/raid1/www/Hosts/bankrupt/TCRAP_Public/180110.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 10, 2018, Vol. 21, No. 007
Headlines
A U S T R A L I A
BOARDERLANDS PTY: Second Creditors' Meeting Set for Jan. 17
DIANA FERRARI: To Close All Shops as Focus Turns to Footwear
KBL MINING: Revival Contingent on Creditors Owning Mine
KIMBERLEY KAMPERS: Second Creditors' Meeting Set for Jan. 18
C H I N A
CHINA COMMERCIAL: Believes Sorghum Breached Share Exchange Pact
SUNRISE REAL: Posts $9.43 Million 2016 Q3 Net Income
WEST CHINA CEMENT: Moody's Hikes CFR & Sr. Unsecured Rating to Ba3
I N D I A
ADITYA CHANAKYA: CARE Assigns B+ Rating to INR6cr LT Loan
ANDOLE-JOGIPET NAGARA: Ind-Ra Assigns B Rating, Outlook Stable
BARUANAGAR TEA: CARE Assigns B Rating to INR8.74cr LT Loan
BRIAR KNOLL: CARE Lowers Rating on INR4.95cr LT Loan to D
BSCPL INFRASTRUCTURE: CARE Cuts Rating on INR872.49cr Loan to D
ENCORP POWERTRANS: Ind-Ra Assigns 'BB+' Issuer Rating
GAJWEL-PRAGNAPUR NAGARPANCHAYAT: Ind-Ra Assigns B+ Issuer Rating
GOVINDAM PROJECTS: CARE Reaffirms B Rating on INR10cr LT Loan
HINDUSTHAN NATIONAL: CARE Lowers Rating on INR2,063cr Loan to D
KAMACHI INDUSTRIES: Ind-Ra Affirms 'D' Issuer Rating
KANUPAT HIMGHAR: CARE Moves D Rating to Not Cooperating Category
KISSAN HATCHERIES: CARE Reaffirms B+ Rating on INR15.50cr Loan
KUMAR AGRO: CARE Lowers Rating on INR80cr Loan to B+(SO)
MADHU CABLE: CARE Assigns D Rating to INR11.50cr LT Loan
MAHAJYOTI FIBERS: CARE Moves D Rating to Not Cooperating Category
MOKAMA-MUNGER HIGHWAY: Ind-Ra Withdraws Rating on INR3,550M Loan
MARUTI FERTOCHEM: CARE Moves B Rating to Not Cooperating Category
NEUEON TOWERS: CARE Moves D Rating to Not Cooperating Category
P HITESH: Ind-Ra Assigns 'BB+' Issuer Rating, Outlook Stable
RAJESHREE FIBERS: CARE Lowers Rating on INR8cr LT Loan to B+
RATNAGARBHA AGRO: CARE Moves D Rating to Not Cooperating Category
REAL GROW: CARE Moves B+ Rating to Not Cooperating Category
RK TRADE: CARE Revises Rating on INR8cr LT Loan to B
SHRI JAMBHESHWAR: CARE Assigns B Rating to INR3cr LT Loan
SHRI SHAMRAO: CARE Assigns D Rating to INR7.49cr LT Loan
SK OVERSEAS: CARE Reaffirms B+ Rating on INR9.56cr LT Loan
SKM BUILDCON: CARE Moves B+ Rating to Not Cooperating Category
SPEEDY MULTIMODES: Ind-Ra Assigns 'BB-' Rating, Outlook Stable
SPLENDID METAL: CARE Moves D Rating to Not Cooperating Category
SUMETCO ALLOYS: CARE Moves B+ Rating to Not Cooperating Category
UMAK EDUCATIONAL: CARE Moves D Rating to Not Cooperating Category
YSG CABS: CARE Assigns B Rating to INR40cr Long-Term Loan
M A L A Y S I A
KINSTEEL BHD: Appeals Against Suspension, Delisting From Bursa
N E W Z E A L A N D
PROPERTY VENTURES: Liquidator Settles Suit with Former Directors
P H I L I P P I N E S
PHILIPPINE TELEGRAPH: Set to Implement Capital Restructuring Plan
S O U T H K O R E A
BOOYOUNG GROUP: Prosecutors Raid Offices in Graft Probe
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A U S T R A L I A
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BOARDERLANDS PTY: Second Creditors' Meeting Set for Jan. 17
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Boarderlands
Pty Ltd has been set for Jan. 17 at 11:00 a.m. at the offices of
Deloitte, 8 Brindabella Circuit, Brindabella Business Park, in
Canberra Airport, ACT.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 16, 2018 at 4:00 p.m.
Ezio Senatore of Deloitte was appointed as administrator of
Boarderlands Pty on Dec. 3, 2017.
DIANA FERRARI: To Close All Shops as Focus Turns to Footwear
------------------------------------------------------------
Patrick Hatch at The Sydney Morning Herald reports that fashion
brand Diana Ferrari will close its bricks and mortar boutiques
across Australia, scrap its apparel line and focus solely on
footwear as its owner tries to adapt to the tough retail
environment.
Diana Ferrari's owner, the Munro Footwear Group (MFG), said the
37-year-old brand's shoes would continue to be sold online, and
through its Williams and Mathers shops as well as David Jones and
Myer.
MFG will close 14 Diana Ferrari boutiques in the coming months and
three others will be rebranded. Five clearance outlets in Victoria
and one in NSW will remain open.
The nation's largest footwear retailer acquired Diana Ferrari in
June last year when it bought Fusion Retail Brands, which also
owned the Colorado label, the report recalls. This added to its
own stable of vertically integrated brands including Styletread,
Midas, Mollini, Wanted and Django & Juliette.
According to SMH, MFG's chief executive, Jay Munro, said it was
closing Diana Ferrari stores and exiting apparel so it could
"focus on its core business and objective of being Australia's
best footwear company".
"Diana Ferrari is an iconic Australian footwear brand and MFG is
committed through this change to further strengthen the brand
going forward," the report quotes Mr. Munro as saying.
SMH relates that Mr. Munro said Diana Ferrari stores and its
apparel range had been "solid performers" but in the current
retail environment, it was the right strategic decision for the
company to focus solely on footwear.
All affected retail staff would be offered new jobs through MFG's
network of 280 stores, he said, SMH relays.
SMH notes that accounts lodged with the corporate regulator show
MFG's revenue jumped by AUD20 million in the 12 months to July 2,
2017, to AUD57 million, off the back of its acquisitions.
But its after-tax profit fell from AUD2.8 million in 2016 to a
loss of AUD482,894.
The Diana Ferrari stores in Woden, Canberra, and Sydney's
Chatswood, Penrith and Hornsby will close on January 21. The
Miranda, Sydney, and Knox, Melbourne stores will close on
January 28, SMH discloses.
KBL MINING: Revival Contingent on Creditors Owning Mine
-------------------------------------------------------
Stockhead reports that KBL Mining's creditors hold the future of
the company in their hands, but the price has to be right.
Whether the company goes bust, or emerges from administration all
rides on whether interested parties are willing to foot the bill
to take over control of their Sorby Hills mine, Stockhead says.
According to the report, administrators KPMG have three parties
interested in striking a deed of company arrangement (DOCA) to get
KBL, which was placed in administration in September 2016, back on
its feet.
Stockhead relates that the three proposals are contingent on the
creditors purchasing a package of shares that would give them
control of the Sorby Hills lead, zinc and silver mine near
Kununurra in Western Australia.
The report notes that receivers were appointed to KBL in September
by its secured creditor Quintana who took possession of Sorby
Hills in a bid to restart the operation.
However, severe rain prevented the restart and Sorby Hills was put
on care and maintenance about a week after the receivers were
appointed. Stockhead says the AUD80 million mine was originally
scheduled to begin shipping concentrate to China in July of 2016,
but the slump in base metals prices forced KBL in January 2016 to
put Sorby Hills on the backburner until the market improved.
Quintana subsequently exercised its rights over the Sorby Hills
shares and sold them to a new company it controlled, the report
states.
Critical to the success of any deal to pull KBL from
administration is the asking price of that package of shares,
according to the report.
Stockhead says the owner of the shares is now demanding a
"substantially greater" price than previously advised, joint
administrator Matthew Woods told shareholders.
"As such, that price is substantially greater than the price
considered in each of the three DOCA variation proposals."
The interested creditors now have until the end of January to
submit final revised DOCA proposals, Stockhead discloses.
According to Stockhead, KPMG plans to report to creditors by the
end of February regarding the outcome of negotiations.
"We expect we will call a meeting of creditors to consider any
variation to the deed or alternatively to terminate the deed and
wind up the company," Stockhead quotes Mr. Woods as saying.
KIMBERLEY KAMPERS: Second Creditors' Meeting Set for Jan. 18
------------------------------------------------------------
A second meeting of creditors in the proceedings of Kimberley
Kampers Pty Ltd has been set for Jan. 18, 2018, at 10:00 a.m. at
Ballina RSL Club, Canal Road, in Ballina, New South Wales.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 16, 2018, at 4:00 p.m.
Steven Nicols of Nicols + Brien was appointed as administrator of
Kimberley Kampers on Dec. 7, 2017.
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C H I N A
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CHINA COMMERCIAL: Believes Sorghum Breached Share Exchange Pact
---------------------------------------------------------------
China Commercial Credit Inc. disclosed in a Dec. 27, 2017 Form 8-K
filing with the U.S. Securities and Exchange Commission that on
Dec. 21, 2017, it delivered a notice to Sorghum Investment
Holdings Ltd. notifying Sorghum that certain recent actions of
Sorghum constitute a breach of Sorghum's covenants under the Share
Exchange Agreement dated August 9, 2017 by and among the Company,
Sorghum and shareholders of Sorghum.
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.
In a subsequent separate Form 8-K filing with the SEC dated Jan.
3, 2018, China Commercial disclosed that on Dec. 29, 2017, it
received a notice from Sorghum Investment Holdings Ltd. notifying
the Company that the Share Exchange Agreement dated Aug. 9, 2017
by and among the Company, Sorghum and shareholders of Sorghum is
being terminated based on Sorghum's allegation that the Company's
filing of the Form 8-K SEC filing dated Dec. 27, 2017 constituted
a breach of the Agreement.
China Commercial says it reserves the right to seek all damages
and remedies available including but not limited to seeking the
Termination Fee under Section 9.4 of the Agreement, as well as all
costs and expenses (including attorney fees) resulting from any
breach of the Agreement.
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 for the
year ended Dec. 31, 2016, compared with a net loss of US$61.26
million 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.
SUNRISE REAL: Posts $9.43 Million 2016 Q3 Net Income
----------------------------------------------------
Sunrise Real Estate Group, Inc. filed with the Securities and
Exchange Commission its quarterly report on Form 10-Q reporting
net income of $9.43 million on $1.11 million of net revenues for
the three months ended Sept. 30, 2016, compared to a net loss of
$2.85 million on $1.36 million of net revenues for the three
months ended Sept. 30, 2015.
For the nine months ended Sept. 30, 2016, Sunrise Real reported
net income of $18.40 million on $4.06 million of net revenues
compared to a net loss of $6.80 million on $3.71 million of net
revenues for the nine months ended Sept. 30, 2015.
The Company's balance sheet as of Sept. 30, 2016, showed $132.42
million in total assets, $123.71 million in total liabilities and
$8.70 million in total shareholders' equity.
In the first three quarter of 2016, the Company's principal
sources of cash were revenues from its agency sales, receipts in
advance from real estate development projects and property
management business. Most of its cash resources were used to fund
its property development investment and revenue related expenses,
such as salaries and commissions paid to the sales force, daily
administrative expenses and the maintenance of regional offices.
The Company ended the period with a cash position of $10,992,765.
The Company's operating activities provided cash in the amount of
$18,939,915, which was primarily attributable to the receipts in
advance from real estate property development.
The Company's investing activities provided cash resources of
$7,586,281, which was primarily attributable to the disposal of
office property of fixed assets.
The Company's financing activities used cash resources of
$16,116,531, which was primarily attributable to repayments of
bank loan and promissory notes.
The potential cash needs for 2016 will be the repayments of the
Company's bank loans and promissory notes, the rental guarantee
payments and promissory deposits for various property projects as
well as its development projects in Wuhan, GXL project and Linyi.
The Company currently has three bank loans payable, including a
$449,250 (RMB3,000,000) loan and $11,081,494 (RMB74,000,000) loan.
The RMB3,000,000 loan has been extended to March 2017. The
RMB74,000,000 loan will mature in December 2017 and has been
repaid continually with the collection of GXL project pro-sales.
Another loan balance of $7,138,549 (RMB47,669,802) has been
extended for another three years matured in March 2019.
As of Sept. 30, 2016, promissory notes in the principal amount of
$1,434,242 were in default compared to promissory notes in the
principal amount of $1,461,412 that were in default as of
Dec. 31, 2015.
According to Sunrise Real, "Taking into account of our cash
position, available credit facilities and cash generated from
operating activities, we believe that we have sufficient funds to
operate our existing business for the next twelve months. If our
business otherwise grows more rapidly than we currently predict,
we plan to raise funds through the issuance of additional shares
of our equity securities in one or more public or private
offerings. We will also consider raising funds through credit
facilities obtained with lending institutions. There can be no
guarantee that we will be able to obtain such funds through the
issuance of debt or equity or obtain funds that are with terms
satisfactory to management and our board of directors."
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/Z0v0FM
About Sunrise Real Estate
Headquartered in Shanghai, the People's Republic of China, Sunrise
Real Estate Group, Inc., and its subsidiaries' principal
activities are real estate development and property brokerage
services, including real estate marketing services, property
leasing services; and property management services in the People's
Republic of China.
Sunrise Real reported a net loss of US$6.72 million for the year
ended Dec. 31, 2015, compared to a net loss of US$5.21 million for
the year ended Dec. 31, 2014.
RH, CPA, in Bayside, NY, issued a "going concern" opinion in its
report on the consolidated financial statements for the year ended
Dec. 31, 2015, noting that the Company has a working capital
deficiency, accumulated deficit from recurring net losses for the
current and prior years, and significant short-term debt
obligations currently in default or maturing in less than one
year. These conditions raise substantial doubt about its ability
to continue as a going concern.
WEST CHINA CEMENT: Moody's Hikes CFR & Sr. Unsecured Rating to Ba3
------------------------------------------------------------------
Moody's Investors Service has upgraded West China Cement Limited's
(WCC) corporate family and senior unsecured ratings to Ba3 from
B1. The ratings outlook is stable.
RATINGS RATIONALE
"The ratings upgrade reflects Moody's expectation that the
improvement in WCC's revenue and profitability will be
sustainable, supported by higher cement prices, which are driven
in turn by a favorable structural change in the supply and demand
dynamics of its key cement markets," says Gerwin Ho, a Moody's
Vice President and Senior Analyst.
The change in its key markets in Shaanxi, Guizhou and Xinjiang
provinces is driven by the sustained improvement in supply levels
and pricing discipline.
The ratings upgrade comes after the company's announcement on 29
December 2017 that it is likely to post a substantial increase in
net profit for the year ended 31 December 2017 as compared with
its results in 2016.
The positive profit alert reflects a non-recurring foreign
exchange gain, and a rise in revenue resulting from higher average
selling prices for cement. Moody's expects that the improvement in
prices should be sustainable.
In its positive profit alert, WCC indicated that its revenue for
the 11 months ended 30 November 2017 rose about 28% year-on-year.
Moody's expects that WCC's revenue will grow about 29% over the
next 12-18 months, supported by higher sales volumes and average
selling prices when compared with the levels in 2016.
Moody's also expects that WCC's profitability will improve over
the next 12-18 months as against the levels in 2016, with its
gross margin reaching about 25% versus 18.2% in 2016 and its
EBITDA margin registering about 40% versus 35.7% in 2016.
Moody's expectation of an improvement in profitability when
compared to the levels in 2016 is based on the fact that the rise
in average selling prices has outpaced the rise in the unit cost
of goods sold. This situation partly reflects the company's
improved efficiency.
"The upgrade also reflects an improvement in capital structure, as
evident by WCC's improved leverage and liquidity, as a result of
positive free cash flow generation," adds Ho.
WCC's improved cash flow from operations and prudent approach to
capital expenditure are behind the positive free cash flow
generation, which in turn supports the improvement in leverage and
liquidity.
In particular, WCC recorded positive free cash flow of RMB690
million in 2016 and RMB857 million in the 12 months ended June
2017. Moody's expects that the company will remain free cash flow
positive over the next 12-18 months.
Moody's further expects that WCC's debt leverage - as measured by
debt/EBITDA - will improve to about 1.8x over the next 12-18
months from 3.0x in 2016, supported by growth in EBITDA and a
reduction in debt. This level of leverage supports the company's
Ba3 corporate family rating.
Moody's says that WCC's positive free cash flow should help the
company generate sufficient cash, such that its cash to short-term
debt will remain well above 100% over the next 12-18 months versus
106% in 2016.
WCC has extensive experience and a long track record in the cement
industry, with its operations beginning in the mid-1990s. As a
result, the company has established a track record of operating
through industry cycles, which helps it to navigate the cyclical
cement industry.
WCC's Ba3 corporate family rating reflects the company's dominant
market share in cement production in southern Shaanxi Province and
a long track record of operations.
The rating also considers WCC's business synergies with Anhui
Conch Cement Company Limited (Conch, A3 stable) and Conch's
technical support for WCC. Conch held a 21.2% stake in WCC at the
end of June 2017.
However, the rating is constrained by WCC's: (1) small scale; (2)
exposure to government spending levels and economic policies; and
(3) limited pricing power.
The stable ratings outlook reflects Moody's expectation that WCC
will maintain its profitability levels, prudent financial
management and adequate liquidity.
WCC's ratings could be upgraded if the company can demonstrate:
(1) increased scale and greater geographic diversification; (2)
continued prudence in capital expenditure, expansion and
acquisitions; (3) continued prudence in financial management, such
that debt/EBITDA stays below 1.5x on a sustained basis; and (4)
continued sound liquidity, such that its cash balance fully covers
its short-term debt.
On the other hand, downward ratings pressure could emerge if WCC's
financial or liquidity position, or both, weaken because of
falling revenue, rising costs, aggressive acquisitions or
unexpected shareholder distributions.
Financial indicators of a ratings downgrade include an EBITDA
margin below 25%-30%, or debt/EBITDA exceeding 3.5x-4.0x, or
adjusted debt/capitalization exceeding 42%-45% on a sustained
basis.
Any reduction in Conch's support for or level of ownership in WCC
would be negative for WCC's ratings.
The principal methodology used in these ratings was Building
Materials Industry published in January 2017.
West China Cement Limited is one of the leading cement producers
by capacity in Shaanxi Province. At the end of June 2017, the
company's annual cement production capacity measured 29.2 million
tons. Its revenues totaled RMB2.1 billion in 1H 2017.
The company was 32.4%-owned by its founder and chairman, Mr. Zhang
Jimin, at June 30, 2017, and 21.2% by Anhui Conch Cement Company
Limited as of the same date.
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I N D I A
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ADITYA CHANAKYA: CARE Assigns B+ Rating to INR6cr LT Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Aditya
Chanakya Group (ACG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 6 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of ACG is constrained
by the small scale of operations with low capitalisation, weak
capital structure and debt coverage indicators, and working
capital intensive nature of operations. The rating is further
constrained by its presence in a highly fragmented industry, low
order book position and partnership nature of constitution.
The rating however, derives strength from the extensive experience
of the partners in construction industry, comfort from price
escalation clause embedded in the contracts and moderate profit
margins.
Ability of the firm to further increase its scale of operations
while improving its solvency position while maintaining liquidity
remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with low capitalization: The scale of
operations remained small with total operating income (TOI) and
partner's capital base of INR10.50 crore and INR1.89 crore as on
March 31, 2017. Furthermore, owing to low capital base of the firm
financial flexibility is restricted.
Weak capital structure and debt service coverage indicators: The
capital structure of the firm remained weak on account of higher
utilization of working capital bank borrowings. Moreover, higher
reliance on debt with lower accruals led by thin profit margins
resulted in moderate and debt coverage indicators.
Working capital intensive nature of operations: The working
capital cycle of the firm is stretched owing to high gross current
asset days of 288. The firm is indirectly dependent on the
recovery of funds from government agencies being a small size sub-
contractor. The working capital requirement is met by a cash
credit limit, which was utilized in the range of 90-96% during the
last 12 months ended November 2017.
Low order book position: ACG has a low outstanding order book
position as on November 30, 2017 which is to be executed over a
period of 18 months providing only short-term revenue visibility.
Furthermore, timely execution of these projects would be critical
for maintaining adequate cash flows of the firm.
Fragmented nature of business: ACG operates in the construction
industry which is characterized by high competition due to low
entry barriers, high fragmentation and presence of a large number
of players in the organized and unorganized sector. Thus the
entities in present in the segment have a low bargaining power
vis-a-vis their customers.
Partnership nature of constitution: The partnership nature of
entity limits its financial flexibility in the time of contingency
and also poses a risk of withdrawal of capital by partners.
Key Rating Strengths
Experienced partners: The firm is spearheaded by Mr. Dhananjay
Shende and Mr. Janavi Yerpuda. The partners are well versed with
the intricacies of the business on the back of about one decade
experience in construction sector through ACG. Being in the
industry for about a decade, the partners have established good
relationship with labor contractors and the material suppliers
resulting in smooth execution of projects and regular receipt of
orders from them.
Moderate profitability margins: The PBILDT margin has improved
significantly in FY17 owing to decline in raw material cost and
remained in the range of 12-18% during last three years. Moreover,
PAT margin has also seen a significant improvement in FY17.
Comfort from price escalation clause in all the contracts: The
contracts in hand are from various players and all contracts have
price escalation clause. The escalation amount is pegged to a
basket of construction commodities. This mitigates the risk
arising out of adverse movement in raw material price and labour
cost to an extent.
ACG was established in the year 2006 as partnership firm by Mr.
Dhananjay Shende and Mr. Janavi Yerpuda. The firm is engaged in
civil construction and within civil construction it undertakes the
constructions of construction of buildings, and civil structures.
The firm has its presence in Maharashtra state and receives order
from private players as sub contract.
ANDOLE-JOGIPET NAGARA: Ind-Ra Assigns B Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Andole-Jogipet
Nagara Panchayat (AJNP) a Long-Term Issuer Rating of 'IND B'. The
Outlook is Stable.
KEY RATING DRIVERS
The rating reflects AJNP's poor civic infrastructure facilities as
indicated by lack of proper water supply services, sewerage and
storm water drainage network, and sewerage treatment facility. The
scarcity of proper civic amenities provided by the municipality
could hinder the growth of the town.
AJNP's revenue size is small and own revenue source comprises tax
(45.44% of total revenue in FY17) and non-tax revenue (48.23%).
Revenue receipts grew at a CAGR of 22.68% over FY14-FY17
(Provisional) to INR10.51 million (FY14: INR5.69 million). ANP's
tax revenue increased 114.87% yoy to INR4.44 million in FY16
(FY17P: up 16.10% yoy to INR5.15 million) due to a rise in the
overall demand after it was upgraded to nagara panchayat. As per
FY16, per capita revenue generation was INR481. However, AJNP has
ample scope of increasing its revenue by reducing non-revenue for
water, improving cost recovery for water by metering of water
connections, and improving property and water tax collection
efficiency.
AJNP's capital income peaked at INR93.74 million in FY16 and was
lowest at INR14.91 million in FY15. The capital
expenditure/capital income ratio during FY14-FY17P averaged at
0.22x. Panchayat never overutilised its capital income during
FY14-FY17P; its peak utilisation was 0.51x in FY17P.
The rating benefits from AJNP's low dependency on the state
government (compensation in lieu of stamp duty and revenue grants
and contributions). Revenue compensation and revenue grants
cumulatively contributed an average 6.32% to the total revenue
income during FY14-FY17P. AJNP is currently executing projects
worth INR39.50 million granted under the 14th Finance Commission,
Development Plan and Schedule Castes Sub-Plan.
RATING SENSITIVITIES
Positive: A significant improvement in AJNP's infrastructure
facilities and an increase in revenue size would lead to a
positive rating action.
Negative: A significant deterioration in financial performance and
failure to improve civic services in the town would lead to a
negative rating action.
COMPANY PROFILE
AJNP, situated in the Sangareddy district of Telangana, was
upgraded to nagara panchayat on March 22, 2013 from
gramapanchayat. It is almost 90km away from the state capital,
Hyderabad. As per 2011 census, the town's population was 18,588.
AJNP is responsible for the provisioning and governance of civic
services in the town.
BARUANAGAR TEA: CARE Assigns B Rating to INR8.74cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Baruanagar Tea Estates Private Limited (BTEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 8.74 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Baruanagar Tea
Estates Private Limited is constrained by its small scale of
operation and low profitability margin, volatility associated with
tea prices, susceptible to vagaries of nature, fragmented and
competitive nature of industry, and working capital intensity
nature of operation. However, the aforesaid constraints are
partially offset by its experienced promoters and established
track record of operation, satisfactory capacity utilization in
line with recovery rate, satisfactory leverage ratios with
moderate debt coverage indicators and backward integration for its
raw materials.
The ability of the company to grow its scale of operations and
improve its profit margins and ability to manage working capital
effectively would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters and established track record of operation
Smt. Lakhimi Borooah (Director) who has around 6 decades of
experience looks after the day-to-day operation of the company.
She is also supported by other directors Mr. Ashish Phookan, Mrs.
Jahnabi Phookan, Mr. Arjun Thekedath and Mrs. Atreyee Borooah who
have 45 years, 30 years, 25 years and 20 years of experience
respectively in the similar line of business. BTEPL was
incorporated in 1995. Since its inception, the company has been
engaged in tea manufacturing and processing business. The company
has long track record of operation. Over the years, BTEPL has been
able to grow over the years by constantly increasing the quality
of manufactured tea.
Satisfactory Capacity utilization in line with recovery rate
Capacity utilization of the tea processing unit of BTEPL has
remained at satisfactory level during the last three years.
Moreover, the average recovery rate for BTEPL is also in line with
the industry average.
Satisfactory Leverage ratios with moderate debt coverage
indicators: Capital structure of the company remained comfortable
marked by long term debt equity and overall gearing at 0.33x and
0.73x respectively in FY17. However, interest coverage ratio was
low due to operating loss in FY17. Interest servicing is done from
promoter's contribution
Backward integration for its raw material: The company has its own
tea garden, which provides it the flexibility to produce and
supply tea, as per the demand scenario. Most of its requirement of
green leaf is met through its own tea estate.
Key Rating Weaknesses
Small scale of operation and low profitability margin: Baruanagar
Tea Estates Private Limited is a relatively small player in the
tea industry with total operating income and net loss of INR22.08
crore and INR2.21 crore, respectively, in FY17. The total capital
employed was at INR12.82 crore as on March 31, 2017. This apart,
the PBILDT and PAT margins were negative during FY17 due to lower
production on account of natural calamity occurred in the region.
The company has achieved sales of around INR22 crore during
8MFY18. The small size restricts the financial flexibility of the
company in times of stress and it suffers on account of economies
of scale.
Volatility associated with tea prices: The prices of tea are
linked to the auctioned prices, which in turn, are linked to
prices of tea in the international market. Hence, significant
adverse price movement in the international tea market affects
BTEPL profitability margins. Further, tea prices fluctuate widely
with demand-supply imbalances arising out of both domestic and
international scenarios. Tea is a perishable product and demand is
relatively price inelastic, as it caters to all segments of the
society. While demand has a strong growth rate, supply can vary
depending on climatic conditions in the major tea growing
countries. Unlike other commodities, tea price cycles have no
linkage with the general economic cycles, but with agro-climatic
conditions.
Susceptible to vagaries of nature: Tea production, besides being
cyclical, is susceptible to vagaries of nature. BTEPL's tea
processing unit is located in Charaideo district of Assam, the
second largest tea producing state in India. However, the region
has sometimes witnessed erratic weather conditions in the past.
Though demand for tea is expected to have a stable growth rate,
supply can vary depending on climatic conditions in the major tea
growing areas. Therefore adverse natural events have negative
bearing on the productivity of tea gardens in the region and
accordingly BTEPL is exposed to vagaries of nature.
Fragmented and competitive nature of industry: While the tea
industry is an organized agro-industry, it is highly fragmented in
India with presence of many small, mid-sized and large players.
There are about 1000 of tea brands in India, of which 90% of the
brands are represented by regional players while the balance of
the 10% is dominated by big corporate houses. This, coupled with
the growing shift from loose to branded tea among consumers, would
further intense the competition for BTEPL.
Working capital intensive nature of operation: BTEPL's business,
being manufacturing and processing of tea, is working capital
intensive nature. Different types of processes involved in tea
manufacturing like withering, fixing, oxidation, rolling, drying
and aging. This apart more employee are required. Accordingly, tea
manufacturing and processing business is working capital intensive
in nature. Accordingly, the average working capital utilization
remained high at around 95% during the last 12 months ended
November 30, 2017.
Baruanagar Tea Estates Private Limited (BTEPL) was incorporated in
October 1955. Since its incorporation the company is engaged in
manufacturing and processing of tea. The manufacturing unit of the
company is located at Charaideo district of Assam with an
installed capacity of 2000000 Kgs per annum. The company has its
own tea garden at Sundarpur Tea Estate at Charaideo district of
Assam. The company sells its tea under the brand name of Konyak
through auction and through broker. The Registered office of the
company is located at ETB House, 191 GNB, Road Chandmari,
Guwahati781003, Assam. Smt. Lakhimi Borooah (Director) who has
around 6 decades of experience looks after the day to day
operation of the company. She is also supported by other directors
Mr. Ashish Phookan, Mrs. Jahnabi Phookan, Mr. Arjun Thekedath and
Mrs. Atreyee Borooah who have 45 years, 30 years, 25 years and 20
years of experience, respectively, in similar line of business.
BRIAR KNOLL: CARE Lowers Rating on INR4.95cr LT Loan to D
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Briar Knoll Mills Private Limited (BKM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 4.95 CARE D Revised from
Facilities CARE BBB-; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of BKM
takes into account the receipt of communication from the banker
indicating that the account has been classified as Non-performing
asset. Further, CARE has withdrawn the rating assigned to the
proposed facilities with immediate effect, as the company has not
availed any amount under the same.
Detailed description of the key rating drivers
Key Rating Weaknesses
NPA Classification from Bank: CARE is in receipt in a
communication from Indian Overseas Bank (IOB) that the account has
been classified as Non-performing asset.
Small scale of operations: BKM commenced its operations during
November 2014 and the scale of operations of the company remained
small with a total income of INR30.49 crore and PBIDT of INR4.53
crore during FY17.
Key Rating Strengths
Promoter's experience in the textile business: BKM is a 100%
subsidiary of Briar Knoll Textile Private Limited (BKT). The
Company is managed by a team of professionals with vast experience
in their functional areas of Production, Marketing and Finance.
Briar Knoll Mills Private Limited (BKM) was incorporated in August
1, 2012 and started commercial operations during November 2014.
BKM is engaged in manufacture and sale of fine linen fabrics for
home decor both domestic and internationally which is used as
input to produce Bed Sheets, Duvets, Curtains and Upholsteries. As
on November 30, 2017, BKM has 24 Rapier looms with installed
capacity to produce 12.8 lakh metres of fabrics per annum at its
facility in Madurai, Tamilnadu.
BSCPL INFRASTRUCTURE: CARE Cuts Rating on INR872.49cr Loan to D
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
BSCPL infrastructure Limited (BSCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 872.49 CARE D Revised from
Facilities CARE BB-; Stable
Short-term Bank 80.00 CARE D Revised from
Facilities CARE A4
Long-term/Short- 2,611.58 CARE D Revised from
term bank Revised from CARE BB-;
facilities Stable/CARE A4
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the bank facilities to the
BSCPL Infrastructure Ltd takes is on account delays in debt
servicing at the back of liquidity constraint.
Key rating weakness:
Delays in debt servicing: There are delays in debt servicing on
account of liquidity constraint. However, the same has been
regularized subsequently.
Working capital intensive nature of operations: Operating cycle of
the company during FY17 has remained stretched and has
deteriorated compared to FY16 on the back of higher inventory
period. The high inventory period is on account of high work in
progress, which is on account of slow movement of projects.
Equity Commitment towards its SPV's: BSCPL is an investment
vehicle for the BSCPL group in the infrastructure sector. The
company has a significant amount of equity commitment towards its
SPV's. On account of lack of sufficient cash flows, the company is
proposing to liquidate some of its road assets to meet the equity
commitments.
Key rating strengths
Steady growth in total operating income and profitability margins:
The total operating income of the company grew by around 10% from
INR966.71 crore in FY16 to INR1065.03 crore in FY17 on account of
increase in income from execution of orders. With execution of
high margin projects, the profitability margins of the company
have improved during the year.
Healthy and diversified order book position: The company has a
healthy and diversified order book of INR6022.99 crore as on
September 30, 2017 which provides revenue visibility for the
period FY18-FY20. About 90% of the order book constitutes EPC
contract orders.
Improved capital structure: The overall gearing of the company is
comfortable at 0.97x as on March 31, 2017 as against 1.20x as on
March 31, 2016 on account of repayment of term loans and accretion
of profits to net worth. The interest coverage ratio has also
improved to 1.66x in FY17 as against 1.41x in FY16 on back of
increase in PBILDT. Debt coverage indicators total debt to GCA has
remained high at 11.89x as on March 31, 2017 (as against 12.73x as
on March 31, 2016) on back of high debt levels.
Experienced promoters and management team: BSCPL has been
established by Mr. Bollineni Krishnaiah, the Chairman and his
brother Mr. Bollineni Seenaiah, the Managing Director of the
company. It is a Hyderabad-based conglomerate with interests in a
wide range of businesses including roads, bridges, railways,
airports and ports. Besides infrastructure, the group has
interests in real estate development, Power and steel sector,
stone crushing, education and hospitals (Krishna Institute of
Medical Sciences (KIMS).
BSCPL infrastructure Limited (erstwhile B Seenaiah & Co Projects
Limited; BSCPL) is the flagship cum holding company of the BSCPL
group. BSCPL acts as an investment vehicle of the BSCPL group for
all its investments in the infrastructure sector and is ultimate
holding company of diversified infrastructure assets of the group.
BSCPL at a standalone level is engaged in executing EPC contracts
for roads and irrigation projects. It also develops, operates and
maintains national and state highways. On a consolidated basis,
BSCPL's assets are divided into three major segments i.e. EPC for
infrastructure projects (Roads, Bridges, Airports, Railways,
Irrigation works etc), real-estate and BOT projects. It conducts
and operates through three subsidiaries, three step down
subsidiaries and five associate companies as on March 31, 2017.
BSCPL has spread its operations in India, Afghanistan, Dubai and
Nepal.
ENCORP POWERTRANS: Ind-Ra Assigns 'BB+' Issuer Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Encorp Powertrans
Private Limited (EPPL) a Long-Term Issuer Rating of 'IND BB+'. The
Outlook is Stable. The instrument-wise rating actions are:
-- INR240 mil. Fund-based working capital limit assigned
with IND BB+/Stable/IND A4+ rating; and
-- INR310 mil. Non-fund-based working capital limit assigned
with IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect EPPL's increasing-but-moderate scale of
operations, as well as moderate credit metrics. Revenue increased
at a CAGR of 60.8% to INR1,084.3 million over FY13-FY17, driven by
an improved order book position. Moreover, revenue was up 147.8%
yoy in FY17 due to timely project execution. Ind-Ra expects
revenue to grow in FY18, considering it had an unexecuted order
book position of INR1,329 million (1.2x of FY17) as of October
2017. As per interim financials for 1HFY18, revenue was about
INR480 million.
Moreover, in FY17, interest coverage (operating EBITDA/gross
interest expense) was 2.3x (FY16: 1.7x) and net leverage (total
adjusted net debt/operating EBITDAR) was 4.5x (FY16: 4.2x). The
improvement in interest coverage was driven by proportionately
higher increase in absolute EBITDA than that in gross interest
expense, while the deterioration in net leverage was due to
enhanced utilisation of the working capital limits in 4QFY17.
The ratings factor in EPPL's moderate liquidity position,
indicated by an average peak utilisation of the cash credit limits
of 90% for the 12 months ended November 2017 on account of the
working capital-intensive nature of the business. The net cash
conversion cycle was around 152 days in FY17 (FY16: 140 days).
The ratings, however, are supported by a comfortable, albeit
declining, EBITDA margin, which stood at 9.1% in FY17 (FY16:
10.4%). The decline in EBITDA margin was due to the company's
strategy to push sales by bidding competitively.
The ratings are also supported by the promoters' around decade-
long operating experience in the fabrication of power transmission
towers that has helped EPPL in obtaining orders easily amid
intense competition.
RATING SENSITIVITIES
Negative: A decline in revenue and/or EBITDA margin leading to
deterioration in the credit metrics on a sustained basis and/or
any deterioration in the net cash conversion cycle leading to a
stressed liquidity will be negative for the ratings.
Positive: Substantial revenue growth and/or a rise in EBITDA
margin leading to an improvement in the credit metrics on a
sustained basis could lead to a positive rating action.
COMPANY PROFILE
Formed in 2008, EPPL is primarily engaged in the fabrication of
power transmission towers. It also undertakes galvanisation work
for fabricated steel structures. Its manufacturing facility is at
Tarapur, Maharashtra.
GAJWEL-PRAGNAPUR NAGARPANCHAYAT: Ind-Ra Assigns B+ Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Gajwel-Pragnapur
Nagarpanchayat (GPNP) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable.
KEY RATING DRIVERS
The rating is constrained by GPNP's limited revenue size. Its
total revenue income declined 10.12% yoy to INR35.54 million in
FY17 due to a fall in assigned revenues and compensations. On
average, its tax and non-tax revenue contributed 28.57% and 9.00%
to the total revenue income over FY14-FY17, respectively. GPNP's
revenue margin was volatile (between negative 23.39% and 71.46%)
over FY14-FY17 due to lower revenue than expenditure. It has ample
scope for increasing its revenue by reducing non-revenue for
water, improving cost recovery for water by metering of water
connections, and improving property and water tax collection
efficiency.
The rating is also constrained by inadequate civic infrastructure
in Gajwel-Pragnapur. The town lacks proper water supply services,
sewerage and storm water drainage networks, and sewerage treatment
facility. This puts pressure on GPNP's finances. According to Ind-
Ra, huge funding is required to provide proper civic services in
the town.
GPNP's capital income peaked at INR1,376.00 million in FY14 and
was the lowest at INR104.70 million in FY16. GPNP witnessed full
utilisation of capital income over FY14-FY16. However, GPNP has
not received any capital income in FY17.
The rating is further constrained by GPNP's high dependency on the
Telangana government. It receives compensation in lieu of stamp
duty, and revenue grants and contributions. Revenue compensation
and revenue grants contributed an average 62.43% to the total
revenue income during FY14-FY17.
The rating, however, is supported by Ind-Ra's expectations of a
significant rise in revenue of GPNP in view of development works.
The Telangana government has established a separate authorised
body, Gajwel Area Development Authority, for the overall
development of the constituency. The body has undertaken various
developments works, involving an estimated cost of INR987.2
million.
RATING SENSITIVITIES
Negative: Any significant deterioration in the financial
performance of GPNP and no improvement in the civic infrastructure
in the town would trigger a negative rating action.
Positive: Any significant improvement in Gajwel-Pragnapur's
infrastructure and any increase in the revenue size of GPNP would
trigger a positive rating action.
COMPANY PROFILE
Gajwel-Pragnapur is a town in the Siddipet district of Telangana.
The town is 66km away from the state capital, Hyderabad. In 2012,
Gajwel-Pragnapur (erstwhile Gajwel Gram Panchayat) was constituted
as a nagarpanchayat. According to the 2011 census, the town had a
population of 37,881 and had 9,011 households. GPNP is
responsible for the provisioning and governance of civic services
in the town.
GOVINDAM PROJECTS: CARE Reaffirms B Rating on INR10cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Govindam Projects Private Limited (GPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.00 CARE B; Stable Reaffirmed
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of GPPL is continue to
remain constrained by its small scale of operation with low
profitability margin, lack of backward integration vis-a-vis
volatility in raw material prices, working capital intensive
nature of operation, weak debt coverage indicators and its
presence in an highly competitive and fragmented industry. The
rating, however, continues to derive strength from its experienced
promoter and proximity to raw material sources.
Going forward, the ability of the company to improve its scale of
operations along with profitability margins and efficient
management of working capital will the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses: Small scale of operation with low
profitability margin: The scale of operations of the company
remained small with a net loss of INR2.28 crore (net loss of
INR2.86 crore in FY16) on the total operating income of INR48.34
crore (Rs.27.40 crore in FY16) in FY17. Apart from this, the total
capital employed also remained low at INR17.98 crore as on March
31, 2017. The small size restricts the financial flexibility of
the company in times of stress and deprives it from scale
benefits. Moreover, the company has booked turnover of INR51.06
crore with a PAT of INR1.79 crore in 8MFY18.
Lack of backward integration vis-a-vis volatility in raw material
prices: GPPL does not have any backward integration for its basic
raw material (like iron ore, non-coking coal, dolomite etc.) and
is required to purchase the same from open market. Furthermore,
the company does not have any long term contracts for procurement
of raw materials. Since, the raw material is the major cost driver
(88.19% of total costs during FY17) and its prices are volatile in
nature, the profitability margin of the company is susceptible to
fluctuation in raw material prices. Highly competitive and
fragmented industry: The spectrum of the steel industry in which
the company operates is highly fragmented and competitive marked
by the presence of numerous players in northern and eastern India.
Hence the players in the industry do not have pricing power and
are exposed to competition induced pressures on profitability.
This apart, GPPL's products being steel related, it is subjected
to the risks associated with the industry like cyclicality and
price volatility.
Working capital intensive nature of operation: GPPL's business,
being manufacturing of sponge iron, is working capital intensive
marked by high average inventory period on account of company's
decision to stock raw materials to avoid price fluctuation risk
along with slow movement of finished goods due to lesser demand.
The same has resulted in elongated operating cycle ranging between
56 days to 90 days during FY15 to FY17. The aforesaid reason led
to high utilization of its bank borrowing at around 90% during the
last 12 months ended on Nov.30 2017.
Moderately leveraged capital structure and weak debt coverage
indicators: The capital structure of the company remained
moderately leveraged as on March 31, 2017 marked by overall
gearing ratios at 1.28x. The debt coverage indicators of the
company remained weak marked by its negative interest coverage
during last two years. However, the company is regular in its debt
servicing. The company has served its debt obligations in FY17
through cash credit.
Key Rating Strengths
Experienced promoters: GPPL is managed by Pradeep Kr Khemka,
Managing Director, with the help of other three directors. The
directors are having around three decades of experience in iron
and steel industry.
Proximity to raw material sources: GPPL plant is located at
Rourkela in Odisha, which is also in proximity to the steel and
mining areas of West Bengal and Jharkhand. Hence, its presence in
the steel and mining region results in benefits derived from a
lower logistic expenditure (both on transportation and storage),
easy availability and procurement of raw materials at effective
prices.
GPPL was incorporated during February 2003 to initiate a sponge
iron manufacturing business. The company has set up its
manufacturing unit at Kuarmunda, Rourkela in Odisha with an
installed capacity of 60,000 MTPA. During FY16 the company has
initiated an iron ore crusher unit in its existing location.
HINDUSTHAN NATIONAL: CARE Lowers Rating on INR2,063cr Loan to D
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Hindusthan National Glass & Industries Limited (HNG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2,063.00 CARE D Revised from
Facilities CARE B+; Stable
Long-term/Short- 600.00 CARE D/CARE D Revised from
term Bank CARE B+; Stable/CARE A4
Facilities
NCD-Series-III 200.00 CARE C; Negative Revised
from CARE B+; Stable
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to bank facilities/
instruments of HNG takes into account the ongoing delays in
servicing of the bank facilities by the company. There are
instances of devolvement of LC, which are yet to be regularised.
The liquidity position of the company has been severely impacted
due to continued high level of operational loss in FY17 (refers to
the period April 1 to March 31) and cash loss in H1FY18. The loss
is on account of subdued demand in the industry, which has led to
sub-optimal capacity utilisation level.
The ratings also take note of the experience of the promoters and
established position of the company in the glass industry.
Outlook: Negative
The 'Negative' outlook reflects expected continuation of stress on
the liquidity till improvement in the demand scenario and infusion
of funds by the promoters as envisaged. The outlook may be revised
to 'Stable' if the company is able to reduce losses and improve
profitability.
Detailed Description of Key Rating Drivers
Key Rating Weaknesses
Ongoing delays in debt servicing
There are instances of LC devolvement, which are yet to be
regularised.
Continued losses resulting in stressed liquidity position
The company's total operating income declined by 7% y-o-y from
INR1975.51 crore in FY16 to INR1853.52 crore in FY17 on account
subdued demand and stagnant realisations. PBILDT margin declined
from 13.50% in FY16 to 10.42% in FY17. Accordingly, with
relatively stable capital charges, operating loss increased from
INR187.36 crore in FY16 to INR219.81 crore in FY17. However, HNG
reported extraordinary income of INR94.59 crore in FY17 on
disposal of its entire shareholding in a subsidiary. Consequently,
the net loss reduced from INR182.31 crore in FY16 to INR127.11
crore in FY17 and the company achieved GCA of INR47.75 crore.
PBILDT interest coverage was below unity for FY17. The company
made interest payments through other income and utilisation of
working capital borrowings.
During H1FY18, HNG incurred net loss of INR137.53 crore on total
operating income of INR897.90 crore as compared to net profit of
INR16.95 crore on total operating income of INR912.13 crore during
H1FY17. The cash loss has resulted in the stressed liquidity
position of the company.
Key Rating Strengths
Long track record of the company with established market presence
HNG, having track record of over six decades, is a leading
manufacturer of container glass and has a pan India presence. It
is the largest container glass player in the country.
Experienced promoters
HNG was promoted by late Mr. C. K. Somany, who was a renowned
technocrat having over 60 years of experience in glass technology.
Presently his two sons, Mr. Sanjay Somany (Chairman) and Mr. Mukul
Somany (Vice Chairman), manage the overall affairs of the company.
They have an experience of over two decades in the container glass
industry.
HNG, incorporated in February 1946, was promoted by late Mr. C. K.
Somany of the Kolkata-based Somany family. The company is a
leading manufacturer of container glass with seven manufacturing
units, spread across the country having an aggregate installed
capacity of 1,569,500 tpa (tonne per annum), the largest in the
country.
KAMACHI INDUSTRIES: Ind-Ra Affirms 'D' Issuer Rating
----------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Kamachi
Industries Limited's (KIL) Long-Term Issuer Rating at 'IND D'. The
instrument-wise rating actions are:
-- INR7,131.1 mil. Term loans (long-term) due on June 2022
affirmed with IND D rating;
-- INR2,119.8 mil. Fund-based working capital limits (long-
/short-term) affirmed with IND D rating; and
-- INR4,476.8 mil. Non-fund-based working capital limits (short-
term) affirmed with IND D rating.
KEY RATING DRIVERS
The ratings reflect KIL's continued delays in servicing term loan
obligations during the 12 months ended December 2017 because of a
tight liquidity position.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months would result in a positive rating action.
COMPANY PROFILE
Incorporated in 2003, KIL manufactures and trades sponge iron,
mild steel billets and thermomechanical-treated (TMT) bars. The
company has an integrated steel plant with facilities to
manufacture 120,000 metric tons (MT) of sponge iron, 205,000MT of
steel billets and 500,000MT of TMT bars.
In addition, it operates a 10MW waste heat recovery plant and a
70MW thermal power plant. The company is undertaking the
restructuring of its debt under the Scheme for Sustainable
Structuring of Stressed Assets.
KANUPAT HIMGHAR: CARE Moves D Rating to Not Cooperating Category
----------------------------------------------------------------
CARE Ratings has been seeking information from Kanupat Himghar
Private Limited (KHPL) to monitor the ratings vide letters/e-mail
communications dated July 12, 2017, December 20, 2017,
December 22, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company 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 ratings
on KHPL's bank facilities will now be denoted as CARE D/CARE D;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 11.09 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Short term bank 0.09 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Users of these ratings (including investors, lenders and the
public at large) are hence requested to exercise caution while
using the above ratings.
Detailed Description of Key Rating Drivers
At the time of last rating on August 8, 2017, the following were
the rating weaknesses and strengths; (updated for the information
available from lenders).
Key Rating Weaknesses:
Ongoing delays in debt servicing: There are ongoing delays in the
debt servicing of the company due to its stressed liquidity
position.
Kanupat Himghar Private Ltd (KHPL) was incorporated in May 1997 by
Mr. Nemai Charan Ghosh, Mr. Sanjay Kumar Ghosh and Mr. Dhananjoy
Ghosh. After remaining dormant for around one and half decade, it
has commenced operations of cold storage services and trading of
potatoes in May 2013. The cold storage facility of KHPL is located
at Udaynarayanpur, Howrah (West Bengal) with aggregated storage
capacity of 16789 metric ton. KHPL earned revenue of around 68%
from trading activities and rest from rental business in FY16.
KISSAN HATCHERIES: CARE Reaffirms B+ Rating on INR15.50cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Kissan Hatcheries Private Limited (KHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 15.50 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of KHPL continues to
remain constrained by modest scale of operations with low
profitability margins, leverage capital structure, weak coverage
indicators. The rating is further constrained by susceptibility of
KHPL's margins to the fluctuation in the agro-based raw material
prices and inherent risk associated with poultry industry coupled
with high competition in the industry. The rating, however,
continues to draws comfort from the experienced promoters,
moderate operating cycle and positive demand outlook for the
poultry sector.
Going forward, the ability of the firm to scale up its operations
while improving its profitability margins and capital structure,
shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations: The scale of operation remained modest
marked by total operating income of INR85.21 crore and gross cash
accruals of INR0.58 crore during FY17 (FY refers to the period
April 1 to March 31). Furthermore, the company's net worth base
was relatively small at INR4.10 crore as on March 31, 2017. The
small scale limits the company's financial flexibility in times of
stress and deprives it from the scale benefits.
Furthermore, company's total operating income has been fluctuating
over the past three years (FY15-FY17). TOI has registered decline
in FY16; thereafter registered growth in FY17. The decline was
mainly on account of lower average sales realization from broiler
chicks coupled with declined in quantity sold. The company has
achieved TOI of Rs 50 crore during 8MFY18 (refers to the period
April 1 to November 30, based on provisional results).
Weak financial risk profile: The PBILDT margin has been declining
on y-o-y basis over the past three years (FY15-FY17). PBILDT
margin declined from 3.39% in FY15 to 3.02% in FY17. The same was
attributable to lower realization from sale of broiler chicks
coupled with the increase in cost of sales due to price rise which
company did not increase its prices in tandem due to highly
competitive market. Further, PAT margin also stood low at 0.15% in
FY17.
The capital structure of KHPL remained leveraged for the past
three balance sheet date owing to high dependence on external
working capital borrowings for managing working capital
requirements of the business. Debt equity ratio and overall
gearing stood at 0.47x and 4.54x respectively as on March 31, 2017
showing an improvement from 0.69x and 4.69x respectively as on
March 31, 2016. The improvement in debt equity was on account of
repayment of term loan and unsecured loans along with accretion of
profits to reserves. Further, improvement in overall gearing has
also taken into account lower utilization of working capital
borrowings as on balance sheet date along with above cited
reasons.
Further, coverage indicators as marked by interest coverage and
total debt to GCA stood weak at 1.29x and 23.46x for FY17.
Inherent risk associated with poultry industry coupled with high
competition from local players: Poultry industry is driven by
regional demand and supply because of transportation constraints
and perishable nature of the products. Low capital intensity and
low entry barriers facilitate easy entry of players leading to a
large unorganized sector. Poultry industry is also vulnerable to
outbreaks of diseases, which could lead to decline in sales volume
and selling price. Diseases can also impact production of healthy
chicks. The inherent industry risk will, however, continue to be a
constraint for players in the poultry industry.
The spectrum of the agro industry in which the company operates is
highly fragmented and competitive marked by the presence of
numerous players in India. Given the fact that the entry barriers
to the industry are low, the players in the industry do not have
pricing power and are exposed to competition induced pressures on
profitability.
Raw material price volatility risk: Maize, soya bean and bajra are
the major raw material for KHPL which contributed approximately
90% of the total cost of production and 60% of the total revenue
in FY17. With the absence of any long-term contract, the company
is exposed to the risk associated with volatility in raw material
prices. Furthermore, the company has limited ability to pass on
the price increase to the customers because of its small scale of
operations.
Also, maize is relatively a small crop in India and being a rain-
fed crop, any failure in monsoon will affect its harvest.
Furthermore, the prices of soya bean are also sensitive to
seasonality in soya bean production; which is highly dependent on
monsoon.
Key Rating Strengths
Experienced promoters: KHPL is promoted by Mr. Subhash Deshwal and
Mr. Karan Singh. They have an experience of over two decades and
one decade, respectively, in poultry feed manufacturing. Before
this venture, the promoters worked in their family business, also
engaged in the manufacturing of feeds. Mr. Subhash Deshwal looks
after the overall management and Mr. Karan Singh looks after the
marketing and production functions of KHPL.
Moderate operating cycle: The firm had average operating cycle of
69 days for FY17. The company keeps inventory in form finished
goods i.e. poultry feed to cater the immediate demand of the
customers. Also, the company maintains inventory in form of
broilers chicks. The same resulted into average inventory holding
period of 69 days for FY17. Further, the average credit period
with the customer and supplier stood at 20 days for FY17. The
company has around 75% utilization of working capital limits for
the last 12 months period ended November 2017.
Positive demand outlook for the poultry sector: As per APEDA
research report, poultry is one of the fastest growing segments of
the agricultural sector in India. Currently India is the third-
largest egg producer after China and USA and the fourth-largest
chicken producer after China, Brazil and USA. . The potential in
poultry sector is increasing due to a combination of factors -
growth in per capita income, growing urban population and falling
poultry prices. Also poultry meat is the fastest growing component
of global meat demand, and India, the world's second largest
developing country, is experiencing rapid growth in its poultry
sector.
Jind (Haryana) based Kissan Hatcheries Private Limited (KHPL) was
incorporated in June 2003, is promoted by Mr. Subhash Deshwal and
Mr. Karan Singh. The company commenced its commercial production
in January 2009 and is engaged in manufacturing of poultry feeds
for different types of poultry units like broiler, layers and
hatcheries. Also, KHPL is also engaged in trading of broilers
chicks wherein the company sells the broiler chicks (about 1 day
old to 25 days old). The installed capacity for manufacturing of
poultry feeds is 3000 ton per month as on November 30, 2017. The
key raw materials used in manufacturing of poultry feed are maize,
soya bean and bazra which is procured from Rajasthan, Bihar and
Punjab through brokers and dealers directly from markets.
KUMAR AGRO: CARE Lowers Rating on INR80cr Loan to B+(SO)
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Kumar Agro Products Private Limited (KAPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible
Debenture issue@ 80.00 CARE B+ (SO); Stable Revised
from Provisional CARE BB-
(SO), Stable; final rating*
Assigned
*CARE has assigned final rating subsequent to the receipt of the
duly executed debenture trust deed and adherence to the structured
payment mechanism.
@The above rating is based on the strength of the proposed
transaction structure, which stipulates a structured payment
mechanism wherein, the cashflows from the project will be utilized
as per the stipulated waterfall mechanism mentioned below.
Waterfall mechanism:
a. Construction expense
b. Indirect taxes on the goods procured and/or services availed
for the project
c. Marketing expenses and other sales and related expenditure
d. The remaining, if any, will be distributed to the promoters and
the lender in the ratio of 50% each
Furthermore, the cash being distributed to the lender will be
apportioned in the following sequence:
i. Interest payment
ii. Principal payment
iii. Premium on redemption
iv. Admin fees
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
Kumar Agro Products Private Limited (KAPPL) takes into account the
non-availability of NOC from Piramal Enterprises Limited (PEL). It
also factors the initial stages of the project execution and
financial closure risk for its upcoming project and demand off-
take risk amid subdued industry scenario. However, the rating
draws comfort from the experience of the promoters and all
approvals in place for the upcoming project.
Going forward, the ability of the company to timely execute the
project within the envisaged costs and timely collection of the
proceeds will remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project execution with financial closure risk for its upcoming
project: KAPPL is currently executing a residential project 'Kumar
Sienna Phase-II' located in Hadapsar, Pune, Maharashtra. The
project is at nascent stage of execution with all approvals in
place and land being already acquired by the company. However the
company is yet to start the construction of the project, thereby,
exposing the company to execution risk.
Weak financial risk profile: The total operating income of KAPPL
has decreased from INR 34.27 cr in FY16 to INR 29.65 cr in FY17.
In FY17, the net-worth has been eroded on the account of demerger
of KPPPL as that project division has been carved out of KAPPL.
This has led to the deterioration of the debt coverage indicators.
The company has an outstanding debt of ~INR246 cr as on March 31,
2017 and out of that about INR186 cr has been utilized as loans
and advances to its group companies.
Subdued industry scenario: The real estate sector is moving
towards a more rational regime where developers, having learnt
from their mistakes, now focus on project execution and delivery.
2017 is expected to gradually move towards better home sales and
see a spurt in launches in some locations. With the introduction
of the RERA Act, the sector will move ahead to transparent and
credible measures with sustenance for organized players. Moreover,
the expected renewed interest by the banks in funding the
developers is likely to result in the timely completion of the
projects. As per market sentiments the India Real Estate Market
may not witness a sharp reversal in FY18 but its long term the
growth prospects remain strong as the sector continues to remain
troubled with issues of high unsold inventory, delayed delivery of
projects and financial stress on developers.
Key Rating Strengths
Experience of the promoters: Kumar Properties was founded in 1966
and is engaged in the business of real estate development. It has
been involved in developing residential and commercial buildings
and has diversified into engineering construction and plant
biotechnology business. The company also has an in house Direct
Sales Associate, which caters to the requirements of the clients.
Mr. Kewal Jain is the director and has decades of experience in
the real estate development. Kumar Agro Products Private Limited
(KAPPL) is also engaged in the business of real estate
development. Mr. Kewal Jain is one of the directors along with Mr.
Manish Jain and Mr. Hitesh Jain, who are handling the operations
of the company. The group has developed more than 5 lsf of area in
the past.
Structure for the proposed debt: Presently the company is in the
process of raising NCD of INR 80cr for project development (Kumar
Sienna Phase-II). As per the proposed NCD, the repayment
(including interest and principal) to the lender will be done from
the surplus cash flow available from the project, which will be
determined on an annual basis. In the case of non-availability of
the surplus cash flow, the interest payable for the period will be
accrued till the time future surplus cash flows are not available
and will be paid as and when surplus cash flows will be available.
All approvals in place for its upcoming project: For the upcoming
project, Kumar Sienna Phase-II, all the necessary approvals like
sanctioned layout, building plans, commencement certificate,
environment clearance, Fire NOC have all been procured. So, there
will be no delay in the execution of the project on the account of
pending approvals.
Kumar Properties was founded in 1966 and is engaged in the
business of real estate development. It has been involved in
developing residential and commercial buildings and has
diversified into engineering construction and plant biotechnology
business. The company also has an in house Direct Sales Associate,
which caters to the requirements of the clients. Moreover, the
company is also involved in the business of biotechnology for more
than 10 years through a 50:50 JV with Florist de Kwakel B.V,
Netherlands. The company has also tied up with Meijer
International B.V, to develop seed potato in India and has been
involved in the research for the same for more than 5 years. Mr.
Kewal Jain is the director and has decades of experience in the
real estate development.
Kumar Agro Products Private Limited (KAPPL) is also engaged in the
business of real estate development. Mr. Kewal Jain is one of the
directors with Mr. Manish Jain and Mr. Hitesh Jain, who are
handling the operations of the company. Recently in 2017, Kumar
Properties and Promoters Private Limited (KPPPL) got demerged from
this company in order to provide an independent administrative
setup for the project division of the group.
MADHU CABLE: CARE Assigns D Rating to INR11.50cr LT Loan
--------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Madhu
Cable and Conductors Private Limited (MCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 11.50 CARE D Assigned
Short-term Bank
Facilities 10.00 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of MCPL is primarily
constrained on account of irregularity in repayment of interest
obligation on its term loan.
Detailed description of the key rating drivers
Key Rating Weakness
Delay in debt servicing: As confirmed by the banker, there are on-
going delays in the debt servicing of interest obligation due on
term loan. Further, the account is classified as Specially
Mentioned Account-1 (SMA-1) as on November 30, 2017 mainly on
account of stressed liquidity position.
MCPL was originally incorporated as Ask Steels Private Limited.
However, the company remained dormant till 2011. Later in August,
2011, the company was taken over by the management under the name
of Godha Cabcon Private Limited. Subsequently, in July 21, 2017,
the name of the company was changed to Madhu Cable and Conductors
Private Limited. MCPL was established with an objective to set up
a manufacturing unit of Arial bunch cable, conductors and extra
high volte conductors with a total installed capacity of 1000 Tons
per Month (TPM). The company is registered and participates in the
tenders for supply of conductors to Madhya Pradesh State
Electricity Board (MPSEB) and private players in the industry.
The company has envisaged total cost of the project of INR4.00
crore towards the project envisaged to be funded through term loan
of INR1.50 crore, unsecured loans of INR 1.00 crore and remaining
through promoter's contribution of INR 1.50 crore in form of
equity capital. Until December 21, 2017, the company has incurred
total cost of INR3.82 crore towards the project funded through
term loan of INR 1.34 crore, unsecured loans of INR0.91 crore and
remaining INR 1.50 crore through promoter's capital. The company
has started its operations from October 2017.
MAHAJYOTI FIBERS: CARE Moves D Rating to Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings has been seeking information from Mahajyoti Fibers
Private Limited (MEPL) to monitor the rating(s) vide e-mail
communications/ letters dated July 20, 2017, August 16, 2017,
September 1, 2017, September 29, 2017 and November 9, 2017 and
numerous phone calls. However, despite CARE's repeated requests,
the MEPL has not provided the requisite information for monitoring
the ratings. In the absence of minimum information required for
the purpose of rating, CARE is unable to express opinion on the
rating. Furthermore, MEPL has not paid the surveillance fees for
the rating exercise as agreed to in its Rating Agreement. In line
with the extant SEBI guidelines, CARE's rating on Mahajyoti Fibers
Private Limited's Long term Bank Facilities will now be denoted as
CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 7.45 CARE D; Issuer not cooperating;
Facilities Based on 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).
Detailed description of the key rating drivers
Key Rating Weaknesses
Irregularity in debt servicing due to stress liquidity: There are
various instances of delays in debt servicing and has also
irregularity in its overdraft limit due to stress liquidity.
Sendhwa (Madhya Pradesh) based, MFPL was promoted by Agrawal
family in 2008. MFPL is currently managed by Mr. Sanjay Agrawal,
Mr. Mukeshkumar Agrawal, Mr. Sachin Joshi and Mr. Dwarkaprasad
Agrawal. The company is engaged in trading of ginned cotton and
cotton seeds and also produces cotton bales by ginning and
pressing of raw cotton. The ginning facility is located at
Prakasha (Maharashtra) with an installed capacity of 31,500 Metric
tonnes per annum (MTPA) as on March 31, 2016.
MOKAMA-MUNGER HIGHWAY: Ind-Ra Withdraws Rating on INR3,550M Loan
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Mokama-Munger
Highway Limited's (MMHL) term loan rating as follows:
-- INR3,550 mil. Term loan due on FY24 withdrawn with WD rating.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the
agency has received no-due certificates from the lenders. This is
consistent with the Securities and Exchange Board of India's
circular dated March 31, 2017 for credit rating agencies.
COMPANY PROFILE
MMHL is a special purpose vehicle, incorporated to implement two-
laning of the Mokama-Munger section of NH-80 in the state of Bihar
on a design, builds, finance, operate and transfer annuity basis.
This is under a 15-year concession from NHAI.
MARUTI FERTOCHEM: CARE Moves B Rating to Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings has been seeking information from Maruti Fertochem
Limited (MFL) to monitor the rating vide e-mail communications/
letters dated July 5 2017, September 6, 2017 , September 13, 2017
and November 14, 2017 and numerous phone calls. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the rating. In the absence of
minimum required for the purpose of rating, CARE is unable to
express an opinion on the rating. In line with the extant SEBI
guidelines CARE's rating on MFL's bank facilities will now be
denoted as CARE B/CARE A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 22.00 CARE B; Issuer Not Cooperating;
Facilities Revised from CARE B+; Stable
Short term Bank
Facilities 0.25 CARE A4; Issuer Not Cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings have been revised by taking into account non-
availability of information and no due-diligence conducted.
Detailed description of the key rating drivers
At the time of last rating on April 7, 2017, the following were
the rating strengths and weaknesses considered:
Key Rating Weaknesses
Financial risk profile marked by moderate total operating income
as well as capital structure and weak debt coverage indicators:
The scale of operation of the company remained modest with a total
operating income (TOI) of INR24.98 crore in FY16 and total capital
employed base of INR41.47 crore as on March 31,2016. Furthermore,
the company registered a net loss in FY16. The capital structure
of the company is moderate owing to high reliance on external
borrowings and moderate net worth base. Moreover due to net loss
registered by the company resulting in negative gross cash
accruals and moderate gearing levels debt coverage indicators were
weak for FY16.
Highly working capital intensive and seasonal nature of industry:
MFL operates in fertilizer industry, which is highly working
capital intensive in nature, as the company needs to maintain huge
inventory of raw material and finished goods before Kharif season
(June to October) and Rabi season (October to December). This
results in high utilization of working capital borrowings.
Highly regulated nature of fertilizer industry: MFL operates in
highly regulated industry as the fertilizer industry is considered
to be an allied activity of the Agricultural sphere. Being an
important industry to the Indian economy, the government has
ensured the availability of adequate quantity and proper quality
of fertilizers to the farmers. Also, to make sure adequate control
over its quality, price and distribution, the industry is highly
regulated under the Fertilizer Control Order, 1985.
Key Rating Strengths
Experienced Promoters: Mr. Raghavendra Joshi, the Chairman and
Managing Director of RJ Group, has more than 20 years of
experience in the agriculture industry. The other directors Mr.
Shashikant Shastri, Mr. Sanjay Shirsikar and Mr. Deepak Jantikar
are also well qualified and carry industrial experience of more
than two decades. They are associated with MFL for more than a
decade.
Long track record of operations along with established dealer
network: MFL started its operations in 1994 and thus has an
established track record in the fertilizer industry. This has
helped the company in establishing strong relationship with its
customers and suppliers. MFL has set up its marketing and
distribution network in Maharashtra and Karnataka. The company
distributes its products through a channel of distributors,
dealers and retailers with sales through dealers and retailers.
Incorporated in 1992, MFL is a part of Aurangabad-based R. J.
Group promoted by Mr. Raghavendra S. Joshi. The group has its
presence in poultry farming, fertilizers, bio-technology,
infrastructure and education sectors. MFL commenced operations in
1994 and is engaged in manufacturing of granular NPK (Nitrogen,
Phosphorous and Potassium) fertilizers. Apart from these products,
MFL also offers organic fertilizers/ soil conditioners and neem
based pesticides, 'Maruti- Max', which provides micronutrients to
crops during growth phase.
NEUEON TOWERS: CARE Moves D Rating to Not Cooperating Category
-------------------------------------------------------------
CARE Ratings has been seeking for information from Neueon Towers
Limited to monitor the ratings vide e-mail communications dated
June 21, 2017, November 6, 2017 and November 16, 2017 and numerous
phone calls. However, despite CARE's repeated requests, the
company has not provided the requisite information for monitoring
the ratings. In the absence of minimum information required for
the purpose of rating, CARE is unable to express opinion on the
rating. In line with the extant SEBI guidelines, CARE 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. CARE's rating on Neueon Towers Limited's bank
facilities and/or instruments will now be denoted as CARE D;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 1,420.24 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Short-term Bank 200.02 CARE D; Issuer not cooperating;
Facilities Based on 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).
Detailed description of the key rating drivers
At the time of last rating on December 23, 2017, the following
were the rating strengths and weaknesses.
Key Rating Weaknesses
Stretched liquidity position with delays in debt servicing: During
FY17, liquidity position of the company continued to remain
stretched on account of slower realization from debtors. Given the
slow realization of debtors has resulted in stretched liquidity
position of the company leading to ongoing delays in meeting debt
obligation.
Neueon Towers Limited (Erstwhile Sujana Towers Limited (STL)) was
established in April 2006 after demerger of Towers Division of
Sujana Metal Products Limited, pursuant to the scheme of
arrangement and amalgamation as approved by the High Court Andhra
Pradesh. STL is engaged in manufacturing of galvanized steel
towers used in the power transmission and telecom tower sector.
STL is a part of the Sujana group, promoted by Shri Y.S. Chowdhary
who has more than 23 years of experience in steel products
manufacturing and trading. The group has diversified business
activity with presence in construction & structural steel, power
transmission & telecom towers and allied services, energy
(generation, distribution, green energy consulting and manufacture
of energy saving LEDs), basic and urban infrastructure
development, precision engineering components, domestic appliances
and international trade.
P HITESH: Ind-Ra Assigns 'BB+' Issuer Rating, Outlook Stable
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned P. Hitesh & Co.
(PHC) a Long-Term Issuer Rating of 'IND BB+'. The Outlook is
Stable. The instrument-wise rating action is:
-- INR85 mil. Fund-based working capital facilities assigned
with IND BB+/Stable/IND A4+ rating;
-- INR18.6 mil. Term loan, due on September 2018 & March 2022,
assiged with IND BB+/Stable rating;
-- INR111.4 mil. Proposed fund-based working capital facilities*
assigned with Provisional IND BB+/Stable/Provisional IND A4+
rating; and
-- INR35 mil. Proposed term loan* assigned with Provisional IND
BB+/Stable rating.
* The ratings are provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facilities
by PHC to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect PHC's weak operating profitability owing to
its presence in a highly competitive gem industry and
susceptibility to fluctuations in prices of rough, and cut and
polished diamonds, and foreign currency. However, the foreign
currency risk is mitigated to a certain extent through a forward
cover. EBITDA margin declined to 1.45% in FY17 (FY16: 1.83%) on
account of increase in raw material prices and operating expenses
as it commenced cutting and polishing of diamonds in FY17.
The ratings are also constrained by the partnership nature of the
organisation.
The ratings also factor in PHC's moderate liquidity position as
indicated by 98% average peak utilisation of the fund-based
limits, availed in June 2017, during the seven months ended
December 2017. Net working capital cycle ranged between 30 days
and 35 days during FY15-FY16, although improved to 9 days in FY17
mainly on account of higher credit period from suppliers.
The ratings, however, benefit from the firm's comfortable credit
metrics with gross coverage (operating EBITDA/gross interest
expense) of 2.3x in FY17 (FY16: 1.61x). Gross coverage excluding
interest paid on partner's capital was at 9.1x in FY17 (FY16:
3.4x). The company had a net cash position in FY17. Net leverage
(Ind-Ra-adjusted net debt/operating EBITDAR) was 1.58x in FY16.
PHC has proposed to borrow additional term loan and working
capital limits in FY18; this likely to result in deterioration in
the credit metrics in FY18.
The ratings are supported by a substantial growth in revenue to
INR2.1 billion in FY17 (FY16: INR680.67 million), although were
moderate, mainly on account of increasing orders from new and
existing customers.
The ratings also benefit from the promoters' experience of around
two decades in the diamond trading and manufacturing business
leading to longstanding relationships with customers and
suppliers.
RATING SENSITIVITIES
Positive: Sustained growth in revenue and EBITDA margins leading
to gross coverage above 3x on a sustained basis will lead to a
rating upgrade.
Negative: A decline in revenue along with elongation of working
capital cycle leading to gross coverage below 2x on sustained
basis will lead to a rating downgrade.
COMPANY PROFILE
Formed in 1998, PHC is owned and managed by Mehta family. The firm
is engaged in cutting and polishing of -2, +2, +6.5, +11-carat-
sized diamonds. It has a manufacturing facility in Surat, Gujarat,
and a registered office in Mumbai, Maharashtra.
RAJESHREE FIBERS: CARE Lowers Rating on INR8cr LT Loan to B+
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Rajeshree Fibers (RF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.00 CARE B+; Stable Revised from
Facilities CARE BB-; Stable
The revision in the rating assigned to the bank facilities of RF
takes into account significant decline in its scale of operations
coupled with substantially low profit margins. The rating
continues to remain constrained on account of its weak debt
coverage indicators and its presence in the highly competitive and
fragmented industry and susceptibility of its margins to volatile
cotton prices.
The rating, however, continues to derive strength from the
resourceful and experienced promoters and its proximity to key raw
material producing region providing ease in sourcing of raw
material at effective prices.
The ability of RF to scale up its operations along-with
improvement in profitability and debt overage indicators would be
the key rating sensitivities.
Reasons for revision in rating: Declining scale of operations with
low profit margins: During FY17, RF reported a y-o-y decline of
20% in its total operating income (TOI) to INR81.51 crore as
compared to INR 101.91 crore in FY16 due to the economical slow
down as a result of demonetization and moderation in cotton
demand. The profitability of RF remained lower with PBILDT at %
and PAT of 0.20% during FY17.
Key Rating Weakness
Moderate capital structure and weak debt coverage indicators: The
overall gearing remained moderate at 1.64times as on March 31,
2017. Further, the debt protection indicators continued to remain
weak mainly on back of thin gross cash accruals.
Presence in the highly fragmented cotton ginning industry and
susceptibility of its margins to fluctuation in cotton prices
The profitability of cotton ginning business depends largely on
the prices of cotton and cotton yarn, which are governed by
various factors such as area under cultivation, monsoon and
international demand-supply situation, etc. Cotton being the major
raw material of ginning mills, the profitability of textile
ginners is vulnerable to the spread between the raw material and
the finished goods, which has exhibited volatile trend.
Key Rating Strengths
Experienced and resourceful promoters: The partners of RF have an
industrial experience in cotton ginning of over two decades. Mr.
Nilesh Gandhi, key partner, is an engineer by qualification and
looks after the sales and purchase related activities of the firm.
Mrs. Rajeshree Mahajan and Mrs. Anita Mahajan look after the
administration related activities of the firm. Further, the
promoter group also manages Rajeshree Cotex and Rajeshree
Industries India Private Limited which are also engaged in cotton
ginning and pressing business which are operational since 2006 and
January 2012 respectively.
Proximity to cotton producing area: The manufacturing facility of
RF is strategically located in Khargone in western part of Madhya
Pradesh (the cotton producing belt of Central India). RCF enjoys
proximity to the cotton producing and ginning belt which results
in ease of access to raw material, lower logistic expenditure
(both on transportation and storage).
Established in the year 2001, Rajeshree Fibers (RF) is a
partnership firm promoted by three partners having equal profit/
loss sharing ratio. The key partner of RF is Mr. Nilesh Gandhi and
the other two partners are Mrs. Rajeshree Mahajan and Mrs. Anita
Mahajan. RF is engaged in ginning and pressing of raw cotton and
its manufacturing facility is located at Khargone, Madhya Pradesh.
RF has two associate firms namely Rajeshree Cotex (RC; rated CARE
BB-/CARE A4, reaffirmed in December 2016), formed in 2003 and
Rajeshree Industries India Private Limited (RIPL; CARE BB-,
reaffirmed in December 2016). Both these firms are also involved
in the business of cotton ginning and pressing.
RATNAGARBHA AGRO: CARE Moves D Rating to Not Cooperating Category
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CARE Ratings has been seeking information from Ratnagarbha Agro
Private Limited, to monitor the rating(s) vide e-mail
communications/letters dated November 27, 2017 and November 22,
2017 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In-line with the SEBI guidelines, CARE
has reviewed the rating on the basis of publicly available
information which however, In care's opinion is not sufficient to
arrive at fair rating. Furthermore, Ratnagarbha Agro Private
Limited has not paid the surveillance fees for the rating exercise
as agreed to in its rating agreement. The ratings of Ratnagarbha
Agro Private Limited will now be denoted as CARE D; ISSUER NOT
COOPERATING. The ratings have been reaffirmed on account of
ongoing delays in meeting the debt obligations.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 12.99 CARE D; Issuer not
Facilities cooperating; Based on
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.
Detailed description of the key rating drivers
The rating has been reaffirmed on account of ongoing delays in
debt servicing due to stretched liquidity position.
Hardoi (U.P) based Ratnagarbha Agro Private Limited (RAPL) was
incorporated in February, 2007 by Mr. Shri Kishan Agrawal and his
son Mr. Ram Kishan Agrawal. However, the company started its
commercial operations in October 2013. RAPL procures raw material
i.e. wheat from the grain markets located in Uttar Pradesh,
Rajasthan, Delhi and Haryana mainly on cash or advance basis. RAPL
sells its products under brand 'Ratan Bhog" mainly through
commission agents, brokers and wholesalers located in Delhi,
Rajasthan, and Mumbai etc. The products are sold in packaging of
100kg, 100kg and 50kg for Atta, Maida and Suji.
Savaria Rollers Flour Mills Private Limited (SRPL) is associate
company of RAPL, which was established in 2004 and is engaged in
same business line.
REAL GROW: CARE Moves B+ Rating to Not Cooperating Category
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CARE Ratings has been seeking for information Real Grow Exim
Private Limited to monitor the ratings vide e-mail communications
dated June 15, 2017, June 27, 2017, November 6, 2017 and
November 14, 2017 and numerous phone calls. However, despite of
CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE is
unable to express opinion on the rating. In line with the extant
SEBI guidelines CARE's rating on Real Grow Exim Private Limited's
bank facilities and/or instruments will now be denoted as CARE B+/
CARE A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 29.80 CARE B+; Issuer not cooperating
Facilities
Short-term Bank
Facilities 2.00 CARE A4; Issuer not cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on Sept. 9, 2016, the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Trading nature of business with thin profitability margins: The
company is primarily engaged in trading of aqua feed for fish and
prawns. The company currently is operating in the domestic market
with majority of its suppliers and customers in coastal areas of
Andhra Pradesh. Apart from the finished products, RGEPL also
supplies raw materials required to manufacture aqua feed such as
Soya, De Oiled Rice Bran (DORB) and Maize. Given the trading
nature of business and intense market competition, the
profitability margins of the company are expected to remain low.
FY16 being first full year of operation, company has achieved
total operating income of INR100.12 crore with PBILDT% and PAT% of
5.19% and 0.53% respectively.
Leveraged capital structure: The overall debt profile of the
company constitutes working capital borrowings. Working capital
utilization of the company is expected to remain at a higher side
due to trading nature of business. Overall gearing of the company
has improved from 3.58x as on March 31, 2015 to 3.37x as on
March 31, 2016 due to accretion of PAT into Net Worth. The other
debt coverage indicators viz. interest coverage remains
satisfactory at 1.18x; while the total debt/GCA remains on the
higher side at about 55x as on March 31, 2016 due to lower GCA
level during FY16.
Working capital intensive nature of business: The business
operation of RGEPL is working capital intensive given high stock
of inventory of trading materials required to be kept due to
volatile prices of the same, on account of which the inventory
holding period is estimated to be on the higher side of about 2-3
months. Dependence on working capital to finance the business
operation is expected to be on the higher side. The average of
maximum working capital utilization for past twelve months ended
August 2016 has been on a higher side at around 90-95%.
Key rating strengths
Experienced Promoters group: The key promoter directors of the
company are Mr. G. Venkata Reddy, Mr. K. Venkata Srinivas Reddy
and Mr. G N V S Satyanarayana Reddy. The promoters have long
established presence in the fish feed industry through several
other group companies viz. Reddy and Reddy Imports and Exports
since 1997 and Nexus Feeds Limited since 2011 which are engaged in
fish and prawns feed/shrimp processing business. The directors;
through other group companies, are also involved in automobile
dealerships (dealers for Maruti Suzuki India Limited and Hero
Motocorp).
Moderate industry growth prospects: RGEPL is located at West
Godavari region which accounts for the largest part of national
inland aquaculture production based on fresh water from Krishna
and Godavari and supports around 3 lakh acres of inland tanks and
ponds. Thus, the production of both fish and prawns and hence the
demand for feed required to cultivate them is expected to be high
in the aforesaid region. With the commencement of pellet form of
feeds and the associated benefits, the demand for the same has
increased significantly in the region. The delta region of West
Godavari region also ensures sufficient supply of fresh water to
the plants.
Real Grow Exims Private Limited (RGEPL), incorporated in May 2012,
is promoted by Mr. Goluguri Venkata Reddy, Mr. Karri Venkata
Srinivasa Reddy and Mr. G N V S Satyanarayana Reddy. RGEPL
commenced its operations from June 2014 and is engaged in trading
of aqua feed for fish and prawns feeds in and around West Godavari
district, Andhra Pradesh.
The promoters have long established presence in the fish feed
industry through several other group companies viz. Reddy and
Reddy Imports and Exports, Nutrient Marine Foods limited (rated
CARE BB/CARE A4), Reddy and Reddy Motors (rated CARE BB-/CARE A4),
Reddy and Reddy Automobiles (rated CARE BB-) and Nexus Feeds Ltd.
(rated CARE BBB-/CARE A3) which are engaged in fish and prawns
feed/shrimp processing business.
RK TRADE: CARE Revises Rating on INR8cr LT Loan to B
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CARE Ratings revised the ratings on certain bank facilities of
RK Trade Vision Pvt. Ltd (RKTVPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 8.00 CARE B; Issuer not cooperating;
Facilities Revised from CARE B+, based on
best available information
CARE has been seeking information from RKTVPL to monitor the
ratings vide letters/e-mails communications dated July 12, 2017,
December 20, 2017, December 22, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the company 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 RKTVPL's bank facilities will now be denoted as CARE
B, ISSUER NOT COOPERATING.
Users of these ratings (including investors, lenders and the
public at large) are hence requested to exercise caution while
using the above ratings.
The revision in the rating assigned to the bank of RKTVPL takes
into account the significant variation in the actual results as
compared to projections for FY17. Further, the rating continues to
remain constrained by volatile agro-commodity (Dal) prices with
linkages to vagaries of the monsoon, regulated nature of the
industry and intense competition from other players. The rating,
however, derive strength from the experienced promoters,
locational advantage of the unit and increasing demand of dal and
related products.
Detailed description of the key rating drivers
Key Rating Weaknesses:
Significant variation in actual result as compared to projections
for FY17: The overall performance of the company in FY17 actual
was significantly under achieved as compared to projections for
the aforesaid period in terms of revenue, profit levels, cash
accruals, profitability margins and debt coverage indicators.
However, leverage ratios were better than projected owing to lower
availment of loans than estimated.
Volatile agro-commodity (Dal) prices with linkages to vagaries of
the monsoon: Dal is mainly a 'kharif' crop and is cultivated from
June-July to September-October and the peak arrival of crop at
major trading centers begins in October. The output is highly
dependent on the monsoon. Unpredictable weather conditions could
affect the domestic output and result in volatility in price of
pulses. In view of seasonal availability of dal, working capital
requirements remain high at season time owing to the requirement
for stocking of raw products in large quantity.
Regulated nature of the industry: The Government of India (GoI),
every year decides a minimum support price (MSP) to be paid to
various types of Dal growers which limits the bargaining power of
dal millers over the farmers. Given the market determined prices
for finished product vis-Ö-vis fixed acquisition cost for raw
material, the profitability margins of the company are highly
vulnerable.
Intense competition from other players: Dal milling industry is
highly fragmented and competitive due to presence of many players
operating in this sector owing to its low entry barriers, due to
low capital and technological requirements. Raipur and nearby
districts of Chhattisgarh are a major pulses growing area with
many dal mills operating in the area. High competition restricts
the pricing flexibility of the industry participants and has a
negative bearing on the profitability.
Key Rating Strengths:
Experienced promoters: The company is managed by Mr. Radhe Shyam
Agrawal, Director, with the help of the other director Mrs.
Kousalya Agrawal. He has over four decades of experience in agro
commodity trading business.
Locational advantage of the unit: The proposed milling unit of
RKTVPL is located at Raipur district of Chhattisgarh which is
primarily an agricultural region in central India resulting in
lower logistic expenditure (both on transportation and storage),
easy availability and procurement of raw materials at effective
prices.
Increasing demand of dal and related products: Dal, being one of
the primary food articles in India, demand is high throughout the
country and with the change in life style and health
consciousness; by-products of the same are in huge demand.
RKTVPL was incorporated during September 2010 to initiate an agro
commodity related business at Raipur in Chhattisgarh. The area and
the surrounding districts are important agricultural and
commercial areas where availability of various types of pulses and
demand of same and related products are increasing. After
incorporation, the company remained dormant for five years and
subsequently started to set up a Dal milling unit.
SHRI JAMBHESHWAR: CARE Assigns B Rating to INR3cr LT Loan
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CARE Ratings has assigned rating to the bank facilities of Shri
Jambheshwar Gums (SJG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 3.00 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SJG is primarily
constrained on account of its small scale of operations with
moderate profitability margins, weak solvency position and
stressed liquidity position. The rating is, further, constrained
on account of SJG's presence in the highly fragmented &
competitive guar gum industry and constitution as partnership
concern.
The rating, however, derives strength from the experienced
management and proximity to guar producing region of Rajasthan.
The ability of the firm to increase its scale of operations while
maintaining and improving profitability along with efficient
management of working capital shall be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Small scale of operations with moderate profitability margins
Total Operating Income (TOI) of the firm has shown continuous
downtrend during the past three financial years ended FY17 mainly
on account of decline in sales price and sales volume of guar gum.
During FY17, the profitability margins of the firm stood moderate
with PBILDT margin and PAT margin of 7.62% and 1.31% respectively
in FY17.
Weak solvency position and stressed liquidity position: The
capital structure of SJG remained highly leveraged with an overall
gearing of 4.92 times as on March 31, 2017, however, improved from
8.31 times as on March 31, 2016 owing to accretion of profits to
reserve. Debt coverage indicators stood weak marked by total debt
to GCA of 27.48 times as on March 31, 2017 as against 60.45 times
as on March 31, 2016 owing to higher increase in Gross cash
accruals.
The liquidity position of the company stood stressed as it fully
utilized its working capital bank borrowings in past 12 months
ending October, 2017. Also the operating cycle stood elongated at
153 days in FY17 as against 35 days in FY16 on account of higher
inventory holding period though partially offset by higher
creditor period.
Seasonality associated with key input being an agro based
commodity: Although, Guar bean (a key agro input) is drought
resistant crop and requires limited water for cultivation, the
production is largely dependent upon the acreage under
cultivation, yield per hectare and farmers expectation
of gain from substitute crops. Moreover, the production of the
crop is largely skewed in regions of Rajasthan which alone
accounts for around 70% of India's total production due to limited
availability of water supply for cultivation and soil condition
suiting the guar crop. Thus, expectation of higher gain in
substation crop results in decline of area under cultivation and
ultimately lower production and volatile prices.
Presence in highly fragmented & competitive guar gum industry and
constitution as partnership firm: The guar gum industry is
characterized by low entry barrier ensuing high competition from
number of organized as well as unorganized producers of guar gum
and guar splits. The price of the end product depends largely on
global demand and any slowdown in overseas market would largely
impact the demand scenario of guar gum. Further, SJG being a
partnership firm is exposed to inherent risk of partner's capital
being withdrawn at time of personal contingency and firm being
dissolved upon the death/retirement/insolvency of partners.
Key Rating Strengths
Experienced and resourceful partners: The partners of the firm
have experience of more than 2 decades in the industry. The
partners also runs diversified businesses like auto dealership of
Hero Motocorp Limited, 3 HPCL (Hindustan Petroleum Corporation
Limited) Petrol stations, Commercial Vehicle dealership of Ashok
Leyland in Bikaner, Churu & Hanumangarh.
Proximity to guar producing region of Rajasthan: India accounts
for 80% of the total guar seed produced in the world and about 70%
of India's production comes from Rajasthan. The raw material is
procured locally from nearby areas of Bikaner. Thus, SJG's
proximity to guar growing regions like Bikaner, Jodhpur and Jaipur
ensures regular supply of raw material at low transportation cost.
SJG was formed in 2002 as a partnership concern by Mr. Ram Swaroop
Bishnoi along with his family members to undertake business of
processing of guar gum dall, Guar churi, guar korma. The
commercial operations of the firm commenced from 2002. The
manufacturing facility of the firm is located at Nokha (Rajasthan)
having an installed capacity of 18 Metric Tonnes Per month (MTPM)
as on March 31, 2017 for processing guar seeds to guar gum dall,
guar churi, and guar korma. The product manufactured by the firm
finds application in diverse range of industries such as mining,
oil & gas, textile, paper, explosive, cosmetics and
pharmaceutical. It sells guar gum powder in the domestic market.
SHRI SHAMRAO: CARE Assigns D Rating to INR7.49cr LT Loan
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CARE Ratings has assigned rating to the bank facilities of Shri
Shamrao Patil Yadravkar Educational and Charitable Trust (SPCT),
as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.49 CARE D Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SPCTis constrained
on account of irregularity in repayment of installments and
interest of term loan.
The ability of the trust to regularize the payments is the key
rating sensitivity.
Detailed description of the key rating drivers
Key rating Weaknesses
Irregularity in repayment of installments and interest of term
loan: There are continuous delays in the repayment of principal or
interest of term loan due to stretched liquidity position. Further
the account was classified as SMA-1.
Established in the year 1986, Shri Shamrao Patil Yadravkar
Educational and Charitable Trust (SPCT) is engaged in managing
education institutes. The trust is registered under Bombay Public
Trust Act 1950. The trust was established by Patil family of
Kolhapur. Currently, the trust is managing four colleges and three
schools. The student strength in all institutions put together
stands at 6097 for Academic Year (AY) 2017-18. All courses are
also approved by respective technical boards. The institutes are
located in Kolhapur district of Maharashtra. The institutes
provide facilities like science laboratory, computer laboratory,
play ground, canteen, bus facility, hostel facility, library and
study room.
SK OVERSEAS: CARE Reaffirms B+ Rating on INR9.56cr LT Loan
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CARE Ratings reaffirmed ratings on certain bank facilities of
SK Overseas (SKO), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 9.56 CARE B+; Stable Reaffirmed
The ratings assigned to the bank facilities of SKO continues to
remain constrained by small and declining scale of operations with
low partners' capital base, leveraged capital structure, working
capital intensive nature of operations, fragmented and competitive
nature of industry. The ratings are further constrained by
susceptibility to fluctuation in raw material prices and monsoon
dependent operations. The ratings, however, continues to draw
comfort from the experienced partners with moderate profitability
margins and favorable manufacturing location.
Going forward, the ability of the firm to profitably increase
scale of operations while improvement in its capital structure
along with effective working capital management, will be the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small and declining scale of operations with low net worth base:
The scale of operations has remained small marked by a total
operating income and gross cash accruals of INR10.69 crore and
INR0.46 crore during FY17 (FY refers to the period April 1 to
March 31). Further, the scale has been declining on y-o-y basis
for the past three financial years i.e. FY15-FY17 mainly on
account of decline in quantity sold. Furthermore, the capital base
of the firm also remained low at INR2.07 crore as on March 31,
2017. The small scale limits the firm's financial flexibility in
times of stress and deprives it from scale benefits. The company
has achieved scale of ~INR12.00 crore during 8MFY18 (refers to the
period April 1, 2017 to November 30, 2017, based on provisional
results).
Leveraged capital structure: As on March 31, 2017, the capital
structure of the firm remained leveraged marked by overall gearing
ratio of 2.93x due to low net worth base coupled with debt-funded
capex undertaken in past and high dependence on external working
capital borrowings for managing working capital requirements.
Working capital intensive nature of operations: Operations of the
firm stood elongated marked by operating cycle of 128 days in
FY17. SKO procures paddy directly from commission agents, farmers
during the respective harvesting season, store them in order to
smooth running of its production processes for the entire year,
and thereafter sell it during the year. The operations of the firm
are such that it is required to maintain high inventory holdings
making it working capital intensive. The average inventory holding
period stood at 161 days for FY17.
The firm primarily sells on cash with maximum credit period
allowed stood at around 15 days and it procures the raw material
on credit of 60 days. The average working capital sanctioned
limits of the firm remained almost fully utilized for the past 12
months ended November 2017.
Fragmented and competitive nature of industry: 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.
Susceptibility to fluctuation in raw material prices and monsoon
dependent operations: Agro-based industry is characterized by its
seasonality, as it is dependent on the availability of raw
materials, which further varies with different harvesting periods.
The price of rice moves in tandem with the prices of paddy.
Availability and prices of agro commodities are highly dependent
on the climatic conditions. Adverse climatic conditions can affect
their availability and leads to volatility in raw material prices.
Paddy is the major raw material and the peak paddy procurement
season is during November to January during which the company
builds up raw material inventory to cater to the processing of
rice throughout the year. Since there is a long time lag between
raw material procurement and liquidation of inventory, the company
is exposed to the risk of adverse price movement resulting in
lower realization than expected.
Key rating strengths: Experienced partners in trading and
processing of rice: SKO was established as a partnership firm in
the year 2013 by Mr. Krishan Chand and his wife Ms Santosh Kumari
and Ms. Poonam Bansal. The partners have accumulated considerable
experience varying around two decades in paddy processing and
trading of rice through their association with this entity and
other associate concerns. They collectively look after the overall
operations of the firm.
Favourable manufacturing location: The firm's processing facility
is situated in Karnal, Haryana which is one of the highest
producers of paddy in India. Its presence in the region gives
additional advantage over the competitors in terms of easy
availability of the raw material as well as favourable pricing
terms. SKO owing to its location is in a position to cut on the
freight component of incoming raw materials.
Moderate profitability margins: The PBILDT margin of the firm
stood at 8.06% in FY17 and showing improvement from 7.72% in FY16
due to higher proportion of business revenue from processing of
basmati rice which fetches better margin. Consequently, owing to
higher PBILDT margin; PAT margin improved and stood at 0.43% in
FY17 as against 0.25% in FY16.
SK Overseas (SKO) was established as a partnership firms in 2013
by Mr. Krishan Chand, Ms Santosh Kumari and Ms Poonam Bansal
sharing profits and losses in the ratio 20:40:40. The firm is
engaged in milling, processing and trading of basmati and non-
basmati rice. The processing unit of the firm is located in
Karnal, Haryana. SKO procures paddy from local grain markets
through dealers and agents mainly from the state of Haryana. It
primarily sells the product in Northern India i.e. Haryana,
Himachal, Delhi, Rajasthan and Uttar Pradesh to wholesalers,
traders, exporters and government departments.
SKM BUILDCON: CARE Moves B+ Rating to Not Cooperating Category
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CARE has been seeking information from SKM Buildcon (SKMB) to
monitor the rating vide e-mail communications/ letters dated
June 19, 2017, Nov. 22, 2017, Dec. 4, 2017, Dec. 12, 2017 and
numerous phone calls. However, despite CARE's repeated requests,
the firm has not provided the requisite information for monitoring
the rating. In the absence of minimum information required for the
purpose of rating, CARE is unable to express opinion on the
rating. In line with the extant SEBI guidelines CARE's rating on
Divya Shree Industries bank facilities will now be denoted as CARE
B+; ISSUER NOT COOPERATING for long term bank facilities.
Amount
Facilities (INR crore) Ratings
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Long term Bank 5.75 CARE B+; ISSUER NOT
Facilities COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating in December 9, 2016, the following were
the rating strengths and weaknesses:
Key Rating Strengths
Experienced partner with long track record of operation: SKM has
been in operation since 2008, accordingly has a moderate track
record of operation. Further, the entity is managed by Mr. Suresh
Kumar Mirghani having over one and a half decade of experience in
construction business.
Satisfactory order book position: The entity has an order book
(total value of work) of INR72.00 crore as on November 30, 2016
[i.e. about x of FY16 revenue] to be executed within next 18
months indicating a medium term revenue visibility.
Reputed clientele resulting in lower counterparty risk: SKMB
focuses mainly on construction of public works department
contracts and government contracts, like road projects, building,
small bridges etc. and other government funded schemes like
Pradhan Mantri Gram SadakYojna (PMGSY) which resulted in minimal
default risk.
Key Rating Weaknesses
Partnership nature of constitution: SKMB, being a partnership
firm, is exposed to inherent risk of the partner's capital being
withdrawn at time of personal contingency and firm being dissolved
upon the death/retirement/insolvency of the partners. Moreover,
partnership firms have restricted access to external borrowing as
credit worthiness of partners would be the key factors affecting
credit decision for the lenders.
Small scale of operation: SKM is a relatively small player in the
construction business with total operating income and PAT of
INR24.50 crore and INR0.08 crore, respectively, in FY16. The small
size restricts the financial flexibility of the entity in times of
stress. Further, the total capital employed was also low at
INR2.07 crore as on Mar.31, 2016. The firm has achieved total
operating income of INR13.45 crore in H1FY17.
Susceptibility of operating margin to volatility in input material
prices: The basic input materials for execution of construction
projects and works contracts are steel, stone chips, bitumen and
cement etc. The prices of which are highly volatile. However,
currently public works department contracts have price escalation
clause which mitigate price volatility risk to some extent.
Furthermore, the operating margin of the entity is exposed to
sudden change in the input material prices along with increase in
labour prices, being in labour intensive industry, which is offset
by the price escalation clause to some extent.
Exposure to tender driven process risk and intense competition
within the industry owing to low entry barrier: The civil
construction space is highly competitive with many players
operating in the sector affecting the profitability of the
participants. Furthermore, the firm is largely dependent on
government authorities for orders and mainly procures its orders
through tender bidding and in a highly competitive scenario; risk
of non-receiving of contract in tender bidding is also high.
Leveraged capital structure with weak debt coverage indicators
The capital structure of SKM has remained leveraged marked by
overall gearing of 3.56xas on March 31, 2016. The overall gearing
improved marginally as on March 31, 2016 as compared to 3.60x as
on March 31, 2015 due to accretion of profit to capital. The debt
protection indicators also remained weak marked by moderate
interest coverage of 1.37x and high total debt to GCA of 26.77
years in FY16. Moreover, the interest coverage improved in FY16
due to higher increase in PBILDT level vis-a-vis increase in
interest. Furthermore, total debt to GCA improved as on March 31,
2016 but the same remained high at 26.77xin FY16.
M/s SKM Buildcon (SKMB) was established in 2008 as a partnership
concern. M/s SKMB participates in the tender process of various
public works department contracts, government contracts and
related ancillary works. M/s SKMB has reputed client base
primarily dealing with public works department, government
departments and clients like Tarwani group and Fortune Recourse
Private Limited (Swarnbhumi). The day to day affairs of the firm
are looked after by Mr. Suresh Kumar Mirghani with adequate
support from the other partner and a team of experienced
personnel.
SPEEDY MULTIMODES: Ind-Ra Assigns 'BB-' Rating, Outlook Stable
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India Ratings and Research (Ind-Ra) has assigned Speedy Multimodes
Limited (SML) a Long-Term Issuer Rating of 'IND BB-'. The Outlook
is Stable. The instrument-wise rating actions are:
-- INR5 mil. Fund-based working capital facility assigned with
IND BB-/Stable/IND A4+ rating;
-- INR340 mil. Non-fund-based working capital facility assigned
with IND A4+ rating; and
-- INR75 mil. Proposed non-fund-based working capital facility*
assigned with Provisional IND A4+ rating.
*The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facility by
SML to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect SML's small scale of operations and weak
profitability on account of low capacity utilisation. In FY17,
revenue grew to INR930 million (FY16: INR801 million) on the back
of higher realisations (FY17: INR9,663/twenty-foot equivalent unit
(TEU), FY16: INR7,919/TEU). Despite the growth in revenue, the
company continued to incur operating losses (FY17: INR25 million,
FY16: INR47 million) on account of low capacity utilisation and
high operating leverage.
The ratings also factor in the company's weak liquidity position
as reflected by negative operating cash flows of INR166 million in
FY17 (FY16: negative INR38 million) owing to operating losses
incurred and an increase in working capital requirements. In order
to meet its working capital requirements and absorb losses, the
new promoters infused capital in the form of unsecured loans, a
part of which was converted to equity to prevent erosion of net
worth in FY17. The company's fund-based facilities remained
unutilised during the 12 months ended December 2017.
The ratings also factor in risks associated with container freight
station (CFS) business such as slowdown in global seaborne trade,
intense competition and changes in government regulations, among
others, which could impact the operations of the company.
However, the ratings benefit from SML being a designated CFS at
Jawaharlal Nehru Port Trust (JNPT) under the direct port delivery
model. JNPT's increased thrust on the direct port delivery model
to ease congestion at the port has led to a turnaround in the
company's operations.
The company witnessed a significant uptick in container volumes
with containers handled increasing 87% yoy to 76,861 TEUs in
1HFY18. In 1HFY18, SML reported revenue of INR846 million (1HFY17:
INR398 million) and EBITDA of INR178 million (negative INR38
million).
RATING SENSITIVITIES
Negative: A significant deterioration in scale of operations
and/or operating margins resulting in interest coverage below 1.5x
on a sustained basis would be negative for the ratings.
Positive: A significant increase in scale of operations and/or
operating margins resulting in interest coverage above 2.5x on a
sustained basis will be positive for the ratings.
COMPANY PROFILE
Incorporated in 1986 as Speedy Transport Private Limited, the
company provided transport solutions within Mumbai port. In
December 2005, the company was awarded a contract to operate and
manage as a CFS at JNPT for an initial period of 20 years and
extension of another 10 years (20+10 years). The company, formerly
known as DBC Port Logistics Limited, has container handing
capacity of 0.3 million TEUs per annum. In FY17, SML was acquired
by Harish Logistics Private Limited.
SPLENDID METAL: CARE Moves D Rating to Not Cooperating Category
---------------------------------------------------------------
CARE Ratings has been seeking for information from Splendid Metal
Products Limited to monitor the ratings vide e-mail communications
dated June 21, 2017, November 6, 2017 and November 16, 2017 and
numerous phone calls. However, despite CARE's repeated requests,
the company has not provided the requisite information for
monitoring the ratings. In the absence of minimum information
required for the purpose of rating, CARE is unable to express
opinion on the rating. In line with the extant SEBI guidelines,
CARE 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. CARE's rating on Splendid
Metal Products Limited's bank facilities and/or instruments will
now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 1701.84 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Short-term Bank 269.13 CARE D; Issuer not cooperating;
Facilities Based on 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).
Detailed description of the key rating drivers
At the time of last rating on December 23, 2017, the following
were the rating strengths and weaknesses.
Key Rating Weaknesses
Stretched liquidity position with ongoing delays in debt
servicing: During FY17, liquidity position of the company
continued to remain stretched on account of slower realization
from debtors. Given the slow realization of debtors has resulted
in stretched liquidity position of the company leading to ongoing
delays in meeting debt obligation.
SMPL belongs to the Hyderabad-based Sujana group. SMPL was
incorporated in May 1988 under the name of Sujana Steel Re-Rolling
Industries (P) Limited. The name of the company was later changed
to Sujana Steels Private Limited in March 1992 and got converted
into public limited company in April 1992 and changed the name to
current nomenclature in November 2001. SMPL is engaged in trading
of steel products and manufacturing of TMT bars & structural steel
products at its facilities located at Hyderabad, Chennai and
Vizag. Sujana group, promoted by Sri Y. S. Chowdhary, is a South
India-based industrial house having about two decades of
experience in the steel industry. The group is involved in
manufacturing of Thermo Mechanical Treated (TMT) bars, Structural
Steels, Galvanised Steel towers (used in power transmission &
telecom sector) and steel trading through its companies; Sujana
Universal Industries Ltd, Sujana Towers Ltd, etc. SMPL has total
capacity of 1.07 million tons of different steel products.
SUMETCO ALLOYS: CARE Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------------
CARE Ratings has been seeking information from Sumetco Alloys
Private Limited to monitor the rating(s) vide e-mail
communications/letters dated December 12, 2017 and December 6,
2017, and numerous phone calls. However, despite CARE's repeated
requests, the firm has not provided the requisite information for
monitoring the ratings. In the absence of minimum information
required for the purpose of rating, CARE is unable to express
opinion on the rating. In line with the extant SEBI guidelines
CARE's rating on Sumetco Alloys Private Limited bank facilities
will now be denoted as CARE B+; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B+; Issuer Not
Facilities Cooperating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in December 16, 2016, the following
were the rating strengths and weaknesses.
Key Rating Weaknesses
Small and declining scale of operations: The scale of operations
of the company has been declining during the past three years, ie,
FY14- on account of decrease in quantity sold. The small scale
limits the company's flexibility in times of stress and deprives
it of scale benefits.
Weak financial risk profile: The profitability margins of the
company remained low for the last three financial years (FY14-
FY16) mainly on account of low value addition coupled with highly
competitive nature of industry. Moreover, due to high financial
charges and depreciation cost the net profitability continues to
remain below unity.
The capital structure of the company stood leveraged on the
balance sheet date of past three years (FY14-F16) on account of
low net worth base and high dependence on external borrowing to
meet the working capital requirements.
The debt service coverage indicators remained weak.
Elongation inventory holding period: The average working capital
utilization cycle of the company elongated on y-o-y basis mainly
on account of increase in average inventory holding of the
company. The inventory holding is mainly in form of raw materials
and work in progress. The company maintains inventory in form of
raw materials (batteries) for smooth production process and also
in the form of semi-finished goods (lead) resulting in an average
inventory holding period of 100 days. Suppliers allow around 60
days of credit period to SAPL, while the company also grants a
credit period of around 40 days.
Volatility in prices of raw material and finished goods: The raw
material, i.e., lead is the significant portion of total cost of
production. The company is exposed to raw material price
volatility due to volatility experienced in the prices of lead.
The prices of these materials are driven by demand and supply
conditions in the market. The prices are driven primarily by the
existing demand and supply conditions with strong linkage to the
global market. This results into risk of price fluctuations on the
inventory of raw materials. Since there is a long time lag between
raw material procurement and liquidation of inventory, the company
is exposed to the risk of adverse price movement resulting in
lower realization than expected.
Foreign exchange fluctuation risk: The company imports around 50%
of its raw material and the material is completely sold in the
domestic market. With initial cash outlay for procurement in
foreign currency and significant chunk of sales realization in
domestic currency, the company is exposed to the fluctuation in
exchange rates which the company does not hedge. The risk is more
evident now that the rupee has registered considerable volatility
and could leave the company carrying costly inventory in case of
sudden appreciation.
Highly competitive nature of the industry: SAPL operates in a
highly competitive industry wherein there is presence of a large
number of players in the unorganized and organized sectors. There
are number of small and regional players catering to the same
market which has limited the bargaining power of the company and
has exerted pressure on its margins.
Experienced management: The operations of SAPL are currently
managed by Mr. Priyank Bhandari, Mr. N.K. Bhandari, and Mr. Goldee
Bhandari. Mr. N.K. Bhandari and Mr. Goldee Bhandari, both
graduates, have an experience of around two decades through their
association with SAPL, and Mr. Priyank, graduate, has an
experience of more than a decade through his association with this
entity.
Bhiwadi-based (Rajasthan) Sumetco Alloys Private Limited (SAPL)
was incorporated in 1996 by Mr. Priyan Bhandari, Mr. N. K Bhandari
and Mr. Goldee Bhandari. All graduates by qualification and Mr.
N.K. Bhandari and Mr. Goldee Bhandari have an experience of around
two decades through their association with SAPL and Mr. Priyank
has an experience of more than a decade through his association
with this entity. SAPL is engaged in processing of lead from
batteries and also engaged in trading of lead and lead alloys. The
company procures lead and batteries through online actions and
bidding and from traders. It also imports from countries like
Saudi Arabia, UAE, Australia, etc. SAPL sells its products
domestically to companies such as Tata Autocomp GY Batteries,
Aaryan Alloys, Grap Marketing Private Limited and also sells to
local traders.
UMAK EDUCATIONAL: CARE Moves D Rating to Not Cooperating Category
-----------------------------------------------------------------
CARE has been seeking information from Umak Educational Trust, to
monitor the rating(s) vide e-mail communications/ letters dated
November 27, 2017 and November 22, 2017 and numerous phone calls.
However, despite CARE's repeated requests, the company has not
provided the requisite information for monitoring the ratings. In-
line with the SEBI guidelines, CARE has reviewed the rating on the
basis of publicly available information, which however, In care's
opinion is not sufficient to arrive at fair rating. Furthermore,
Umak Educational Trust has not paid the surveillance fees for the
rating exercise as agreed to in its rating agreement. The ratings
of Umak Educational Trust will now be denoted as CARE D; ISSUER
NOT COOPERATING. The ratings have been reaffirmed on account of
ongoing delays in meeting the debt obligations.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 66.37 CARE D; Issuer not
Facilities cooperating; Based
on 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.
Detailed description of the key rating drivers
The rating has been reaffirmed on account of ongoing delays in
debt servicing due to stretched liquidity position.
Umak Educational Trust (UET) was established in 2006 with an
objective to provide education services. The trust operates a
college under the name of Vedatya Institute (VEI) in Gurgaon,
Haryana, offering varied courses. Dr Ramesh Kapur is the chairman
of the trust and has more than three decades of experience through
his association with UET as well as with other group companies.
Furthermore, he is assisted by others members of the trust and
other qualified professional in the relevant experience to carry
out the day-to-day operations the Kapur family is also the
promoters of AB Hotels Limited which manages the overall
operations of the Radisson Hotel, Mahipalpur (Delhi) and Bhadoi
Hotels Limited manages the Radisson Hotel at Varanasi (Uttar
Pradesh).
YSG CABS: CARE Assigns B Rating to INR40cr Long-Term Loan
---------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of YSG
Cabs and Logistics Private Limited (YSG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 40.00 CARE B; Stable Assigned
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of YSG is primarily
constrained by its small size of operations and capital intensive
nature of operations with high debt repayment obligations. The
rating also constrained by working capital intensive nature of its
operations, leveraged capital structure, weak debt coverage
indicators and its presence in a highly competitive and fragment
industry. The aforesaid constraints are partially offset by the
extensive experience of the promoters.
Ability of the company to increase the scale of operations,
improvement in profitability margins and to manage working capital
effectively would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small size of operations: YSG is a small player in the car rental
industry marked by its total operating income of INR13.03 crore
with GCA of INR0.11 crore in FY17 (Provisional). Further, the net
worth base was also low at INR12.06 crore as on March 31, 2017.
The small size restricts financial flexibility in times of stress
and it suffers on account of lack of economies of scale. However,
the total operating income grew at a compounded annual growth rate
of 252.27% during last three years (FY15-FY17) mainly on account
of increase in number of cars. Moreover, YSG has reported PBILDT
of INR1.77 crore, net loss of INR8.95 crore and GCA of INR0.11
crore in FY17. The company has reported net loss of INR8.95 crore
in FY17 due to high depreciation charges owing to capital
intensive nature of its operations. Moreover, in 8MFY18, the
company has reported revenue of INR9.35 crore.
Capital intensive nature of operations with high repayment
obligations: The company is into car rental business and
accordingly it needs to procure vehicles for which it required lot
of capital investment at a time. Currently YSG has around 619 cars
running across 11 states of India. Furthermore the company has
plans to increase the cars numbers to 12000 within next five
years. Thus the company is dependent on external barrowings for
funding its capital investment. Further the company has high
repayment obligations for next three years and thus going forward,
the ability of the company to generate cash accruals as envisaged
from business is crucial for the company.
Working capital intensive nature of operations: The business of
the company is working capital intensive in nature as the payment
comes with delay from online cab operators as the payments from
the drivers are attached with Ola and Uber cabs for securing its
collections from drivers. Furthermore the business model of the
company operates fully on online platform for tracking the vehicle
on real time basis, this bears a high operating expense for the
company. Accordingly the operations remained working capital
intensive.
Leveraged capital structure and weak debt coverage indicators: The
capital structure of the company remained leveraged marked by debt
equity ratio and overall gearing ratios at 2.00x each as on March
31, 2017. Further, the leverage ratios were deteriorated as on
March 31, 2017 due to availment of term loans for funding its
fleets. Furthermore the interest coverage ratio also deteriorated
to 1.02x in FY17 (Provisional) due to high capital charges. The
total debt to GCA deteriorated as on March 31, 2017 due to
increase in debt level and remained weak at 228.79x as on March
31, 2017.
Presence in highly competitive and fragment industry: Car rental
industry is a very competitive space due to low entry barriers
resulting into presence of numerous players in the industry which
further results in an intensely competitive environment especially
for small players like YSG. Further the organized players like Ola
cabs, Uber cabs, Meru cabs etc. also offering aggressive pricing
and better services making the industry as intensely competitive.
Due to high competition and offering better services, the car
rental service providers are facing pressure on their profit
margins. Going forward the highly fragmented and unorganized
nature of the industry may further result in intense price
competition and may lead to pressure on the company's
profitability in case of adverse situations.
Key Rating Strengths
Extensive experience of the promoters: Mr. Kumar Vihaan has around
25 years of experience in transportation and logistics industry,
looks after the day to day operations of the company. He is
supported by other promoter Mr. Raj Kumar Bamalwa who has around
20 years of experience in this line of business. The promoters are
well assisted by a team of experienced professionals.
YSG was originally incorporated in the name of JAS Cabs Private
Limited in August 2009 and subsequently the name of the company
changed to Yo Cabs Private Limited in November 2010. However, the
company was taken over by the present promoters namely Mr. Kumar
Vihaan and Mr. Raj Kumar Bamalwa in December 2015 and the name of
the company changed to the current one (YSG) with effect from
February 02, 2016 (YSG). The company has been engaged in car
rental services. The company provide car to individual drivers on
daily subscription basis and the company attached each driver with
Ola and Uber cabs. The company bears repairs & maintenance,
insurance and road tax costs itself whereas the fuel cost is born
by the driver. The company take one time joining fee i.e.
INR25,000 and charge daily subscription of on an average of
INR1000 per day. The company currently has around 619 cars which
are operating across 11 states of India.
===============
M A L A Y S I A
===============
KINSTEEL BHD: Appeals Against Suspension, Delisting From Bursa
--------------------------------------------------------------
The Sun Daily reports that Kinsteel Bhd is appealing against Bursa
Securities' decision to suspend and delist the company.
With the appeal, the removal of the securities of Kinsteel from
Bursa Securities on Jan. 9, 2018 will be deferred pending the
decision on the appeal, the Sun Daily relates citing the steel
maker's filing with the stock exchange.
The report says the suspension and delisting came after Kinsteel's
application for a further extension of time to submit its
regularisation plan was rejected by Bursa Securities last month.
For the first quarter ended Sept. 30, 2017, the Practice Note 17
(PN 17) company reported a widened net loss of MYR29.1 million
against MYR11.47 million in the previous corresponding period, due
to the decrease in production of steel products as the group is in
the midst of restructuring its debts with its lenders and the
difficulty to obtain further credit facilities to procure raw
material from suppliers, the Sun Daily discloses.
Malaysia-based Kinsteel Berhad (KLSE:KINSTEL)--
http://www.kinsteel.com.my/home/home.php-- is an integrated
steel manufacturer and steel millers in Malaysia. The Company
manufactures a range of long steel products used in the
manufacturing, construction and infrastructure industries. The
Company, with a product portfolio encompassing upstream,
midstream and downstream steel products, fully integrated and
streamlined manufacturing processes, serves the need for steel in
the region. It produces mild steel round bars, high tensile
deformed bars, angle bars and flat bars servicing, in particular,
the construction and infrastructure industries. There steel bars
and sections manufactured by the Company are also known as long
products. The Company has eight production lines with a total
steel bars production capacity of 800,000 metric tonnes per
annum. The types of steel bars produced are round and deformed
bars, angle bars, U-channel, wire rods and flat bars.
In October 2016, Kinsteel triggered the criteria pursuant to
Practice Note 17 (PN17) of the Main Market listing requirements
of Bursa Malaysia Securities Bhd. The company was considered a
PN17 company pursuant to paragraph 2.1(d) of PN17 as the
company's auditors have expressed a disclaimer opinion in the
Kinsteel's latest audited financial statements for the financial
year ended June 30, 2016.
====================
N E W Z E A L A N D
====================
PROPERTY VENTURES: Liquidator Settles Suit with Former Directors
----------------------------------------------------------------
Chris Hutching at Stuff.co.nz reports that a long-running lawsuit
with potentially hundreds of millions of dollars at stake has been
settled out of court by the liquidator of Christchurch developer
Dave Henderson's Property Ventures group of companies.
According to the report, liquidator Robert Walker's claim was
against lawyer Austin Forbes QC, Gordon Hansen, Alister Spedding,
Adolf De Roos, Daniel Godden and their insurers. The former
directors strongly denied liability.
Wellington-based Walker's action was funded by Auckland litigation
company SPF No 10, a subsidiary of LPF Group, Stuff says.
Stuff relate that Mr. Walker said he opted for settlement ahead of
a scheduled February High Court hearing that could have lasted
months, after weighing up the costs and likely benefits.
"That's the calculation you have to make," the report quotes
Mr. Walker as saying.
More information would be provided in a report finalising the
liquidation in coming months, he said, Stuff relays.
Stuff says Mr. Walker had sought information about the financial
position of the directors and therefore any likely recovery from a
court case.
Neither Mr. Walker nor the ex-directors would reveal the size of
the latest settlement, although other players on the business
scene described it as likely to be minimal, Stuff notes.
There have been about six rulings concerning financial disclosure
and security of costs leading up to the settlement.
According to Stuff, Mr. Henderson had earlier been dropped from
the suit and Mr. Walker negotiated an out of court settlement with
Property Ventures auditors PwC and former valuers Fright Aubrey.
Mr. Walker's pursuit of various parties involved with the Property
Ventures group involved more than 40 court rulings, but none of
them resulted in a substantial financial result, Stuff relates.
Stuff says the settlement has helped bring the Property Ventures
saga towards a close, although there may be further legal tussles
between Messrs. Walker and Henderson over other matters.
Mr. Henderson's interests have also purchased 10 securities or
mortgages that give rights to some money recovered by Mr. Walker,
Stuff states.
Interests associated with Mr. Henderson are understood to have
bought back the mothballed SOL Square buildings in Lichfield and
Tuam Streets housing several former bars and restaurants, Stuff
adds.
Property Ventures Limited(PVL), the central company of the
David Henderson property development ventures, was put into
receivership in March 2010. The company was placed into
liquidation in July 2010 owing about NZ$70 million mostly to
finance companies.
=====================
P H I L I P P I N E S
=====================
PHILIPPINE TELEGRAPH: Set to Implement Capital Restructuring Plan
-----------------------------------------------------------------
Miguel R. Camus at the Philippine Daily Inquirer reports that
listed Philippine Telegraph & Telephone Corp. (PT&T) is poised to
implement a capital restructuring plan that would settle long-
running obligations ahead of the entry of a foreign strategic
partner.
A key feature of the plan, according to PT&T chief operating
officer Miguel Bitanga, is the conversion of its creditors into
preferred shareholders, which was outlined under the company's
court-mandated rehabilitation, the Inquirer relates.
This was linked to a series of steps, including increasing PT&T's
authorized capital. This would pave the way for the entry of a
strategic partner, deemed crucial in PT&T's goal of becoming a
third telco player to challenge incumbents PLDT Inc. and Globe
Telecom, the report says.
"This is one of the things we are now resolving, the debt
situation," the Inquirer quotes Mr. Bitanga as saying.
PT&T chair Salvador B. Zamora II earlier told the Inquirer that
PT&T, established in 1962 and was once a rival to telco giant PLDT
Inc., had accumulated debts of about PHP12 billion under its
previous owners.
When Mr. Zamora's group took over in the middle of 2017, it tapped
SGV & Co. to conduct an audit on PT&T for its capital
restructuring, Mr. Bitanga said, the Inquirer relays.
"SGV is wrapping up its audit. Then we can meet with the PSE
[Philippine Stock Exchange] and discuss the next steps," he said.
He said PT&T was still in talks with foreign groups for tie-ups,
the Inquirer relays.
Asked about a [GMA News Online] report on the company having
advanced talks with a Korean telco, Mr. Bitanga said this was for
a "specific purpose" and not necessarily for the latter to be its
operating partner, according to the Inquirer.
He declined to name the Korean group. However, Mr. Zamora earlier
told the Inquirer that PT&T was in talks with South Korea's LG
Plus, part of South Korean conglomerate LG Corp.
According to the Inquirer, Mr. Bitanga said PT&T also remained in
talks with China Telecom, which was named by the Duterte
administration as China's candidate amid calls for a third telco
player in the Philippines.
PT&T, which has fixed-line internet operations in Metro Manila and
is eyeing to eventually enter the mobile business, is among
several local groups vying for this status, given the current
administration's desire for more competition in the
telecommunications space, the Inquirer says.
The Inquirer says incumbents PLDT and Globe Telecom, aware of the
looming threat, said they would ramp up spending to bolster their
networks, especially in terms of high-speed mobile and fixed
internet.
PLDT earlier said it would raise capital spending in 2018 to PHP50
billion while Globe will spend $850 million (PHP42 billion) this
year, the report adds.
Philippine Telegraph and Telephone Corporation operates as a
telecommunications company in the Philippines. It has three
segments: Local Exchange Carrier, Business Convergence, and Retail
Distribution Network.
====================
S O U T H K O R E A
====================
BOOYOUNG GROUP: Prosecutors Raid Offices in Graft Probe
-------------------------------------------------------
Yonhap News Agency reports that prosecutors raided the offices of
Booyoung Group on Jan. 9 as part of a probe into a string of
suspected irregularities involving its chairman.
Investigators from the Seoul Central District Prosecutors' Office
raided Booyoung Housing headquarters and other properties in
central Seoul to confiscate evidence, including accounting books
and computer hard drives, the office said, Yonhap relays.
According to Yonhap, the prosecutors are looking into allegations
that Booyoung Housing chairman and chief executive Lee Joong-keun
is involved in a series of crimes, from tax-dodging to managing a
slush fund.
With some 22 trillion won (US$26.2 billion) in assets, Booyoung is
South Korea's 16th largest conglomerate which focuses on apartment
construction and leisure facilities, Yonhap discloses.
The National Tax Service filed a complaint with the prosecution in
April last year, after a tax probe into Booyoung and the chief,
Yonhap says.
Yonhap relates that the Fair Trade Commission, the state anti-
trust watchdog, also requested a prosecution investigation into
suspicions that Mr. Lee avoided regulations by falsifying
ownership disclosure for companies run by his relatives.
Mr. Lee is also seen implicated in a massive corruption scandal
that brought down former President Park Geun-hye early last year,
Yonhap notes. Mr. Lee allegedly asked Park's longtime friend Choi
Soon-sil to use her influence to have the government tax agency
close its case against him and his company, in return for a
donation to a foundation allegedly controlled by Choi. Lee did not
make the donation because Choi refused his proposal.
Prosecutors are also looking into suspicions that he secretly
transferred some KRW270 billion of slush fund to an account in
Cambodia, Yonhap adds.
Prosecutors have banned Lee from leaving the country and are
expected to summon him after they examine the seized evidence.
*********
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,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***