unallocated limits of Aditya Rice Industries (ARI).
The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash credit 5.00 [ICRA]B+ (Stable); Reaffirmed
Term loan 2.80 [ICRA]B +(Stable); Reaffirmed
Unallocated Limits 5.20 [ICRA]B +(Stable); Reaffirmed
Rationale
The rating continues to be constrained by small scale of
operations of ARI in the intensely competitive nature of the rice
milling industry with presence of several small-scale players
resulting in thin margins. The rating considers modest financial
risk profile characterized by high gearing of 1.29 times as on
March 31, 2017, moderate coverage indicators with interest
coverage ratio at 1.78 times and NCA/total debt at 18% for FY2017.
This apart, rating is further constrained by vulnerability of
paddy availability to agro-climatic conditions; and risks inherent
in the partnership nature of the firm.
The rating, however, positively factors in long track record of
the promoters in the rice milling industry, and ease in paddy
procurement due to proximity of the plant in major paddy
cultivating region of the country. The rating also considers
favorable demand prospects of the industry with India being the
second largest producer and consumer of rice internationally which
augurs well for the company.
Outlook: Stable
ICRA believes Aditya Rice Industries will continue to benefit from
the extensive experience of its partners in the rice milling
industry. The outlook may be revised to 'Positive' if substantial
growth in revenue and profitability, and better working capital
management, strengthens the financial risk profile. The outlook
may be revised to 'Negative' if cash accrual is lower than
expected, or if any major capital expenditure, or stretch in the
working capital cycle, weakens liquidity.
Key rating drivers
Credit strengths
Significant experience of the promoter in the rice-milling and
trading business: The promoters have established presence in rice
milling industry with over 19 years of experience resulting in
established relationship with customers.
Favourable demand prospects for rice: Demand prospects of the rice
industry are expected to remain good as rice is a staple food
grain and India is the world's second largest producer and
consumer of rice.
Presence of the firm in major paddy-growing region: ARI is located
in Settipalem village of Nalgonda district, Telangana which is
major rice growing area resulting in easy availability of paddy.
Credit weaknesses
Small scale of operations: The scale of operations of the firm has
been small with revenues of INR18.60 crore in FY2017, limiting its
financial flexibility.
Moderate financial risk profile characterised by moderate gearing
and coverage indicators: ARI's financial profile is characterised
by high gearing of 1.29 times and moderate coverage indicators
with interest coverage ratio of 1.78 times and NCA/total debt of
18% for FY 2017.
Highly competitive nature of industry: Rice milling industry is
highly competitive with presence of a large number of organised
and unorganised players impacting the margins.
Industry susceptible to agro-climatic risks: The rice-milling
industry is susceptible to agro-climatic risks, which can affect
the availability of the paddy in adverse weather conditions.
Risk related to partnership nature of the firm: The firm is
exposed to the risks inherent to the partnership nature of firm
including capital withdrawal risk.
Aditya Rice Industries (ARI) was founded in the year 2010 as a
partnership firm and is engaged in the milling of paddy and
produces raw and boiled rice. The firm started its operations from
February 2012. The firm has a milling unit in Settipalem village
of Nalgonda district of Telangana with an installed capacity of 8
tons per hour.
ARI has reported an operating income of INR18.60 crore and net
profit of 0.08 crore respectively in FY2017 as against an
operating income of INR16.93 crore and net profit of INR0.09 crore
in FY2016.
AGRA OIL: ICRA Reaffirms B+ Rating on INR11.10cr Loan
-----------------------------------------------------
ICRA Ratings has reaffirmed a long-term rating of [ICRA]B+ to the
INR11.10-crore fund-based facilities of Agra Oil & General
Industries Limited. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Working
Capital Facilities 11.10 [ICRA]B+ (Stable); Reaffirmed
Rationale:
The ratings reaffirmation factors in approx. 11% decline in the
operating income (OI) in FY2017 owing to volume decline in sale of
self-manufactured mustard oil. The ratings also note the thin
profitability margins that have declined to 1.05% in FY2017 from
2.09% in FY2016. However, the margins have remained range bound
within ~1-2% over the past few years, as is inherent to edible
oil-refining business. The ratings also factor in the weak credit
profile of the company with highly leveraged capital structure
with a gearing of 3.14 times and stretched coverage metrics with
Net Cash Accruals/Debt of 2% and interest coverage of 0.45 times
in FY2017. The ratings continue to be affected by high product-
concentration risk as the company's product portfolio includes
only mustard oil and cake. The ratings continue to be constrained
by the highly-fragmented nature of the mustard oil industry, and
the vulnerability of the company's profitability to agro-climatic
risks that may impact the availability as well as price of mustard
oil and oilseeds.
Nevertheless, ratings favorably factor in the long track record of
the promoters in mustard oil-refining business. The ratings also
derive comfort from the company's favourable location for raw
material purchase of mustard oil seeds. Moreover, the ratings take
comfort from the favorable demand outlook in the domestic market,
especially northern and north-eastern India for mustard oil, which
is one of the most widely-consumed edible oils in the country.
Outlook: Stable
ICRA believes AOGIL will continue to benefit from the extensive
experience of its partners. The outlook may be revised to Positive
if substantial growth in revenue and profitability, and better
working capital management, strengthens the financial risk
profile. The outlook may be revised to Negative if cash accrual is
lower than expected, or if any major capital expenditure, or
stretch in the working capital cycle, weakens liquidity.
Key rating drivers:
Credit strengths
Established track record of the promoters in edible oil business:
The promoters have more than four decades of experience in the
edible oil-refining business. The company is a part of the Goyal
Group with a number of Group companies involved in the similar
line of business.
Location advantage: The company's manufacturing facility is
located in proximity to regions growing its primary raw material.
Most of the mustard seeds are procured domestically from
neighbouring states like Rajasthan, UP, and Haryana. In addition,
the entire raw material is domestically procured and import of
mustard oil is almost nil, which protects the domestic mustard oil
producers.
Absence of long-term debt: AOGIL has cushion to absorb any adverse
spikes in the business to a certain extent due to negligible long-
term loan liabilities.
Favorable demand prospects for edible oil industry: Edible oils
constitute an important component of food expenditure of Indian
households and the demand for edible oils is expected to increase
with growing population and per capita increase in consumption.
The consumption of mustard oil is largely impacted by regional
tastes and preferences and climatic conditions, besides price
effectiveness. The eastern and north-eastern regions constitute a
sizeable market for mustard oil due to taste preference.
Credit challenges
Moderate scale of operations: The OI of the company has declined
in FY2017 as a result of a decline in volumes sold. The topline of
the company has remained flat over the past few years as it has
not been able to increase the production of mustard oil.
Weak credit profile: Adverse capital structure, moderate interest-
coverage indicators on account of low net worth and thin margins.
Thin profitability as is inherent in edible oil-refining industry:
Decline in profitability in FY2017 as a result of high volumes
traded and highly fragmented and competitive edible oil industry
results in limited pricing power and inherently thin
profitability. The company's operating profitability has been
range bound between 1% and 2% over the past few years.
High product-concentration risk: With only mustard oil in AOGL's
portfolio, its business is vulnerable to supply-side risks such as
agro-climatic risks and geo-political risks. This is mainly
because most of the demand is met domestically.
Intensely competitive market: Stiff competition from cheaper
varieties of imported edible oils and vulnerability to movements
in global edible oil prices. Forex fluctuation and adverse changes
in duty structure can also impact competitiveness.
AOGIL was incorporated in 1972 as a proprietorship firm and was
later converted into a public limited company. The company
manufactures mustard oil and mustard cake at its unit in Agra, UP,
which has a seed-crushing capacity of 32,000 metric tonne per
annum (MTPA). It is also involved in the trading of mustard oil
and cake. Along with manufacturing operations, the company is
involved in trading of mustard oil and cake. In edible oil, 100%
of the company's sales are in the branded segment, named 'Krishna'
and 'Swastik'. AOGIL is the flagship company of the Goyal Group,
which encompasses various business such as mustard oil production
as well as trading of cattle feed, packaging products,
refrigeration of agro product, mushroom growing, manufacturing of
soap noodles, allied chemicals and real-estate development for
around four decades.
In FY2017, the company reported a net profit of INR0.12 crore on
an OI of INR62.49 crore compared with a net profit of INR0.55
crore on an OI of INR70.45 crore in the previous year.
AQUAFINE MICRONS: CRISIL Assigns B+ Rating to INR5.77MM Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank loan facilities of Aquafine Microns LLP (AML).
The ratings reflect the firm's exposure to risks related project
implementation and stabilisation of operations, and its ability to
scale-up business during the initial phase. These weaknesses are
mitigated by the extensive experience of its partners in the
ceramic industry, their funding support and lower demand off-take
risk.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 5.77 CRISIL B+/Stable
Proposed Fund-
Based Bank Limits .33 CRISIL B+/Stable
Bank Guarantee .40 CRISIL A4
Cash Credit 3.00 CRISIL B+/Stable
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks related to project implementation: As the
project is still in the implementation stage, the firm's ability
to execute it on-time and generate anticipated revenue will be a
key monitorable.
* Average financial risk profile: Networth is small and capital
structure leveraged. Gearing is expected to remain high, but
should improve with a build-up in networth and gradual repayment
of term loans. Debt protection metrics are expected to remain
average.
Strengths
* Extensive experience of the promoters: Benefits from the
partners' decade-long experience in the industry and healthy
relationships with customers and suppliers, should support
business.
* Low demand risk: Demand off-take risk is low as around 30% of
the production will be supplied to group firms and companies
involved in the ceramic industry.
Outlook: Stable
CRISIL believes AML will benefit from the extensive experience of
its partners and from the high demand for feldspar in Morbi,
Gujarat where the plant is located. The outlook may be revised to
'Positive' if on-time implementation of project within budgeted
cost leads to generation of anticipated revenue, profitability,
cash accrual resulting in timely repayment of debt obligations
during initial phase of operation. The outlook may be revised to
'Negative' if delay in project implementation results in modest
revenue, lower profitability and cash accruals, and stretch in
cash cycle leading to weak financial risk profile, especially
liquidity.
Established in 2017, AML is a limited liability partnership firm
which is setting up a project for manufacturing soda and potash
feldspar. Feldspar is used mainly in ceramic and glass industries
and to some extent in paints, plastics and rubber as an extender.
The unit is expected to commence commercial operations from April,
2018.
BRAHMAPUTRA BIOCHEM: Ind-Ra Corrects December 27 Release
--------------------------------------------------------
India Ratings and Research (Ind-Ra) corrects a ratings release
version on Brahmaputra Biochem Private Limited (BBPL) published on
Dec. 27, 2017 to remove the long-term rating incorrectly assigned
to the non-fund-based facilities.
The amended version is as follows:
India Ratings and Research (Ind-Ra) has assigned Brahmaputra
Biochem Private Limited (BBPL) a Long-Term Issuer Rating of 'IND
B+'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR612.7 mil. Long term loans due on March 2023 assigned with
IND B+/Stable rating;
-- INR179.4 mil. Fund-based facilities assigned with IND
B+/Stable/IND A4 rating; and
-- INR37.5 mil. Non-fund based facilities assigned IND A4
rating.
KEY RATING DRIVERS
The ratings reflect BBPL's nascent stage of operations as it began
commercial operations in April 2016. Also, its manufacturing
facility was operational for only 125 days in FY17 due to
machinery re-modification for efficiency purpose. The company
reported revenue of INR293 million in FY17 and INR519.5 million
during April-October 2017. The company incurred an EBITDA loss of
INR47 million in FY17. Also, BBPL's promoters have only three
years of experience in the distillery industry.
Moreover, BBPL's liquidity position is moderate with its 93%
utilisation of the fund-based facilities on average during the 12
months ended November 2017.
However, Ind-Ra expects substantial revenue growth in FY18 as it
will be the first full year of operations for the company. EBITDA
margins is likely to be in the range of 18%-21% while interest
coverage around 1.2x in FY18.
RATING SENSITIVITIES
Negative: Failure in the stabilisation of operations or less-than-
expected profitability resulting in stress on the liquidity
position could lead to a negative rating action.
Positive: Substantial revenue growth and profitability improvement
along with comfortable liquidity position and credit metrics, will
lead to a positive rating action.
COMPANY PROFILE
BBPL was incorporated in August 2010 by Mr. Jagmohan Singh Arora,
Mr. Kuljeet Singh Arora, Mr. Harishankar Bilwal, and Mr. Avinash
Diwan. The present directors of the company are Mr. Jagmohan Singh
Arora, Mr. Kuljeet Singh Arora and Mr. Arjun Arora. BBPL has set
up a distillery in Guwahati, producing grain-based 60,000
litres/day extra neutral alcohol as the main finished product and
40-50 tonnes/day distillers dried grains with solubles and about
30 tonnes/day liquid carbon dioxide as major by-products plant. It
has also a 2MW captive power plant.
G SONS: CRISIL Assigns B+ Rating to INR5.75MM Cash Loan
-------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating on the
long-term bank facilities of G Sons Retail Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.75 CRISIL B+/Stable
Proposed Cash
Credit Limit 4.25 CRISIL B+/Stable
The rating reflects experience of promoter and prudent working
capital management. These strengths are partially offset by
average financial risk profile.
Analytical Approach
The management has indicated that there are no intercompany
transactions between G mall and G sons Private Limited in Kerala.
Hence the team has not consolidated the financials.
Key Rating Drivers & Detailed Description
Strengths
* Experience of promoter: Benefits from the promoter's experience
(over three decades) and established relationships with major
suppliers and customers should continue to support the business.
Weakness
* Weak financial risk profile: The capital structure remained
below average because of small networth (INR0.61 crore as on March
31, 2017) and high total outside liabilities to adjusted networth
ratio (44.96 times). However, interest coverage ratio is expected
around 3.7 times over the medium term, driven by moderate cash
accrual.
* Working capital management: Gross current asset were 105 days as
on March 31, 2017, driven by high creditors and high inventory of
190 days and 100 days, respectively.
Outlook: Stable
CRISIL believes that GSORPL will continue to benefit from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' in case of higher than expected increase in revenues
and profitability leading to improvement in the financial risk
profile. Conversely, the outlook may be revised to 'Negative' in
case of deterioration in revenues or operating margins or a
stretch in working capital cycle leading to a material impact on
the financial and liquidity profiles of the company.
GSORPL is engaged in in organised retail business through its
store. It was set up as partnership in 2015 in Koannur, Kerala.
The company presently operates3 segments textile, garment and home
furninshing.
Profit after tax (PAT) and net sales were estimated at INR0.40
crore and INR51 crore, respectively, for fiscal 2017, as against
INR0.36 crore and INR51 crore, respectively, in the previous
fiscal.
GOLDEN RETREATS: CARE Assigns B+ Rating to INR8.35cr Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Golden
Retreats Private Limited (GRPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.35 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of GRPL is constrained
by its project implementation risk, seasonality associated with
hotel industry, highly competitive and fragmented nature of the
industry and capital intensive nature of operation. However, the
aforesaid constraints are partially offset by its experienced
promoters and locational advantage of the hotel.
The ability of the company to complete the project without any
cost & time overrun, ability to achieve the projected scale of
operations and profitability as envisaged and ability to manage
working capital effectively would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project implementation risk: GRPL is engaged in the construction
of four star hotel in Murshidabad, West Bengal with an aggregate
project cost of INR14.45 crore, which is proposed to be financed
by way of promoter's contribution of INR6.35 crore and term loan
of INR8.10 crore. The company has already invested INR1.91 crore
towards land & site development, building etc. till November 30,
2017 which is met entirely through promoter's contribution. The
project is expected to be operational from July, 2019.
Seasonality associated with hotel industry: The demand for hotel
and hospitality sector has direct relation to the overall health
of economy. The Indian hotel industry normally experiences high
demand during April to November month, mainly on account of summer
vacations and marriage season in the state. However, this trend is
seeing a change over the recent few years. Hotels have introduced
various offerings to improve performance (occupancy) during the
lean months. These include targeting the conferencing segment and
offering lucrative packages during the lean period.
Highly competitive and fragmented nature of the industry: The
Indian hotel industry is highly fragmented in nature with presence
of large number of organized and unorganized players spread across
various regions. Further, the hotel industry is region-based and
is highly sensitive to the untoward events such as slowdown in the
economy coupled with the slew of militant attacks which have had
an adverse impact on the hotel industry. Cyclical nature of the
hotel industry and increasing competition from already established
hospitality addresses in and around Murshidabad district may
impact the performance of GRPL.
Capital intensive nature of operation: The hospitality business is
extremely capital intensive in nature as a very high amount of
investment is required to get the requisite infrastructure in
place.
Key Rating Strengths
Experienced promoters: Debosree Das, Himadri Das and Niladri Das
are the directors of GRPL and looks after the overall management
of the company. They all are having more than two decades of
experience in the hotel industry and are ably supported by a team
of experienced professional who has rich experience in the same
line of business.
Locational advantage of the hotel: The proposed hotel is
strategically located having access to all forms of logistics
thereby enhancing its acceptability amongst the likely clientele
of the hotel. The Murshidabad district, being centrally located in
the state capital, and one of main tourism as well as business
destination of the state of West Bengal, is well connected by
road. The surrounding areas are renowned for natural beauty, which
leading to envisaged regular occupancy by the business, as well
as, leisure travellers.
Incorporated in March 2010, Golden Retreats Private Limited is
engaged in setting up a four star hotel in Murshidabad, West
Bengal. The proposed hotel will be spread over 0.52 acre, and is
expected to comprise of 43 furnished rooms (i.e. presidential
suite, super delux room and delux room), restaurants, spa,
Conference Hall, Swimming Pool, mini-theatre etc. The project is
estimated to be set up at a cost of INR14.45 crore, which is
proposed to be financed by way of promoter's contribution of
INR6.35 crore and term loan of INR8.10 crore. The company has
already invested INR1.91 crore towards land & site development,
building etc. till November 30, 2017, which is met entirely
through promoter's contribution. The project is expected to be
operational from July 2019.
Debosree Das (aged, 71 years), having more than two decades of
experience in the hotel industry, looks after the day to day
operations of the company. He is supported by other directors
Himadri Das (aged, 44 years) and Niladri Das (aged, 47 years) and
a team of experienced professionals.
GUJARAT NRE: Faces Liquidation as Creditors Junk Resolution Plan
----------------------------------------------------------------
Financial Express reports that Gujarat NRE Coke (GNCL) is likely
to face liquidation process as the creditors of the company have
rejected the resolution plan, submitted by an Ahmedabad-based
asset reconstruction company (ARC) - Rare Asset Reconstruction -
under the corporate insolvency resolution process.
Following this to save the company from going in to liquidation,
employees of the Kolkata-based firm on Dec. 30 submitted a
resolution plan to the resolution professional (RP), Sumit Binani,
Arun Kumar Jagatramka, chairman and managing director of GNCL,
told FE. The company currently employs close to 2,000 workers.
However, it seems unlikely that the plan, submitted by the
workers, will be considered due to paucity of time, FE states. For
Gujarat NRE group, the moratorium of nine months expires on Jan.
1.
The case was listed for hearing on January 1 at the Kolkata bench
of the National Company Law Tribunal (NCLT), the report notes.
Gujarat NRE owes lenders around INR4,600 crore, FE discloses. In
April, the Kolkata bench of the National Company Law Tribunal
(NCLT) had admitted the application by the metallurgical coke
producer for commencing the insolvency resolution process.
Talking to FE, Anil Kumar Bhandari, MD of Rare Asset
Reconstruction, said his company had submitted over INR400 crore
resolution plan, and this offer was more than the liquidation
value of Gujarat NRE Coke. "I am not aware of the CoC voting
results. But, our offer was more than the liquidation value of
around INR359 crore. As per our proposal, our investment to debt
and equity both would have been over 421 crore," Bhandari told FE.
"Now, I believe that there could be some haircuts (for the banks),
but then this was the best offer that we could work out given the
circumstances. But, the final decision lies with the lenders," he
added. The last CoC meeting was held on December 28.
Although four companies had expressed interest in submitting
resolution plans for the debt-stricken company, finally only the
ARC submitted the resolution plan, said the sources cited above,
FE relays. "There was only one resolution plan on the table. But
the CoC has voted against that resolution plan. Now, according to
the IBC norms the company is to be liquidated," the source added.
The company's financial creditors are State Bank of India (SBI),
Bank of Baroda, Axis Bank, Standard Chartered Bank, ICICI Bank,
Tamilnad Mercantile Bank and DBS Bank, among others, the report
states. SBI has the largest share among the creditors.
On December 20, during the hearing of the case, Binani submitted
before a division bench of the tribunal, comprising justices Vijai
Pratap Singh and Jinan KR, that he invited a fresh expression of
interest (EoI) from the public as the resolution plan, which had
been submitted by the promoters, could not be considered in view
of the commencement of the Ordinance amending the Insolvency and
Bankruptcy Code (IBC), notified on
November 23, the report recalls.
As the company's loans have remained non-performing for over a
year, its promoters have become ineligible under the revised IBC
guidelines, FE states.
Appearing before the bench, the promoter's counsel MS Tiwari had
urged the bench to direct the CoC to consider the resolution plan
submitted by Jagatramka as the plan had been submitted before
promulgation of the Ordinance. The bench rejected the plea of the
promoter, the report relates.
With the tribunal dismissing his application for directing the CoC
to consider the resolution plan submitted by the defaulting
promoter, Tiwari had said he wanted to recall the insolvency
application, which the company had filed before the tribunal under
Section 10 of the IBC, according to FE. The bench dismissed this
plea also, stating that the insolvency petition had already been
admitted, and therefore it could not be withdrawn now.
FE adds that the tribunal had also rejected an appeal of the RP
for providing more time for the completion of the resolution
process. The committee of creditors (CoC) of the firm had in
principle agreed to a further extension of the moratorium period.
Gujarat NRE Coke reported a net loss of INR676 crore on the back
of INR541 crore in revenues in FY17, FE discloses.
Gujarat NRE Coke Ltd. (BOM:512579) -- http://www.gujaratnre.com/
-- is an India-based company engaged manufacturing metallurgical
coke. The Company operates in two segments: coal & coke and
steel. The Company together with its subsidiaries owns and
operates two coal mines: NRE No.1 Colliery and NRE Wongawilli
colliery (Avondale and Elouera colliery) having about 652 million
tons insitu resources of metallurgical coal with coking
properties. Coke segment is at the core of the operations of the
Company and contributed approximately 75% of the total turnover
during the fiscal year ended March 31, 2012 (fiscal 2012). Steel
segment contributed around 25% to the total turnover in fiscal
2012.
JRJ SEA: CRISIL Assigns B+ Rating to INR3MM Demand Loan
-------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of JRJ Sea Foods India Private
Limited (JRJ).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital
Demand Loan 3 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 0.9 CRISIL B+/Stable
Long Term Loan 1.1 CRISIL B+/Stable
Cash Credit 1 CRISIL B+/Stable
Export Packing Credit 4 CRISIL A4
The ratings reflect modest scale of operations and exposure to
risks inherent in the highly competitive seafood industry.
However, this is partly mitigated by the benefits derived from the
extensive experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and intense competition in sea food
industry: Scale of operations were small at INR48 crore for fiscal
2017. Though the revenue are expected to improve to INR80-90
crore over the medium term, it will remain modest in the highly
competitive seafood business.
* Exposure to risks inherent in the highly competitive seafood
industry: Marine producer exporters face risks arising from
regulatory changes in client countries along with intense
competition emanating from the highly fragmented seafood industry.
Strength
* Extensive experience of its promoters: JRJ is promoted by Mr KS
Augustine, who has experience of more than 30 years in the
seafood-processing industry. The promoter is assisted by his
family members in managing the business. The promoters should be
able to increase export customer base over the medium term.
Outlook: Stable
CRISIL believes the JRJ will continue to benefit over the medium
term from the extensive experience of the promoters. The outlook
may be revised to 'Positive' if revenue and profitability improve,
leading to a better financial risk profile particularly networth
and liquidity. Conversely, the outlook may be revised to
'Negative' if the financial risk profile weakens, most likely
because of decline in cash accrual, deterioration in working
capital management, or any large capital expenditure.
JRJ is engaged into sea food processing, particularly processing
of cuttle fish, shrimp and crab meat, and exports it to the
markets of South East Asia. The processing facilities are located
near the south-eastern coast of Tamil Nadu at Padukottai. JRJ is
managed by Mr K S Augustine, along with his family members.
K.S. FIBER: ICRA Removes Rating From 'Not Cooperating Category'
---------------------------------------------------------------
ICRA has removed its earlier rating of [ICRA]B (Stable) and
[ICRA]A4 from the 'ISSUER NOT COOPERATING' category as K. S. Fiber
(KSF) has now submitted its 'No Default Statement' ("NDS") which
validates that the company is regular in meeting its debt
servicing obligations. The company's rating was moved to the
'ISSUER NOT COOPERATING' category in November 2017.
The current ratings derive comfort from the extensive experience
of the promoters in the textile industry by virtue of their
association with other group entities and the favourable location
of the firm in Surat, which provides proximity to raw material
suppliers and downstream processing units.
KALYAN VAIJINATHRAO: CARE Assigns B+ Rating to INR6.39cr Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Kalyan
Vaijinathrao Kale (KVK), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.39 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of KVK is constrained
on account of the project execution, implementation and
stabilization risk, susceptibility of margins to risk associated
with price volatility of raw material and its procurement in
addition to seasonal nature of the milk processing industry, its
presence in highly fragmented industry and constitution of entity
as a proprietorship firm limiting financial flexibility in times
of stress.
The rating however derive strength from the experience of
promoters albeit limited in milk processing industry and positive
outlook of the dairy industry: The ability of the firm to execute
the project without any time and cost overruns is a key rating
sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project execution, implementation and stabilization risk: KVK is
in process of setting up a milk processing and packaging unit with
a proposed installed capacity of 10,000 LPD. The total cost of the
project is estimated to be funded at a debt equity ratio of 6.21x
and the entity is expected to commence its operations from April,
2018.
Susceptibility of margins to risks associated with raw milk
procurement, price volatility and seasonality associated: KVK is
planning to procure 60% milk from local farmers in the district of
Aurangabad and is therefore exposed to the risk of quality of milk
being procured. Furthermore, supply of milk and prices is exposed
to external risks like cattle diseases, seasonality and others.
Since, raw milk constitutes a very high proportion of total sales
any fluctuation in the procurement prices are likely to impact the
bottom-line of the Firm. The dairy industry is characterized by
the short supply of milk during peak of summers.
Presence in a highly fragmented: KVK is present in a highly-
fragmented milk processing industry and faces competition in the
dairy segment from other established brands in the organized
market. The competition gets fiercer with presence of unorganized
players leading to pricing pressures. Intense competition limits
the pricing abilities of the players in the industry.
Constitution as a proprietorship firm limiting financial
flexibility: KVK, being a proprietorship concern, is closely held
and is subject to limited disclosure norms. Further, owing to the
constitution of the entity, it is exposed to the risk of
withdrawal of capital as well as long-term existence of business
operations under the entity.
Key Rating Strengths
Experienced promoters albeit limited in milk processing industry:
KVK is promoted by Dr. Kalyan V Kale. He practiced medicine for
approximately 7 years. After which, he completely focused his
attention to agriculture. The firm is likely to benefit from the
experience of promoters in running business. However, the
promoters do not have any experience in milk processing industry
and hence, the firm might face project stabilization risk.
Growing demand for milk and milk products: With growing population
and increasing purchasing power of the average consumer, demand
for milk and milk products is expected to continue growing in the
future. The future opportunities for the Indian dairy industry are
high in the exports market as well on account of increased demand
of Skimmed Milk Powder (SMP) in China and South-East Asian
countries and reduced supply of milk products from New Zealand and
China.
Established in 2016, Dr. Kalyan Viajinathrao Kale (KVK) is an
Aurangabad (Maharashtra) based firm promoted by Mr. Kalyan
Vaijinathrao Kale. The firm proposes to set up a milk processing
and packaging unit for supply of processed milk and milk based
products such as ghee, paneer, curd and others.
KHODAL COTTON: ICRA Moves B+ Rating to Not Cooperating Rating
-------------------------------------------------------------
ICRA Ratings has moved the long-term ratings for the bank
facilities of Khodal Cotton Processing Private Limited (KCPPL) to
the 'Issuer Not Cooperating' category. The rating is now denoted
as "[ICRA]B+ (Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term
Loan 0.14 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund based-Cash
Credit 9.00 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity to
monitor its performance and had also sent repeated reminders to
the company for payment of surveillance fee that became overdue,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. The current rating action has been taken
by ICRA on the basis of the best available information on the
issuers' performance. Accordingly, the lenders, investors and
other market participants are advised to exercise appropriate
caution while using this rating as the it may not adequately
reflect the credit risk profile of the entity.
Established in 2011, Khodal Cotton Processing Private Limited
(KCPPL) is a private limited company. The company is managed by
four directors namely Mr. Mansukhbhai Ajani, Mr. Lalitbhai Ajani,
Mr. Maheshbhai Bhayani and Mr. Ashvinbhai Ajani. The company is
engaged in ginning and pressing of raw cotton. KCPPL's
manufacturing facility is located at Jangvad, Rajkot District in
Gujarat and is currently equipped with 24 ginning machines and one
pressing machine to produce cotton bales and cottonseeds. KCPPL
has an installed capacity to produce 280 cotton bales per day (24
hours operation).
KRIFOR INDUSTRIES: ICRA Ups Rating on INR26.26cr Loan to B+
-----------------------------------------------------------
ICRA Ratings has upgraded the long-term rating to [ICRA]B+ from
[ICRA]B and has reaffirmed the short term rating of [ICRA] for
INR46.26 crore bank lines of the Krifor Industries Private
Limited. The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 26.26 [ICRA]B+ (Stable); Upgraded
from [ICRA]B
Fund based-Cash
Credit 20.00 [ICRA]B+ (Stable); Upgraded
from [ICRA]B
Non-fund based-
Import letter of
credit and Buyers
credit (9.20) [ICRA]A4; Reaffirmed
Rationale
The ratings upgrade positively factors in the considerable growth
in KIPL's operating income backed increase in sales volume and
improved sale realisation. This is attributable to the optimum
utilisation of installed capacity given the favourable demand for
particle boards in domestic market due to its eco-friendly and
economical nature as compared to plywood. Furthermore, ramp up in
scale of operation has led to better absorption of fixed cost
which has led to improvement profit metrics and subsequent return
indicators. ICRA also takes a note of strong business acumen of
promoters as well as the group support received from its sister
concerns inorder to stabilise operations of KIPL.
The ratings, however, continue to remain constrained by KIPL's
high working capital intensive nature of operation resulting from
high inventory levels holding due to seasonal procurement of raw
materials which has resulted in near to full utilisation of
working capital limits. The ratings also remain constrained by the
company's highly leveraged capital structure as indicated by high
gearing of 8.01 times as 31st March 2017 though unsecured loans
from promoters form a significant part of total debt. ICRA also
takes a note on vulnerability of revenues and profitability to
cyclicality inherent in the real estate industry, which is the
main consuming sector. Further, the ratings also take note of the
stiff competition as well as availability of alternate products
like plywood, which restricts the margin flexibility of the
company.
Outlook: Stable
ICRA believes Krifor industries Private Limited will continue to
benefit from the eco-friendly and economical nature of particle
board which shall enable the company to operate at an optimum
level of capacity utilsation. The outlook may be revised to
'Positive' if substantial growth in revenue and profitability,
improvement in capital structure and better working capital
management, strengthens the financial risk profile. Conversely,
the outlook may be revised to 'Negative' if cash accrual is lower
than expected, or if any major capital expenditure leading to
further deterioration in capital structure of the company, or
stretch in the working capital cycle, weakens liquidity.
Key rating drivers
Credit strengths
Growth in operations along with improvement in profit metrics:
Commercial operations of the company commenced in March 2014.
Within a limited time period, KIPL has witness a considerable
growth in revenues backed by optimum utilisation of installed
capacity. Furthermore, steady ramp up in scale of operation has
led to better absorption of fixed cost, which has led to
improvement profit metrics from net losses till FY2016 to positive
net profit during FY2017.
Financial support through group concerns: The Company has nine
group concerns operating in and around surat, majorly engaged in
textile industry. The company draws financial support from the
group company. Strong business acumen of the promoters across the
industries has guided the growth of KIPL and stabilised the
operations within a limited time period.
Favourable demand prospects for particle board industry: Particle
board find its application in production of boxes for packaging
industry, household furniture, office furniture as well as
interior decoration work. Given the eco-friendly and economical
nature of particle board, the demand prospects for the particle
board remains good.
Credit weaknesses
Modest scale of operations and thin profitably: Though operating
income of the company witness a considerable growth of approx. 36%
in FY2017, overall operations of the come remains modest as
represented by OI of about Rs73.16 crore during FY2017.
Profitability as represented by NPM of the company remains thin at
approx. 2.09% during FY2017 due to high interest cost and
depreciation charges. Furthermore, return indicator as represented
by ROCE remains low at about 8.29% during FY2017 due to lower
profitability.
Leveraged capital structure with modest coverage rations: Capital
structure of the company continued to remain highly leveraged as
represented by gearing level of about 8.01 times as on March 31,
2017. However, unsecured loans of about Rs30.35 crore from
promoters against a total debt of INR72.95 crore as on March 31,
2017 provides comfort to the capital structure of the company.
Thin profitability coupled with higher interest cost coupled with
annual term loan repayment of about Rs4.93 crore led to modest
coverage indicators as represented by OPBDITA/I&F charge and DSCR
of about 2.48 times and about 1.27 times respectively.
High working capital intensity resulting from high inventory
levels which impacts liquidity: Due to seasonal procurement of
bagasse, the key raw material for manufacturing of particle
boards, the company needs to maintain high inventory level. Due to
the same, the liquidity position of the company continues to
remain tight as represented by almost full utilisation of working
capital limits and high working capital intensity as represented
by NWC/OI of about 56% during FY2017. Nevertheless, due to recent
procurement of wood working machine, through which, the company
can manufacturing particle boards from residual wood sticks and
wood waste products, the dependency on bagasse is expected to be
reduced in coming years.
Highly competitive industry limiting margin flexibility, given the
presence of a large number of organised and unorganised players as
well as availability of substitute products such as plywood: KIPL
not only faces stiff competition from several unorganised and
organised players within the industry, but also from plywood
manufacturers which remains alternative to particle board. This in
turn limits the margin flexibility of the company.
Susceptibility to cyclicality in the real estate industry: Due to
demand cyclicality inherent within the real estate industry, which
is the key consuming sector, the profitability and cash flows
remains vulnerability to certain extent.
Krifor Industries Private Limited (KIPL) was incorporated in April
2012 with the objective of manufacturing particle boards from
sugarcane bagasse. Manufacturing operations were initiated from
March 2014. The company has an installed manufacturing capacity of
~14.85 lakh units per annum (4,070 units per day) for boards of an
approximate size of 8ft. x 4ft. and ~17mm thickness. Mr. Sanjeev
Dalmia, Mr. Mandeep Bajaj, Mr. Chetandas Khatri and Mr. Jugal
Bhutra are the key management personnel of the company, who manage
the overall operations of the company.
KIPL has nine other operational group companies - Gannayak Agency
Private Limited, Ridhi Sidhi Organisors Private Limited, Prayagraj
Dyeing & Printing Mills Private Limited, Armaan Industries Private
Limited, Aastha Fashions Private Limited, K Fins Pumps Private
Limited, Jai Mata Di Fashions Private Limited, Jai Mata Di Dyeing
& Printing Mills Private Limited and Jai Mata Di Art & Creations
Private Limited. Out of these nine, seven are associated with the
textile industry.
In FY2017, the company reported a net profit of INR1.53 crore on
an operating income of INR73.16 crore, as compared to a net loss
of INR2.62 crore on an operating income of INR53.91 crore in the
previous year.
KRISHNAPATNAM PORT: Ind-Ra Withdraws Bank Facility Ratings
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Krishnapatnam
Port Company Limited's (KPCL) bank facility ratings as follows:
-- INR44,000 mil. Senior loans (facility A) withdrawn with WD
rating;
-- INR7,500 mil. Senior loans (facility B) withdrawn with WD
rating;
-- INR2,000 mil. Fund-based Facility withdrawn with WD rating;
-- INR2,000 Non-fund-based Facility withdrawn with WD rating;
and
-- USD140 mil. External commercial borrowings withdrawn with WD
rating.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the
agency has received a no-objection certificate from the lead
banker (on behalf of all consortium banks). This is consistent
with the Securities and Exchange Board of India's circular dated
March 31, 2017 for credit rating agencies.
COMPANY PROFILE
KPCL was formed as an SPV in March 1996 to build, operate, share
and transfer Krishnapatnam port in Andhra Pradesh. The project was
allocated on a concession basis to Navyuga Group for 30 years from
the commercial operations date. The concession terms also provide
for an extension of another two 10-year terms.
LB COTTON: CRISIL Raises Rating on INR5MM Cash Loan to B+
---------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of LB Cotton Industries LLP (LCIL) to 'CRISIL
B+/Stable' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Upgraded
from 'CRISIL B-/Stable')
Term Loan 3 CRISIL B+/Stable (Upgraded
from 'CRISIL B-/Stable')
The upgrade reflects sustaining of improved financial risk profile
over the medium term. Gearing improved to 1.4 times as on March
31, 2017, from 9.4 times as on March 31, 2015. Also, debt
protection metrics remained comfortable, with interest coverage
and net cash accruals to total debt ratios of 2.19 times and 0.22
time, respectively, for fiscal 2017. Furthermore, promoters have
supported operations by infusing capital and unsecured loans.
The rating continues to reflect LCIL's modest scale of operations,
low profitability, exposure to volatility in cotton prices, and
high government regulations. These weaknesses are partially offset
by extensive experience of promoters in the cotton ginning
industry and their funding support, established relationship with
suppliers and customers, proximity to raw material sources, and
moderate financial risk profile due to above average net worth and
gearing.
Analytical Approach
Unsecured loans from promoters have been treated as neither debt
nor equity since these are subordinate bank debt and it will
remain in business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale in highly competitive cotton industry: With
expected revenue of INR50 crore for fiscal 2018, scale is likely
to remain small in the intensely competitive cotton ginning
industry that has many small players.
* Exposure to volatility in raw material prices: Raw material
(cotton) prices have been volatile in the past few years and are
also highly regulated by government policies. Thus, operating
margin is susceptible to fluctuations in input prices.
Strengths
* Extensive experience of promoters and established relationship
with stakeholders: Presence of over a decade in the cotton ginning
industry has enabled the promoters to establish strong
relationship with customers and suppliers.
* Moderate financial risk profile: Networth and gearing were above
average at INR5.2 crore and 1.4 times, respectively, as on March
31, 2017. Debt protection metrics were also robust for fiscal
2017.
Outlook: Stable
CRISIL believes LCIL will benefit over the medium term from its
promoters' extensive experience. The outlook may be revised to
'Positive' if improvement in revenue and cash accrual along with
better working capital management result in better liquidity. The
outlook may be revised to 'Negative' if financial risk profile,
particularly liquidity, weakens on account of low cash accrual,
stretched working capital cycle, or any major capital expenditure
or capital withdrawal.
Set up in 2011 as a limited liability partnership firm by Mr.
Dharmendra Pande and his family, LCIL gins and presses cotton and
extracts oil from cotton seeds. The firm also trades in de-oiled
cakes, cotton seeds, and cotton seed oil. Unit in Dharmabad,
Maharashtra, has ginning and pressing capacity of 200 bale per
day.
LENORA VITRIFIED: ICRA Assigns B+ Rating to INR20.20cr Term Loan
----------------------------------------------------------------
ICRA Ratings has assigned a long-term rating of [ICRA]B+ to the
INR29.20-crore fund-based facilities of Lenora Vitrified LLP. ICRA
has also assigned a short-term rating of [ICRA]A4 to the INR2.50-
crore non-fund based facility of Lenora Vitrified LLP. ICRA has
also assigned a long-term rating of [ICRA]B+ and a short-term
rating of [ICRA]A4 to the INR0.30 crore unallocated limits of LVL.
The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 20.20 [ICRA]B+ (Stable); Assigned
Fund-based-Cash
Credit 6.50 [ICRA]B+ (Stable); Assigned
Fund-based-Cash
Credit (Proposed) 2.50 [ICRA]B+ (Stable); Assigned
Non-fund based-
Bank Guarantee 2.50 [ICRA]A4; Assigned
Unallocated 0.30 [ICRA]B+ (Stable)/[ICRA]A4;
Assigned
Rationale
The assigned ratings remain constrained by the firm's limited
track record of operations along with below average financial
profile reflected by stretched capital structure due to debt-
funded capex, impending debt repayments and high working capital
intensity. The ratings also factor in the exposure of the firm's
profitability to volatility in raw material and gas/coal prices.
Further, the cyclical nature of the real estate industry, which is
the main end-user sector and highly fragmented nature of the tiles
industry, which results in intense competitive pressures, are the
other rating concerns.
The assigned ratings, however, favourably factor in the extensive
experience of the partners in the ceramic industry, the benefits
derived from its established associate concern in terms of
marketing and distribution network and also the proximity of the
firm to Morbi (Gujarat), the tiles hub, for easy raw material
procurement.
Outlook: Stable
ICRA believes Lenora Vitrified LLP will continue to benefit from
the extensive experience of its partners and established
distribution network of its associate concerns. The outlook may be
revised to 'Positive' if the firm reports healthy revenue and
profitability, better working capital management while ensuring
regular debt repayments which is likely to strengthen the
financial risk profile. The outlook may be revised to 'Negative'
if cash accrual is lower-than-expected, or delay in debt
repayments or stretch in working capital cycle, weakens liquidity
position of the firm.
Key Rating Drivers
Credit strengths
Experience of partners in the ceramic industry and benefits
derived from associate concerns: The key partner of the firm has
been associated with ceramic industry through other associate
entities like Lemstone Ceramic LLP and Lovin Tiles LLP which
operate in the similar line of business. The firm also derives
support from the marketing and distribution network of associate
concerns.
Locational advantage from proximity to raw materials: The
manufacturing facility of the firm is located in the ceramic tiles
manufacturing hub of Morbi (Gujarat), which provides easy access
to quality raw materials like body clay, feldspar and glazed frit
in Gujarat and Rajasthan in terms of saving of transportation
costs.
Credit weaknesses
Limited track record of operations and below average financial
risk profile: The firm commenced operations from April 2017 and
recorded an operating income of INR21.76 crore till October 31,
2017. The operating margin of the firm remained at 20.72% up to
October 31, 2017 while net margin remained low at 0.68% due to
high depreciation and interest charges given the debt-funded
nature of the capex. Further, on account of debt-funded capex, the
capital structure remained stretched with gearing of 2.21 times as
on October 31, 2017. The coverage indicator stood moderate with
interest coverage ratio of 2.83 times and NCA/Debt of 17% for 7
months of operations.
High working capital intensity resulting from high inventory and
receivables: The firm provides a credit period of 90-120 days to
its customers and gets a credit period of 40-60 days from its
suppliers. However, owing to intense competition in the ceramic
industry, the working capital intensity remained high at 33% as on
October 31, 2017 due to stretched receivables and high inventory
levels. The working capital utilisation also stood high with an
average utilisation of ~76% for the period from April, 2017 to
October, 2017.
Margins subject to pressure from intense competition and
cyclicality in the real estate industry: The ceramic tile
manufacturing industry remains highly fragmented with competition
from the organised as well as the unorganised segments, most of
which are located in Gujarat and operate with low cost structures,
create a pressure on prices. Further, the real estate industry
accounts for the maximum consumption of ceramic tiles, and hence
the firm's profitability and cash flows are expected to remain
vulnerable to cyclicality in the real estate industry.
Vulnerability of profitability to fluctuations in raw material and
energy costs: Raw material and fuel are the two major components
determining cost competitiveness in the ceramic industry. The firm
can, however, exercise little control over the prices of key
inputs such as natural gas/coal and raw materials, and thus the
firm's margins are expected to remain exposed to the movement in
raw material and gas/coal prices and its ability to pass on any
upward movements to its customers.
Established in July, 2016; Lenora Vitrified LLP is involved in
manufacturing glazed vitrified floor tiles at its facility in
Morbi (Gujarat). The firm commenced operations from April 2017
with an installed manufacturing capacity of 63,000 MTPA. The
partners of the firm have longstanding experience in the ceramic
industry by virtue of being associated with other ceramic
entities.
In 7M FY2018 (April, 2017 to October, 2017), on a provisional
basis, the firm reported profit before tax of INR0.15 crore on an
operating income of INR21.76 crore.
NARSINGH THAKUR: CARE Assigns B Rating to INR3.60cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Narsingh Thakur (NST), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3.60 CARE B; Stable Assigned
Short-term Bank
Facilities 3.00 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of NST are primarily
constrained on account of its modest scale of operations with
financial risk profile marked by leveraged capital structure and
stressed liquidity position and constitution as a proprietorship
concern. The ratings are, further, constrained on account of high
competitive intensity in the government civil construction segment
and tender driven nature of business. The ratings, however, drive
strength from its long track record of operations with experienced
management and strong order book position of the firm. The ability
of the firm to increase its scale of operations with speedy
execution of contracts and improvement in solvency position would
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations with financial risk profile marked by
leveraged capital structure and stressed liquidity position and
constitution as a proprietorship concern: The scale of operations
stood modest with TOI of INR6.65 crore and PAT of INR0.19 crore in
FY17 and net-worth of INR3.39 crore as on March 31, 2017. TOI of
NST has shown a declining trend over the past three financial
years ended FY17 mainly due to lower orders received from client.
The profitability margins of the firm stood moderate with PBILDT
and PAT margin stood at 15.50% and 2.86% respectively. The
solvency position of the firm stood weak marked by leveraged
capital structure, high total debt to GCA and low interest
coverage ratio in FY17. The liquidity position of the firm stood
moderately stressed with full utilization of its working capital
bank borrowings in last twelve month ended November, 2017. Its
constitution as a proprietorship concern with moderate net worth
base restricts its overall financial flexibility in terms of
limited access to external fund for any future expansion plans.
Furthermore, there is an inherent risk of possibility of
withdrawal of capital and dissolution of the firm in case of
death/insolvency of proprietor.
High competitive intensity in the government civil construction
segment and tender driven industry: The construction industry is
highly fragmented in nature with presence of large number of
unorganized players and a few large organized players coupled with
the tender driven nature of construction contracts poses huge
competition and puts pressure on the profitability margins of the
players. Further, as the firm participates in tenders invited by
large lead contractor, high competition and lower bargaining power
restricts its profitability margins.
Key Rating Strengths
Long track record of operations with experienced management and
strong order book position: The firm was formed in 1975, hence,
has a track record of more than four decades in the civil
construction industry. As on December 06, 2017, NST has an
outstanding order book position of INR25.42 crore forming 3.82
times of FY17's Total Operating Income (TOI) with nine projects in
hand reflecting strong order book position. The on-going projects
of the firm are likely to be executed over a period of 12-15
months, providing medium term revenue visibility.
Jabalpur -based (Madhya Pradesh) Narsingh Thakur (NST) was formed
in 1975 by Mr. Rajendra Singh Thakur as a proprietorship concern.
NST is mainly engaged in the business of construction & repair of
roads, commissioning of water supply lines, construction of sewage
lines and sewage treatment plants. NST is registered 'A' class
(in the scale of AA to E) approved contractor with Public Works
Department (PWD), Madhya Pradesh. Further, the firm gives
contracts on sub-contract basis to private players.
NINERICH INFOTECH: CRISIL Assigns B Rating to INR4MM Overdraft
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable/CRISIL A4'
ratings to the bank facilities of Ninerich Infotech (NI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 6 CRISIL A4
Overdraft 4 CRISIL B/Stable
The ratings reflect its modest scale of operations, large working
capital requirement, and below-average financial risk profile
because of small networth, aggressive capital structure and modest
debt protection metrics. These weaknesses are partially offset by
the extensive experience of its promoters in the industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Modest scale of operations is
reflected in revenues of INR13 crores in fiscal 2017. The revenues
have been volatile, in the range of INR13-43 crores in past 4
years, on account of tender based business. Although, revenues are
expected to increase in fiscal 2018, sustenance of revenue growth
will be key monitorable.
* Large working capital requirement: Gross current assets were 348
days as on March 31, 2017, due to stretched receivables of 133
days and need to furnish earnest money deposit of about 1-2% for
bidding of tenders. However, majority of working capital
requirement is met by stretching payment to sub-contractors and
creditors.
* Weak financial risk profile: Networth was small at INR3.48 crore
and total outside liabilities to tangible networth ratio and high
at 3.31 times, respectively, as on March 31, 2017. Also, debt
protection metrics were muted, with interest coverage and net cash
accrual to total debt ratios of 1.9 times and 0.09 time,
respectively, for fiscal 2017. Financial risk profile is expected
to improve over the medium term with ramp up in scale and hence
accretion of reserves; and low external borrowing.
Strength
* Extensive experience of promoters: Longstanding presence has
enabled the promoters to develop keen understanding of industry
and established strong relationship with customers.
Outlook: Stable
CRISIL believes NI will continue to benefit over the medium term
from the experience of its promoters and established relationship
with customers and principal. The outlook may be revised to
'Positive' if sustained improvement in revenue and profitability,
and if working capital management improves, leading to better
financial risk profile. The outlook may be revised to 'Negative'
if decline in topline or profitability or any major debt-funded
expansion further weakens financial risk profile.
Established in 2003, as a partnership firm NI is engaged in
installation of system integration, distribution, installation and
maintenance of telecom, security, audio-visual, and digital wall
systems for government organisations, educational institutions,
BFSI customers, and corporates. Operations are managed by Mr V
Narayan Swamy and Ms M N Pushpa.
P.M. INDUSTRIES: CARE Moves D Rating to Not Cooperating Category
----------------------------------------------------------------
CARE has been seeking information from P.M. Industries to monitor
the rating(s) vide e-mail communications/letters dated Dec. 5,
2017 and numerous phone calls. However, despite CARE's repeated
requests, the firm has not provided the requisite information for
monitoring the ratings. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the publicly
available information, which however, in CARE's opinion is not
sufficient to arrive at a fair rating. The rating on P.M.
Industries' bank facilities will now be denoted as CARE D; ISSUER
NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.64 CARE D; Issuer not cooperating
Facilities Revised from CARE B on the basis
of best available information
Short-term Bank 2.36 CARE D; Issuer not cooperating
Facilities Revised from CARE B on the basis
of best available information
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 rating takes into account ongoing delays in debt servicing and
fragmented nature of industry coupled with high level of
government regulation.
Detailed description of the key rating drivers
Ongoing delays in debt servicing: There are ongoing delays in
servicing the debt obligations. The delays are on account of weak
liquidity as the firm is unable to generate sufficient funds on
timely manner.
Fragmented nature of industry coupled with high level of
government regulation: The commodity nature of the product makes
the industry highly fragmented with numerous players operating in
the unorganized sector with very less product differentiation.
There are several small scale operators which are not into end-to-
end processing of rice from paddy, instead they merely complete a
small fraction of processing and dispose-off semi-processed rice
to other big rice millers for further processing. Furthermore, the
concentration of rice millers around the paddy growing regions
makes the business intensely competitive. Additionally, the raw
material (paddy) prices are regulated by government to safeguard
the interest of farmers, which in turn limits the bargaining power
of the rice millers.
P.M. Industries (PMI) was established in 2007 by Mr. Mukesh Doomra
as a proprietorship firm. However, on April 1, 2014, the
constitution of PMI was changed into a partnership firm with Mr.
Mukesh Doomra and Mrs Neena Rani as its partners sharing profit
and losses in the ratio of 4:1. The firm is engaged in processing
of paddy at its manufacturing facility in Fazilka, Punjab, with an
installed capacity of processing 120,000 quintal of paddy per day
as on December 31, 2016.
PATIL & COMPANY: CARE Hikes Rating on INR10cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Patil & Company (PC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10 CARE B; Stable Revised
Facilities from CARE B-; Stable
Long/Short-term 7 CARE B; Stable/CARE A4
Bank Facilities Revised from CARE B-;
Stable and reaffirmed CARE A4
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the bank facilities of PC
takes into account the growth in scale of operations, strengthened
debt coverage indicators and improved liquidity indicators.
The ratings continue to derive strength from the long track record
of operations of the firm along with experienced partners,
comfortable solvency position and moderate order book position.
The ratings, however, are constrained by its small scale of
operations with modest capitalisation and moderate profit margins,
geographical concentration with business exposure in a single
state, presence in a highly fragmented industry with intense
competition and exposure to tender-driven process. The ratings are
also constrained on account of the working capital-intensive
nature of operation and partnership nature of constitution.
The ability of the firm to strengthen its order book and execute
the order in a timely manner, further increase its scale of
operations, profitability maintain while maintaining its solvency
position and efficiently managing its working capital requirement
are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations and moderate profitability margins: The
total operating income of the firm has seen a y-o-y growth of
approximately 36% to INR38.97 crore in FY17, on account of higher
orders executed during the years. However, despite the growth, the
scale of operations remains small. Profit margins of the firm
although moderate have been fluctuating owing to the higher cost
of raw materials and competitive bidding process owing to
fragmented nature of industry. However, the PBILDT margin remained
moderate and in the range of 16%-23%.
Working capital intensive nature of operations: The liquidity
position of the firm remained stretched with funds being mainly
blocked in inventory as reflected by high gross current asset days
of over 151 days during FY17. The same resulted in high
utilization of its working capital limits.
Presence in a highly fragmented industry: The firm is a small
sized player involved in executing civil construction contracts.
The construction sector is plagued by numerous unorganized and
organized players making it highly competitive. The high
concentration on government contracts makes PC susceptible to any
drop in government spend on infrastructure projects and changes
pertaining to government policy regarding awarding of tenders to
contractors.
Partnership nature of constitution: PC being a partnership concern
is exposed to inherent risk of partner's capital being withdrawn
at times of personal contingency and limited ability to raise
capital. Moreover, poor succession planning may result in
dissolution of firm.
Key Rating Strengths
Long track record and experienced partners: Established in 1976,
PC has a long track record of 40 years in the industry.
Furthermore, the long standing experience and relationship of the
partners has enabled the firm to reinforce its footing in the
construction business.
Comfortable capital structure and debt coverage indicators: the
low debt profile of the company as against the healthy net worth
base resulted in comfortable capital structure for the firm as
marked by the overall gearing of 0.37x as on March 31, 2017.
Moreover, with moderate profitability and low debt profile, the
debt coverage indicators of the firm are satisfactory and have
seen an improvement as at the end of FY17.
Moderate order book position: PC has a healthy outstanding order
book position, as on November 30, 2017, which is to be executed
over a period of three to three to fifteen months providing
revenue visibility in the short term.
PC was established in the year 1976 as a partnership firm and is
engaged in civil construction of roads and is registered as a
Class 1-A contractor with Public Work Department (PWD),
Maharashtra, and Karnataka by virtue of which it is eligible to
undertake all types of civil works contract within the respective
states. The partners of the firm have an extensive experience of
more than four decades since the inception of the firm. Brief
Financials (Rs. crore) FY16.
PATWARI ELECTRICALS: CARE Reaffirms B+ Rating on INR11cr Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Patwari Electricals Private Limited (PEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 11.00 CARE B+; Stable Re-affirmed
Short-term Bank
Facilities 19.00 CARE A4 Re-affirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of PEPL continues to
be constrained by its modest scale of operation with low
profitability margins, moderate capital structure, weak debt
coverage indicators and low order book position providing short-
term revenue visibility. The ratings are further constrained by
working capital intensive nature of operation, customer
concentration risk with revenues completely dependent on orders
from Maharashtra State Electricity Distribution Company Limited
(MSEDCL) and its presence in highly fragmented industry coupled
with tender driven nature of operation.
The above constraints are partially offset by strengths derived
from the experience of promoters and its association with reputed
clientele.
The ability of the company to increase its scale of operations and
improvement in profitability margins along with timely completion
of orders with efficient management of the working capital
requirement are the key rating sensitivities.
Detailed description of the key rating drivers
Key rating Weaknesses
Modest scale of operation with low profitability margins: The
scale of operations of the company remained modest with total
operating income of INR73.20 crore in FY17. Despite growth in
scale of operation, it continues to be modest with net worth of
INR6.78 crore as on March 31, 2017. PEPL's profit margins has
reflected fluctuating trend and remained low owing to higher
operating expenses and fixed capital charges
Moderate capital structure coupled with weak debt coverage
indicators: The relatively modest net worth base of the company
led to increased reliance on debt to support its business
operations, hence resulting in moderate capital structure.
Moreover with low profitability and high debt profile, the debt
coverage indicators of the company remained weak.
Working capital intensive nature of operation: The operations of
the company remained working capital intensive with gross current
assets of 77 days with funds being blocked in receivables and
inventory. This resulted in stretched payment to suppliers in
FY17. The working capital requirements are met by the cash credit
facility availed by the company utilization of which remained
high.
Low order book position and customer concentration risk: The
company has an outstanding order book to sales ratio of 0.38x of
FY17 sales as on October 31, 2017 which is likely to be executed
by the end of FY18, thereby providing short term revenue
visibility. However, the revenue derived is concentrated from a
single customer i.e. MSEDCL which makes the company's revenue and
profitability susceptible to any drop in the tenders awarded by
the client.
Highly competitive industry because of the fragmented and tender-
driven nature of business: The construction industry is fragmented
in nature with a large number of medium scale players present at
regional level. This coupled with the tender-driven nature of
contracts poses huge competition and puts pressure on the profit
margins of the players. PEPL is a regional player with civil and
structural works contracts primarily concentrated towards one
client. Furthermore PEPL faces fierce competition from other
companies for tenders of contracts.
Key rating Strengths
Experienced promoters: The directors of PEPL, Mr. Ajinkya Patwari
and Mr. Sanjay Patwari have a significant experience of more than
a decade in the electrical & fabrication industry. Further the
directors are also assisted by experienced management team to
carry out the day to day operations.
Incorporated in 2011 by Mr. Ajinkya Patwari and Mr. Sanjay
Patwari, Patwari Electricals Private Limited (PEPL) is engaged in
the business of electrical engineering procurement and
construction (EPC) work for Maharashtra State Electricity
Distribution Company Limited (MSEDCL). Earlier, the promoters
carried out the same business under a proprietorship firm "M/s.
Patwari Electricals" since 2000 and as on March 31, 2015, the
entire business was transferred to PEPL.
PEPSU ROAD: ICRA Reaffirms B+ Rating on INR25cr Cash Loan
---------------------------------------------------------
ICRA Ratings has reaffirmed the [ICRA]B+ rating assigned to the
INR40.00-crore fund-based bank facilities of Pepsu Road Transport
Corporation. The outlook assigned on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-Based Limits 25.00 [ICRA]B+(Stable);
(Cash Credit/ re-affirmed
Overdraft)
Long-term Unallocated 15.00 [ICRA]B+(Stable);
re-affirmed
Rationale
The rating takes into consideration the PRTC's strategic
importance to the Government of Punjab (GoP) as a provider of
passenger transport services in the southern region of Punjab and
regular fare revisions during the last two years, although
frequency of such revisions in future remains uncertain. While the
recent upward fare revisions have resulted in nominal operating
profits for the PRTC, the extent of future fare hikes in relation
to the rising cost of operations will remain a challenge. The
rating is, however, constrained by the PRTC's weak financial
profile as characterised by net losses, modest coverage indicators
and strained liquidity position, though an improvement was noticed
during the last two years. PRTC continues to have negative net
worth, though it improved during the last two years subsequent to
the receipt of a grant from a state government agency and nominal
cash accruals. The PRTC has large payables towards retiring
employees, which if funded by fresh debt, will adversely impact
its liquidity position. Additionally, large receivables from
various government departments towards subsidised travel also
necessitates working-capital requirement, leading to an increase
in the PRTC's interest cost. A stretched liquidity position would
also impact the PRTC's capex plans related to adding new vehicles
to its fleet, which is critical for improving the operational
efficiency. ICRA notes that an improvement in the operational
performance of the PRTC, as witnessed during the last two years,
is likely to support its financial position, going forward.
Outlook: Stable
ICRA believes that PRTC will continue to get approval for upward
fare revision from the state government. However, due to
inadequacy of the same to cover an increase in the overall cost of
operations, PRTC will continue to report nominal operating profit
and losses at net level. Additionally, the corporation's
operational performance is likely to shown an improving trend with
the augmentation of new buses in future. The outlook may be
revised to 'Positive' if substantial growth in operating
profitability is witnessed. The outlook may be revised to
'Negative' if the timely upward fare revision is not implemented,
and as a result liquidity position of the PRTC is stretched.
Key rating drivers
Credit strengths
Strategic importance of PRTC to the state government: The PRTC,
being a provider of passenger transport services in the southern
region of Punjab, is strategically important for the state
government. The importance is reflected by the financial support
provided to the PRTC in the form of various grants, loans and
exemptions by the GoP.
Upward fare revisions during FY2017 and FY2018: The state
government approved upward fare revision thrice during FY2017 and
once during FY2018. Consequently, the corporation was able to
report nominal operating profits and clear some of its liabilities
towards retiring employees. However, timely approval of future
fare revisions in relation to the cost of operations would remain
critical for comfortable financial position of the PRTC.
Credit weaknesses
Weak financial profile, but improved somewhat: Although the PRTC
continued to report net losses during FY2016 and FY2017, the same
has shown a reducing trend compared to the previous years.
Additionally, the corporation reported nominal operating profits
during FY2016 and FY2017 compared to significant operating losses
in the previous years. As a result, the interest coverage improved
to 1.69 times in FY2017 compared to 1.48 times in FY2016. However,
other debt-coverage indicators remained under pressure.
Adverse capital structure: The PRTC had a negative net worth as on
March 31, 2017 on account of accumulated losses from the previous
years. However, it improved to INR-28.90 crore as on March 31,
2017 from INR-42.49 crore as on March 31, 2016 on account of a
grant received from the state government agency, Punjab
Infrastructure Development Board (PIDB) as well as nominal cash
accruals of the PRTC. Its total debt of INR124.53 crore as on
March 31, 2017 includes INR41.41-crore term loans from bank,
repayment of which remained within the comfortable limits of the
corporation.
Large shortfall in retirement benefit fund of employees: The PRTC
had a liability of around INR150.00 crore towards benefits of
employees due for retirement in future. Payment of such a large
amount, though in phases, would adversely impact the liquidity
position of the PRTC. Moreover, if such payments are funded by
fresh loans, the profitability as well as capex plans of the
corporation would be impacted.
Pepsu Road Transport Corporation (PRTC) was established by the GoP
in October, 1956 under the provision of the Road Transport
Corporations (RTC) Act, 1950 with a view to provide efficient,
adequate, economic and properly co-ordinated operation system of
Road Transport Services in the southern region (erstwhile PEPSU -
Patiala and East Punjab States Union) of Punjab. The corporation
operates over 1,085 buses daily through nine depots and around
4,000 personnel.
RITA INTERNATIONAL: Ind-Ra Migrates B Rating to Not-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Rita
International'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 B(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR80 mil. Fund-based limit migrated to non-cooperating
category with IND B(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Dec. 20, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Rita was established by Pankaj Shukla in 2010 as a proprietorship
concern in Varanasi. The entity manufactures handmade carpets.
ROMAX STEELS: CRISIL Assigns B+ Rating to INR5MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' ratings to the
long-term bank loan facilities of Romax Steels Private Limited
(RSPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 1 CRISIL B+/Stable
Cash Credit 5 CRISIL B+/Stable
Proposed Term Loan 1 CRISIL B+/Stable
The ratings reflect a moderate financial risk profile marked by
high gearing, in addition to its small scale of operations and
susceptibility to intense industry competition. These rating
weaknesses are partially offset by extensive experience of the
promoters in the steel industry and their established
relationships with the suppliers and funding support in the form
of unsecured loans.
Analytical Approach
CRISIL has treated unsecured loans (Rs.1.90 crore as on March 31,
2017) extended to RSPL by its promoters as neither debt nor equity
as the loans are subordinated to bank debt and are likely to
remain in the business.
Key Rating Drivers & Detailed Description
Weaknesses
* Moderate average financial risk profile: The financial risk
profile is moderate marked by high gearing of 3.71 times as on
March 31, 2017. Networth is small at INR1.14 crore and debt
protection metrics are average as reflected in interest coverage
and net cash accrual to total debt (NCATD) of 1.7 times and 0.09
time, respectively, in fiscal 2017.
* Modest scale of operation in fragmented steel ingot industry and
exposure to intense competition: The scale of operations is modest
as reflected in operating income of INR31.64 crore as on March 31,
2017, owing to a fragmented industry, which intensifies
competition and limits pricing power of individual players. Weak
pricing power restricts RSPL's ability to pass on increase in
input prices to its customers.
Strengths
* Extensive experience of promoters and established relationship
with suppliers: The promoters have an extensive experience in the
steel industry, which has enabled the company to establish
relationships with its customers, which belong to various
industries, such as automobiles, and rolling mills.
* Funding support from promoters: The liquidity is supported by
unsecured loans of INR1.90 crore as on March 31, 2017, from
promoters which are non-interest bearing in nature.
Outlook: Stable
CRISIL expects RSPL to maintain its established presence in the
steel industry over the medium term on the back of its promoters'
industry experience and strong relationships with suppliers. The
outlook may be revised to 'Positive' if there is substantial and
sustained improvement in the revenue and profitability margin from
the current levels or if there is an improvement in its working
capital management. The outlook may be revised to 'Negative' if
there is a steep decline in the profitability margin from the
current levels or if there is a significant decline in the capital
structure on account of larger-than-expected working capital
requirement or large debt-funded capex.
RSPL was incorporated in 2014. The company manufactures non-alloy
steel ingots. The company was started by Mr Raj Kumar. The
production facility is located at Ludhiana with installed capacity
of 2500 tonne per month.
S.A. PLYWOOD: CRISIL Reaffirms D Rating on INR12.50MM Loan
----------------------------------------------------------
CRISIL Ratings has reaffirmed the ratings on the bank facilities
of S. A. Plywood Industry Private Limited (SAPIPL) at 'CRISIL
D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.25 CRISIL D (Reaffirmed)
Cash Credit 12.50 CRISIL D (Reaffirmed)
Long Term Loan 2.79 CRISIL D (Reaffirmed)
Proposed Cash
Credit Limit 2.50 CRISIL D (Reaffirmed)
Proposed Fund-
Based Bank Limits .96 CRISIL D (Reaffirmed)
The rating was downgraded to 'CRISIL D/CRISIL D' from 'CRISIL
B+/Stable/CRISIL A4' on October 10, 2017. The downgrade reflected
delay in servicing term loan due to weak liquidity.
The ratings continue to reflect SAPIPL's working capital-
intensive, and modest scale of, operations in an intensely
competitive segment. These weaknesses are partially offset by the
extensive experience of its promoters in the plywood industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Gross current assets were
high at 333 days as on March 31, 2017.
* Modest scale of operations: With revenue of INR25 crore in
fiscal 2017, scale remains small in the intensely competitive
plywood industry.
Strength:
* Extensive experience of promoters: Presence of more than 35
years in the plywood industry has helped the promoters to gain
strong insight into market dynamics and establish healthy market
position in West Bengal, Bihar, and Odisha. The company also has
marginal presence in Andhra Pradesh and Rajasthan. Its Globe,
Glider, and Grand brands are widely known in eastern India. SAPIPL
has a network of around 200 dealers spread across states.
Set up in 1979 as a partnership concern by Mr. Arun Saha and Mr.
Salil Shah and reconstituted as a private limited company in 2009,
SAPIPL manufactures plywood, block board, and flush door at its
facility in Mathabhanga in Coochbehar (West Bengal).
SHRI KALYANIKA: CARE Assigns B- Rating to INR10cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Shri
Kalyanika Promoters & Developers Private Limited (SKPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10 CARE B-; Stable Assigned
Detailed Rationale & Key rating Drivers
The rating assigned to the bank facilities of SKPL is primarily
constrained on account of project implementation risk associated
with its ongoing real estate project, salability risk associated
with un-booked units and subdued outlook of the cyclical real
estate sector.
The rating, however, derives strength from the experienced
management in the real estate industry.
The ability of company to complete its on-going real estate
project without any time and cost overrun along with the timely
booking of un-booked flats are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Project implementation risk and saleability risk for un-booked
units: SKPL is constructing the residential building coupled with
some portion of commercial area. The project has 134 residential
flats and 30 shops comprises of four blocks. The company has
envisaged total project cost of INR56.60 crore to be funded
through term loan, unsecured loans from promoters, customer
advances and remaining through capital in the proportion of
18:19:54:9. As on November 2017, the firm has incurred total cost
of INR27.62 crore towards the project to be funded through the
term loan of INR10 crore, promoter's capital of INR1.94 crore,
unsecured loans of INR9.81 crore and remaining through booking
advances from customers. The project is envisaged to be completed
by April, 2020 and hence, project implementation risk is
associated with SKPL to complete the project within envisaged time
and cost parameters. Further, saleability risk is also associated
with SKPL for un-booked units indicated as only 26 flats have been
booked out of total 134 flats and 30 shops till November 30, 2017.
Subdued outlook for the cyclical real estate sector: The real
estate industry in India is highly fragmented with most of the
real estate developers having a city-specific or region-specific
presence. The risks associated with real estate industry are
cyclical nature of business (linked to economic cycle), interest
rate risk, roll back of income tax benefits etc.
Key Rating Strengths
Experienced partner and construction work given to its group
concern on subcontract basis: SKPL's promoters have more than
three decades of experience in well-known real estate development
companies in Jabalpur.
Jaipur (Rajasthan) based Shri Kalyanika Promoters & Developers
Pvt. Ltd. (SKPL) was incorporated as a private limited company in
March, 2011. SKPL was incorporated with a purpose to construct a
residential project coupled with some portion of commercial area,
having saleable area of 203519 Sq Feet, situated at Narmada Road,
Jabalpur, Madhya Pradesh-482001. SKPL has constructed 134
residential flats and 30 shops comprises of four blocks. The
company is registered with Real Estate Regulatory Authority Madhya
Pradesh with registration number P-JBP-17-973.
SONI SOYA: CARE Hikes Rating on INR9.77cr LT Loan to BB-
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Soni Soya Products Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.77 CARE BB-; Stable Revised
Facilities from CARE B+
Detailed Rationale & Key Rating Drivers
The revision in rating of SSPL takes into account continuous
growth in Total Operating Income (TOI) since last three financial
years ended FY17 (FY refers to the period from April 1 to
March 31) and improvement in profitability margins along with
continuous infusion of capital by the promoters.
The rating of SSPL, however, continues to remain constrained on
account of its moderate solvency and liquidity position, its
presence in a highly competitive and fragmented soyabean oil
industry and vulnerability of margins to fluctuation in raw
material prices and foreign exchange rate. The ratings are,
further, constrained on account of customer concentric risk.
The ratings, however, continue to favorably take into account
experienced management with accreditation from various authorities
and locational advantage being situated at soya bean growing
region.
The ability of SSPL to continuous improves its scale of operations
with improvement in solvency position and better management of
working capital is the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Moderate solvency and liquidity position: The capital structure of
SSPL continued to remain moderately leveraged with an overall
gearing of 1.68 times as on March 31, 2017. Further, the debt
service coverage indicators of the company stood moderate marked
by total debt to GCA at 8.03 times as on March 31, 2017.
The liquidity position of SSPL stood moderate with 80-85%
utilization of working capital bank borrowings during last 12
months ended in November 2017 and comfortable operating cycle of
27 days in FY17.
Key Rating Strengths
Significant growth in Total Operating Income (TOI): During FY17
(FY refers to the period from April 1 to March 31), the company
has witnessed continuous growth in Total Operating Income (TOI)
and grew at a Compounded Annual Growth Rate (CAGR) of around
89.93% during last three financial years ended FY17 attributed to
increase in manufacturing activities of soya bean oil as well as
export sales which offset decrease in trading activities. The
profitability of the company improved but stood thin with PBILDT
margin and PAT margin of 3.98% and 1.80% respectively in FY17.
Infusion of share capital by the promoters and planning for IPO
The promoters of the company are continuously infusing share
capital including share premium in the company to support its
growing scale of operations and purchase of machineries. The
promoters have infused share capital of INR1.80 crore in FY17 and
INR1.83 crore up to October, 2017.
Further, the company has proposed to bring IPO for issuing of 18
Lakh equity shares at INR25 (face value of INR10 with a premium of
INR15 each share) on the SME Platform of National Stock Exchange
of India Limited.
Indore based (Madhya Pradesh) Soni Soya Products Private Limited
was incorporated in September 2014 by Mr. Dilip Kumar Soni, Mr.
Javed Ali and Mr. Balendra Shukla. Subsequently in August 2017,
the company was converted into a public limited company and the
name was changed to SSPL. SSPL is engaged in the business of
trading and processing of organic and non-GMO agricultural
products. It exports its products mainly to Canada, USA, Dubai,
South Korea and Sri Lanka.
SREE JEYASOUNDHARAM: ICRA Reaffirms C Rating on INR23.07cr Loan
---------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating at [ICRA]C for
the INR24.40-crore long-term facilities of Sree Jeyasoundharam
Textile Mills Private Limited (SJTM). ICRA has also reaffirmed the
short-term rating at [ICRA]A4 for the INR3.25-crore non-fund based
limits of SJTM.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund
Based 23.07 [ICRA]C; Reaffirmed
Long-term
Interchangeable (1.00) [ICRA]C; Reaffirmed
Long-term
Unallocated 1.33 [ICRA]C; Reaffirmed
Short-term-Non-
fund based 3.25 [ICRA]A4; Reaffirmed
Rationale
The rating reaffirmation factors in the revenue de-growth in
FY2017 on account of subdued demand during the year primarily
owing to de-monetization of higher denomination currency. Besides,
the company incurred operating level losses due to lower
realisations on sales coupled with sell-off of a portion of
previous year's inventory in order to meet the shortfall in raw
material availability during the year. The financial profile of
the company continues to remain stretched as characterised by
negative net worth position on account of continued losses, and
inadequate coverage indicators. The ratings remain constrained by
the company's presence in a highly fragmented industry
characterized by intense competition which restricts its pricing
flexibility. The ratings, nevertheless, continue to favourably
factor in the extensive experience of the promoters in the textile
industry and financial support extended by the promoters in the
form of unsecured loans, which aids the company in meeting the
debt obligations in a timely manner.
Going forward, the ability of the company to increase its scale of
operations, and minimise its losses by stabilising the operations
will remain the key rating sensitivities.
Key rating drivers Credit strengths
Extensive experience of the promoters: The promoters of the
company have extensive experience of over five decades in the
textile spinning industry, which supports growth prospects. The
promoters also extend financial support to the company in the form
of non-interest bearing unsecured loans, which aids in meeting the
debt obligations in a timely manner.
Strong operational linkages with group companies: Being a part of
Ramalinga Group of Companies promoted by Mr. T R Dhinakaran along
with his family members, the company benefits from the operational
linkages. The flagship entity of the group, Shri Ramalinga Mills
Limited, procures cotton in bulk and distributes it to other
companies in the group. The bulk procurement enables availability
of better quality cotton at competitive prices.
Credit weaknesses
Drop in operating income and steep losses in FY2017: The operating
income declined by 25% in FY2017 on account of limited cotton
availability for manufacturing of yarn coupled with sluggish
demand post de-monetization. In order to meet the shortfall in
cotton supply required for producing yarn, the company sold-off
previous year's inventory at lower prices. This coupled with lower
realisation on yarn produced during the year resulted in steep
losses.
Weak financial profile: The financial profile of the company is
characterised by negative net worth position on account of
sustained losses in the past. Further to continued losses incurred
by the company, the coverage indicators also remain inadequate to
meet the debt obligations.
Highly fragmented nature of industry results in intense
competition: The presence of the company in a highly competitive
industry restricts its pricing flexibility and limits the
company's ability to pass on rise in raw material prices to the
customers thereby impacting the profitability.
Sree Jeyasoundharam Textile Mills Private Limited was incorporated
as a private limited company in September 1989 in Sivagangai,
Tamil Nadu. In 1997, it was taken over by Mr. T R Dhinakaran, the
promoter of Ramalinga Group of Companies. The company is primarily
engaged in manufacturing of cotton yarn of medium to fine counts.
Over the years, the company has increased the spindle capacity
from 3,000 spindles to its current level of 41,760 spindles and
672 rotors.
The company is a part of Ramalinga Group of Companies based out of
Aruppukottai, Tamil Nadu. The major companies in the Ramalinga
group include (a) Shri Ramalinga Mills Limited (SRML) (ii)
Aruppukottai Shri Ramalinga Spinners Private Limited and (iii)
Tamilnadu Jaibharath Mills Limited.
SREE RANI: CRISIL Assigns B Rating to INR10MM Cash Loan
-------------------------------------------------------
CRISIL Ratings has revoked the suspension of its rating on bank
facility of Sree Rani Sati Overseas Private Limited (SROPL), and
has assigned its 'CRISIL B/Stable/CRISIL A4' on the bank
facilities of SROPL. The rating was 'suspended' vide rating
rationale dated January 18, 2016, as the company had not provided
adequate information for the rating review. SROPL has now shared
the requisite information, enabling CRISIL to assign a rating to
its bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B/Stable (Assigned;
Suspension Revoked)
Letter of Credit 20 CRISIL A4 (Assigned;
Suspension Revoked)
Proposed Long Term 9 CRISIL B/Stable (Assigned;
Bank Loan Facility Suspension Revoked)
The ratings reflect modest scale of operations in the timber
industry, large working capital requirements and weak financial
risk profile. These rating weaknesses are partially offset by the
extensive industry experience of SROPL's promoters and established
customer relationships.
Key Rating Drivers & Detailed Description
Weakness
* Working capital intensive nature of operations: The operations
of the company is working capital intensive (GCA) in nature marked
GCA of 246 days in fiscal 2017. The high GCA days are driven by
high debtors of 165 days due to high credit period offered by the
company and moderate inventory of 59 days in fiscal 2017.
* Modest scale of operations in the timber industry: SROPL
operates in highly fragmented timber processing trading and
industry wherein entry barriers are low as the capital
requirements are small and thus is marked by the presence of many
un-organized players. These players primarily cater to regional
demand to reduce high transportation costs, as price is the main
differentiating factor in the timber industries. The operating
income for fiscal 2017 stand at INR57.92 cr in fiscal 2017 and is
expected to grow by 5-10% over the medium term.
* Weak financial risk profile: SROPL capital structure is highly
leveraged (total outside liabilities to adjusted net worth),
primarily due to its modest net worth and high working capital
requirements. Company's TOL/ANW was high at 4.64 times as on
March 31, 2017. The debt protection metrics also stood modest
marked by interest coverage ratio of 1.4 times and net cash
accruals to adjusted debt (NCAAD) at 3% in fiscal 2017.
Strength
* Long standing experience of promoters in timber trading: SROPL
is owned and managed by Poddar family, with promoters' experience
of more than 2 decades. Over the years, the company has increased
its product range, which now covers teak wood, with varied
subtype, length & diameter therein.
Outlook: Stable
CRISIL believes that SROPL will continue to benefit over the
medium term from its promoter's extensive experience in the timber
industry. The company's financial risk profile, however, is
expected to remain constrained due to the working-capital-
intensive nature of its operations. The outlook may be revised to
'Positive' if SROPL's working capital management and net worth
improves significantly, leading to improvement in its financial
risk profile. Conversely, the outlook may be revised to 'Negative'
if the company's financial risk profile deteriorates
significantly, most likely because of substantial borrowings for
capital expenditure (capex) or working capital requirements.
SROPL was established by Mr. Sanjay Poddar and his family members
in 2010. The company is engaged in trading and processing of
timber logs mainly from teak wood and hard wood.
SREE SATYANARAYANA: CRISIL Reaffirms B+ Rating on INR25MM Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the bank facility of
Sree Satyanarayana Builders (SSB) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 25 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect SSB's exposure to implementation
and demand risks associated with its ongoing commercial real
estate project at Proddatur, Cuddapah District, and its
vulnerability to cyclicality inherent in the Indian real estate
industry. These rating weaknesses are partially offset by the
extensive experience of promoters in the real estate industry, and
the strategic location of the project and moderate financial risk
profile marked by moderate debt service coverage ratio expected
over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to implementation and demand risks associated with its
ongoing commercial real estate project at Proddatur: The current
project has been completed up to an extent of around 45%-50% which
exposes the firm to the risk of implementation of the same
furthermore though around 90% of the total shops (316) have been
booked advances received against the same are low.
* Exposure to risks relating to cyclicality in Indian real estate
industry: SSB's business risk profile is susceptible to slowdown
in the Indian real estate industry. The commercial real estate
sector in India is cyclical and is marked by volatile prices,
opaque transactions, and a highly fragmented market structure. The
execution of the commercial real estate projects in India is
affected by multiple property laws and non-standardized government
regulations across the states. Also, the continuous changes in
fiscal and monetary measures will cause a variation in interest
rates impacting the demand for housing loans.
Strength
* Extensive industry experience of the promoters: The firm
benefits from the extensive experience of the promoters in
construction industry. The firm is promoted by six partners namely
Mr. K. Padmanabhiah, Mr. K Satyanarayana, Mr. M Ramesh, Mr. V.
Sreedhar, Mr. B Srinivasa Reddy and Smt B. Indira. Further, the
day to day operations of the firm are managed by Mr. K.
Padmanabhiah. The promoters have been in the industry for more
than 2 decades. Prior to setting up a shopping complex the
promoters were involved in construction of various residential
apartments across Andhra Pradesh and Telangana region. CRISIL
believes that the firm will benefit from the extensive experience
of the promoters in the construction industry over the medium
term.
* Strategic location of the project and moderate debt service
coverage ratio expected over the medium term: The firm benefits
from its location as Proddatur is a developing industrial hub in
Andhra Pradesh as few new industries have started their
operations. CRISIL believes due to strategic location of the
project it has moderate demand risk furthermore company's
financial risk profile is supported by above 1 times debt service
coverage ratio expected over the medium term.
Outlook: Stable
CRISIL believes that SSB will continue to benefit from its
promoters' extensive industry experience over the medium term. The
outlook may be revised to 'Positive' if SSB generates more-than-
expected cash flows, aided by earlier-than-expected completion of
its ongoing projects and healthy occupancy rates in its commercial
properties, improving the company's business and financial risk
profile. Conversely, the outlook may be revised to 'Negative' in
case of time and cost overruns in its projects, or lower than-
expected occupancy resulting in deterioration of financial risk
profile.
Set up in 2008 as a partnership concern, SSB is developing a
commercial real estate project at Proddatur, Cuddapah District.
The firm is promoted by Mr. Mr. B Srinivasa Reddy and others.
SRI SAI BABA: ICRA Ups Rating on INR12cr Cash Loan to B+
--------------------------------------------------------
ICRA Ratings has upgraded the long-term rating to [ICRA]B+ from
[ICRA]B to the INR14.07-crore fund-based limits and INR3.93-crore
unallocated limits of Sri Sai Baba Enterprises. The outlook on the
long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term Loan 2.07 [ICRA]B+ (Stable) upgraded
from [ICRA]B
Fund based-Cash Credit 12.00 [ICRA]B+ (Stable) upgraded
from [ICRA]B
Unallocated Limits 3.93 [ICRA]B+ (Stable) upgraded
from [ICRA]B
Rationale
The rating upgrade takes into account stabilisation of ginning
operations during FY2017, with earlier-than-expected commencement
of operations in November 2016, and healthy ramp-up of operations
in 5M FY2017. The rating, however, is constrained by the modest
scale of SSBE's operations, and highly fragmented and competitive
cotton industry with low entry barriers, leading to increase in
number of ginning mills in the area and low pricing power. The
rating also takes into account moderate financial profile as
reflected in high gearing and moderate coverage indicators. ICRA
notes that the profitability of the company continues to remain
exposed to fluctuation in cotton prices.
The rating, however, favorably factors in over four decades of
experience of the promoters in the cotton-ginning industry and the
logistic advantage enjoyed by the company due to its proximity to
cotton-growing areas of Telangana. ICRA notes that the subsidies
provided by the Telangana Government support the firm's
profitability.
Outlook: Stable
ICRA believes SSBE will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if substantial growth in revenue, profitability, and
better working-capital management strengthen the financial risk
profile. The outlook may be revised to 'Negative' if cash accrual
is lower than expected, or if any major capital expenditure, or
stretch in the working-capital cycle, weakens liquidity.
Key rating drivers
Credit strengths
Experience of promoters in the cotton industry: The promoters have
over four decades of experience in the cotton and oil industry,
and maintain healthy relationships with farmers, traders and
customers resulting in repeat orders from clients.
Proximity to cotton-growing areas: The firm's plant is located
near major cotton-growing area of Telangana, resulting in easy
availability of raw material and savings in transportation costs.
Credit weaknesses
Modest scale of operations: The company's scale of operations is
moderate with revenues of INR95.21 crore during the first five
months of operations during FY2017. However, the company's
capacity utilisation is expected to increase in the near term with
full year of operations from FY2018.
Low pricing power in the highly-fragmented ginning industry: The
ginning industry is highly fragmented with presence of a large
number of small and medium-sized units, which results in stiff
competition. High competition and commoditised nature of the
product result in lower pricing power. The firm's profitability is
also exposed to fluctuations in cotton prices, given the
seasonality in cotton availability.
High gearing and moderate coverage indicators: The gearing of the
company has been high at 5.07 times as on March 31, 2017 owing to
high unsecured loans to fund the firm's working-capital
requirements. The coverage indicators of the company remained
moderate with NCA/Debt at 9.9% and Debt/OPBDITA of 7.83 times.
The firm was established in June 2016, and the company's
operations began from November 2016. The firm was set up as a
cotton ginning and pressing unit with an installed capacity of 48
ginning machines or capacity to process 250 MT of cotton per day.
The unit is a partnership firm and Mr. Santosh Goyal is the
Managing Partner. The partners have vast experience of over 40
years in this field.
SURAT WOVENSACKS: ICRA Hikes Rating on INR8.60cr Loan to B+
-----------------------------------------------------------
ICRA Ratings has upgraded a long-term rating to [ICRA]B+ from
[ICRA]B to the INR13.60-crore fund based facilities bank
facilities of Surat Wovensacks Industries LLP. The outlook on the
long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 8.60 [ICRA]B+ (Stable); Upgraded
from [ICRA]B
Fund based-
Working Capital
Facilities 5.00 [ICRA]B+ (Stable); Upgraded
from [ICRA]B
Rationale
The upgrade in the long-term rating takes into account the
stabilisation of operations and achievement of estimated operating
parameters. Nonetheless, the ratings continue to remain
constrained by company's modest scale of operations, its high
gearing and high working capital intensity. The ratings also take
into consideration the vulnerability of profitability to any
adverse fluctuations in the raw material prices, low bargaining
power with suppliers and limited ability to pass on any adverse
fluctuation to customers because of intense competition in the
woven fabric manufacturing industry.
The rating, however, continue to favourably takes into account the
established customer relationship of promoters through their
association with other group concerns, the stable demand outlook
for the packaging industry and various fiscal benefits available
to the firm that supports profitability.
Outlook: Stable
ICRA believes SWIL will continue to witness moderate revenue
growth driven by the stable demand outlook for woven fabrics. The
outlook may be revised to 'Positive' if substantial growth in
revenue and profitability, strengthens the financial risk profile
supported by infusion of equity. The outlook may be revised to
'Negative' if cash accrual is lower than expected, or if any major
debt funded capital expenditure, or stretch in the working capital
cycle, weakens liquidity.
Key rating drivers
Credit strengths
Established customer relationship along with stable demand outlook
for woven fabrics: The promoters of SWIL have been associated with
textile industry for more than a decade and has established
relationship with various fabric manufacturing units. The high
density poly ethylene and poly propylene (HDPE & PP) fabric is one
of the most preferred packaging options as it is strong,
dependable and economical. This packaging finds application in a
wide range of industries such as cement, food grains, chemicals
and minerals, salt, fertilizers, FIBC's etc resulting in stable
demand outlook for woven fabric.
Various fiscal benefits available from government supports
profitability: Being a new unit in the technical textile sector,
the firm is eligible for incentives under the Central Government's
Technology Up-gradation Fund Scheme (TUFS). Firm is eligible for a
15% capital subsidy in the term loan availed to set up its
manufacturing facility, along with a 6% interest subsidy.
Subsidies such as these are expected to support the company's
profitability going forward.
Credit weaknesses
Average financial risk profile: SWIL commenced commercial
production from August 2016 and recorded an operating income of
INR11.0 crore in FY2017; reflecting modest scale of operations.
The operating profitability stood at 13.1% as per provisional
financials while it reported loss at net loss at 6.4% in FY2017
depreciation and interest cost. The company has adverse capital
structure as reflected by high gearing of 4.1 times as on March
31, 2017 due to debt funded capex and high working capital
requirement. Thus the coverage indicators also remained moderate
with interest coverage ratio of 1.66 times and NCA/Debt of 12% in
FY2017. The working capital intensity stood high at 35% in FY2017
on account of high inventory and receivables as on FY2017 end.
Vulnerability of profitability to fluctuations in raw material
prices; limited bargaining power with suppliers: HDPE/PP granules
and master batch are the major raw materials required by the firm.
Being crude oil derivates, prices of these raw materials witness a
high degree of volatility, which affects the firm's profitability.
Domestically, HDPE production is concentrated among a few
established players such as Reliance Industries Limited, Indian
Oil Corporation Limited, etc, leading to low bargaining power with
suppliers in terms of price as well as the credit period.
Margins subject to pressure from intense competition: The Indian
synthetic or technical woven fabric industry is characterised by
high fragmentation and competition due to low capital and
technical requirement. Intense competition and pricing pressure
stress the profit margins of most industry players.
Established in October 2015, Surat Wovensacks Industries LLP
(SWIL) manufactures high density poly ethylene and poly propylene
(HDPE & PP) woven fabrics (laminated and non-laminated). The firm
started its commercial operations in August 2016 from its
manufacturing facility at Magrol, in Surat, with an installed
capacity to manufacture 3960 Metric Tonnes (MT) fabrics. The firm
is managed by Mr. Anil Pugliya and Mr. Harjeet Singh Chhabra.
In FY2017, the company on a provisional basis reported a net loss
of INR0.70 crore on an operating income of INR10.96 crore.
SV POWER: Ind-Ra Alters Outlook to Neg & Affirms BB- Loans Rating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has undertaken the following
rating actions on SV Power Private Limited's (SVPL) bank loans:
-- INR2,590 mil. Term loan due on March 15, 2028 affirmed;
outlook revised to negative from stable with IND BB-/Negative
rating;
-- INR200 mil. Fund-based working capital limit affirmed;
outlook revised to negative from stable with IND BB-/Negative
rating;
-- INR100 mil. Non-fund-based working capital limit affirmed
with IND A4+ rating.
KEY RATING DRIVERS
The Outlook revision reflects the stoppage of SVPL's power plant
generation due to a turbine blast in May 2017 and the resultant
halt of coal washery operations. ACB (India) Limited, the parent
sponsor ('IND AA-'/Negative), has provided an undertaking to meet
any funding shortfall with regards to the refurbishment of the
power plant to recommence operations at optimal capacity levels.
The ratings are constrained by the company's stressed liquidity
position, attributed to its halted operations and high working
capital requirements. The absence of a debt service reserve
equivalent to six months of principal and interest is a structural
weakness. As per the company, SVPL has requested the lenders to
create the account by end-September 2018.
However, the ratings continue to be supported by the financial
assistance extended by the sponsors, Spectrum Coal & Power Limited
(SCPL, holding company) and ACB (India). SCPL infused INR845
million of equity share capital into SVPL in FY17 and INR640.25
million until end-September 2017. ACB (India) has provided an
unconditional, absolute and irrevocable guarantee for servicing
SVPL's debt; however, the guarantee will be invoked post-default
only.
SVPL is proposing to raise additional debt to the extent of INR500
million from the existing lenders. The debt raised shall be
utilised to repay existing debt obligations. SVPL raised INR190
million of short-term debt from one of the lenders in FY18 and the
repayment will commence from September 2018. As per SVPL's FY17
auditor report, the company has an adequate and appropriate
insurance cover and the insurance claim is expected to be settled
by June 2018. Proceeds from the claim will be used to repay the
additional debt.
The ratings remain supported by the sponsor's track record in
running washery operations since 1999 and the presence of a 30MW
coal reject-based thermal power plant in Chhattisgarh since 2007.
RATING SENSITIVITIES
Positive: Successful commencement and stabilisation of operations
at the power plant and coal washery, and a better-than-expected
operational and financial performance on a sustained basis could
result in a rating upgrade.
Negative: Absent sponsor support, delay in the restoration and
commencement of operations at the power plant and washery and/or a
delay in receiving insurance proceeds could result in a rating
downgrade.
COMPANY PROFILE
SVPL operates a coal washery with a beneficiation capacity of 2.5
million tonnes per annum and a 63-megawatt power plant based on
the washery rejects and reprocessed rejects supplied by ACB
(India).
TEJAS INTERNATIONAL: CRISIL Assigns B Rating to INR34MM Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating on the
long-term bank facility of Tejas International Educational
Institutions (TIEI). The rating reflects the TIEI's exposure to
risks related to initial phase of operations, exposure to intense
competition and its aggressive financial structure. These
weaknesses are partially offset by niche facility offerings, which
help in attracting wider base of students by the school.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 34 CRISIL B/Stable
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition: TIEI faces intense competition
in Bagalkot Chandigarh from around 200 institutes affiliated with
State Board. The sustained inflow of students will depend to a
large extent on the TIEI's ability to offer quality education
through continuous infrastructure development, and by retaining
and recruiting the best faculty
* Aggressive financial structure: The cost for setting the school
is funded by debt to equity ratio of 2.5:1.
Strengths
* Potential for growth available on account of the geographical
loacation of the school: TIEI is a non-profit company incorporated
under the Section 25 of Indian Company's Act, 1956 set up in
Bagalkot, Karnataka. In the Bagalkot district there are 10 ICSE
and CBSE board schools including 1 Kendriya Vidyalaya. However
none of the schools in the region provide residential facilities
and the state of the art extracurricular activities like TIEI. The
school has 19 acre campus with state of the art class room and
other facilities like amphitheatre, gym, sports fields and
swimming pool. These facilities separate TIEI from other schools
in the district.
Outlook: Stable
CRISIL believes that TIEI to benefit from the extensive industry
experience of its promoters in the educational industry. The
outlook may be revised to 'Positive' if the company commences
operations on time and improves its scale of operations and
profitability significantly on a sustained basis thereby leading
to an improvement in its financial risk profile. Conversely, the
outlook may be revised to 'Negative' if adverse regulations impact
TIEI operations deteriorate or in case of a 'larger-than-expected'
debt funded capex thereby leading to deterioration in its
financial risk profile.
TIEI is a non-profit company incorporated under the Section 25 of
Indian Company's Act, 1956. Under the TIEI umbrella, the company
is starting a school with the name Vishal International
Residential School. In this school TIEI is planning to set up a
CBSE syllabus school with hostel facilities and other
extracurricular activities. The school will be set up in Bagalkot,
Karnataka.
VASISHT MARKETING: CRISIL Assigns B+ Rating to INR5.6MM LT Loan
---------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Vasisht Marketing Private Limited
(VMPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 0.4 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 5.6 CRISIL B+/Stable
Cash Credit 5.0 CRISIL B+/Stable
Proposed Cash
Credit Limit 4.0 CRISIL B+/Stable
The ratings reflect Limited Geographical diversity and modest
scale of operations, Limited Bargaining power with the Principal,
Low operating margin due to trading nature of operations. These
rating Weakness are partially offset by Promoters' extensive
experience in the consumer durable distributorship and its
established relation with its key principal Samsung India
Electronics Pvt Ltd.
Key Rating Drivers & Detailed Description
Weaknesses:
* Limited Geographical diversity and modest scale of operations:
The Company has operations in the Krishna District of Andhra
Pradesh. The Company also has modest scale of operations as seen
in the revenues of INR27.3 Crs as on March 31, 2016.
* Limited Bargaining power with the Principal: Given the intense
competition that VMPL faces and the limited entry barriers that
are there for the segment, VMPL has limited bargaining power with
Principal
* Low operating margin due to trading nature of operations: Low
operating margins of 1.5% due to trading activities.
Strengths:
* Partner's extensive experience in the consumer durable
distributorship: Mr. Rukesh who is the main promoter of the
Company and has been working with other dealers before starting
his dealership with Samsung and also has backed 20 years of
experience in Samsung dealership.
* Established relation with its key principal Samsung India
Electronics Pvt Ltd: The Company has been sourcing the mobiles
from Samsung from 1998 and with established relationship of 20
years the Company has established relation with Samsung.
Outlook: Stable
CRISIL believes that of VMPL will continue to benefit over the
medium term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if increase in revenue and
profitability and improved working capital management leads to
improvement in debt-protection measures and considerably stronger
net cash accruals for VMPL. Conversely, the outlook may be revised
to 'Negative' if VMPL's financial risk profile deteriorates on
account of further decline in its revenues and profitability or in
case of a larger-than-expected, debt-funded capital expenditure,
or if its liquidity weakens significantly on account of increase
in its working capital requirements.
Incorporated in 1998 as partnership firm as Vasisth Marketing, the
firm was converted into Pvt Limited company as VMPL in 2015.The
firm has been established by Mr.Rukesh and Ms. Deepika. The
Company is the sole distributor of Samsung consumer durables in
the Krishna District.
The Company has recorded PAT of INR0.06 Crore on operating income
of INR27.2 Crore for the fiscal 2016 vis-a-vis PAT of INR0.06
Crore on operating income of INR22.2 Crore for the fiscal 2015
VENKATESH ASSOCIATES: CARE Raises Rating on INR20cr Loan to BB-
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Venkatesh Associates (VA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 20 CARE BB-; Stable Revised
Facilities from CARE B+; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of VA
is on account of healthy sales velocity of the area launched and
scheduled completion of one of the project, i.e. Oxy Primo. The
rating continues to derive benefit from the experience of the
promoter group in real estate development in Pune, receipt of
approvals and clearances, strategic location of the project having
proximity to key areas of Pune city and marketing advantage due to
presence of the group projects in the same vicinity.
The rating continues to be constrained on account of project
execution risk due to high dependence on customer advances,
competition from other real estate players in the region coupled
with inherent cyclicality associated with the real estate sector
along with partnership nature of constitution leading to limited
financial flexibility.
The ability of the firm to timely execute the project within
envisaged cost supported by timely inflow of customer receivables
and sale of the inventory at envisaged prices are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project execution risk due to high dependence on customer
advances: The project is heavily dependent on customer advances as
it is assumed to fund 44% of the total project cost. However, the
debt has been tied up for the projects. Moreover, the customer
advance to be receivable covers about 25% of the balance
construction cost and total debt. Furthermore, the firm has sold
around 46% of the total saleable area and has received
INR35.75crore as customer advances. The project under the name
'Oxy Primo' has been recently completed in October 2017.
Presence in competitive and cyclical real estate industry: The
firm is exposed to the cyclicality associated with the real estate
sector which has direct linkage with the general macroeconomic
scenario, interest rates and level of disposable income available
with individuals. The real estate industry in India is highly
fragmented with most of the real estate developers having region-
specific presence.
Partnership nature of constitution: VA's constitution as a
partnership firm restricts its access to external borrowing owing
to its partnership nature of constitution. Furthermore, the firm
is exposed to inherent risk of partners' capital being withdrawn
at time of personal contingency. This limits the financial
flexibility of the firm.
Key Rating Strengths
Experienced promoter group in real estate development in Pune
resulting in marketing advantage: VA is a part of Venkatesh Oxy
Group which is one of the established real estate groups of Pune
and has been engaged in real estate business since past more than
a decade. The group has developed six residential projects with an
area of 9.35 lsf. Moreover, VA has a marketing advantage due to
strong presence of its group projects in the same vicinity and
hence reducing the risk of project execution and selling to some
extent.
Receipt of approvals and clearance for the project coupled with
moderate booking status: VA has received all the necessary
clearances and approvals for the projects, related to land
acquisition and construction. Commencement certificate from the
Pune Municipal Corporation has been received. Furthermore, the
said land has also been converted to non-agriculture use and
environmental clearance for the project has also been obtained.
Further, the firm has sold 1.08lsf for its two ongoing projects
and has already received about 81% of the customer advances from
the sold area. Furthermore, 71% of the total area sold has been
registered thereby mitigating the cancellation risk to an extent.
Strategic location of the project: The project has a strategic
location being situated in one of the established localities of
Pune at Wagholi Road which is around 16-17 kilometers from the
centre of Pune. In addition, the project has easy access to basic
civic amenities such as schools, hospitals, colleges, malls,
situated close by and has close proximity to Kharadi IT Park, Pune
International Airport and Pune railway station.
Venkatesh Associates (VA) is a partnership firm (SPV) formed on
August 7, 2012 and belongs to Venkatesh Oxy Group. Currently, VA
is developing two residential projects named 'Venkatesh Oxy
Evolve', and 'Venkatesh Oxy Desire' with a total saleable area of
2.34lakh square feet (lsf), situated at Wagholi (Pune). The total
cost of the projects is to be estimated at INR58.77 crore which is
to be funded by promoter's contribution, term loan from bank and
customer advance in the ratio mix of 0.22:0.34:0.44 The land for
the projects has been acquired by entering into the joint
development agreement (JDA) with the landowners. The project under
the name 'Oxy Primo' has been completed in October 2017.
VIJAY STONE: ICRA Reaffirms B Rating on INR4.94cr Loan
------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating at [ICRA]B to the
INR0.06-crore term loan and INR4.94-crore unallocated limits and
the short-term rating at [ICRA]A4 to the INR5.00-crore fund-based
limits of Vijay Stone Quarries Pvt. Ltd. The outlook on the long-
term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 5.00 [ICRA]A4; Reaffirmed
Term Loan 0.06 [ICRA]B (Stable); Reaffirmed
Unallocated Limits 4.94 [ICRA]B (Stable); Reaffirmed
Rationale
The assigned ratings factor in VSQPL's small scale of operations
in the stone quarrying business, and weak financial profile
characterized by low profitability, modest coverage indicators and
high working capital intensity of operations on account of high
credit period extended to customers and high inventory maintained.
The ratings are also constrained by the high competition and
company's operations being vulnerable to slowdown in the real
estate and construction industry. Further, given that exports
account for company's entire revenues and in the absence of any
hedging policy, it is exposed to foreign exchange fluctuation
risk. The rating, however, derives comfort from the experience of
promoters in the stone quarrying business and easy availability of
stones on account of favourable location of its leased quarries in
Telangana.
Outlook: Stable
ICRA believes Vijay Stone Quarries Pvt. Ltd will continue to
benefit from the extensive experience of its promoters. The
outlook may be revised to 'Positive' if substantial growth in
revenue and profitability, and better working capital management,
strengthens the financial risk profile. The outlook may be revised
to 'Negative' if cash accrual is lower than expected, or stretch
in the working capital cycle, weakens liquidity.
Key rating drivers
Credit strengths
Significant Experience of promoters: The management has more than
two decades of experience in the stone quarrying and export
industry leading to established customer relationships. They have
been involved in quarrying and export of lime stone, sand stone
and slate.
Favourable location of quarries: The company has leased around 5
acres of land in Tandur, Vikarabad District, Telangana; and the
quarry is expected to have sufficient reserves to last for the
entire term of the license which is valid till 2020. Also, there
are massive deposits covering thousands of acres of land spread
from Ranga Reddy district in Telangana to Gulbarga District in
Karnataka which ensures availability of lime stones and slates.
Credit weaknesses
Small scale of operations: VSQPL's has small scale of operations
and operating income has remained stagnant over the last few years
with the operating income increasing marginally from INR8.39 crore
in FY2016 to INR10.04 crore in FY2017, limiting the financial
flexibility.
Low profitability and modest coverage indicators: Thin margins are
inherent to the industry owing to limited value addition in
quarrying of stones. Further, the operating margins decreased from
6.70% in FY2016 to 4.72% in FY2017 owing to write-off of INR0.40
crore bad debts. Net margin have remained low at around 0.48% and
ROCE at 3.06% in FY2017. The coverage indicators are modest with
Total Debt/OPBITDA of 8.62 and NCA/Total Debt of ~9% as on
March 31, 2017.
High competition in the industry and dependence on construction
industry: The operations of the company remains vulnerable to
intense competition emanating from the presence of a several other
stone crushing units in the vicinity thereby pressurizing margins
of the company. Also, the company's operations are vulnerable to
downturns in the construction and real estate industry.
High working capital intensity resulting from high inventory
levels which impacts liquidity: VSQPL's working capital intensity
has been high over the years and remained at ~49% in FY2017 on
account of high inventory maintained and high credit extended to
customers. A part of working capital requirement has been funded
by higher creditor days. High working capital intensity of
operation constrains the liquidity position of the company.
Absence of hedging policy exposes to volatility in foreign
exchange rate: The company derives its entire revenue from
exports. However, the company does not hedge its receivables,
which exposes it to volatility in foreign exchange rate. Any
volatility in foreign exchange rate would impact the margins of
the company.
Vijay Stone Quarries Private Limited was incorporated in 1991 by
Mr M Ramesh and his brothers. The directors have an experience of
more than 25 years in quarrying and export of lime stone and slate
stone. The company is currently involved in the quarrying of lime
stone, sand stone and slate. The entire sale is made in
international market to countries like USA, UK, France, Belgium,
Japan, China and others.
In FY2017, the company reported a net profit of INR0.05 crore on
an operating income of INR10.04 crore, as compared to a net profit
of INR0.08 crore on an operating income of INR8.39 crore in the
previous year.
VINCI GLOBAL: CARE Assigns 'B' Rating to INR4cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Vinci
Global Private Limited (VGPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 4 CARE B; Stable Assigned
Short term bank
Facilities 6 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of VGPL are tempered
by small scale of operations, profitability margins are
susceptible to fluctuations in raw material prices, highly
fragmented industry with intense competition from other players
along with geographic and customer concentration risk. The ratings
are, however, underpinned by the experienced promoters, achieved
total operating income, moderate profit margins during review
period, comfortable capital structure, debt coverage indicators
and stable outlook demand for construction and infrastructure
sector.
Going forward, the ability of the company to increase its scale of
operations and improve profitability margins in competitive
environment, maintain its capital structure and debt coverage
indicators, while managing its working capital efficiently would
be the key rating sensitivities.
Detailed Description of the key rating drivers
Key Rating Weaknesses
Short track record and Small Scale of operations: The company has
short track record of 11 months operations. VGPL was established
in the year 2016. Further, the scale of operations of the entity
marked by total operating income (TOI), remained small at INR3.65
crore in FY17 in eleven months operations coupled with moderate
net worth base of INR0.16 crore as on March 31, 2017 as compared
to other peers in the industry.
Working capital intensive nature of operations: The operating
cycle of the company remained elongated at 117 days in FY17 due to
delay from the debtors, as the payment is received through the
principle contractor which resulted in elongated debtors days.
Further the company pays to its supplier within 40-60 days and the
average working capital utilization was 100% for the last 6 months
ended November 30, 2017.
Medium-term visibility in order book: The company has an order
book of INR157.3 crore as on November 30, 2017 which translates to
3.03x of total operating income of FY17 and the same is likely to
be completed by FY20.The said order book provides revenue
visibility for long term. The entire work order comprise of
Karnataka government resulted in high customer and geographic
concentration risk.
Geographic and customer concentration risk: The confirmed order
book for the firm constitutes 100% of the values of orders from
the Meghalaya and Karnataka which exposes the firm to geographical
concentration risk. Furthermore, 100% of the order book in hand is
from United Global Corporation Ltd, Sri Srinivasa construction
India Pvt Ltd and PSR Elecon Pvt Ltd, which indicates high
dependence on these clients, with subject to successfully getting
the order in tender process. Furthermore, the firm is trying to
increase the customer base which is expected to reduce the
concentration risk in future.
Highly fragmented industry with intense competition from other
players: The company is engaged in construction of civil works,
which is fragmented industry due to presence of large number of
organized and unorganized players in the industry resulting in
huge competition.
Key Rating Strengths
Experience of the promoters for more than one decade in Civil
Construction work: VGPL was incorporated in the year 2015 and has
been in the civil construction industry for more than one decade.
The company is managed by Mr. Vishnu Prasad (Managing Director)
and Mr. Shailesh arvapalli (Director). Mr. Vishnu Prasad is a
qualified MBA and Mr. Shailesh Arvapalli a qualified B Tech
Mechanical and both promoters has more than one decade of
experience in the civil construction industry. Due to long
experience of promoter, they are able to establish long term
relationship with the subcontractors and suppliers of raw
materials.
Achieved total operating income and moderate profit margins during
review period: Total operating income stood at INR3.64 crore in
the first 11 months of FY17 with PBILDT margin at 5.92%.
Furthermore, the PAT margin stood high at 4.15% due to absence of
interest expenses at the back of debt free status of the company.
Comfortable capital structure and debt coverage indicators: The
capital structure of the company is comfortable marked by debt
equity ratio and overall gearing ratio as nil as on March 31,
2017. The company have not availed any bank facilities as on March
31, 2017. However, the capital structure of the company is likely
to be deteriorated in FY18 due to company availed bank overdraft
of INR4 crore during the year. Moreover, the debt coverage
indicators marked by total debt/GCA and interest coverage ratio
also stood comfortable as at the end of FY17.
Stable outlook in construction and infrastructure industry:
Construction & Infrastructure sector is a key driver for the
Indian economy. The sector is highly responsible for propelling
India's overall development and enjoys intense focus from
Government for initiating policies that would ensure time-bound
creation of world class infrastructure in the country. India needs
INR31 trillion (US$ 465 billion) to be spent on infrastructure
development over the next five years, with 70 per cent of funds
needed for power, roads and urban infrastructure segments. The
Planning Commission foresees India's Infrastructure spending to be
in the range of US $ 1 trillion for the 12th plan (2012-17). Also,
India's rate of urbanization is high and the ambitious 100 smart
cities project is in process and would require a number of
infrastructure planning and development efforts. The Indian
construction equipment industry is reviving after a gap of four
years and is expected to grow to US$ 5 billion by FY19-FY20 from
current size of US$ 2.8 billion. Thus, the growth prospects of the
industry are robust
Vinci Global Private Limited (VGPL) was incorporated in the year
May 2016, by Mr. Vishnu Prasad and Mr. Sailesh Arvapalli. The
company is engaged in executing civil construction projects like
construction of water pipeline, rural electrification and power
transmission works, roads and others. VGPL undertakes the works as
sub-contractor from the principal contractors like United Global
Corporation Ltd, Top View Infratech India Pvt Ltd, Sri Srinivasa
Construction Pvt Ltd and others. The promoters of the company is
having more than one decade of experience in civil construction
works and has strong management team who are qualified engineers
with an average 5 years of experience years in construction
business. Currently the company is executing the project in
Meghalaya which is under construction and covering only two states
i.e Telangana, Karnataka and Meghalaya.
VISWATEJA COTTON: ICRA Withdraws B Rating on INR3cr LT Loan
-----------------------------------------------------------
ICRA Ratings has withdrawn the long term rating of [ICRA]B
assigned to the INR7.50-crore bank limits of Viswateja Cotton
Industries.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund
Based-CC 3.00 [ICRA]B; Withdrawn
Long Term-Fund
Based-Term loan 2.67 [ICRA]B; Withdrawn
Long Term-Unallocated 1.83 [ICRA]B ; Withdrawn
Rationale
The rating is withdrawn in accordance with ICRA's policy on
withdrawal and suspension at the request from the company based on
account closure certificate from the lender.
Viswateja Cotton Industries was established in June 2014 as a
partnership firm. The entity is promoted by Ms. K. Padmavathi and
Mr. K. Ramana Rao and is involved in ginning and pressing of
cotton with a capacity of 18 ginning machines and one pressing
machine. It is located at Gajwel, in Medak district of Telangana.
The entity began its commercial operations in February 2015.
VITRA INDIA: CARE Revises Rating on INR4.63cr Loan to B+
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
of Vitra India Glass Private Limited (VIGPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 4.63 CARE B+; Stable Revised
Facility from 'CARE B'
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Vitra India Glass
Private Limited (VIGPL) is constrained by its small scale of
operations, Lack of backward integration vis-a-vis volatility in
raw material prices, working capital intensive nature of
operations and moderately leveraged capital structure. The
aforesaid constraints are partially offset by its experienced
management and strategic location of the plant.
Going forward, the ability of the company to increase its scale of
operations, improve profitability margins and manage working
capital effectively will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management: The main promoter of VIGPL, Mr. Dinesh
Kumar aged about 56 years has more than two decades of experience
in similar line of business and is involved in the strategic
planning and running the day to day operations of the company. He
is being duly supported by the other director's along with a team
of experienced personnel.
Strategic Location of the plant: The plant is strategically
located at Bihta, near Patna (Bihar), in close proximity to the
sources of major raw material, reasonable proximity to end users
with availability of necessary infrastructure (like railways,
roads, ports, airports, power, labour& water).
Key Rating Weaknesses
Small scale of operations: VIGPL is a relatively small player in
the toughened glass business with total operating income and net
profit of INR8.35 crore and INR0.17 crore, respectively, in FY17.
The small size restricts the financial flexibility of the entity
in times of stress. Further, the tangible net worth was also low
at INR2.93 crore as on Mar. 31, 2017. The company has achieved
total operating income of INR7.22 crore in 7MFY18.
Lack of backward integration vis-a-vis volatility in raw material
prices: The company does not have any long term agreement for
supply of input materials (float glass) and hence is exposed to
volatility in the prices of the input materials.
Competition from organized sector players: VIGPL is exposed to
competition from organized sector players in the toughened glass
market. In spite of being capital intensive, the entry barrier in
glass manufacturing segment is low and poses a major challenge to
the company.
Working Capital Intensive Nature of Business: VIGPL is primarily
engaged in manufacturing of toughened glass and accordingly its
operations are working capital intensive. The same is reflected by
the higher working capital requirement for the company and the
average utilization for the same remained at about 98% for the
last 12 months ending on November 30, 2016.
Leveraged capital structure: The capital structure have improved
in FY17 over FY16 with improvement in debt equity ratio and
overall gearing ratio on account of scheduled repayment of term
loans over the period. However, the same remains leveraged marked
by debt equity ratio of 1.93x and overall gearing ratios 2.15x as
on March 31, 2017.
Incorporated in 2012, Vitra India Glass Private Limited commenced
its operations in December 2015. VIGLP was promoted by Kumar
family of Bihar having decade long experience in similar line of
business. VIGPLhas a state-of-the-art toughened glass plant with
an installed capacity of 20,000 sq. meters at its plant located
atSrirampurGaon, BihtaSarmera Road, Danyinwa, Patna. The major
clients of the company are entities like K.B.S.P.L, Baba Glass &
Crockery and Glass & Glass. Mr. Rahul Kumar looks after the day to
day operations of the entity with the help of other three
director's alongwith a team of experienced personnel.
====================
N E W Z E A L A N D
====================
CALLACTIVE LTD: To Be Removed From Companies Office Register
------------------------------------------------------------
Chloe Winter at Stuff.co.nz reports that CallActive Ltd is being
wound up leaving creditors, including former staff and Wellington
ratepayers, more than NZ$2.1 million out of pocket.
Despite a plan to create 2,000 jobs in the capital when it arrived
in 2013, CallActive was put into liquidation in November 2015 due
to unpaid tax, Stuff discloses. Around the same time, its
Australian-based directors, Rick Allan and Phillip Allan, were
declared bankrupt.
Stuff relates that in the final liquidators' report, Colin Owens
and David Vance, of Deloitte, said there were insufficient funds
to pay creditors of the company.
This means there is no money to pay back the Wellington City
Council which invested NZ$300,000 to help the firm set up its call
centre in the capital, or former Call Active staff who are owed
"substantial amounts [of] unpaid wages and holiday pay", or any
other creditors, according to Stuff.
In June, an investigation into the financial records prompted a
call for some people associated with the company to pay up, Stuff
recalls. By December 15, settlements had been reached with the
individuals.
However, there were no other avenues left to recover money,
therefore the company would be wound up owing in excess of
NZ$2.112 million, Stuff states.
"No claims were submitted by employees and therefore we believe
the actual loss to creditors would be significantly greater," the
liquidator's report said, Stuff relays.
Stuff says Messrs. Owens and Vance are now seeking to remove
CallActive from the Companies Office register.
About 60 CallActive workers at the Willeston Street office in
Wellington were made redundant weeks before Christmas two years
ago, Stuff recalls. This came after its Australian branch folded
a month earlier.
Liquidators froze the company's bank account with ANZ, which held
a small amount of money.
HONEY SPECIALTIES: Placed in Voluntary Receivership
---------------------------------------------------
Simon Hartley at Otago Daily Times reports that specialist manuka
honey exporter New Zealand Honey Specialties - trading as the New
Zealand Honey Company - has been placed in voluntary receivership
by its shareholders.
The New Zealand Honey Company, established in 2005, topped
national business growth awards in 2005, at the time being
New Zealand's single largest producer of specialty honeys,
according to the report.
ODT relates that the certified honey producer and exporter is
being kept as a going concern by receivers Insolvency Management
of Dunedin, which has already fielded domestic and international
expressions of interest.
Last year's honey season was counted as one of the worst in about
30 years in the Dunedin area, but the industry was optimistic of a
turnaround this coming season, albeit with rising concerns about
the lack of rain and dry conditions in Central Otago and
Middlemarch, the report recalls.
The UK was New Zealand Honey Company's biggest market, and it also
exports to Hong Kong, Singapore, China and South Korea, from its
Mosgiel factory.
New Zealand Honey Specialties was placed in receivership on
November 24, ODT discloses.
Its directors are Duncan McKinlay, of Auckland, Chris Swann, of
Dunedin, and Peter Ward, of Wanaka, who is the company chairman.
According to ODT, Insolvency Management director Iain Nellies was
contacted and confirmed the voluntary receivership, saying the
company's books were still being assessed and it would be several
weeks before a report was filed.
=================
S I N G A P O R E
=================
K1 VENTURES: Unit Placed Under Members' Voluntary Liquidation
-------------------------------------------------------------
Rachel Mui at The Business Times reports that k1 Ventures Ltd on
Dec. 27, 2017, said that its wholly owned subsidiary, FSHCO
Holdings Pte Ltd, will be placed under members' voluntary
liquidation.
It added that filings will be made in Singapore for the
liquidation, and that this liquidation is not expected to have any
material impact on the net tangible assets, or earnings per share
of the group for the financial year ending June 30, 2018, the
Business Times relates.
k1 Ventures last traded 0.66 per cent, or SGD0.01 higher to
SGD0.76 apiece on Nov. 17, 2017, the report discloses.
According to the report, the firm had suspended trading of its
shares on the Singapore bourse from Nov. 20, 2017, onwards to
"avoid market speculation on the value of the company", it said
previously.
This comes as k1 Ventures disposed of its entire interests in
Chicago-based financial services and investment management holding
company Guggenheim Capital, for about US$221 million on Nov. 17,
2017, the report adds.
Singapore-based k1 Ventures Limited is an investment holding
company, which invests in energy related companies and technology
companies by providing value-added venture capital. The Company
also invests in publicly listed companies and operates in crude
oil production.
MARCO POLO: FY2017 Net Loss Widens to SGD312.7MM
------------------------------------------------
The Strait Times reports that Marco Polo Marine has posted a full-
year net loss of SGD312.7 million, widening from a loss of SGD16.9
million previously.
This was mainly due to an increase in other operating expenses to
SGD253.1 million, compared with SGD10 million for the previous
financial year.
Loss per share worsened to 92.91 cents from five cents last year.
Full-year revenue decreased by 18 per cent to SGD38.6 million, the
Strait Times notes.
According to the report, the offshore support vessel group said it
expects to wrap up the last leg of its debt restructuring exercise
early next year.
About Marco Polo
Singapore-based Marco Polo Marine Ltd (SGX:5LY) --
http://www.marcopolomarine.com.sg/-- engages in marine logistics
services. The Company's segments include Ship chartering
services, which relates to charter hire activities, and Ship
building and repair services, which relates to ship building and
ship repair activities. Its shipping business consists of
offshore support and marine logistics services, and relates to
the chartering of offshore supply vessels (OSVs), which include
anchor handling tug supply vessels (AHTS) for deployment in the
regional waters, including the Gulf of Thailand, Malaysia,
Indonesia and Australia, as well as the chartering of tugboats
and barges to customers, which are engaged in the mining,
commodities, construction, infrastructure and land reclamation
industries. Its shipyard business relates to ship building, as
well as the provision of ship maintenance, repair, outfitting and
conversion services that are carried out through its shipyard in
Batam, Indonesia.
MARCO POLO: Court OKs Indonesian Yard Unit Restructuring
--------------------------------------------------------
Jacqueline Woo at The Strait Times reports that the Batam-based
unit of Marco Polo Marine has been given the approval to place
itself under a Penundaan Kewajiban Pembayaran Utang (PKPU)
suspension of debt payment.
This means Marco Polo has cleared the final hurdle to proceed with
debt restructuring for the holding company and its key shipyard
subsidiary under the two schemes of arrangement filed with
Singapore's High Court, the report says.
The Strait Times recalls that the group in December 2017 won a
majority vote at an extraordinary general meeting in favor of
issuing new securities that is key to its restructuring plan.
In a filing to the Singapore Exchange on Dec. 20, Marco Polo said
that its subsidiary, Marcopolo Shipyard, has obtained the
requisite court declaration made in response to the PKPU
restructuring proposal - namely, that a valid debt restructuring
has been agreed to by Marcopolo Shipyard and the relevant
creditors, the report notes.
Accordingly, the Commercial Court of Medan has endorsed the agreed
debt restructuring under the PKPU restructuring proposal and has
ordered Marcopolo Shipyard and the relevant creditors to comply
with the proposal, the Strait Times adds.
About Marco Polo
Singapore-based Marco Polo Marine Ltd (SGX:5LY) --
http://www.marcopolomarine.com.sg/-- engages in marine logistics
services. The Company's segments include Ship chartering
services, which relates to charter hire activities, and Ship
building and repair services, which relates to ship building and
ship repair activities. Its shipping business consists of
offshore support and marine logistics services, and relates to
the chartering of offshore supply vessels (OSVs), which include
anchor handling tug supply vessels (AHTS) for deployment in the
regional waters, including the Gulf of Thailand, Malaysia,
Indonesia and Australia, as well as the chartering of tugboats
and barges to customers, which are engaged in the mining,
commodities, construction, infrastructure and land reclamation
industries. Its shipyard business relates to ship building, as
well as the provision of ship maintenance, repair, outfitting and
conversion services that are carried out through its shipyard in
Batam, Indonesia.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
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Information contained herein is obtained from sources believed
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firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***