/raid1/www/Hosts/bankrupt/TCRAP_Public/180117.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 17, 2018, Vol. 21, No. 012
Headlines
A U S T R A L I A
ABSOLUTE EMBROIDERY: Second Creditors' Meeting Set for Jan. 23
QUEST CARE: Supreme Court Appoints Liquidators
S&S PARTNERS: Second Creditors' Meeting Set for Jan. 23
WAYS PHONE: Second Creditors' Meeting Set for Jan. 22
C H I N A
EHI CAR: Fitch Places 'BB-' IDR on Rating Watch Negative
HNA GROUP: Problems Mount as Airlines Delay Payments
HYDOO INTERNATIONAL: Fitch Affirms B- IDR; Outlook Stable
JIANGSU ZHONGNAN: S&P Assigns 'B' CCR, Outlook Stable
PARKSON RETAIL: Tender Offer No Impact on Moody's B3 CFR
SHANDONG RUYI: Moody's Rates US$300MM 5-year Sr. Unsec. Notes B3
I N D I A
AARCOT CERAMIC: CRISIL Moves D Rating to Not Cooperating
ABJA INVESTMENT: S&P Rates US$-Denom. Nonguaranteed Notes 'BB-'
ALAKNANDA HYDRO: CARE Reaffirms D Rating on INR2,147.94cr Loan
AMA INDUSTRIES: CRISIL Withdraws B Rating on INR3.0MM Cash Loan
BHAGAWATI INDIA: CARE Reaffirms B+ Rating on INR15.91cr LT Loan
BHAGWANDAS METALS: CRISIL Reaffirms B+ Rating on INR3MM Loan
BHAWNA HOUSING: CRISIL Moves B Rating to Not Cooperating Category
BLUEBERRY INDUSTRY: CARE Assigns B+ Rating to INR15cr LT Loan
DHANA JEWEL: CRISIL Assigns B+ Rating to INR3.5MM Cash Loan
ECKO CABLES: CRISIL Moves B- Rating to Not Cooperating Category
EZA GOLD: CARE Assigns B Rating to INR6cr LT Loan
GOURAV POULTRIES: CARE Reaffirms B- Rating on INR10.29cr Loan
INTEGRATED THERMOPLASTICS: CARE Moves D Rating to Not Cooperating
JAMMU PIGMENTS: CRISIL Moves B+ Rating to Not Cooperating
JASAMRAT COTGIN: CRISIL Moves B Rating to Not Cooperating
JAY JINENDRA: CRISIL Withdraws B+ Rating on INR13.5MM Term Loan
JAY SOMNATH: CARE Raises Rating on INR10.06cr LT Loan to B+
M S SHIP: CRISIL Moves B+ Rating to Not Cooperating Category
MAHARASHTRA ENGINEERING: CRISIL Cuts Rating on INR5.7MM Loan to D
MBE COAL: CARE Hikes Rating on INR18.50cr Loan to B+
MINDSCAPE INTERNATIONAL: CARE Moves B- Rating to Not Cooperating
MITTAL PIGMENTS: CRISIL Moves B+ Rating to Not Cooperating
PATHANIA EDUCATION: CRISIL Moves B+ Rating to Not Cooperating
PBN CONSTRUCTIONS: CRISIL Moves B+ Rating to Not Cooperating
PINE EXPORTERS: CARE Moves B Rating to Not Cooperating Category
POWERCON CEMENT: CRISIL Moves B+ Rating to Not Cooperating
PRASUR ELECTRICALS: CARE Assigns B+ Rating to INR5.25cr LT Loan
RAHIL COLD: CARE Moves B Rating to Not Cooperating Category
SEGAM TILES: CARE Moves B+ Rating to Not Cooperating Category
SHREE JAGDAMBA: CARE Reaffirms B+ Rating on INR15cr LT Loan
SHREE TIRUMALA: CARE Revises Rating on INR6cr LT Loan to B
SHRI GANGA: CRISIL Moves B+ Rating to Not Cooperating Category
SHRI NAVALAI: CRISIL Reaffirms B Rating on INR5.65MM Loan
SHUBH RICE: CARE Lowers Rating on INR14.35cr LT Loan to B+
SHURU STONES: CARE Assigns B Rating to INR12cr Long Term Loan
SREEKANTH PIPES: CARE Lowers Rating on INR2cr LT Loan to B
SURYAJYOTI SPINNING: CARE Moves D Rating to Not Cooperating
TRANSSTROY INDIA: Canara Bank Files Bankruptcy Bid v. Firm
V. D. MOTORS: CARE Assigns B+ Rating to INR18cr LT Loan
I N D O N E S I A
BANK DANAMON: Fitch Places BB+ IDR on Rating Watch Positive
WIJAYA KARYA: Fitch Assigns BB Rating to Komodo Bonds
N E W Z E A L A N D
GOOD FOOD: Former Owners Ordered to Pay Sacked Worker NZ$17K
MOSSGREEN-WEBB'S: Auction House to Close if Buyer Can't be Found
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A U S T R A L I A
=================
ABSOLUTE EMBROIDERY: Second Creditors' Meeting Set for Jan. 23
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Absolute
Embroidery Pty Ltd has been set for Jan. 23, 2018, at 2:30 p.m.
at the offices of Worrells Brisbane, Level 8, 102 Adelaide
Street, in Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 22, 2018, at 6:00 p.m.
Morgan Lane and Chris Cook of Worrells Solvency & Forensic
Accountants were appointed as administrators of Absolute
Embroidery on Dec. 7, 2017.
QUEST CARE: Supreme Court Appoints Liquidators
----------------------------------------------
Helen Spelitis at The Queensland Times reports that a liquidator
has been assigned to wrap up an Ipswich healthcare organisation
and is seeking information on claims of abuse which may have
taken place inside the facility.
QT relates that a public notice published on Jan. 16 stated a
liquidator has been appointed to Quest Care Incorporated on
Whitehill Rd at Eastern Heights, formerly known as New Life
Centre.
The Supreme Court ordered the appointment of the liquidator on
October 23, the report says.
Within the notice, liquidator Peter Lucas calls for anyone who
believes they were a victim of abuse at the centre, to come
forward, according to QT.
"It has been brought to my attention that different levels of
abuse may have occurred at the Centre/s over the course of a
number of years," the notice reads, QT relays.
"Should you believe you may have a claim against the Incorporated
Association on the basis that you were the subject of abuse at
the Centre/s, please provide details of your claim to my office
before February 6, 2018.
"All claims must be provided in writing . . .."
Quest Care Incorporated offered a wide range of health and social
welfare services, often to the most disadvantaged people in the
community.
S&S PARTNERS: Second Creditors' Meeting Set for Jan. 23
-------------------------------------------------------
A second meeting of creditors in the proceedings of S&S Partners
Group Pty Ltd has been set for Jan. 23, 2018 at 11:00 a.m. at the
offices of Hall Chadwick Chartered Accountants, Level 40, 2 Park
Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 22, 2018, at 5:00 p.m.
David Allan Ingram of Hall Chadwick was appointed as
administrator of S&S Partners on Dec. 7, 2017.
WAYS PHONE: Second Creditors' Meeting Set for Jan. 22
-----------------------------------------------------
A second meeting of creditors in the proceedings of Ways Phone
Pty Ltd has been set for Jan. 22, 2018, at 9:00 a.m. at the
offices of Helm Advisory, Suite 2, Level 16, 60 Carrington
Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 19, 2018, at 4:00 p.m.
Stephen Wesley Hathway of Helm Advisory was appointed as
administrator of Ways Phone on Dec. 18, 2017.
=========
C H I N A
=========
EHI CAR: Fitch Places 'BB-' IDR on Rating Watch Negative
--------------------------------------------------------
Fitch Ratings has placed China-based car rental and services
operator eHi Car Services Limited's Long-Term Issuer Default
Rating (IDR), outstanding bonds and senior unsecured rating on
Rating Watch Negative (RWN).
The RWN reflects the reduced financial transparency and limited
visibility over the company's long-term strategy following the
proposed privatisation of the company.
KEY RATING DRIVERS
Reduced Financial Transparency: eHi has not published its 3Q17
results, which are normally released in November each year. Fitch
understand that due to the ongoing privatisation deal, the
company will comply with minimum disclosure requirements and only
publish annual reports. This reduces Fitch ability to monitor the
company's developments at a time where competitive pressure
remains intense and liquidity appears tight.
Deleveraging Commitment Less Clear: Fitch has less visibility
over management's commitment to deleveraging in light of the
potential change in shareholding. Fitch previously believed the
company would moderate capex in 2017 and keep net leverage stable
at around 3.0x, despite a sharp rise in eHi's FFO adjusted net
leverage to 3.4x at end-2016. This view was supported by Fitch
discussion with management and the tight covenants on eHi's
syndicated loans, which required that total debt/EBITDA falls
below 3.5x by end-2017. However, management is no longer bound by
the syndicated loan covenants, as the loan was repaid following
eHi's bond issuance in August 2017
Competition Remains Intense: China's car rental and services
market continues to change rapidly. eHi faces fierce competition,
particularly from CAR Inc., which has adopted an aggressive
pricing strategy since the beginning of 2017. This has not
directly affected eHi's margins in 1H 2017, but may pressure its
pricing and profitability if it continues.
DERIVATION SUMMARY
eHi has a smaller operating scale and weaker financial profile
compared to other Fitch-rated car rental operators, such as Car
Inc. (BB-/Stable), China's largest car rental operator, and
Localiza Rent a Car S.A. (BB+/Negative), Brazil's leading rental
car operator. However, eHi has lower concentration risk compared
with CAR Inc., which is exposed to one large customer. No Country
Ceiling, parent/subsidiary or operating environment aspects
affect the rating.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Fitch Rating Case for the Issuer
- 20,000 vehicles added and 10,000 vehicles disposed in 2017
- 37% revenue growth in 2017, then 4%-12% in 2018-2020 (2016:
45%)
- EBITDA margin of 45%-47% in 2017-2020 (2016: 44%)
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Fitch will review the rating after eHi announces its financial
results and when there is greater clarity over the proposed
privatisation plan.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- FFO adjusted net leverage above 3.0x for a sustained period
(2016: 3.4x)
- FFO fixed-charge coverage below 3.0x for a sustained period
(2016: 3.8x)
- EBITDA margin below 40% for a sustained period
LIQUIDITY
Tight Liquidity: eHi had satisfactory liquidity as of 3Q17, as a
USD400 million bond issuance in August 2017 largely addressed its
refinancing needs for the subsequent six to nine months. However,
Fitch expect liquidity risk to increase in 2H18, as eHi's USD200
million 7.5% bonds will mature in December 2018.
FULL LIST OF RATING ACTIONS
eHi Car Services Limited
Foreign Currency Long-Term IDR of 'BB-', placed on RWN
Senior unsecured rating of 'BB-' placed on RWN
USD400 million 5.875% senior notes due 2022 of 'BB-', placed on
RWN
USD200 million 7.5% senior notes due 2018 of 'BB-', placed on RWN
HNA GROUP: Problems Mount as Airlines Delay Payments
----------------------------------------------------
Reuters reports that some airlines affiliated with China's HNA
Group are delaying aircraft lease payments to lessors, and
Export-Import Bank of China, which is a long-term financer of the
group, has formed a team to handle the conglomerate's liquidity
issues, several banking and leasing sources said.
Executives from leasing units of Chinese lenders including Bank
of China, China Minsheng Banking Corp and Bank of Communications
have held talks with some HNA-linked airlines to recover
payments, the sources said, Reuters relates.
"Some payments have been delayed by over two months," the report
quotes one senior Beijing-based executive at a Chinese lessor as
saying. He said HNA airlines had informed the lessor that
payments would be made soon as they expected banks to support HNA
in coming months, Reuters relays.
HNA, an aviation-to-financial services conglomerate, said in a
statement to Reuters: "HNA and its subsidiaries are maintaining
stable operations, and are in the process of gradually paying
each lessor's fees as planned."
HNA's US$50 billion worth of deal-making over the past two years,
which included investments in Deutsche Bank and the Hilton hotels
group, has sparked intense scrutiny of its opaque ownership and
use of leverage, Reuters says.
In June, the Chinese government told major banks to review their
credit exposure to HNA and a handful of other non-state
companies, putting pressure on its finances, the report recalls.
Reuters relates that some of the sources from lessors and banks
said HNA's flagship Hainan Airlines and smaller ones including
Lucky Air and Capital Airlines had missed payments, while Tianjin
Airlines was seeking to extend the term for payments due this
year.
The sources declined to be named because of the sensitivity of
the matter, Reuters notes.
According to Reuters, Lucky Air, Capital Airlines and Tianjin
Airlines said in separate statements that they maintained good
relationships with their respective lessors and were operating
safely and stably.
Hainan Airlines suspended trading on Jan. 10 pending an
announcement. The reason for the share suspension is unclear, the
report says.
Tianjin Airlines has asked a Chinese lessor to delay June rental
payments for three aircraft, Reuters reports citing one source
with direct knowledge.
Reuters relates that another source said one HNA-affiliated
airline has told Bank of Communications Financial Leasing that it
will not be paying rental payments due in January. He did not
name the airline, the report states.
In the last few weeks, executives from some international lessors
have flown to China to meet executives at HNA-affiliated airlines
and thrash out a repayment plan, the sources, as cited by
Reuters, said.
"This is a widespread issue among many lessors but they
understand that a lot depends on whether banks re-open their
funding for HNA and lessors are betting on that," Reuters quotes
one financier at a European bank as saying.
In November, Airfinance Journal reported the delays in lease
rental payments and the problems have intensified since then, the
sources said, the report relays.
However, Robert Martin, the chief executive of BOC Aviation, said
his company, the leasing unit of Bank of China, did not have
problems on lease payments by HNA-linked airlines, Reuters adds.
"BOC Aviation has very strong focus on receivables management and
we ended 2017 with a collection rate of 99.9 percent. This
included airline subsidiaries of the HNA Group," Reuters quotes
Mr. Martin as saying in an e-mail.
Faced with a slew of repayment obligations and concerns about
rising financing costs, HNA had its creditworthiness downgraded
in November by S&P Global Ratings, as a result of its "aggressive
financial policy," according to Reuters.
Underlining the growing concern by lenders over the group's
repayment obligations, the Beijing-based EXIM set up a team this
month to handle HNA's debt, which the conglomerate is struggling
to repay, banking sources said, Reuters relays.
HNA has promised to pay all outstanding delayed payments by the
end of January, said a source with direct knowledge, adds
Reuters.
HNA Group Co. Ltd. offers airlines services. The Company provides
domestic and international aviation transportation, air travel,
aviation maintenance, and aviation logistics services. HNA Group
also operates holding, capital, tourism, logistics, and other
business.
HYDOO INTERNATIONAL: Fitch Affirms B- IDR; Outlook Stable
---------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of Chinese property developer Hydoo International Holding
Limited (Hydoo) at 'B-'. The Outlook is Stable. The foreign-
currency senior unsecured rating and the rating on its
outstanding USD160 million 13.75% senior unsecured bonds due 2018
have also been affirmed at 'B-', with a Recovery Rating of 'RR4'.
The ratings are supported by Hydoo's low forecast leverage of
approximately 14% as of end-December 2017, which has declined
further from 24% in 2016 following its recent asset disposals, as
well as its controlled pace of construction and land acquisition.
Hydoo's sufficient liquidity profile also supports its ratings as
it had an unrestricted cash balance of CNY976 million as of 1H17,
which was subsequently boosted by further asset disposals
(Huaiyuan and Xingning) in 3Q17 of roughly CNY689 million which
should be sufficient to cover its short-term debt of CNY1,455
million as of end-June 2017. Hydoo's ratings are constrained by
its small business scale, low non-development income and sluggish
trade centre demand.
KEY RATING DRIVERS
Trade Centre Performance Stabilised: Hydoo is focused on trade
centre development, where demand has been weak in the past few
years due to SMEs scaling down new investments; slower relocation
demand; local government delays in completing transport networks;
and lower investor appetite for commercial properties. Contracted
sales have been shrinking, with declining average selling prices
(ASP) for Hydoo from 2014 to 1H17, but Fitch are starting to see
a slowdown in this decline compared with previous years, and with
ASP starting to stabilise.
Hydoo expects ASPs to stabilise at the current reduced level, and
there are signs that trade centre demand is beginning to pick-up
as local governments have been boosting their efforts to relocate
existing distributors located in city centres to more rural
areas. This is in order to free up the land for higher economic
value-added purposes such as residential and commercial uses due
to the run-up of property prices in the past few years.
Leverage May Decline: Hydoo's leverage (net debt/adjusted
inventory) deteriorated swiftly to 24% by end-2016 from a net
cash position at end-2014 because of slower sales and continued
capex. Hydoo's plans to cut its construction pace and land
acquisitions could help it deleverage in the next two years.
Fitch may see leverage decline to below 10% by 2018, when also
considering the asset disposals of CNY892 million in 2017 and
assuming disciplined capex plans. Hydoo's large land bank of over
9 million square metres (sqm) (post-disposal), is still
sufficient for around 14 years of development based on 2016 gross
floor area (GFA) sold, giving Hydoo more flexibility in cutting
future land purchases if necessary.
Low Non-Development Income: Hydoo's rating is constrained by its
focus on trade centre development and its lack of significant
non-development income. Rental income contributed only 2% of
total revenue as of 1H17. The lack of diversification results in
Hydoo's weaker cash flow quality, and raises its operation risk
amid industry downturns. Continued weakness in the demand for
trade centres may lead to ASP cuts and a narrower margin to speed
up sales, which may substantially reduce operational cash flow
generation. Recurring EBITDA/gross interest paid is likely to
remain at the 0.1x level.
Higher Risk in Lower-Tier Cities : Hydoo's trade centres are
mainly in Tier 3 and Tier 4 cities spread across 10-12 cities to
tap relocation and urbanisation demand. Fitch believes sales are
more volatile in these cities than in more developed cities, and
demand may reach saturation faster due to the smaller populations
and GDP in these economies. Sales for the subsequent phases of
Hydoo's large-scale integrated trade centre projects (those of
400,000 sqm or larger) would hinge on continued urbanisation, but
lower-tier cities will face intense competition for financial and
human resources from other developing cities.
US Dollar Notes Refinancing in Progress: Management plans to
refinance its USD160 million bonds due 2018 with new issuance,
and has submitted an application to the National Development and
Reform Commission. Fitch will continue to monitor the progress of
NDRC's approval for Hydoo, and believes the company is able to
execute its refinancing plan - given its sufficient liquidity
position, especially after its asset disposals.
DERIVATION SUMMARY
Fitch has compared Hydoo with other trade centre developers such
as China South City Holdings Limited (CSC) (B/Stable) and Wuzhou
International Holdings Limited (CCC). Hydoo is weaker than CSC in
project location and asset quality, contracted sales scale,
margin and business diversification in non-development income.
However, Hydoo does have lower leverage (net debt/adjusted
inventory) than CSC.
Hydoo has a faster asset churn than Wuzhou and slightly wider
EBITDA margin. Hydoo's and Wuzhou's business relies heavily on
contracted sales of trade centres, and are more susceptible to
industry cycles. Hydoo's financial profile compares strongly
against that of Wuzhou with its much lower leverage, justifying
the one-notch rating difference.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch rating case for the issuer
include:
- Contracted ASP increase of 3% per year over 2018-2019
- Contracted GFA increase by 25% in 2018 and 5% in 2019
- Contracted sales of roughly CNY3.5 billion in 2018 and CNY3.8
billion in 2019
- EBITDA margin of around 20% over 2018-2019
- CNY436 million used for land bank acquisition in 2018
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
-Positive rating action will not be considered unless Hydoo is
able to boost its scale substantially by expanding its
geographical coverage beyond lower-tier cities, and is able to
sustain sales in subsequent phases of its existing projects,
while at the same time not compromising on financial metrics
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Deterioration in refinancing prospects that has a significant
adverse impact on the liquidity profile
- Sustained decline in trade centre contracted sales
- Net debt/adjusted inventory sustained above 40% (2016: 24%)
LIQUIDITY
Liquidity Stronger after Asset Sales: Fitch believe that Hydoo
has sufficient liquidity to meet its debt obligation after its
asset disposals in 2017, and given its available bank credit
facilities of over CNY2 billion. Hydoo had unrestricted cash of
CNY976 million as of end-1H17, with short-term debt of CNY1,455
million (i.e. only enough to cover 67% of its short-term debt).
Hydoo's USD160 million 2018 senior notes will also be due in
December 2018. However, liquidity has substantially improved
after the asset disposals for CNY892 million.
FULL LIST OF RATING ACTIONS
Hydoo International Holding Limited
Long-Term IDR affirmed at 'B-'; Outlook Stable
Senior unsecured foreign-currency rating affirmed at 'B-';
Recovery Rating of 'RR4'
USD160 million 13.75% senior unsecured notes due 2018 affirmed at
'B-'; Recovery Rating of 'RR4'
JIANGSU ZHONGNAN: S&P Assigns 'B' CCR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings assigned its 'B' long-term corporate credit
rating to China-based Jiangsu Zhongnan Construction Group Co.
Ltd. (Zhongnan). The outlook is stable.
The rating reflects Zhongnan's growing contracted sales and
established market positions in China's Jiangsu province.
However, the company's high financial leverage to support its
high-growth aspirations and its moderate concentration in lower-
tier cities constrain the rating. S&P said, "We believe the
company's rapid expansion may create more cash flow pressure if
there is a slowdown in China's property market, since sales in
tier three and four cities are even more susceptible to policy
and credit tightening. In our view, the company's expansion into
high-tier cities will also increase the execution risk given
substantial established competition." In addition, due to its
large exposure in lower-tier cities and the lower-margin
construction business, the company's profit margin is lower than
property peers with similar business model and scale.
S&P said, "We view Zhongnan's refinancing risk as higher than the
industry average due to sizable short-term debt maturities.
Nonetheless, we believe the company's proven sales execution and
market position, rapid contracted sales growth, and various
financing channels could temper these risks.
"We believe the company has an established market position in
Jiangsu and good brand recognition, particularly in its core and
home city of Nantong. Zhongnan also has moderate geographic
diversification with about 100 projects spread across 31 cities,
with no cities accounting for more than 20% of its land bank. Its
top five cities--Nantong, Nanjing, Suzhou, Qingdao, and Xuzhou--
also represent not more than 20% of Zhongnan's total land bank,
respectively. With fast sales execution and aggressive land
acquisitions, the company's contracted sales grew to Chinese
renminbi (RMB) 37 billion in 2016, from RMB22.5 billion in 2015.
We forecast the contracted sales will further increase to RMB55
billion-RMB65 billion in 2017 and 2018.
"Notwithstanding this sales growth, we believe some key risks
remain for Zhongnan's expansion strategy and contracted sales
outlook. The company sees lower sell-through rates in some of its
projects in tier-three and tier-four cities due to slower
inventory turnover. Although its land reserves appear quite
sizable, with unsold reserves of about 18 million square meters
(sqm), about 50% of this is in tier-three and tier-four cities,
such as Tangshan, Xuzhou, Yancheng, and Heze. In our view, the
sustainability of high sales growth in lower-tier cities is
uncertain given that sales volumes in higher-tier cities have
slowed in 2017. In addition, Zhongnan aims to increase its
exposure to higher-tier cities that have good growth potential
such as Shanghai, Shenzhen, and Beijing. However, we expect the
company will face strong competition as it penetrates established
markets outside its home province, highlighting the execution
risk of the company's expansion strategy.
"In our view, Zhongnan's large land reserves in lower-tier cities
are likely to cap its profitability. The company's gross profit
margin from property sales was about 18% in 2016, down from about
24% in 2015. This is due to the recognition of the lower-margin
projects from the acceleration of destocking in tier three and
four cities prior to 2015. We expect the gross profit margin from
property sales to gradually improve to about 19%-21% in the next
12-24 months upon more project completions in higher-tier cities.
In addition, the company's construction business, which as an
industry norm carries lower margins, affects its overall gross
profit margin. We expect the profit margin from the construction
business to stabilize around 13%-14% in the coming one to two
years, and revenue to experience modest growth amid an increase
in new contracts. However, the profit contribution from this
segment will likely drop gradually due to stronger growth from
property development, thereby benefiting the overall profit
margin.
Zhongnan's financial leverage will likely remain high in the next
two years due to its large debt-funded acquisitions to support
its scale expansion. We anticipate the company to maintain
continued high spending of about RMB30 billion-RMB36 billion
annually in 2017-2019 to support the rapid growth in scale. This
represents about 50%-55% of contracted sales during the same
year, moderately higher than the industry average of spending
about 40%-50% of contracted sales proceeds on land acquisition
each year.
"We forecast the company's debt-to-EBITDA ratio to increase to
about 10x in 2017-2018, then slightly drop to about 9x in 2019.
This is due to our expectation that revenue will increase upon
project completions, and this will slightly outpace the increase
in debt.
"In our view, Zhongnan's sizable short-term debt maturities make
the developer highly dependent on its cash flow from contracted
sales to maintain adequate liquidity. Zhongnan has short-term
borrowings of about RMB10 billion, which account for about 21% of
total reported debt of about RMB47 billion as of Sept. 30, 2017.
Bank borrowing and domestic bonds each represent about 40% of
total debt, with the remainder from trust and asset management
companies. Zhongnan has raised RMB4.6 billion through equity
issuance in 2016. We believe the company's various funding
channels and growing contracted sales are able to support its
short-term debt obligations and strong growth appetite.
"We assess Zhongnan as a core entity of its parent, Zhongnan
Holdings Ltd. The parent is the single largest shareholder of
Zhongnan, holding 54.26% of shares through an intermediate
holding company. Zhongnan Holdings has other smaller businesses
such as civil engineering, private capital, and financial
services. We believe Zhongnan is the key business contributor as
it accounts for the majority of the parent's revenue, profit,
assets, and debt (80%-99%).
"The stable outlook reflects our expectation that Zhongnan will
maintain its moderate contracted sales growth and fair project
execution in the coming 12 months. We expect the company will
continue to operate under high leverage while maintaining its
property development segment's profitability. We also expect the
company's property development business will become a stronger
key driver of the company's debt, revenue, and improving
profitability.
"We could lower the rating if Zhongnan's debt-funded acquisitions
are more aggressive than we expect or its contracted sales and
sell-through rate drop substantially. A debt-to-EBITDA ratio
worsening considerably from our expectation of about 10x, or an
EBITDA interest coverage ratio falling below 1x over the next 12
months, could indicate such a deterioration. We could also lower
the rating if the company's liquidity weakens. A significant drop
in the ratio of liquidity sources (cash balance and contracted
sales) to liquidity uses (such as short-term debt and land and
construction payment) would be indicative of such weakening.
"An upside is remote in the coming 12 months because we expect
the company's leverage is less likely to materially improve.
Nonetheless, we may consider raising the rating if Zhongnan's
leverage substantially improves from our expectation of a debt-
to-EBITDA ratio of about 10x. This could happen if the company's
contracted sales materially exceed our base case and the company
has better control of its debt leverage during expansion."
PARKSON RETAIL: Tender Offer No Impact on Moody's B3 CFR
--------------------------------------------------------
Moody's Investors Service says that Parkson Retail Group
Limited's (B3 negative) announcement that it has commenced a
tender offer for its outstanding USD500 million 4.5% senior
unsecured notes due May 2018, if completed, is credit positive.
However, the proposed tender offer will not have an immediate
impact on its B3 corporate family and senior unsecured bond
ratings and negative outlook.
On January 9, 2018, Parkson announced a tender offer for any and
all outstanding existing notes due in May 2018 with an
outstanding principal amount of about USD485 million. The tender
offer will expire on January 19, 2018.
Moody's does not deem this tender offer a distressed exchange --
which is considered a default event under Moody's definition --
because the holders will not incur economic loss as the tender
offer is at par value with the existing notes.
Under the offer, for each USD1,000 principal amount of the
outstanding existing notes, the holders of the existing notes
will receive USD1,010.75 in aggregate principal amount of the
proposed notes and capitalized interest.
According to the announcement, completion of the offer is subject
to the entering into of a facility agreement by the company with
a certain lender.
"Moody's view the proposed refinancing plan as credit positive,
because the repurchases -- which will likely funded by a term
loan -- should extend Parkson's debt maturity profile and thereby
alleviate near-term refinancing pressure, if completed," says
Danny Chan, a Moody's Analyst.
"In addition, the company will be able to maintain its cash
holdings for its ongoing business transformation by refinancing
its maturing debt with the new borrowings," adds Chan.
Parkson's negative outlook reflects refinancing risk and
uncertainty over the company's ability to turn around its weak
revenue and profitability.
Parkson has been rectifying its operations and business
strategies over the past 1-2 years. While some key indicators --
such as store traffic and same store sales -- showed signs of
recovery in 1H2017, these initiatives have yet to make a
significant impact on its financial performance.
Moody's estimates Parkson's adjusted debt/EBITDA will stay around
7.0x-7.5x, and retained cash flow (RCF)/net debt (including
principal guaranteed deposits) around 7%-8% over the next 12-18
months.
Parkson's B3 corporate family rating continues to reflect its
long operating history in China's highly fragmented department
store industry, its well-recognized brand name and national
presence, and the low level of collection risk in its
concessionaire sales business model.
On the other hand, the rating also reflects the company's weak
profitability and cash flows, as a result of intense competition
and rising operating costs.
Moody's will continue to closely monitor the execution of the
refinancing plan, the terms and conditions and its business
fundamentals.
A failure to complete the proposed refinancing in a timely manner
will likely result in downward rating pressure, because the
company's probability of default would rise, due to its inability
to raise the funds necessary to repay the 2018 notes. There is no
upward rating pressure, given the negative outlook. However, the
outlook could return to stable if the company (1) successfully
refinances its US dollar bond, and (2) arrests the decline in its
gross sales proceeds, operating cash flow and profit margins.
Downward ratings pressure could emerge if (1) Parkson is unable
to refinance the US dollar bond in the near team; and/or (2) its
revenue, profitability, liquidity or financial metrics
deteriorate further.
Any sign that the company is extending financial support to its
indirect owner, the Lion Group, could also pressure Parkson's
corporate family rating.
The principal methodology used in these ratings was Retail
Industry published in October 2015.
Parkson Retail Group Limited, listed on the Hong Kong Stock
Exchange, is one of the largest operators of department store
chains in China, focuses on the middle and middle-upper end of
the Chinese retail market.
At end-2017, the company was 54.97%-owned by Parkson Holdings
Berhad, a member of Malaysia's Lion Group.
SHANDONG RUYI: Moody's Rates US$300MM 5-year Sr. Unsec. Notes B3
----------------------------------------------------------------
Moody's Investors Service has assigned a definitive B3 rating to
the US$300 million, 6.95%, 5-year senior unsecured notes, due
July 5, 2022, issued by Prime Bloom Holdings Limited.
The notes are guaranteed by Shandong Ruyi Technology Group Co.,
Ltd. (Ruyi, B2 stable) and its wholly owned subsidiary, Forever
Winner International Development Limited.
The rating outlook is stable.
RATINGS RATIONALE
The definitive rating assignment follows Ruyi's completion of its
USD bond issuance, the final terms and conditions of which are
consistent with Moody's expectations, and the registration of
Ruyi's guarantee on the issued bonds with China's State
Administration of Foreign Exchange.
The provisional rating was assigned on June 19, 2017, and Moody's
ratings rationale was set out in a press release published on the
same day.
The principal methodology used in this rating was Retail Industry
published in October 2015.
Established in 2001, Shandong Ruyi Technology Group Co., Ltd. is
a vertically integrated textile company that engages in textile
manufacturing and trading, apparel manufacturing and retailing,
and cotton and wool production.
The company has three listed subsidiaries, including the Shenzhen
Stock Exchange-listed Shandong Jining Ruyi Woolen Textile Co.
Ltd., the Tokyo Stock Exchange-listed Renown Incorporated and the
Euronext Paris-listed SMCP Group (B1 stable).
=========
I N D I A
=========
AARCOT CERAMIC: CRISIL Moves D Rating to Not Cooperating
--------------------------------------------------------
CRISIL Ratings has been consistently following up with Aarcot
Ceramic Private Limited (ACPL) for obtaining information through
letters and emails dated November 30, 2017 and December 22, 2017
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Cash Credit 2.5 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Cash Term Loan 4.6 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Proposed Long Term
Bank Loan Facility 4.4 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Aarcot Ceramic Private Limited
which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on Aarcot Ceramic Private Limited is consistent with
'Scenario 2' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BBB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Aarcot Ceramic Private Limited to 'CRISIL D/CRISIL
D Issuer not cooperating'.
ACPL, incorporated in Morbi (Gujarat) in 2013, is promoted by Mr.
Jitendra Lavjibhai Dekavadiya and Mr. Lakhmanbhai Madhavbhai
Zalariya. The company has set up a factory to manufacture digital
wall tiles and started commercial operation in November 2014.
ABJA INVESTMENT: S&P Rates US$-Denom. Nonguaranteed Notes 'BB-'
---------------------------------------------------------------
S&P Global Ratings said it has assigned its 'BB-' long-term issue
rating to the proposed, U.S. dollar-denominated, senior
unsecured, nonguaranteed notes issued by ABJA Investment Co. Pte.
Ltd. (ABJA). S&P said, "At the same time, we assigned our 'BB-'
long-term issuer rating on ABJA with a stable outlook. We will
finalize the ratings on the notes upon our review of the final
issuance documentation."
ABJA is a 100%-owned subsidiary of Tata Steel Ltd. ABJA will use
proceeds from the issuance to refinance Tata Steel group's short-
term debt. As a result, S&P doesn't expect the group's cash flow
leverage profile to alter post the proposed notes issuance;
however, a reduction in short-term debt is supportive of Tata
Steel's liquidity management.
S&P said, "We assess ABJA as a core subsidiary of the Tata Steel
group because we believe ABJA is an integral part of the group
and its sole purpose is to raise funding for the group. Tata
Steel guarantees ABJA's current debt; however, the proposed notes
are not guaranteed. We expect ABJA to continue to benefit from
Tata Steel's long-term commitment to the subsidiary. Given ABJA's
core subsidiary status, we equalize our ratings on ABJA with that
on Tata Steel Ltd.
"We also rate the notes in line with the issuer credit rating on
ABJA. This is because the parent Tata Steel's key cash flow
generating assets operate in India, a jurisdiction where we
believe the priority of claims in a theoretical bankruptcy is
highly uncertain. As a result, we do not apply any notching for
the debt rating."
Tata Steel group's performance in India and Europe continues to
be in line with our expectations for the fiscal year ending March
2018. Its Indian and European operations will likely generate
EBITDA per ton of Indian rupee (INR) 11,000-INR11,500 and US$60
respectively. S&P expects production of about 13 million tons in
India and 10 million tons in Europe.
Tata Steel is entering a joint venture (JV) with Thyssenkrupp AG
for its European operations. This will have a material impact on
Tata Steel's business and financial position. As part of this
transaction, Tata Steel will transfer EUR2.5 billion of debt held
by its European operations to the JV. In addition, Tata Steel
will no longer consolidate this debt in its financial statements
once the JV is operational, which is most likely in fiscal 2020.
S&P projects this move will improve Tata Steel's ratio of funds
from operations (FFO) to debt to about 17% in fiscal 2020, higher
than its rating upgrade trigger of about 15%. Its FFO to debt was
about 12% in fiscal 2017. S&P estimates the ratio will be 14%-15%
in a scenario that the JV does not materialize.
Completion of Tata Steel's restructuring of its European assets
will help the company to focus on its Indian operations by adding
new sizable capacity. Tata Steel recently announced a plan to add
5 million tons per annum capacity (mtpa) at its Kalinganagar
facility at a capital expenditure (capex) budget of US$4.0
billion to be invested over the next 4 years. S&P believes such
capex could delay deleveraging at Tata Steel to some extent;
however, the capex will most likely occur toward the later years-
-that, is during or after fiscal 2020. In addition, Tata Steel is
also looking to acquire stressed assets in India that are going
through bankruptcy resolution.
S&P said, "We expect Tata Steel's leverage to gradually improve
as the company reduces debt using its positive free operating
cash flow, which we envisage will start from fiscal 2018. At the
same time, the company's leverage trend will significantly be
influenced by management's strategic decisions. We currently do
not factor in distress-acquisition opportunities given that they
have no fixed timelines and the impact of such acquisitions on
Tata Steel's financials is still difficult to estimate. In
addition, Tata Steel has announced plans to raise about US$2.0
billion in the form of an equity rights issuance. However, we are
uncertain of the planned use of proceeds.
"The stable outlook on the Tata Steel ratings reflects our
expectation that the group will maintain healthy margins and
stable production. In addition, we expect the group to maintain
prudent capital spending and working capital management. We would
likely raise the rating on Tata Steel should the company's FFO to
debt sustain above 15%. On the other hand, downgrade pressure
could emerge if the company's EBITDA interest coverage
deteriorates below 2.0x."
ALAKNANDA HYDRO: CARE Reaffirms D Rating on INR2,147.94cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Alaknanda Hydro Power Company Limited (AHPCL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 2,147.94 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to bank facilities of AHPCL is on account of
stretched liquidity profile resulting in continued delays in debt
servicing.
Detailed description of the key rating drivers
Key Rating Weaknesses
Stretched liquidity profile: There has been significant time and
cost overrun in the project which has been funded through
additional debt resulting in high debt servicing obligation.
However, on the other hand, the Tariff rates are on the lower
side. Consequently, the company has been reporting net loss and
there are delays in debt servicing.
Key Rating Strengths
Promoter's strength & experience in power sector: Alaknanda Hydro
Power Co Ltd (AHPCL) belongs to Hyderabad based GVK group, which
is one of the first Independent Power Plant developers in the
country. The GVK group through GVK Power & Infrastructure Limited
(GVKPIL) and its subsidiaries has substantial ownership interest
into power generating assets.
Long-term PPA in place: AHPCL has entered into long term PPA with
UPPCL for selling 88% of the power generated and the state of
Uttarakhand will be provided balance 12% of the power generated
as free energy. The initial term of PPA is 30 years from the date
of commissioning of the last unit, extendable for a further
period of 20 years on mutually agreeable terms and conditions
between AHPCL and UPPCL. The company at present gets a tariff of
INR4.76 per unit.
Alaknanda Hydro Power Company Ltd (AHPCL) is a Special Purpose
Vehicle (SPV) promoted by GVK group to set up a 330 MW (4x82.5)
run-of-the-river hydroelectric power project on Alaknanda River
at Shrinagar, Uttarakhand. The project is located on the
Alaknanda river, a major tributary of the Ganges River, a
perennial river in Uttarakhand. The project site is at a distance
of about 110 km from Rishikesh railhead, along Rishikesh-
Badrinath highway. The company has completed the project and
commenced commercial operations from June 21, 2015.
AMA INDUSTRIES: CRISIL Withdraws B Rating on INR3.0MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of AMA Industries Private Limited (AIPL) and has subsequently
withdrawn the rating on the request of the company and receipt of
a no-dues certificate from its banker. The rating action is in
line with CRISIL's policy on withdrawal of its bank loan ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3.5 CRISIL A4 (Rating reaffirmed
and Withdrawal)
Cash Credit 3.0 CRISIL B/Stable (Rating
reaffirmed and Withdrawal)
Proposed Long Term 1.5 CRISIL B/Stable (Rating
Bank Loan Facility reaffirmed and Withdrawal)
AIPL is promoted by three brothers, Mr. Iqbal Maimoon, Mr. Abdul
Maimoon, and Mr. Akhtar Maimoon. The company, incorporated in
2003 in Nagpur (Maharashtra), manufactures slurry explosives,
emulsion explosives, non-electrical explosives, and detonators;
it also trades in explosive accessories and transports
explosives.
BHAGAWATI INDIA: CARE Reaffirms B+ Rating on INR15.91cr LT Loan
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Bhagawati India Motorizer Private Limited (BIML), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 15.91 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BIML continues to
remain constrained on account of its leveraged capital structure
and weak debt coverage indicators and moderate liquidity
position. The rating is, further, continued to remain constrained
on account of volume driven business with high competition in
auto dealership industry and limited bargaining power with
principal automobile manufacturer.
The rating, however, continues to derive strength from the wide
experience of the promoters and established presence of the group
in various business segments within Madhya Pradesh (MP) and
significant improvement in Total Operating Income (TOI) along
with moderate profitability margins.
BIML's ability to improve its scale of operations with an
improvement in overall financial risk profile marked by
improvement in profit margins and better management of working
capital would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Leveraged capital structure and weak debt coverage indicators:
The capital structure of BIML stood leveraged although improved
marginally with an overall gearing of 8.03 times as on March 31,
2017 as against 8.66 times as on March 31, 2016 on account of
higher increase in net worth base as compare to increase in total
debt level.
Further, the debt service coverage indicators stood weak marked
by total debt to GCA of 18.32 times as on March 31, 2017,
improved from 20.51 times as on March 31, 2016 mainly due to
higher increase in GCA level as against increase in total debt
level. Further, interest coverage ratio also stood moderate at
1.72 times in FY17, improved from 1.53 times in FY16 owing to
decrease in interest charges.
Moderate Liquidity position: On account of high working capital
intensity, BIML's fund based limits remained almost fully
utilized during past 12 months ending November, 2017. Current
ratio remained moderate at 1.27 times as on March 31, 2017 as
compared to 1.35 times as on March 31, 2016. Operating cycle
remained comfortable at 58 days in FY17 as against 64 days in
FY16. The cash flow from operating activities has improved from
negative cash flow in FY16 to positive cash flow in FY17 mainly
due to lower working capital gap.
Volume driven business with high competition in auto dealership
industry and limited bargaining power with principal automobile
manufacturer: Indian automobile industry is highly competitive in
nature as there are large numbers of players operating in the
market like MSIL, Tata Motors, Hyundai, Honda, Toyota, Renault
etc. in the passenger vehicle segment. Original Equipment
Manufacturers (OEMs) are encouraging more dealerships to improve
penetration and sales, thereby increasing competition amongst
dealers. Entry of the global players in the Indian market has
further intensified the competition. Hence, OEMs offer various
discount schemes to attract customers. Due to very high
competition in the industry, dealers are also forced to pass on
discounts and exchange schemes to attract customer as this is a
volume driven business. Dealers' fate is also linked to the
industry scenario and performance of OEMs. BIML is dealer of
Mahindra & Mahindra (M&M) and it derives its TOI from sale of
M&M's passenger cars and spare parts. Hence, performance and
prospects of BIML is highly dependent on M&M being its principal.
Further, in this business a dealer has very less bargaining power
over principal manufacturer. The margin on products is set at a
particular level by the principal manufacturer thereby
restricting the company to earn incremental income.
Key Rating Strengths
Experienced promoters and established presence of group in Madhya
Pradesh: BIML is promoted mainly by Mr. Saurabh Singh, nephew of
Mr. Vikram Singh, who is the key promoter of Bhagawati group. Mr.
Saurabh Singh is associated with Bhagawati group over the past 10
years and is also a director in BDSPL (Bhagawati Development
Services Private Limited). He is an engineer by qualification and
is actively involved in the family business along with Mr. Vikram
Singh.
Bhagawati group was established in 1997 with the formation of
Karan Developers (KD) followed by Bhagawati Palace in Bhind. Mr.
Vikram Singh served as a director in KD for 14 years and now the
operations are looked after by his elder brother, Mr. Karan Singh
who is also the chairman of KD. Later in September 2000, BCPL was
formed to undertake warehousing and trading of agro commodities
in Bhind, MP. In 2005, BCPL started the distributorship of M&M
tractors in Gwalior. In 2002, Bhagawati Estate Warehouse Private
Limited (BEWPL) started the business of warehousing and trading
of agro commodities.
BDSPL was incorporated in the year 2005 and has been engaged in
warehousing and trading of commodities since its inception.
During FY12, BDSPL took up the distributorship of Indo Farm
tractors.
Further, BEW (K) and Bhagawati Estate Warehouse (Ashoknagar) [BEW
(A)] are also part of the Bhagawati group and are engaged in
warehousing and trading of agro commodities.
The group also has Bhagawati Traders (BT), Kirar Trading Company
(KTC), Bhagawati Tractors and Bhagawati Estate Warehouse (Dang
Guthina) under its wing.
Significant improvement in TOI along with moderate profitability
margins: During FY17, TOI of the company has improved
significantly by 34.50% over FY16 mainly on account of increase
in sale of vehicles. During FY17, BIML has sold total 1453
vehicles as against 1,120 vehicles during FY16. Further, the
profitability of the company stood moderate marked by PBILDT and
PAT margin of 3.46% and 0.45% respectively in FY17. During FY17,
PBILDT margin of the company has declined by 92 bps over FY16
owing to increase in employee and administration cost. However,
PAT margin of the company has increased by 24 bps y-o-y owing to
decrease in interest and depreciation charges. Further, the gross
cash accruals of the company has improved by 23.32% and
registered GCA of INR1.23 crore in FY17 owing to increase in
scale of operations.
BIML was incorporated in October 2013 to take up the dealership
of Mahindra & Mahindra (M&M) vehicles and servicing of auto parts
in four districts of Madhya Pradesh (MP) namely Shahdol, Mandla,
Dindori and Anuppur. BIML is a part of Gwalior based Bhagawati
group which has varied business interests in the state of Madhya
Pradesh.
The group is engaged in dealership of Mahindra & Mahindra and
Indo farm tractors through Bhagawati Cools Private Limited and
Bhagawati Development Services Private Limited. The group also
extends warehousing facilities through Bhagawati Estate
Warehouse, Kolaras. BCPL and BDSPL are also engaged in trading of
agro-commodities like wheat, potato, soya etc. Another group
entity named Bhagawati Estate Warehouse; Ashoknagar is also
engaged in warehousing and trading of agro-commodities like
potatoes and wheat.
BHAGWANDAS METALS: CRISIL Reaffirms B+ Rating on INR3MM Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on bank facilities of Bhagwandas Metals and Steel (BMS).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B+/Stable (Reaffirmed)
Letter of Credit 6.5 CRISIL A4 (Reaffirmed)
The ratings continue to reflect the modest scale of operations,
low profitability, exposure to intense competition in the steel
industry, and weak financial risk profile. These rating
weaknesses are partially offset by extensive experience of the
partners in the steel trading industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and low operating margin amidst
intense competition: Intense competition keeps the scale of
operations modest, as reflected in revenue and operating margin
of INR31.5 crore and 4.9%, respectively, for fiscal 2017. Limited
value addition and bargaining power with customers, and growing
competition from other dealers, will continue to preclude
benefits from economies of scale, in the medium term.
* Weak financial risk profile: Financial risk profile is marked
by a small networth of INR2.4 crore, and high total outside
liabilities to adjusted networth ratio of 5.2 times as on
March 31, 2017. Debt protection metrics were weak, with interest
coverage ratio of 1.3 times for fiscal 2017. With minimum
accretion to reserves and absence of any equity infusion by
partners, financial risk profile is likely to remain weak in the
medium term
Strength
* Extensive experience of partners in the steel trading industry:
The three decade-long experience of the partners in steel trading
industry, their sound understanding of market dynamics, and
established relations with suppliers and customers, will continue
to support the business risk profile.
Outlook: Stable
CRISIL believes BMS will continue to benefit from the extensive
experience of the partners in the steel industry. The outlook may
be revised to 'Positive' if higher-than-expected growth in
revenue, profitability and cash accrual, or infusion of capital
by the partners, strengthens financial metrics, including the
capital structure. The outlook may be revised to 'Negative' if
decline in revenue or profitability, or stretch in working
capital cycle, weakens the financial risk profile, particularly
liquidity.
BMS, a partnership firm, was taken over by the current partners
in 2006. The Chennai-based firm trades in iron and steel
products, such as thermos-mechanically treated bars, sheets and
plates. Mr Govind Prasad and Mrs Bobby Sonthalia are the
partners. The firm was earlier known as MGM steels, has been
renamed as BMS, from fiscal 2017.
BHAWNA HOUSING: CRISIL Moves B Rating to Not Cooperating Category
-----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Bhawna
Housing Private Limited (BHPL) for obtaining information through
letters and emails dated November 6, 2017 and December 11, 2017
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 12.5 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Bhawna Housing Private Limited
which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on Bhawna Housing Private Limited is consistent with
'Scenario 2' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BBB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Bhawna Housing Private Limited to 'CRISIL B/Stable
Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting
rating surveillance as agreed to in the rating agreement.
BHPL was set up by Mr. Bhagat Singh Baghel and his brother Mr.
Hirday Singh Baghel in 2002. The company undertakes construction
and development activity in and around Agra (Uttar Pradesh).
BLUEBERRY INDUSTRY: CARE Assigns B+ Rating to INR15cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Blueberry Industry (Blueberry), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 15.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Driver
The rating assigned to the bank facilities of Blueberry is
constrained by its proprietorship nature of constitution,
operations stabilization risk, high customer concentration risk
with dependence on the performance of Gujarat Co-operative Milk
Marketing Federation Limited (GCMMFL) and its presence in a
highly fragmented and competitive industry. The rating, however,
derives strength from the experienced proprietor, long term
agreement with Kaira District Milk Producers Co-operative Union
Limited (KDMPCUL) and GCMMFL and its entitlement for subsidy from
Assam State Government.
Going forward, the entity's ability to stabilize its operations
and derive benefit from the recently completed project as
envisaged shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Constitution as proprietorship entity: Blueberry, being a
proprietorship entity, is exposed to inherent risk of the
proprietor's capital being withdrawn at time of personal
contingency and entity being dissolved upon the death/insolvency
of the proprietor. Furthermore, proprietorship entities have
restricted access to external borrowing as credit worthiness of
proprietor would be the key factors affecting credit decision for
the lenders.
Operations stabilization risk: The entity has recently setup a
liquid milk processing plant with an aggregate project cost of
INR15.40 crore funded at debt equity of 3:1.The entity has
already started its commercial operations from November 2017.
Since plant is already operational, the project implementation
risk is mitigated, however operations stabilization risk exits.
High customer concentration risk with dependence on the
performance of GCMMFL: Blueberry will derive its entire revenue
from a single customer which exposes it to high customer
concentration risk. However, Blueberry has an agreement with
GCMMFL for processing of packaged milk and curd for 10 years with
effect from October 2016. The risk of customer concentration is
mitigated to a large extent due to its long term agreement.
However, the performance of the entity is linked with the
performance of GCMMFL as it is doing job work for GCMMFL only.
Highly fragmented and competitive industry: The milk processing
industry is highly fragmented and competitive due to presence of
huge small players owing to low entry barriers, low capital and
technology requirement. In such a competitive scenario smaller
entities like Blueberry in general are more vulnerable on account
of its small scale of operations.
Key Rating Strengths
Experienced proprietor: Mr. Kamal Deka has more than two decades
of business experience. He has an experience in the similar line
of business for around 9 years through a diary firm 'Nandin
Dairy'. Further, since 1996 he is into cable TV distribution
business, PCOs, transport, etc. In 2014 he had established a
state of art fully automated packaged drinking water plant at
Panikhaiti, Assam. He will look after the overall management of
the entity.
Long term agreement with KDMPCUL and GCMMFL: Blueberry has
entered into an agreement with KDMPCUL and GCMMFL for a period of
10 years with effect from October 2016. Under the terms of the
agreement raw milk will be procured by KDMPCUL, the raw milk will
be processed into packaged milk and curd by Blueberry and the
finished products will be marketed by GCMMFL under the brand name
of Amul, Sagar, Taaza. Besides raw milk, KDMPCUL will also supply
all packaging materials, transportation costs etc. and place
technical qualified staff at its owned cost for quality control.
Entitled for subsidy from Assam State Government: The entity is
entitled for capital subsidy of 33.33% of total investment in
setting up new plant in the state under Integrated Scheme for
Agricultural Marketing from the State Government of Assam with a
maximum capping of INR5.00 crore. The subsidy will be released in
two phases' viz. advance subsidy and final subsidy. The advance
subsidy of 50% will be available after sanction of the loan and
final subsidy after successful commercial production.
Blueberry was established as a proprietorship entity by Mr. Kamal
Deka of Guwahati, Assam for setting up a liquid milk processing
plant. The entity has entered into a tripartite agreement with
Kaira District Milk Producers Co-operative Union Limited
(KDMPCUL) and Gujarat Co-operative Milk Marketing Federation
Limited (GCMMFL). According to the agreement, raw milk will be
procured by KDMPCUL and the same will be processed into packaged
milk and curd by Blueberry. The finished products i.e., processed
milk in pouches and curd in cups will be marketed by GCMMFL.
Blueberry activities will be limited to processing of the raw
milk and its packaging for which it will be paid processing
charges.
Blueberry has setup a liquid milk processing plant with an
aggregate project cost of INR15.40 crore financed at debt equity
of 3:1. The entity has already started the commercial operations
from November 2017.
DHANA JEWEL: CRISIL Assigns B+ Rating to INR3.5MM Cash Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Dhana Jewel Craft (Dhana).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.5 CRISIL B+/Stable
The rating reflects weak financial risk profile marked by
leveraged capital structure and average debt protection metrics
and small scale of operations along with susceptibility to
intense industry competition. The rating weakness are partially
offset by the benefits that Dhana derives from its promoter's
extensive industry experience and adequate operating efficiency.
Key Rating Drivers & Detailed Description
Weakness
* Weak Financial Risk Profile: Dhana has a weak financial risk
profile, marked by leveraged capital structure and average debt
protection metrics. Gearing stood at 10.2 times as on March 31,
2017 on account of debt funded capital expenditure (capex)
incurred by the firm. Debt protection metrics marked by interest
coverage and net cash accruals to total debt (NCATD) ratios was
1.4 times and 0.04 times respectively for fiscal 2017. CRISIL
believes financial risk profile is expected to remain weak over
the medium term on account of continued reliance on bank lines
for funding its working capital requirement. Ability of the firm
to substantially increase its revenue along with healthy
accretion to reserves while ensuring lower reliance debt will be
the key rating sensitivity. Furthermore, the financial
flexibility of the firm to raise funds for the growth needs is
moderated by constitution of the entity as a proprietorship firm.
* Small scale of operations along with susceptibility to intense
industry competition: Dhana generates revenue primarily by the
way of job work for Joyalukas India Private Limited (JIPL; rated
CRISIL A/Stable) and Kalyan Jewellers. The scale of operations of
the firm remained small at INR4.15 crore in fiscal 2017. Revenue
of the firm remains susceptible to the quantum of jobs outsourced
by the principal. Furthermore, the firm faces intense competition
for several other players in the fragmented gold jewellery
industry. The intense industry competition could constrain the
pricing and operating margin.
Strengths
* Promoters' extensive experience in jewellery manufacturing
business: Mr. Cherussery Velayudhan Raveendran, the proprietor of
the firm, has been in the jewellery manufacturing business for
more than 30 years. The firm has established relationship with
major companies like JIPL, Kalyan Jewellers for whom the firm
does the job work. CRISIL believes that Dhana will continue to
benefit from its promoter's extensive industry experience and
established relationship with its client over the medium term.
* Adequate operating efficiency: The operating profitability of
the firm remained healthy with the firm earning operating profit
margin of ~18% in fiscal 2017 supported by lower fixed cost. The
operating profit margin is expected to remain steady as increase
in cost structure offsets impact of strong growth in revenues.
Outlook: Stable
CRISIL believes that Dhana Jewels Craft will continue to benefit
over the medium term from its promoter's extensive industry
experience. CRISIL further believes the financial risk profile
will remain weak marked by stretched gearing.
Upward Scenario:
* Significant increase in scale of operations and profitability
and thereby leading to better than expected cash accruals.
* Significant improvement in the financial risk profile and debt
protection metrics.
Downward Scenario:
* Deterioration in liquidity due to decline in profitability or
withdrawals by the proprietor.
* Higher than expected debt leading to deterioration in the
capital structure or debt protection metrics.
Dhana, a proprietorship firm set up by Mr. Cherussery Velayudhan
Raveendran, is engaged in the business of manufacturing
jewellery. The firm has its manufacturing unit in Thrissur. The
firm supplies its products to major player including Joyalukkas
India Private Limited (Joyalukkas; rated CRISIL A/Stable), Kalyan
Jewellers, etc.
The firm is a part of Cherussery Group. The group company,
Cherussery Credits Private Limited (Cherussery; rated CRISIL
B/Stable) is engaged in financing business. Cherussery, a non-
deposit-taking NBFC licensed by the Reserve Bank of India,
provides gold loan, property loans, SBLs, and
international/domestic money transfer services of Western
Union/Express money. The company has a customer base of around
500 members.
ECKO CABLES: CRISIL Moves B- Rating to Not Cooperating Category
---------------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of Ecko Cables Private
Limited (ECPL) to 'CRISIL B-/Stable/CRISIL A4 Issuer not
cooperating'. However, the management has subsequently started
sharing requisite information, necessary for carrying out
comprehensive review of the rating. Consequently, CRISIL is
migrating the rating on bank facilities of NKG from 'CRISIL B-
/Stable/CRISIL A4 Issuer not cooperating' to 'CRISIL B-
/Stable/CRISIL A4'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Migrated from
'CRISIL A4' Issuer Not
Cooperating)
Cash Credit 3 CRISIL B-/Stable (Migrated
from 'CRISIL B-/Stable'
Issuer Not Cooperating)
Letter of Credit 4 CRISIL A4 (Migrated from
'CRISIL A4' Issuer Not
Cooperating)
Proposed Cash 5 CRISIL B-/Stable (Migrated
Credit Limit from 'CRISIL B-/Stable'
Issuer Not Cooperating)
The ratings reflect the company's weak financial risk profile
driven by negative gearing, and its small scale of operations and
negative operating margin in the highly-fragmented cables and
wires industry. These weaknesses are partially offset by the
extensive industry experience of its promoters in the cables and
wires segment.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: ECPL's financial risk profile is
constrained by gearing of negative 0.84 time as on March 31,
2017, and interest coverage and net cash accrual to total debt
ratios of negative 1.8 time and negative 0.25 time, respectively,
in fiscal 2017.
* Small scale of operations and negative operating margin:
Despite being in business for over 36 years, scale of operations
remains small (sales of INR29.92 crore in fiscal 2017). Operating
margin is negative 4.4 percent in fiscal 2017.
Strengths
* Promoters' experience in the cables and wires segment: The
promoters have been in the cables and wires industry for over
three decades, and have established a procurement network that
meets the company's growing needs.
Outlook: Stable
CRISIL believes ECPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' if there is an increase in net cash accrual, driven
by improved profitability and revenue, and moderation in working
capital requirement, resulting in a stronger financial risk
profile, particularly liquidity. The outlook may be revised to
'Negative' if liquidity, capital structure, or profitability
weaken considerably.
ECPL, incorporated in 1981 and based in Delhi, manufactures
cables and wires. Founded by Mr Amar Singh, the company is
currently managed by his son Mr Ravinder Singh.
EZA GOLD: CARE Assigns B Rating to INR6cr LT Loan
-------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of EZA
Gold and Diamonds (EZA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6 CARE B; Stable Assigned
Short-term Bank
Facilities 7.50 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities EZA are primarily
tempered by small scale of operations with weak overall gearing
and debt coverage indicators, thin profitability margins albeit
marginal improvement, highly fragmented and competitive business
segment due to presence of numerous players, constitution of a
partnership concern with risk of withdrawal of capital and
falling demand for gold in the Indian scenario.
However, the rating derives comfort from vast experience of the
partners in retailing ornaments, growth in total operating income
and improved operating cycle days.
Going forward, the firm's ability to improve its scale of
operations, profitability, capital structure and debt coverage
indicators and efficiently utilize its working capital
requirements are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with weak overall gearing and debt
coverage indicators: The firm's networth stood negative on
account of the losses incurred during the past financial years.
The partners have infused capital to the extent of INR0.56 lakh
during FY17 in order to improve the scale of operations. Due to
the negative networth, the overall gearing also stood negative.
The interest coverage ratio stood weak at 1.06x as of March 31,
2017, improved slightly from 0.09x as on March 31, 2016 due to
decline in interest costs on the back of repayment of loans. Due
to low cash accruals at INR0.03 crore as of FY17, the total
debt/GCA stood very high at 213.98x as of March 31, 2017.
Thin profitability margins albeit marginal improvement: The
PBILDT improved from 5.62% in FY16 to 6.72% in FY17 due to higher
realisation on gold jewellery led by the firm's ability to pass
on the wastage and making charges to its customers. On account of
the profit reported by the firm, the PAT margin stood positive at
0.06% during FY17 against a negative margin during FY16.
Highly fragmented and competitive business segment due to
presence of numerous players: The firm is engaged into a
fragmented business segment and competitive industry. The market
consists of several small to medium-sized firms that compete with
each other along with several large enterprises. There are
several small sized firms and well established firms in and
around Kerala which compete with EZA. Established brands are
guiding the organised market.
Constitution of a partnership concern with risk of withdrawal of
capital: The firm was established as a partnership concern and
the risk of withdrawal of partner's capital prevails. There is
parity between the existence of the firm and the life of the
partners.
Falling demand for gold in the Indian scenario: The Indian demand
for gold has been falling for a number of reasons like,
government's regulation to disclose identity on purchase of gold
above a specified limit which enabled curbing the conversion of
black money into white, stabilising of GDP prospects and the
lowering of inflation levels along with the dramatic returns
stock markets were offering, there has been a significant fall in
investment in physical assets like gold and land which are losing
value, and a shift towards financial assets like mutual funds
etc. In the case of household demand for gold, a rough barometer
for those buying gold as an investment was 31% of demand in the
March quarter of 2012; this fell to 21% in the September quarter
of 2017.
Key Rating Strengths
Vast experience of the partners in retailing ornaments: Mr. P.K.
Antony, partner of the firm has about two decades of experience
in retailing gold ornaments. Ms.Jency Jacob and Mr.Ragi Antony,
the Managing partners have about a decade of experience in
retailing gold ornaments.
Growth in total operating income: The firm's total operating
income grew by over 12 times from INR1.59 crore during FY16 to
INR19.43 crore during FY17. The firm availed fund-based and non-
fund based facilities from financial institutions to support the
purchase of gold, diamond and platinum, at a larger scale which
lead to increase in ornaments retailed.
Improved operating cycle days: EZA purchases gold as bullion from
a Bank and diamonds and platinum from local suppliers in Kerala.
On purchase, the firm avails credit upto 100 days. The firm's
inventory period depends on the demand for gold in the economy
and the preferences of the customers. Also due to first year of
operations, the inventory period stood very high during FY16 at
1782 days, however improved to 191 days due to establishment of
the firm in the market along with better sales. EZA sells the
ornament on cash and carry basis. Due to better inventory period
and creditor days, the operating cycle also stood improved at 86
days in FY17 as compared to 1407 days in FY16. The average
utilization level of working capital facility stood at 100% for
the year ended November 30, 2017.
EZA Gold and Diamonds (EZA) was established as a partnership
concern by Ms.Jency Jacob, Mr. Ragi Antony, Mr. P.K. Antony and
Ms. Mary Antony with equal profit sharing ratio in 2014. The firm
is engaged in retailing of gold, diamond and platinum jewellery.
The metals and stone are processed into ornaments by smiths in
Kerala on job work basis. The ornaments are then retailed through
their outlet in Thrissur, Kerala. EZA deals with gold purity of
22 Karat.
GOURAV POULTRIES: CARE Reaffirms B- Rating on INR10.29cr Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Gourav Poultries India Private Limited (GPI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.29 CARE B-; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of GPI continue to be
constrained by its small scale of operations, low PAT margin,
leveraged capital structure, and working capital intensive nature
of business. The rating is further constrained by susceptibility
of margins to fluctuation in raw material prices and inherent
risk associated with the poultry industry coupled with high
competition from local players. The rating, however, derives
strength from the experienced promoters and positive demand
outlook for the poultry sector.
Going forward, the ability of the company to increase its scale
of operations while improving its profitability margins and
overall solvency position will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations and low PAT margin: The total operating
income (TOI) of GPI increased from INR16.72 crore in FY16 (refers
to the period April 01 to March 31) to INR18.09 crore in FY17 at
an annual growth rate of 8.22% mainly on account of higher
quantity sold owing to higher demand received from existing
domestic customers.
The PBILDT margin declined from 18.74% in FY16 to 16.37% in FY17
due to increase in raw material costs which could not be passed
on to the customers owing to company's presence in competitive
industry. However, the company registered a net profit of INR
0.06 crore as compared to net loss of INR 0.07 crore in FY16 on
account of reduced interest and depreciation costs.
Leveraged capital structure: The capital structure of the company
continues to be leveraged with overall gearing ratio of 2.56x as
on March 31, 2017 mainly on account of company's high reliance on
borrowings to fund various requirements of business. However, the
same improved marginally from 2.87x as on March 31, 2016 mainly
on account of repayment of term loans.
Additionally, the total debt to GCA also remained weak at 12.07x
for FY17. However, the same improved marginally from 12.73x for
FY16. The improvement was owing to decline in debt levels of the
company.
Working capital intensive nature of operations: The average
operating cycle of the company stood elongated at 253 days for
FY17 (266 days for FY16) due to high inventory level of 282 days
for FY17 as the company has to generally maintain high level of
inventory owing to long breeding period of 26 weeks before
chicken start laying eggs coupled with maintenance of large
stocks of poultry feed. As per banker, the working capital limits
remain fully utilized for the past 12 months period ended
November, 2017.
Susceptibility to fluctuation in feed prices: GPI's profitability
is vulnerable to the volatility associated with the key raw
material prices which are dependent upon prices of maize and
soybean (Agro products). As the poultry industry is virtually a
buyers' market, producers may not be able to pass on any sharp
increase in raw material prices, as the egg prices are controlled
by their own demand-supply dynamics.
Inherent risk associated with the poultry industry coupled with
high competition from local players: The 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 leads to a fall in
demand and consequent sharp crash in the egg prices.
Key Rating Strengths
Experienced promoters: GPI is a private limited company being
managed by Mr. Jai Bhagwan and Mrs. Kiran collectively. Mr. Jai
Bhagwan has total work experience of around one and a half
decades in poultry industry. Mrs. Kiran has an experience of a
half decade in the same industry. Both the directors have
adequate acumen about various aspects of business which is likely
to benefit the company in the long term.
Positive demand outlook for the poultry sector: As per APEDA,
poultry is one of the fastest growing segments of the
agricultural sector in India. The potential in the 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, one of the world's fastest growing
country is experiencing a rapid growth in its poultry sector.
Gourav Poultries India Private Limited (GPI) was incorporated in
December, 2010 by Mr. Jai Bhagwan and Mr. Vinod Kumar. The
company is currently being managed by Mr. Jai Bhagwan and Mrs
Kiran. GPI is engaged in poultry farming business at its poultry
farm located in Jind, Haryana. The company sells broiler chicks
(1 day old chick) to various poultry farmers. Besides GPI, the
directors' are also engaged in another group concerns namely
Rathi Hatcheries Private Limited (RHPL) and Rathi Feeds India
Private Limited.
INTEGRATED THERMOPLASTICS: CARE Moves D Rating to Not Cooperating
-----------------------------------------------------------------
CARE has been seeking for information from Integrated
Thermoplastics Limited to monitor the ratings vide-mail
communications dated December 12, 2017, October 31, 2017,
October 23, 2017 & October 11, 2017 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 Integrated Thermoplastics Limited bank
facilities will now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 14.50 CARE D; Issuer not
Facilities cooperating; Based on best
available information
Short-term Bank
Facilities 6.50 CARE D; Issuer not
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(s).
The ratings take into account stretched liquidity position
resulting in delays in debt servicing.
Detailed description of the key rating drivers:
Key rating weakness:
Reduced revenue and loss in FY17: The total operating income of
the company reduced from INR61.79 crore in FY16 to INR46.24 crore
in FY17, 25% fall on account of decrease in the sales volume of
PVC pipes. The company registered net loss of INR1.24 crore
during FY17.
Stretched liquidity profile: The company has been facing
stretched receivable days for the last few years. Collection
period of the company has been on a higher side and has further
increased from 79 days during FY16 to 99 days during FY17.
Consequently, the stretched liquidity along with net loss has
resulted in delays in debt servicing.
Key Rating strengths:
Experienced promoter group with established industry presence:
ITL belongs to Nandi group, a South India based industrial house,
promoted by Mr. S.P.Y Reddy. The company was originally promoted
by Mr. Simon Joseph and Mr. S.V. Raghu. Later, during FY06, ITL
was acquired by Nandi Group. Nandi Group of Industries has
presence in diversified businesses such as cement, dairy, TMT
bars, construction etc. in Andhra Pradesh/Telanagana.
Integrated Thermoplastics Ltd (ITL), erstwhile Torrent Thermo-
Plastics Limited, was originally promoted by Mr. Simon Joseph and
Mr. S.V. Raghu. Later, during FY06, ITL was acquired by the Nandi
Group of companies. ITL is engaged in the manufacturing of
fabricate Polyvinyl Chloride (PVC) pipes and fittings, tubes,
bends etc. (installed capacity of 15,000 MTPA) at its facilities
located at Medak District (Telangana). Nandi group, promoted by
Shri S.P.Y Reddy, is a South India based industrial house having
diversified business interest such as cement, dairy, PVC pipes,
construction etc.
JAMMU PIGMENTS: CRISIL Moves B+ Rating to Not Cooperating
---------------------------------------------------------
CRISIL Ratings has been consistently following up with Jammu
Pigments Limited (JPPL) for obtaining information through letters
and emails dated October 23, 2017, and December 13, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Buyer's Credit 8 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Cash Credit 12 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Standby Letter 2 CRISIL A4 (Issuer Not
of Credit Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Jammu Pigments Limited, which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Jammu Pigments Limited is consistent with 'Scenario 1' outlined
in the 'Framework for Assessing Consistency of Information with
CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Jammu Pigments Limited to 'CRISIL B+/Stable/CRISIL
A4 Issuer not cooperating'.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of JPPL, and Mittal Pigments Pvt Ltd
(MPPL). This is because the two companies, together referred to
as the Mittal group, are in the same line of business, and have a
common management and fungible funds. CRISIL had earlier combined
the business and financial risk profiles of R G Pigments Pvt Ltd
(RPPL) too. However, as the client is non-cooperative in sharing
the information of the same, CRISIL has not combined RPPL's
business and financial risk profiles for this rating exercise.
The Mittal group was established by Mr. Ramesh Kumar Agarwal and
his wife. The promoters have been in the same line of business
for over 20 years through other group entities. MPPL,
incorporated in 1991, manufactures refined lead ingots, alloys,
and oxides; and zinc oxides and alloys. The company's
manufacturing facility is in Kota (Rajasthan). JPPL, incorporated
in 2003, also manufactures lead and zinc products. Its
manufacturing facility is in Kathua (Jammu and Kashmir), which is
an excise-free zone.
JASAMRAT COTGIN: CRISIL Moves B Rating to Not Cooperating
---------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of Jasamrat Cotgin Private
Limited (JCPL) to 'CRISIL B/Stable/Issuer Not Cooperating'.
However, the management has subsequently started sharing
requisite information, necessary for carrying out comprehensive
review of the rating. Consequently, CRISIL is migrating the
rating on bank facilities of JCPL from 'CRISIL B/Stable/Issuer
Not Cooperating' to 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7 CRISIL B/Stable (Migrated
from 'CRISIL B/Stable'
Issuer Not Cooperating)
Term Loan 3.45 CRISIL B/Stable (Migrated
from 'CRISIL B/Stable'
Issuer Not Cooperating)
The rating continues to reflect the company's modest scale of
operations in a highly fragmented industry and exposure of
margins to volatility in cotton prices. These weaknesses are
partially offset by its promoters' extensive experience in the
cotton industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in a highly fragmented industry:
The scale of operations of the firm is expected to increase in
the medium term but remain at modest levels. The entry barriers
are low on account of low capital and technology intensity and
little differentiation in the end product. Moreover, high
fragmentation limits the pricing and bargaining power, leading to
lower profitability levels. CRISIL believes JCPL will continue to
face competition from many unorganized players and thus will have
limited pricing power and small scale of operations over the
medium term.
* Susceptibility of margins to volatility in cotton prices:
Operating margin of cotton yarn manufacturers such as JCPL are
susceptible to changes in cotton prices. Apart from demand and
supply factors, cotton prices are also influenced by government
policies. Thus, operating margin is expected to remain
susceptible to volatility in cotton prices.
Strengths
* Extensive experience of promoter: Prior to starting this
venture, Mr Rajpal was engaged in the same line of business
through Jaideep Trading Company (CRISIL B/Stable) and Harshgeet
Oversees (CRISIL B+/Stable), which are involved in trading of
cotton. Over the years, the promoter has established good
relationship with suppliers and customers. Thus, the extensive
experience of promoter is expected to aid the scale of operation.
Outlook: Stable
CRISIL believes JCPL will benefit over the medium term from the
extensive industry experience of its promoters. The outlook may
be revised to 'Positive' in case of successful commissioning of
the company's project, and strong revenue and profitability. The
outlook may be revised to 'Negative' in case of lower-than-
expected revenue or profitability.
JCPL was set up in June 2016 by Mr Jaideep Singh Rajpal and his
brother, Mr Paramjeet Singh Rajpal. It is setting up a cotton
ginning and oil extraction unit in Sendhwa, Madhya Pradesh, and
will commence operations in December 2016.
JAY JINENDRA: CRISIL Withdraws B+ Rating on INR13.5MM Term Loan
---------------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of Jay Jinendra Realators
Private Limited (JJRPL) to 'CRISIL B+/Stable' and had
subsequently withdrawn. However, the management has subsequently
started sharing requisite information, necessary for carrying out
comprehensive review of the rating. Consequently, CRISIL is
migrating the rating on bank facilities of JJRPL from 'CRISIL
B+/Stable' Issuer not cooperating to 'CRISIL B+/Stable' and has
withdrawn the same at the company's request and based on the no
due certificate received from the banker. The rating action is
in-line with CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 13.5 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable'
Issuer Not Cooperating;
Rating Withdrawal)
JJRPL was incorporated in 2010 in Thane by Mr Sunderlal Aklinglal
Jain and Mr Chandubhai Ramshankar Rawal. The company is
developing a commercial real estate property under name 'Jai
Vijay Industrial Estate' at Naigaon, National Highway 8, near
Vasai (Maharashtra).
JAY SOMNATH: CARE Raises Rating on INR10.06cr LT Loan to B+
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Jay Somnath Paper Mill (JSPM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 10.06 CARE B+; Stable Revised
Facility from CARE B; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of
JSPM takes into account successful completion of the project and
stabilization of operations. Further, the rating also derives
strength from the diversified experience of the promoters.
The rating, however, remained constrained on account of its
nascent stage of operations and constitution as a partnership
firm. Further, the rating remained constrained on account of
presence in highly competitive paper industry along with
susceptibility of profit margins to raw material price
volatility.
The ability of JSPM to achieve envisaged level of sales and
profitability along with efficient working capital management are
the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Successful completion of project and stabilization of operations
JSPM has successfully completed the project of set up a
manufacturing plant of kraft paper. The commercial production had
commenced from April, 2017 and FY18 is the first year of
commercial operations for the firm. Till October 2017, JSPM
reported total operating Income (TOI) INR20.21 crore with
operating profit of INR2.06 crore.
Diversified experience of promoters: The management of JSPM rests
in the hands of seven partners. Mr. GirishbhaiKathiriya, Mr.
JayrajbhaiKthiriya, Mr. VijaybhaiKathiriya, Mr.BakulbhaiViradiya,
Mr. KantilalVaghasiya, Mr. Pravin Divaskar and Mr. Rasmin
Viradiya who have experience in diversified industry viz.
construction industry, trading of copper wire, parts of
submersible pumps etc. Overall operations at JSPM are looked
after jointly.
Key Rating Weaknesses
Partnership nature of its constitution: The constitution as a
partnership firm restricts JSPM's overall financial flexibility
in terms of limited access to external funds for any future
expansion plans. Further, there is inherent risk of possibility
of withdrawal of capital and dissolution of the firm in case of
death/insolvency of partner.
High degree of competitive intensity of paper industry along with
susceptibility to volatility in prices of raw material: JSPM
operates in a competitive segment of kraft paper industry which
is affected from low profitability due to highly fragmented
industry, low entry barriers, presence of large number of
unorganized players with capacity additions by existing players
as well as new entrants. Accordingly profitability of small sized
kraft paper producers is affected who have limited bargaining
power with their customers. Raw-material accounts for around 60-
70% of the total manufacturing cost for waste paper-based kraft
paper producers. Accordingly profitability of small sized kraft
paper producers was affected who have limited bargaining power
with their customers.
Rajkot-based (Gujarat), JSPM was established in January 2016 by
Mr. Rasmin Viradiya, Mr. Bakulbhai Viradiya, Mr. Girishbhai
Kathiriya, Mr. Vijaybhai Kathiriya, Mr. Jayraj Kathiriya, Mr.
Kanthibhai Vagasiya and Mr. Mayurbhai Movaliyato carry out
business of manufacturing kraft paper. JSPM is completed a green-
field project to manufacture kraft paper with an installed
capacity of 21,000 MT per annum at its manufacturing facilities
located at Rajkot, Gujarat. JSPM commenced operations from end of
April 2017 onwards.
M S SHIP: CRISIL Moves B+ Rating to Not Cooperating Category
------------------------------------------------------------
CRISIL Ratings has been consistently following up with M S Ship
Breaking Private Limited (MSBPL) for obtaining information
through letters and emails dated December 21, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Import Letter of 6.5 CRISIL A4 (Issuer Not
Credit Limit Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of M S Ship Breaking Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on M S Ship Breaking Private Limited is
consistent with 'Scenario 4' outlined in the 'Framework for
Assessing Consistency of Information'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of M S Ship Breaking Private Limited to 'CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
MSBPL, incorporated in 1998, is engaged in ship-breaking
activities and trades in related materials. Until fiscal 2010,
the company was only into trading of iron and steel products and
thereafter started undertaking ship-breaking activities. Mr
Pankaj Agrawal, along with his son Mr Punit Agrawal, manages the
operations. The ship-breaking process is carried out at a ship-
breaking yard in Mumbai for which the company uses a plot in the
Bombay Port Trust area on a rental basis.
MAHARASHTRA ENGINEERING: CRISIL Cuts Rating on INR5.7MM Loan to D
-----------------------------------------------------------------
CRISIL Ratings has been consistently following up for information
with Maharashtra Engineering (ME) through letters and emails
dated October 23, 2017 apart from telephonic communication.
However, the issuer remains non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.5 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL B-/Stable')
Term Loan 2.8 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL B-/Stable')
Working Capital
Demand Loan 5.7 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL B-/Stable')
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of ME. This restricts CRISIL's
ability to take a forward looking view on the credit quality of
the entity. CRISIL believes that the information available for
the group is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information'
corresponding to CRISIL BB rating category or lower.
Based on the last available information, CRISIL has downgraded
the rating on bank facilities of ME to 'CRISIL D' from 'CRISIL B-
/Stable'. The downgrade reflects overdrawn working capital limits
of the group for over 30 days and delay in debt servicing.
Analytical Approach
For arriving at the rating, CRISIL had earlier combined the
business and financial risk profiles of AAPL, ME, and Axleo
Industries, as the three entities were managed by the same
promoters, had common suppliers and customers, and had
considerable cash flow fungibility. While the shareholding in the
entities remains the same, they now have limited cash flow
fungibility. Hence, CRISIL has now considered each entity's
standalone business and financial risk profiles for arriving at
the rating.
ME manufactures tractor components, primary for Mahindra and
Mahindra Ltd ('CRISIL AAA/Stable/CRISIL A1+'). The firm was
established in by Mr R S Kamble in Mumbai.
MBE COAL: CARE Hikes Rating on INR18.50cr Loan to B+
----------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
MBE Coal & Mineral Technology India Pvt. Ltd (MCMT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 18.50 CARE B+; Stable Revised
Facilities from CARE B
Long/Short term 10.00 CARE B+; Stable/CARE A4
Bank Facilities Revised from CARE B/CARE A4
Detailed Rationale and Key Rating Drivers
The revision in the ratings assigned to MCMT takes into account
the increase in operating income and improvement in the operating
margins in FY17 (refers from April1 to March 31). However, the
ratings continue to be constrained by the small scale of
operations of the company, working capital intensive nature of
operations, exposure to volatility in the prices of raw materials
and stretched operating cycle.
The ratings also factor in the experience of the promoters and
modest order book position with proven project execution
capability.
Ability to diversify and garner orders to maintain growth in
business with effective management of working capital,
maintaining profitability and timely receipt of contract proceeds
are the key rating sensitivities.
Detailed description of Key Rating Drivers
Key Rating Weaknesses
Relatively small scale of operations: The scale of operations of
MCMT continue to remain relatively small with total operating
income of INR52.74 crore in FY17 and total capital employed of
INR22.71 crore as on March 31, 2017. Further, the operations of
the company are mostly concentrated in the eastern part of the
country.
Exposure to volatility in the prices of raw materials: The
company is exposed to volatility in prices of raw materials and
finished goods as majority of the contracts of the company are on
fixed price basis.
Working capital intensive nature of operations and stretched
operating cycle: The operations of MCMT are working capital
intensive with long collection period which is mitigated to an
extent by back to back payments to creditors. Though working
capital cycle of MCMT improved to 177 days during FY17 from 296
days during FY16, it continued to remain elongated. The
improvement in operating cycle was primarily on account of
improvement in the average collection period. The overall gearing
continued to remain high at 2.75x as on Mar.31, 2017 on account
of significant amount of working capital borrowings.
Key Rating Strengths
Experienced Promoters: MCMT belongs to Kolkata based B.M. Khaitan
group, which is a well-diversified industrial house having
interest in dry batteries, tea, chemicals, construction etc.
Given the long track record of the B.M. Khaitan group in
construction & construction equipment business, technical and
business support is available to the company.
MCMT was incorporated in August, 2009 through demerger of the
coal and minerals division of Humboldt Wedag India Pvt Ltd
(HWIPL). However, the company was operating as the coal & mineral
division of HWIPL from 1976, indicating experience of more than
three decades.
Modest order book position: The outstanding order book as on
October 31, 2017 stood at INR111.28 crore. However, out of the
total orders of INR111.28 crore, orders worth INR46.95 crore are
delayed or have been kept on hold due to various reasons.
Increase in operating income and improvement in operating margins
in FY17: Net Sales increased by 27.28% during FY17 primarily due
to significant increase in contract revenue with faster execution
of contracts. Further, PBILDT margin also improved to 15.74%
during FY17 from 14.07% in FY16 on account of improved sales.
However the PAT margin declined to 1.89% during FY17 from 3.60%
during FY16 due to significant increase in interest expense.
Interest coverage though deteriorated remained moderate.
Proven project execution capability with updated technology
MCMT has technical tie-ups with various overseas entities for
design and development of equipment for the filtration,
thickening, dewatering, washing of solid-liquid suspensions, wet-
mechanical preparation of minerals and environmental technology
giving it access to world-class technology with latest
engineering advances, apart from helping in securing orders.
Stable growth prospects: Increase in government spending and
boost for the development of infrastructure sector is expected to
result in stable growth prospects for the company.
MCMT belongs to B.M. Khaitan Group of Kolkata. It is a subsidiary
of McNally Sayaji Engineering Ltd. The company is engaged in
turnkey engineering & project execution of coal and mineral
beneficiation plants, manufacturing of various material handling
equipment, trading of material handling equipments and providing
technical services.
MINDSCAPE INTERNATIONAL: CARE Moves B- Rating to Not Cooperating
----------------------------------------------------------------
CARE has been seeking information from Mindscape International
Education Society to monitor the rating(s) vide e-mail
communications/ letters dated December 23, 2017 and numerous
phone calls. However, despite CARE's repeated requests, the
society has not provided the requiste 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
Mindscape International Education Society's bank facilities will
now be denoted as CARE B-; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.08 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 October, 2016 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Weak financial risk profile: The financial risk profile of the
society is weak marked by small scale of operations, cash losses
and negative corpus fund: Despite being in operations for around
7 years, the society's scale of operations has remained small
marked by Total Operating Income (TOI) of INR2.33 crore in FY16
(Provisional, refers to the period April 01 to March 31) and
corpus fund of INR(-) 1.90 crore as on March 31, 2016.
Furthermore, the society's GCA stood negative at INR0.96 crore
for FY16. The small scale limits the society's financial
flexibility in times of stress and deprives it from scale
benefits. Although, the TOI of the society increased from INR1.10
crore in FY14 to INR2.33 crore in FY16 due to increase in the
cumulative student strength along with increase in monthly
tuition and admission fees charged from the students. The scale
of operations, however, continued to remain small.
Furthermore, the society continued to incur losses at the cash
level. In FY16, the society had losses at SBID level as well with
SBID margin of (-) 0.38% (compared to 7.8% in FY15). The loss was
mainly on account of increase in operational expenses.
Furthermore, due to high interest and depreciation expenses, the
society incurred losses at the cash level amounting to INR0.96
crore in FY16 (compared to cash loss of INR0.70 crore in FY15).
Additionally,the capital structure of the society remains weak
owing to erosion of the corpus on account of continued losses.
Though, the members of the society have regularly infused funds
in the past, the total corpus of the society continued to remain
negative as on March 31, 2016. Losses incurred by the society (at
both operational and net level) along with continuous erosion of
the net-worth have led to weak overall solvency position in the
past.
Increasing competition and limited reach: TSWS is located in
Panchkula, Haryana. This limits the enrollment in the school to
the tri-city region and nearby rural areas. Single location of
Haryana limits the penetration level for the society.
Furthermore, due to increasing focus on education in India, a
number of schools have opened up in close proximity and several
established private and government schools are already running in
and around the city.
This exposes the revenue of TSWS to competition from other
schools: High regulation in the education sector of India:
Education sector of India is placed in the concurrent list of the
constitution and thus comes under the purview of both Central and
State Government. The sector is regulated by the Ministry of
Human Resource at the national level, by the education ministries
in each state, as well as by Central bodies like University Grant
Commission (UGC) and 14 other professional councils. The
operating and financial flexibility of the education sector is
limited, as regulations governs almost all aspects of operations.
Key Rating Strengths
Experienced and qualified promoters along with competent teaching
staff & well established infrastructure: The managing trustees of
the society, Mrs Santosh Bhandari has an experience of almost
three decades in the education industry. Prior to MIES, she
worked as principal and was associated with the management of DAV
Senior Secondary School. The other trustee of the society, Mr.
Manu Bhandari, is also well qualified and together they look
after the overall operations of the school.
Buoyant prospects of Pre-school and K-12 segment in India
It is expected that the total number of schools in the K- 12
education segment will grow rapidly. The Government's thrust on
improving the country's literacy rate through higher enrolments
as well as ensuring lower drop-out rates in the K- 12 education
space is expected to drive the growth in terms of opening-up of
the new schools especially in Tier-III cities and rural areas of
the country, which will facilitate more and more opportunities to
students spread across the nation. The enrolment across primary
education has grown over the years. In an effort to expand the
reach to tier- III cities and rural areas of the country and
thereby spur enrolments, the Central government's revenue
expenditure allocation towards primary education has grown in the
past few years.
Mindscape International Education Society (MIES) got registered
under the Society registration Act-1860 on September 7, 2009.The
society was established by Mr. Manu Bhandari and Mrs. Santosh
Bhandari with an objective to provide education service. The
society is running a school under the name of "The Sky World
School" (TSWS) at Panchkula, Haryana. TSWS is Central Board of
Secondary Education (CBSE) affiliated, currently offering classes
from Pre-nursery to 8th standard.
MITTAL PIGMENTS: CRISIL Moves B+ Rating to Not Cooperating
----------------------------------------------------------
CRISIL Ratings has been consistently following up with Mittal
Pigments Private Limited (MPPL) for obtaining information through
letters and emails dated October 23, 2017 and December 13,2017
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Buyer's Credit 20 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
Cash Credit 10 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Term Loan 5 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Mittal Pigments Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Mittal Pigments Private Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Mittal Pigments Private Limited to 'CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of JPPL, and Mittal Pigments Pvt Ltd
(MPPL). This is because the two companies, together referred to
as the Mittal group, are in the same line of business, and have a
common management and fungible funds. CRISIL had earlier combined
the business and financial risk profiles of R G Pigments Pvt Ltd
(RPPL) too. However, as the client is non-cooperative in sharing
the information of the same, CRISIL has not combined RPPL's
business and financial risk profiles for this rating exercise.
The Mittal group was established by Mr. Ramesh Kumar Agarwal and
his wife. The promoters have been in the same line of business
for over 20 years through other group entities. MPPL,
incorporated in 1991, manufactures refined lead ingots, alloys,
and oxides; and zinc oxides and alloys. The company's
manufacturing facility is in Kota (Rajasthan). JPPL, incorporated
in 2003, also manufactures lead and zinc products. Its
manufacturing facility is in Kathua (Jammu and Kashmir), which is
an excise-free zone.
PATHANIA EDUCATION: CRISIL Moves B+ Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has been consistently following up with Pathania Education
Society (PES) for obtaining information through letters and
emails dated November 23, 2017 and December 13, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 7.33 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Overdraft 2.75 CRISIL A4 (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Pathania Education Society
which restricts CRISIL's ability to take a forward looking view
on the entity's credit quality. CRISIL believes information
available on Pathania Education Society is consistent with
'Scenario 1' outlined in the 'Framework for Assessing Consistency
of Information with CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Pathania Education Society to 'CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
PES was incorporated in 1984 and is managed by its managing
director Mr. Anshul Pathania. PES is engaged in providing primary
and secondary education. The society currently runs a school '
Pathania Public School (PPS). PPS is located at Gohana Road,
Rohtak (Haryana).
PBN CONSTRUCTIONS: CRISIL Moves B+ Rating to Not Cooperating
------------------------------------------------------------
Due to inadequate information and in line with the guidelines of
Securities and Exchange Board of India, CRISIL had migrated the
ratings on the bank facilities of PBN Constructions Pvt Ltd
(PCPL) to 'CRISIL B+/Stable/CRISIL A4; Issuer not cooperating' on
September 4th, 2017. However, the firm's management subsequently
shared information necessary for a comprehensive review of the
ratings. Consequently, CRISIL is migrating the ratings to 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7.52 CRISIL A4 (Migrated from
'CRISIL A4' Issuer Not
Cooperating)
Cash Credit 3.00 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable'
Issuer Not Cooperating)
Proposed Cash 0.48 CRISIL B+/Stable (Migrated
Credit Limit from 'CRISIL B+/Stable'
Issuer Not Cooperating)
The ratings continue to reflect the tender-based and working
capital-intensive nature of operations, and geographic
concentration in revenue profile. These weaknesses are partially
offset by the extensive experience of the promoter.
Key Rating Drivers & Detailed Description
Weakness
* Highly working capital intensive operation: Working capital
intensity persists, with gross current assets (GCAs) of 296 days
as on March 31, 2017. This is largely on account of stretched
receivables which was 121 days as on March 31, 2017.
* Modest scale of operation and tender-based nature of operations
Scale of operations remains small, with operating income of
INR17.13 crore in fiscal 2017. As sales is almost entirely
tender-based, revenue is dependent on ability to bid successfully
for tenders. The modest scale limits bargaining power with
customers, and constrains operating margin.
* Geographic concentration: PBN is a regional player, with 100
per cent of the works executed in West Bengal, making the
operations susceptible to any slowdown in tenders floated in
other regions or changes in government policies.
Strengths
* Extensive experience of the promoter: Benefits from the
promoter's experience of over a decade, and track record at
executing several projects for the state and central PWD and
other government entities, should continue to support the
business. The experience has helped get regular orders, as
reflected in the moderate unexecuted orders.
Outlook: Stable
CRISIL believes PCPL will continue to benefit over the medium
term from the promoter's extensive experience. The outlook may be
revised to 'Positive' if significant improvement in scale of
operations, operating profitability and cash accrual, coupled
with geographical diversification in revenue strengthens credit
metrics. Conversely, the outlook maybe revised to 'Negative' if
decline in operating margin and topline, stretch in working
capital cycle, or any large debt-funded capital expenditure,
constrains financial risk profile, especially liquidity.
Incorporated in 2007 and promoted by Mr Sanjay Kumar Agarwala,
PBN undertakes civil construction projects mainly related to
construction of buildings and warehouses for state and central
government bodies such as the Government of West Bengal, Public
Works Department, and Public Health Engineering department as a
contractor. The company is based at Siliguri, West Bengal.
PINE EXPORTERS: CARE Moves B Rating to Not Cooperating Category
---------------------------------------------------------------
CARE Ratings has been seeking information from Pine Exporters
Private Limited (PEPL) to monitor the rating vide e-mail
communications/letters dated December 6, 2017, November 16, 2017,
November 1, 2017, October 17, 2017, October 3, 2017, August 23,
2017, August 8, 2017, June 21, 2017, June 8, 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 Pine Exporters Private
Limited's bank facilities will now be denoted as CARE B/CARE A4;
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 3.50 CARE B; Issuer not
Facilities cooperating; Based on best
available information
Short term Bank
Facilities 4.59 CARE A4; Issuer not
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 ratings.
The ratings take into account fluctuating scale of operations
with low profitability, leveraged capital structure, weak debt
coverage indicators and moderate liquidity position during FY17
(refers to the period April 1 to March 31). The ratings are
further constrained on account of susceptibility of profit
margins to volatile raw material prices and foreign exchange
fluctuations along with presence in highly fragmented and
competitive wood processing industry. The ratings, however,
continue to derive strength from the experienced promoters in the
wood processing business along with established track record of
operations and location advantage. The ability of PEPL to
increase its scale of operations coupled with improvement in
profitability and solvency position with efficient working
capital management remains the key rating sensitivities.
Detailed description of the key rating drivers
At the time of last rating in December 15, 2016, the following
were the rating strengths and weaknesses (updated for details
available from ROC).
Key Rating Weaknesses
Financial risk profile marked by fluctuating scale of operations,
low profitability, leveraged capital structure, weak debt
coverage indicators and moderate liquidity position: The total
operating income (TOI) of PEPL increased and stood low at
INR16.97 crore during FY17 as against INR13.92 crore during FY16
whereas operating profit remained stable and stood low to INR0.82
crore during FY17 from INR0.84 crore during FY16. The capital
structure stood leveraged as marked by an overall gearing ratio
of 2.89 times as on March 31, 2017 as against 2.98 times as on
Macrh 31, 2016. The debt coverage indicators as marked by total
debt to GCA continued to remain weak at 37 times as on March 31,
2017, while interest coverage ratio stood at 1.26 times in FY17.
The liquidity position stood moderate as marked by current ratio
of 1.13 times as on March 31, 2017 as against 1.06 times as on
March 31, 2016, while the operating cycle remained at 97 days in
FY17.
Susceptibility of profit margins to volatility in raw material
prices and foreign exchange fluctuations: PEPL imports its entire
raw materials from various countries; hence the company is
exposed to foreign exchange fluctuation risks. Moreover the
company is exposed to fluctuations in prices of raw material;
i.e. timber, owing to difference in the price fluctuation
occurring between placing orders to suppliers on the basis of
anticipated demand and the sawing of logs against customer
specific orders.
Presence in highly fragmented and competitive wood processing
industry: Timber trading segment is highly unorganized and
witnesses intense competition due to low entry barriers and
presence of latge number of players. Hence the profit margins of
the company remain under pressure.
Key Rating Strengths
Experienced promoters in the wood processing business: PEPL was
incorporated in 2008 and it has established more than 8 years of
track record in the industry. Furthermore, the key promoter Mr.
Manoj Surana, has an experience of around three decades in the
wood processing business.
Location advantage: PEPL's manufacturing facilities are located
at Gandhidham which enjoys good road & rail connectivity leading
to better lead-time and facilitates delivery of finished products
in a timely manner. PEPL's manufacturing unit is located in the
industrial area which ensures easy raw material access and smooth
supply of finished products at competitive prices and lower
logistic expenditure (both on the transportation and storage).
Gandhidham-based (Gujarat), PEPL is a private limited company
incorporated in 2008 by Mr. Manoj Surana and Ms Rashmi Surana.
The company imports round timber logs from New Zealand as well as
from local suppliers of Gandhidham which is subsequently sawn and
sized at its saw mill into various commercial sizes as per the
requirement of its customers. The facility is located at
Gandhidham in Kutch district of Gujarat with an installed
capacity of 3600 cubic meter per month. The timber processed by
PEPL finds its application in packaging of various products apart
from use in infrastructure, building construction, interior
designing, woodwork, transportation and furniture.
POWERCON CEMENT: CRISIL Moves B+ Rating to Not Cooperating
----------------------------------------------------------
CRISIL Ratings has been consistently following up with Powercon
Cement Limited (PCL) for obtaining information through letters
and emails dated October 31, 2017 and December 13,2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.5 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
Term Loan 7.25 CRISIL B+/Stable (Issuer Not
Cooperating; Rating Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Powercon Cement Limited which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Powercon Cement Limited is consistent with 'Scenario 1' outlined
in the 'Framework for Assessing Consistency of Information with
CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Powercon Cement Limited to 'CRISIL B+/Stable Issuer
not cooperating'.
Furthermore, the company has not paid the fee for conducting
rating surveillance as agreed to in the rating agreement.
PRASUR ELECTRICALS: CARE Assigns B+ Rating to INR5.25cr LT Loan
---------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Prasur
Electricals & Engineering Co. (PEEC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 5.25 CARE B+; Stable Assigned
Short-term Bank
Facility 9.75 CARE A4 Assigned
Detailed Rationale & Key Rating Driver
The ratings assigned to the bank facilities of PEEC are
constrained by its small scale of operation, presence in highly
competitive and fragmented industry, working capital intensive
nature of operations, exposure to volatility of input materials
and leveraged capital structure with moderate debt coverage
indicators. However, the aforesaid constraints are partially
offset by its experienced management and work order position.
Going forward, ability to increase its scale of operation and
profitability margins and ability to manage working capital
effectively are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operation: PEEC is a relatively small player in
the construction business, with total operating income and PAT of
INR22.14 crore and INR0.71 crore, respectively, in FY17. Further,
the net worth base and total capital employed was low at INR3.25
crore and INR9.84 crore, respectively, as on Mar.31, 2017. As
such, the entity has a limited cushion in times of stress. This
apart, the profitability of the firm has been moderate over the
years due to volatility in the prices of input materials. The
PBILDT margin was 6.62% and PAT margin was 3.22% during FY17.
This apart, the firm has achieved revenue of INR12.5 crore in
8MFY18.
Constitution as partnership firm: PEEC, 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 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.
Working capital intensive nature of the business: PEEC's business
being construction of roads and buildings is working capital
intensive by nature. The average collection period remained in
the range of 67-88 days during FY16-FY17 as the firm executes
contracts for MES which is a government defense infrastructure
development agency. The average utilization of cash credit was
about 85% during last 12 months ended October 31, 2017. The
working capital requirement depends on the payment method
followed by the MES, which is its main client.
Low order book position: PEEC has satisfactory order book
position of INR11.84 crore as on December 11, 2017 which is 0.53x
of FY17 revenue, executable by March 2019, providing a
satisfactory long term revenue visibility.
Volatility associated with input prices: Steel, bitumen, cement
and pipes are the major inputs for PEEC, the prices of which are
highly volatile. Moreover, the firm does not have any long term
contracts with the suppliers for the purchase of the aforesaid
input materials. Hence, the profitability margins of the firm are
exposed to any sudden spurt in the input material prices. In
absence of escalation clauses in majority of contracts, any
increase in input prices will affect the profitability of the
firm.
Highly competitive intensity on account of low complexity of work
involved with sluggish economic scenario: The firm has to bid for
contracts based on tenders opened by the government departments.
Upon successful technical evaluation of various bidders, the
lowest bid is awarded the contract. Since the type of work done
by PEEC is mostly commoditised, the firm faces intense
competition from other players. The firm receives projects which
majorly are of a short to medium tenure (i.e. to be completed
within maximum period of twelve to fifteen months). Apart from
this, moderate economic growth during the last three years is
also having a negative bearing on the construction sector which
may also hinder the growth of the firm.
Key Rating Strengths
Experienced partners: The key promoter, Mr. Surendra Kumar
Prahladka (aged about 61 years) having more than two decades
decades of experience in the civil and electrical construction
industry. He looks after the overall management of the firm, with
adequate support from other directors and a team of experienced
personnel. The long experience of the directors has supported its
business risk profile to a large extent.
Reputed clientele: PEEC is empanelled with Defence (MES), CPWD,
AAI, DRDO, PWD and various PSUs like ECIL, NBCC, BEL, NHPC etc.
However its main client is MES and major part of revenue accrues
from MES. The firm has an established relation with the state
government departments and PSU's.
Established in 1993, Prasur Electricals & Engineering Co. (PEEC)
is a partnership firm which is engaged in Civil and Electrical
Construction in West Bengal. The firm has branches at Port Blair
(Andaman), Pune (Maharashtra) and its registered office is
located at Kolkata, West Bengal. The firm undertakes electrical
and civil contracts for state and local government agencies in
West Bengal, Andaman, Maharashtra and Andhra Pradesh. PEEC
secures all its contracts through tender driven open bidding
process.
The two partners Mr. Pradip Kumar Prahladka and Mrs. Sarita
Prahladka are having more than two decades of experience in
construction industry with a profit sharing ratio of 50% each.
RAHIL COLD: CARE Moves B Rating to Not Cooperating Category
-----------------------------------------------------------
CARE Ratings has been seeking information from Rahil Cold Storage
LLP (RCSL) to monitor the ratings vide e-mail
communications/letters dated July 3, 2017, August 1, 2017,
September 1, 2017, September 12, 2017, October 3, 2017,
October 4, 2017, October 9, 2017, November 1, 2017, November 6,
2017, November 30, 2017, December 23, 2017 and numerous phone
calls. However, despite CARE's repeated requests, the entity 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 ratings. The
ratings on Rahil Cold Storage LLP's bank facilities will now be
denoted as CARE B; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 3.25 CARE B; Issuer not
Facilities co-operating
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on November 3, 2016 the following were
the rating strengths and weaknesses:
Key Rating Weakness
Project implementation and stabilization risk: RCSL is
implementing green field project to provide cold storage
facilities with proposed installed capacity of 3500 MTPA. The
project is at very nascent stage and total capital cost is
INR32.04 crore with project debt/equity ratio of 2.55 times.
Fragmented nature of industry coupled with competitive nature of
business: The entity operates in the cold storage services
industry which is highly fragmented with presence of numerous
independent small-scale enterprises owing to low entry barriers
leading to high level of competition in the segment. Furthermore,
RCSL requires storing fruits and vegetables in the season itself
for future off-season sale which allow RCSL to keep the profit
margin moderately high. However, higher profit margin attracts
new players to enter in the industry and thereby competition is
bound to increase in future.
Key Rating Strenghts
Experienced promoters in different industries albeit no relevant
experience in the storage service industry: RCSL is promoted by
Shukla family led by Mr. Kaushikbhai Shukla and his son Mr. Rahil
Shukla. Mr. Kaushikbhai Shukla, also director at Rahil Builders
Private Limited, is actively involved in Agricultural activities.
Mr. Rahil Shukla will look after sales and other financial
matters at RCSL. Although, promoter possesses long experience in
the other industrial segments, they do not have any relevant
experience in cold storage facilities.
Location advantage: RCSL has a locational advantage as its
manufacturing facilities are strategically located near to the
entry point of Gujarat and Maharashtra. Also there is abundant
water availability from Narmada Canal and transportation is
available at negligible cost along with skilled and low cost
labour availability. There is also major plantation in the area
of lemon, Potato, Banana, Tomato, Carrots and Pomegranates which
will be collected directly from the farm.
Capital subsidy from the government and deduction under section
35AD of Income Tax Act, 1961: RCSL is eligible for capital
subsidy under National Horticulture Board (NHB) under the scheme
name 'Capital Investment Subsidy for Construction / Modernization
/ Expansion of Cold Storage and Storages for Horticulture
Produce'. Many activities of cold storage are included in the
exempted and the negative list for the purpose of service tax.
RCSL is also eligible for deduction of 150% of capital
expenditure incurred to set up cold storage facility under
section 35AD of Income Tax Act, 1961.
Rahil Cold Storage LLP (RCSL) was incorporated in July 2013 by
Mr. Kaushikbhai Shukla and Mr. Rahilbhai Shukla. RCSL was
incorporated with main objective to preserve fruits and food for
longer duration at its cold storage facilities, Bagodra with
total installed capacity of 3500 metric tonne per annum (MTPA).
SEGAM TILES: CARE Moves B+ Rating to Not Cooperating Category
-------------------------------------------------------------
CARE Ratings has been seeking information from Segam Tiles
Private Limited to monitor the ratings vide e-mail
communications/letters May 23, 2017, June 8, 2017, June 13, 2017,
August 19, 2017, September 21, 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's rating on Segam Tiles
Private Limited bank facilities will now be denoted as CARE
B+/CARE A4; ISSUER NOT COOPERATING.
CARE gave these ratings:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 40.00 CARE B+; Issuer not
Facilities Cooperating
Short-term Bank 3.00 CARE A4; 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 ratings.
Detailed description of the key rating drivers
At the time of last rating on October 21, 2016 the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Implementation and stabilization risk associated with the highly
leveraged project: STPL is implementing a green field project for
manufacturing of vitrified tiles with the estimated total cost of
the proposed project is INR 53.36 crore which will be financed
through a term loan of INR30 crore, promoters' contribution of
INR 18.00 crore and unsecured loan of INR 5.36 crore reflecting
high project gearing of 1.96 times. The company has incurred a
cost of INR10.88 crore (20% of the project cost) till July 4,
2016 which was funded entirely through promoters' contribution.
Owing to the high reliance on the external funding for the
project implementation and working capital management post
implementation, any delay in the project implementation or
stabilization of operations may result in lower than envisaged
cash flows.
Presence in highly competitive ceramic industry and fortune
linked with demand from real estate: STPL operates in highly
competitive and open market of ceramic industry marked by large
number of medium sized players. The industry is characterized by
low entry barrier due to negligible government policy
restrictions, no inherent resource requirement constraints and
easy access to customers and supplier. Also, the presence of big
sized players with established marketing & distribution network
results into intense competition in the industry.
Most of the demand for the porcelain floor tiles comes from the
real estate industry, which, in India is highly fragmented. The
industry is also highly sensitive to the interest rates in the
economy. Any impact on real estate industry will adversely affect
the growth rate of ceramic tiles industry.
Susceptibility of profitability to volatile raw material prices
STPL has applied for supply of natural gas with GSPC Limited,
which is one of the essential raw materials, prices of which are
volatile in nature. Apart from natural gas, prices of other raw
materials i.e. clay, sand are market driven which due to higher
demand is expected to put pressure on the margins of tile
manufacturers.
Key Rating Strengths
Experienced promoters: STPL has six partners and namely two
prmoters are Mr. Kamlesh Rajkotiya and Mr. Mahesh Rugnath hold
healthy expreince of more than a decade in ceramic industry.
Located in the ceramic hub with easy access to raw material, fuel
and labor: The manufacturing unit of STPL is located at Morbi
(Gujarat) which is one of the largest ceramic clusters in India.
Majority of ceramic tiles production in India comes from the
Morbi cluster that houses more than 600 units engaged in
manufacturing of wall tiles, vitrified tiles, floor tiles,
sanitary wares, roofing tiles and others such products. It
provides easy access to raw material, fuel and labor.
Established marketing network of associate concern: STPL would
derive benefit from the existing marketing network of is an
associate concerns i.e. Segal Ceramic Private Limited who have a
decade long track record in ceramics industry. Promoters had
setup this unit to expand its product profile to vitrified tiles.
STPL will utilize their marketing and dealer network which is
present all over India and will be later replaced by its own
setup of dealer and marketing network.
Wankaner (Gujarat)-based, STPL was incorporated in February 2016
by Mr. Kamlesh Rajkotiya and Mr. Mahesh Rugnath to setup green
field project for manufacturing of vitrified tiles with a
proposed installed capacity of 93,000 MTPA. Total cost of the
project is estimated at INR53.36 crore, which is proposed to be
funded through a term loan of INR 30.00 crore, promoters'
contribution of INR18.00 crore and remaining through unsecured
loan of Rs 5.36 crore. STPL will sell the tiles through brand
name of "Segam".
Promoters have decade long experience in ceramics industry and
have promoted Segal Ceramic Private Limited (SCPL; started in
2010) and Antique Marbonite Private Limited (AMPL; started in
2003) which are engaged in similar line of business.
SHREE JAGDAMBA: CARE Reaffirms B+ Rating on INR15cr LT Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shree Jagdamba Rice Mills (SJRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 15.00 CARE B+; Stable Reaffirmed
Detailed Rationale and key rating drivers
The rating assigned to the bank facilities of SJRM continues to
be constrained by its modest scale of operations, low
profitability margins, weak coverage indicators and working
capital intensive nature of operations. The rating is further
constrained by its dependence on the vagaries of nature, presence
in fragmented and competitive nature of industry and partnership
nature of its constitution. The rating, however, draws comfort
from experience of the partners and favorable manufacturing
location. The rating also takes cognizance of improvement in
capital structure.
Going forward, the ability of the firm to increase its scale of
operations while improving its profitability margins and overall
solvency position shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced partners: SJRM's operations are currently being
managed by Mr. Om Prakash Garg, Mrs Sunita Garg, Mr. Pankaj Kumar
and Mr. Pardeep Garg, a family run business. Mr. Om Prakash Garg
has an experience of more than four decades through his
association with this entity and its group concern. He is ably
supported by his two sons, namely Mr. Pankaj Kumar and Mr.
Pardeep Garg having an experience of one decade through their
association with this entity.
Favorable manufacturing location: SJRM is mainly engaged in
milling and processing of rice. The main raw material (Paddy) is
procured from grain markets, located mainly in Haryana. The
firm's processing facility is situated in 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 favorable
pricing terms.
Key Rating Weaknesses
Increase in total operating income albeit decline in PBILDT
margin: The total operating income of SJRM increased from
INR52.82 crore in FY16 (refers to the period from April 01 to
March 31) to INR64.66 crore in FY17 at an annual growth rate of
22.42% on account of higher quantity sold owing to higher orders
received from the existing clients. However, the PBILDT margins
declined by 97 bps and stood at 4.17% in FY17 due to increase in
administrative expenses. However, PAT margins stood in line with
previous year at 0.05% in FY17 (PY: 0.04%).
Improvement in capital structure: The capital structure of the
firm is moderate as reflected by overall gearing ratio of 1.85x
as on March 31, 2017. The same improved from 2.15x as on
March 31, 2016 mainly owing to infusion of funds amounting to
INR1.44 crore in FY17 in the form of partners' capital.
Elongated operating cycle: The operating cycle of the firm stood
elongated at 132 days for FY17 (PY: 141 days). SJRM is required
to maintain adequate quantity of raw materials and finished
products to ensure smooth production and to meet demand of
customers. Furthermore, basmati rice requires longer ageing of
the semi-finished rice for better quality, which further
elongates the inventory holding period of the firm. The firm
generally extends credit period of around one week to its
customers.
Weak debt coverage indicators: The debt coverage indicators
marked by interest coverage ratio and total debt to GCA stood at
1.48x in FY17 and 22.90x for FY17 respectively as compared to
interest coverage ratio of 1.54x in FY16 and total debt to GCA of
20.8x for FY16. The interest coverage ratio deteriorated due to
decrease in PBILDT in absolute terms coupled with increase in
interest expenses. Further, the total debt to GCA deteriorated as
compared to previous year due to decrease in gross cash accruals
in FY17.
Business susceptible to the vagaries of nature: Agro-based
industry is characterized by its seasonality, as it dependent on
the availability of raw materials, which varies with different
harvesting periods. The monsoon has a huge bearing on crop
availability which determines the prevailing paddy prices. Since
there is a long time lag between raw material procurement and
liquidation of inventory, the firm is exposed to the risk of
adverse price movement resulting in lower realization than
expected.
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. Furthermore, the concentration of
rice millers around the paddy growing regions makes the business
intensely competitive.
Shree Jagdamba Rice Mills (SJRM) was established in June 2008 as
a partnership firm and is managed by Mr. Om Prakash Garg and his
family members Mrs Sunita Garg, Mr. Pankaj Kumar and Mr. Pradeep
Garg sharing profit and losses in the ratio of 20%, 20%, 30% and
30% respectively. They collectively look after the overall
operations of the firm. SJRM is engaged in processing of paddy
with an installed capacity of 43800 tonnes per annum (TPH) of
paddy as on March 31, 2016 at its unit located at Kaithal,
Haryana. The firm is also engaged in milling and trading of rice
(income from trading constituted 20% in FY17).
SHREE TIRUMALA: CARE Revises Rating on INR6cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shree Tirumala Agro Industries (STAI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.00 CARE B; Stable Revised from
CARE B+
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of STAI continues to
be tempered by the small scale of operations along with decline
in total operating income, weak debt coverage indicators, working
capital intensive nature of operations, monsoon dependent
operations and high level of government regulation with
fragmented nature of industry. The rating, however, derives its
strengths from experienced partners with locational advantage,
increase in profitability margins and comfortable capital
structure.
Going forward, the ability of STAI to improve the scale of
operations and profitability margins in competitive environment
and utilise the working capital facilities efficiently will be
the key rating sensitivities.
Detailed Description of the key rating drivers
Key Rating Weaknesses
Small scale of operations along with decline in total operating
income: STAI was established in the year 2011, the firm has
reasonable track record of operations. The total operating income
of the firm has reduced from INR11.84 crore in FY16 to INR8.46
crore in FY17 due to decrease in sales on account of low
production of paddy in the state of Karnataka.
Weak debt coverage indicators during review period: The debt
coverage indicators of the firm remained weak during review
period, however, improving year on year marked by total debt/GCA
which improved from 16.04x in FY16 to 11.95x in FY17 on account
of increase in cash accruals. The PBILDT interest coverage ratio
of the firm stood at 1.90x in FY17 due to decrease in financial
expenses driven by repayment of term loan along with increase in
PBILDT level.
Elongated working capital cycle days: The operating cycle of the
firm increased from 200 days in FY16 to 322 days in FY17 due to
increase in average inventory days i.e, from 170 days in FY16 to
301 days FY17. The average inventory days of the firm has
increased, as the firm held the paddy and rice stocks during FY17
for a longer period in order to realize better profit margins.
The millers have to stock enough paddy by the end of each season
as the price and quality of paddy is better during the harvesting
season. The working capital utilisation of the firm for the last
12 months ended November 30, 2017 was between 75%-80%.
Partnership nature of business: STAI, 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 firm business has restricted avenues to
raise capital which could prove a hindrance to its growth.
Monsoon dependent operations and high level of government
regulation: STAI's operations are dependent on agro-climatic
conditions and may get adversely impacted in case of weak monsoon
or poor crop quality. The rice industry is highly regulated by
the government as it is seen as an important sector which could
affect the food security of the country. The Government of India
(GOI), every year decides a minimum support price (MSP) for
paddy. The sale of rice in the open market is also regulated by
the government through levy quota and fixed prices. Hence, the
firm is exposed to the risk associated with fluctuation in price
of rice. Furthermore, depending on the production capacity of the
firm, it has to make sales to FCI (Food Corporation of India) at
a fixed levy price. Therefore, companies bargaining position
weakens further.
Key Rating Strengths
Experienced partners for more than a decade in Rice mill
Industry: The partners of the firm have experience of more than a
decade in rice mill industry. Through the experience of partners
in the rice processing industry, the firm has established healthy
relationship with key local suppliers and customers as well.
Locational Advantage: The rice milling unit of STAI is located at
Raichur district in Karnataka. The manufacturing unit is located
near the rice producing region, which ensures easy raw material
access and smooth supply of raw materials at competitive prices
and lower logistic expenditure.
Increase in Profitability margins during FY17: The profitability
margins of the firm have increased in FY17. The PBILDT margin of
the firm increased by 512 bps from 8.25% FY16 to 13.37% in FY17
due to decrease in procurement cost of paddy which was sourced
directly from the local farmers in and around Raichur area of
Karnataka along with increase in sales realisation.The PAT margin
of the firm also increased by 181bps from 0.26% FY16 to 2.07% in
FY17 due to increase in PBILDT levels along with decline in
financial expenses and depreciation provision.
Satisfactory capital structure during review period: The capital
structure of the firm remained comfortable during review period.
Working capital borrowings is the major portion (around 87%) of
the debt of the firm to manage day to day operations. The debt
equity ratio and overall gearing ratio of the firm stood at 0.02x
and 1.41x respectively as on March 31, 2017 compared to 0.08x and
1.42 respectively as on March 31, 2016.
Healthy demand outlook of Rice: Rice is consumed in large
quantity in India which provides favorable opportunity for the
rice millers and thus the demand is expected to remain healthy
over medium to long term. India is the second largest producer of
rice in the world after China and the largest producer and
exporter of basmati rice in the world. The rice industry in India
is broadly divided into two segments - basmati (drier and long
grained) and non-basmati (sticky and short grained). Demand of
Indian basmati rice has traditionally been export oriented where
the South India caters about one-fourth share of India's exports.
However, with a growing consumer class and increasing disposable
incomes, demand for premium rice products is on the rise in the
domestic market.
Karnataka based, Shree Tirumala Agro Industries (STAI) was
established in the year 2011 as a partnership firm. The rice
milling unit of the firm is located at Raichur, Karnataka with
the area covering two acres. The main raw material, paddy, is
purchased from the local farmers located in and around Raichur.
The firm sells the rice majorly in the state of Karnataka. The
rice milling unit of the firm has an installed capacity of 4
metric ton of rice per day.
SHRI GANGA: CRISIL Moves B+ Rating to Not Cooperating Category
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Shri Ganga
Vehicles Private Limited (SGVPL) for obtaining information
through letters and emails dated November 23, 2017 and
December 13, 2017 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.95 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Migrated)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Shri Ganga Vehicles Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Shri Ganga Vehicles Private Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Shri Ganga Vehicles Private Limited to 'CRISIL
B+/Stable Issuer not cooperating'.
Incorporated in 1984, SGVPL is an authorised dealer for Suzuki's
motorcycles (with one showroom) and the passenger cars of Hyundai
(2 showrooms) in Sikar and Nangod District of Rajasthan. It is
promoted by Mr. Sukhbir Singh (Sikar showroom) and Mr. Ratan Lal
Burdak (Nangod showroom).
SHRI NAVALAI: CRISIL Reaffirms B Rating on INR5.65MM Loan
---------------------------------------------------------
CRISIL's rating on the long term bank facilities of Shri Navalai
Enterprises (SNE, part of Navalai group) continue to reflect
modest scale of operations in an intensely competitive industry
and below-average financial risk profile due to low networth and
accrual. These weaknesses are partially offset by the extensive
experience of the partners and diversified product profile.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit .35 CRISIL B/Stable (Reaffirmed)
Proposed Fund-
Based Bank Limits 5.65 CRISIL B/Stable (Reaffirmed)
CRISIL had assigned its 'CRISIL B/Stable' rating to long term
bank facilities of SNE vide release dated September 29, 2017.
Analytical Approach
For arriving at the ratings, CRISIL has consolidated the business
and financial risk profiles of SNE and Shri Laxmi Enterprises
(SLE), together referred to as the Navalai Group, as these are
under common management and are in similar line of business.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: The Navalai group commenced
business in fiscal 2015. Scale of operations is modest with a
turnover of INR3 crore in fiscal 2017. The building material
industry is fragmented with a large number of unorganised players
catering only to local demand, primarily to save on large
transportation costs, as price is the main differentiating
factor. Scale of operations is expected to increase over the
medium term once the group starts its ready-mix-concrete (RMC)
business.
* Below-average financial risk profile: Financial risk profile is
constrained by modest networth of INR42 lakh as on March 31,
2017. Further, net cash accrual was low at INR17 lakh in fiscal
2017. Networth is expected to remain modest over the medium term
due to low accretion to reserve. Further, the expected debt-
funded capex of INR3.5 crore for setting up of RMC plant will
lead to higher debt and gearing over the medium term.
Strengths
* Extensive experience of the partners and diversified product
basket: The promoters have an experience of around 10 years in
the construction and building material industry, which has helped
establish strong relationships with customers and suppliers. The
group presently trades building materials like sand, stones and
aggregates and proposes to venture into manufacturing of RMC.
This diversification of product profile will also support
business.
Outlook: Stable
CRISIL believes that Navalai group will benefit over the medium
term from the experience of its partners. The outlook may be
revised to 'Positive' if increase in scale of operations leads to
higher than expected cash accrual or capital infusion of fresh
capital improves the capital structure. The outlook may be
revised to 'Negative' if decline in profitability or revenue
result in low cash accrual and weaken financial risk profile,
particularly liquidity.
Navalai group, based at Ratnagiri (Maharashtra), is a trader of
building materials such as sand, aggregates (khadi) and stone.
SNE and SLE, setup in 2014, is promoted by Mr. Jitendra Sawant
and Mr. Rajendra Sawant.
SHUBH RICE: CARE Lowers Rating on INR14.35cr LT Loan to B+
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shubh Rice Exports Private Limited (SREPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 14.35 CARE B+; Issuer not
Facilities cooperating, Revised
from CARE BB-
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SREPL to monitor the
rating(s) vide e-mail communications/letters dated December 8,
2017 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requiste 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. In line with the
extant SEBI guidelines CARE's rating on Shubh Rice Exports
Private Limited's bank facilities will now be denoted as CARE B+;
ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised on account of decline in scale of
operations, deterioration in capital structure, debt coverage
indicators and elongation of operating cycle
Detailed description of the key rating drivers
The revision in the rating takes into consideration the following
weaknesses:
Decline in scale of operations: The total operating income (TOI)
of SRE had declined from INR46.02 crore in FY16 (refers to the
period April 01 to March 31) to INR39.45 crore in FY17 mainly on
account of lower quantity sold owing to lower demand received
from existing customers.
Deterioration in capital structure: The overall gearing ratio of
the company deteriorated from 0.85x as on March 31, 2016 to 3.71x
as on March 31, 2017 mainly on account of higher utilization of
working capital limits as on last balance sheet date.
Deterioration of debt coverage indicators: The debt coverage
indicators as marked by interest coverage ratio and total debt to
GCA stood at 1.44x and 30.23x respectively for FY17 as against
2.26x and 3.14x respectively for FY16.
Elongation of operating cycle: The operating cycle of the company
stood elongated at 113 days for FY17 as compared to 63 days for
FY16. The elongation was mainly due to increase in average
inventory period.
Shubh Rice Exports Private Limited (SREPL) was incorporated in
July, 2013, however, the commercial operations commenced in
September, 2014. The company is currently being managed by Mr.
Upkar Chand and Mr. Rajesh Kumar. The company is engaged in
processing of paddy at its manufacturing facility located at.
Patiala, Punjab having an installed capacity of 73000 metric
tonnes per annum (MTPA) as on March 31, 2017.
SHURU STONES: CARE Assigns B Rating to INR12cr Long Term Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Shuru
Stones LLP (SSL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.00 CARE B; Stable Assigned
Rating Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SSL is primarily
constrained on account of project implementation risk which is
debt funded in nature and risk associated with vulnerability of
margins to fluctuation in raw material prices and foreign
exchange rates. The rating is, further, constrained due to its
presence in a highly competitive marble industry along with
linkage to cyclical real estate sector and constitution as a
partnership concern.
The rating, however, derives strength from experienced management
and location advantage with ease of availability of raw material
and labor.
The ability of the firm to successfully complete its project
within achievement of envisaged level of TOI along with
profitability and efficient working capital management would be
the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Project implementation risk: SSL undertook greenfield project to
set up plant for processing of marble and granite slabs. The firm
had envisaged total project cost of INR23.45 crore towards the
project to be funded through term loan of INR12.00 crore and
promoter's contribution INR 11.45 crore. As on December 16, 2017,
the firm has incurred total cost of INR7.01 crore towards the
project funded through promoter's contribution of INR 7.01 crore.
The firm has envisaged to commence its operations from first week
of March, 2018.
Vulnerability of margins to fluctuation in raw material prices
and foreign exchange rates: The firm will procure raw materials
mainly from Rajasthan. The profitability of the firm is
vulnerable to any adverse movement in raw material prices as the
firm will not be immediately able to pass on the increased price
to its customer.
SSL will be exposed to foreign exchange fluctuation risk
considering that the firm will generates major income in foreign
currency.
Presence in a highly competitive marble industry and linkage to
cyclical real estate sector: The industry is primarily dependent
upon demand from real estate and construction sector across the
globe. The real estate industry is cyclical in nature and is
exposed to various external factors like the disposable income,
interest rate scenario, etc. Any adverse movement in the macro-
economic factors may affect the real estate industry and in turn
business operations of SSL. In addition, its constitution as a
partnership concern led to risk of withdrawal of capital.
Key Rating Strengths
Experienced management: Mr. Harsh Singhvi and Ms Khushboo are the
partners of the firm. Mr. Harsh Singhvi is Graduate by
qualification and has an experience of 7 years. He will look
after overall management, strategy and policy making functions of
SSL and will be supported by Ms Khushboo, who is M.com by
qualification. She will look after accounts function of SSL.
Location advantage with ease of availability of raw material and
labor: SSL's processing facility of marbles is situated in
Rajasthan which has the largest reserve of marbles in India with
estimated reserves of 1,100 million tons accounting of more than
91% of the total marble reserves of the country. There are many
units located in the cities of Rajasthan mainly in Udaipur,
Chittorgarh and Kishangarh which are engaged in the business of
mining and processing of marbles. Further, skilled labour is also
easily available by virtue of it being situated in the marble
belt of India. The company procures marble blocks from domestic
market.
Jaipur(Rajasthan)-based SSL was formed in April 2017 as a limited
liability partnership firm by Ms Khushboo and Mr. Harsh Singhvi
with an objective to set up a greenfield project for the
manufacturing of marble and granite slabs. SSL has envisaged that
project will be completed by last week of January, 2018 and is
expected to commence its operations from first week of March,
2018. The plant of the firm will have installed capacity of 12
Lakh Square Feet Per Annum (LSFPA) of processing of marble and
granites. The raw material of the firm will be marble and
granites stones which it will procure from local dealers in
Rajasthan region. The firm will generate revenue from export as
well as sell in the domestic market.
SREEKANTH PIPES: CARE Lowers Rating on INR2cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sreekanth Pipes Private Limited (SPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2 CARE B; Issuer not
Facilities cooperating; Revised
from CARE B+
Detailed Rationale & Key Rating Drivers:
CARE has been seeking for information from Sreekanth Pipes
Private Limited to monitor the ratings vide-mail communications
dated December 19, 2017, December 12, 2017 & December 7, 2017
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's rating on Sreekanth Pipes Private Limited bank facilities
will now be denoted as CARE B/CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings take into account the small scale of operations, low
profit margins due to competition and volatility in raw material
prices, supplier concentration coupled with low bargaining power,
weak debt coverage indicators and working capital intensive
nature of business. The ratings are, however, underpinned by
satisfactory experience of the promoters, and established market
channel. The ability of the company to improve the scale of
operation and liquidity profile are the key rating sensitivities.
Detailed description of the key rating drivers:
At the time of last rating on October 7, 2016 the following were
the rating strengths and weaknesses.
Key rating weakness:
Small scale of operations: Income from continuing operations has
increased from INR22.74 crore in FY13 to INR33.34 crore in FY15
at CAGR of 21.08%. The growth in revenue over the years was
backed by an increase in sales volume of PVC pipes & fittings due
to increase in demand of pipes & fittings from civil construction
projects (mainly irrigation, water supply and sanitation).
However, the scale of operations of the company remained small
with low net worth base of INR2.38 crore during FY15
(Provisional).
Low profit margins due to volatility in raw material prices: The
PBILDT margin of the company has remained range bound between 4%-
6% over the years. The raw material prices are extremely volatile
in nature (with the prices of PVC resins and chemicals driven by
crude oil prices). Since the raw material cost is the major cost
(comprising around 85% of cost of sales), fluctuation in raw
material price would affect the cost of sales and profit margins.
As the company has small scale of operations, it lacks the
bargaining power against its suppliers and also finds it
difficult to pass on the increase in cost to its customers. The
PAT margin has also remained low over the years due to low PBILDT
and increasing financial charges over the years.
Weak debt coverage indicators: The debt coverage indicators of
the company marked by interest coverage and Total debt/GCA
ratios, has been weak over the years. However, the interest
coverage marginally improved from 1.48x in FY13 to 1.55x in FY15
(Provisional) due to marginal improvement in operational profit.
Furthermore, the total debt/ GCA improved from 11.95x in FY13 to
8.36x in FY15 (Provisional) due to similar debt levels and
marginal improvement in cash accruals over the years.
Key Rating Strengths:
Experienced Promoters
SPPL belongs to Nandi Group, a South India based industrial
house, promoted by Mr. SPY Reddy. He is a Graduate in Engineering
(Mechanical) and worked in M/s Baba Atomic Research Centre,
Mumbai during 1973 to 1977. He is the Chairman of Nandi Group of
Industries and has also been elected as Member of Parliament (MP)
from Nandyal Constituency.
Established marketing channel: SPPL has established goodwill with
the end users and the distributors of the products due to the
established brand name of Nandi group which has presence in
diversified business. The company is operating in fourteen
districts across four states namely- Telangana (10 districts),
Andhra Pradesh (2 districts), Maharashtra (1 district) and
Karnataka (1 district). The company has appointed district wise
distributors in Andhra Pradesh and operates through in rest of
the districts.
Sreekanth Pipes Private Limited (SPPL), incorporated in 2002, is
part of Nandyal (Andhra Pradesh) based Nandi Group of companies.
Promoted by Mr. Sajjala Sreedhar Reddy, SPPL is engaged in the
business of manufacturing of rigid Polyvinyl Chloride (PVC) pipes
and fittings at its facility located at Medak District,
Telangana. The manufacturing facility has an installed capacity
of 12,500 metric tonnes per annum (MTPA). The products are widely
used in irrigation, telecommunication, potable water supplies,
electrical industry, construction industry, sewerage and drainage
etc.
SURYAJYOTI SPINNING: CARE Moves D Rating to Not Cooperating
-----------------------------------------------------------
CARE has been seeking for information from Suryajyoti Spinning
Mills Limited to monitor the ratings vide-mail communications
dated December 12, 2017, December 5, 2017 & November 27, 2017
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's rating on Suryajyoti Spinning Mills Limited bank
facilities will now be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 256.70 CARE D; Issuer not
Facilities cooperating
Short-term Bank 52.32 CARE D; 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).
The ratings assigned to the bank facilities of Suryajyoti
Spinning Mills Limited (SSML) takes into account continued weak
financial profile and stretched liquidity position of the company
resulting in delays in servicing debt obligations.
Detailed description of the key rating drivers:
At the time of last rating on March 3, 2017, the following were
the rating weakness and strengths.
Key rating weakness:
Stretched liquidity position resulting in delays in servicing
debt obligation: The company has been facing subdued financial
performance since the last three years on account of sluggish
demand for cotton yarn in the domestic and export markets and the
same continued during FY16 (refers to the period April 1 to
March 31). The financial parameters continued to remain weak
during FY16 with the company reporting net loss and cash loss
during the year.
Key Rating Strengths:
Experienced Promoters: Mr. Ravinder Kumar (Managing Director)
has more than four decades experience in the textile industry.
His son, Mr. Arun Kumar Agarwal (Executive Director), is also
associated with the company from 1995 onwards and is also
actively involved in the day-to-day operations of SSML.
Suryajyoti Spinning Mills Ltd. (SSML), promoted by Mr. Ravinder
Kumar Agarwal (Managing Director), was incorporated in 1983, and
commenced operations from January 1991. SSML commenced operations
with installed capacity of 5,040 spindles and gradually increased
it to 86,560 spindles. The manufacturing units are located at
Makthal, Burgul and Rajapur Villages of Mahaboobnagar District,
Telangana. SSML manufactures medium to coarser counts of carded
and combed cotton yarn and various blends of synthetic yarn such
as polyester (100%), viscose (100%) and
polyesterviscose/polyester-cotton blends. SSML also has a fabric
manufacturing unit with an installed capacity of 20 Million
Meters Per Annum.
TRANSSTROY INDIA: Canara Bank Files Bankruptcy Bid v. Firm
-----------------------------------------------------------
The Times of India reports that Canara Bank has filed a petition
before National Company Law Tribunal, Hyderabad, urging it to
declare M/s Transstroy (India) Ltd as bankrupt and to initiate
corporate insolvency process against the construction company.
This decision of the bank is likely to have several ramifications
as Transstroy is the main contractor currently entrusted with the
task of constructing AP's Polavaram irrigation project and the
company is owned by a TDP MP from AP, the report says.
According to the report, Canara Bank filed the plea informing the
tribunal that the construction firm has become a defaulter of the
Rs 725 crore loans it availed. As at Dec. 22, 2017, the total
outstanding liability was Rs 489 crore and contingent liability
like bank guarantee was Rs 379 crore, TOI discloses.
Transstroy (India) Limited engages in construction and
development of the infrastructure projects.
V. D. MOTORS: CARE Assigns B+ Rating to INR18cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of V. D.
Motors Private Limited (VDM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 18.00 CARE B+; Stable Assigned
Detailed Rationale & Key rating Drivers
The rating assigned to the bank facilities of VDM is primarily
constrained on account of fluctuating scale of operations with
thin profitability margins, weak solvency position and working
capital intensive nature of operations. The rating further
constrained on account of volume driven business with high
competition in auto dealership industry.
The rating, however, favorably takes into account the experienced
management in the industry and long standing association with its
principal Mahindra & Mahindra Ltd.
Improvement in the scale of operations while sustaining
profitability margins and improvement in the liquidity position
are key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Fluctuating scale of operations with thin profitability margins:
Total Operating Income (TOI) has witnessed fluctuating trend over
the past three financial years (FY15-FY17) from INR90.31 crore in
FY15 to INR81.60 crore in FY17. The profitability margins of the
company stood thin with PBILDT and PAT margin of 3.58% and 0.14%
respectively in FY17 as against 2.32% and 0.11% respectively in
FY16.
Weak solvency position: The capital structure of VDM stood
leveraged with an overall gearing of 4.22 times as on March 31,
2017, mainly due to lower utilization of working capital bank
borrowings as on balance sheet date along marginal increase in
tangible net worth of VDM. Further, the debt coverage indicators
stood weak with total debt to GCA of 74.77 times as on March 31,
2017.
Working capital intensive nature of operations: The operating
cycle of the company stood elongated at 84 days in FY17 due to
lower sales of vehicles that led to higher inventory holding
period as well as increase in collection period. The liquidity
position of the company stood stressed with 95-100% utilization
of working capital bank borrowings during last 12 months ended
November 2017.
Volume driven business with high competition in auto dealership
industry: Indian automobile industry is highly competitive in
nature as there are large numbers of players operating in the
market like Mahindra, Maruti Suzuki, Tata Motors, Hyundai, Honda,
Toyota and Skoda etc. in the passenger vehicle segment. VDM is
dealer of M&M and it derives its TOI from sale of M &M's
passenger cars and spare parts. Hence, performance and prospects
of VDM is highly dependent on M&M being its principal.
Moreover, in this business a dealer has very less bargaining
power over principal manufacturer. The margin on products is set
at a particular level by the principal manufacturer thereby
restricting the company to earn incremental income.
Key Rating Strengths
Long standing experience of the promoters in Automobile
dealership business: The overall affairs of VDM are looked after
by Mr. Vikas Godara, Director, who has more than two decades of
experience in the automobile dealership. He is further supported
by other directors, Mr. Rajendra Singh Godara who has experience
of around three decades and is involved in strategic decision
making of the company.
Established track record of operations and long standing
association with its principal- M&M: VDM is engaged in the
automobile dealership business and has a long standing
association with its principal since 1998. Currently, the company
operates two showrooms at Sri Ganganagar, Hanumangarh and Nohar
and has five sales showrooms. It has service stations, spare
parts distribution, vehicle finance and insurance which provide
the customer with complete solution at single point.
Sri Ganganagar (Rajasthan) based V.D. Motors Private Limited
(VDM) was incorporated in 1998 by Mr. Rajendra Singh Godara and
Mr. Vikas Godara. VDM is an authorised dealer of Mahindra &
Mahindra Ltd and currently, the company operates two showrooms 3S
(Sale , service and spares) at Sri Ganganagar and Hanumangarh and
also sales offices at Anupgarh, Suratgarh, Nohar and Bhadra
within Rajasthan region. Further, the company also receives
orders from Rajasthan Government for service of vehicles in
various departments.
=================
I N D O N E S I A
=================
BANK DANAMON: Fitch Places BB+ IDR on Rating Watch Positive
-----------------------------------------------------------
Fitch Ratings has placed PT Bank Danamon Indonesia Tbk's Long-
Term Issuer Default Rating (IDR) of 'BB+', Short-Term IDR of 'B'
and Support Rating of '3' on Rating Watch Positive (RWP). At the
same time, Fitch Ratings Indonesia has placed the bank's National
Long-Term Rating of 'AA+(idn)' on RWP. The bank's other ratings
are affirmed.
'AA' National Ratings denote expectations of very low default
risk relative to other issuers or obligations in the same
country. The default risk inherent differs only slightly from
that of the country's highest rated issuers or obligations.
'F1' National Ratings indicate the strongest capacity for timely
payment of financial commitments relative to other issuers or
obligations in the same country. On Fitch's National Rating
scale, this rating is assigned to the lowest default risk
relative to others in the same country. Where the liquidity
profile is particularly strong, a "+" is added to the assigned
rating.
KEY RATING DRIVERS
IDRs AND NATIONAL RATINGS
The rating action follows a 26 December 2017 announcement by The
Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU, A/Stable/a) - the
commercial banking arm of Japanese financial group, Mitsubishi
UFJ Financial Group, Inc. (MUFG, A/Stable/a) - that it had
entered into conditional share purchase agreements to acquire
73.8% of the shareholding interest in Danamon from Asia Financial
(Indonesia) Pte. Ltd. (ultimate parent: Temasek Holdings Private
Limited) and other affiliated entities, subject to regulatory
approval. On 29 December 2017, MUFG announced that it had
completed the acquisition of a 19.9% stake in the bank.
MUFG intends to seek regulatory and other necessary approval to
acquire an additional 20.1% of Danamon's shares in 2Q18 or 3Q18,
thereby increasing its stake in the bank to 40%. Once achieved,
MUFG will seek approval to obtain a majority stake in Danamon,
and it expects its final shareholding to be over 73.8%.
Danamon's IDRs and National Ratings are currently based on its
standalone credit profile. The RWP reflects the likelihood that
Danamon's ratings may benefit from extraordinary support from
MUFG if it successfully increases its shareholding to 40%. Fitch
believes Danamon's ratings are likely to be higher than its
current standalone-driven ratings if including extraordinary
support from MUFG.
VIABILITY RATING
Danamon's Viability Rating reflects its satisfactory company
profile, including a solid consumer finance franchise, strong
capitalisation, satisfactory profitability and moderate asset
quality and funding profiles. Danamon benefits from ordinary
support from Temasek, which Fitch expect to remain available
until it disposes of its stake to MUFG. During the transition
Fitch also expect support to be made available by MUFG, albeit
Fitch do not expect support to be required.
SUPPORT RATING AND SUPPORT RATING FLOOR
Danamon's Support Rating and Support Rating Floor reflect Fitch's
expectation of a moderate probability of extraordinary state
support, if needed. Fitch believes Danamon is systemically
important to Indonesia as its eighth-largest bank by assets.
RATING SENSITIVITIES
IDRs AND NATIONAL RATINGS
Fitch will resolve the Rating Watch Positive on Danamon's ratings
on completion of the acquisition of 40% of its shares by MUFG,
expected before end-3Q18. Fitch will upgrade the ratings if Fitch
conclude that Danamon's ratings can be based on potential
extraordinary support from MUFG. This would likely result in a
two notch upgrade of Danamon's Long-Term Issuer Default Rating
(IDR) to 'BBB', with further upside constrained by Indonesia's
Country Ceiling. It would also result in a one notch upgrade of
both its Short-Term IDR and National Long-Term Rating. There is
no rating upside for the bank's National Short-Term Rating as it
is already at the highest point on the scale.
VIABILIY RATING
Danamon's Viability Rating may be downgraded in the event of
deterioration in the company's profile and significant weakening
of its capitalisation, asset quality and profitability. Rating
upside for Danamon may result from a significant improvement in
its franchise, leading to better funding and liquidity metrics,
while maintaining sound capitalisation similar to that of higher-
rated peers. This could potentially arise from more material and
tangible benefits stemming from MUFG's increased ownership and
involvement in the bank. However, Fitch views the likelihood of
movement on the bank's Viability Rating to be unlikely in the
short-term.
SUPPORT RATING AND SUPPORT RATING FLOOR
MUFG's acquisition of a 40% stake in Danamon is likely to lead to
an upgrade of Danamon's Support Rating to '2' and a withdrawal of
its Support Rating Floor, as Fitch would view MUFG, rather than
the Indonesian sovereign, as the primary source of extraordinary
support for the bank.
Fitch is likely to affirm the existing ratings if MUFG does not
acquire a 40% shareholding in Danamon.
The full list of rating action is as follows:
Long-Term IDR of 'BB+', placed on RWP
Short-Term IDR of 'B', placed on RWP
National Long-Term Rating of 'AA+(idn)', placed on RWP
National Short-Term Rating affirmed at 'F1+(idn)'
Viability Rating affirmed at 'bb+'
Support Rating of '3', placed on RWP
Support Rating Floor affirmed at 'BB'
WIJAYA KARYA: Fitch Assigns BB Rating to Komodo Bonds
-----------------------------------------------------
Fitch Ratings has assigned an expected rating of 'BB(EXP)' to
Indonesia-based construction company PT Wijaya Karya (Persero)
Tbk's (WIKA; BB/Stable) proposed rupiah-denominated senior
unsecured notes that are payable in US dollars.
The notes, known as komodo bonds, are denominated in rupiah, but
both the coupon payments and principal on maturity are settled in
US dollars at the prevailing rupiah-dollar exchange rate. As
such, the investors bear the foreign-exchange risk due to a
weaker rupiah. The settlements are still subject to transfer and
convertibility risk on foreign exchange involving the rupiah and
the rating on the notes can be no higher than Indonesia's Country
Ceiling of 'BBB'.
The linkage of payments under the terms of the notes to the
prevailing exchange rate means that Fitch does not regard the
conversion of currencies at the transaction's initiation and
maturity as altering the underlying local-currency nature of the
note.
The unsecured notes will be a direct, unsecured and
unsubordinated obligation to the company, ranked pari passu with
all other unsecured and unsubordinated debt of the company, and
will be effectively subordinated to secured obligations of the
company and its subsidiaries. Part of the proceeds of the notes
will be used to repay secured debt, which, in Fitch estimate,
would cut the ratio of prior ranking debt to total debt to below
2.0x. Fitch considers a threshold of 2.0x-2.5x as the level above
which senior unsecured creditors' interests are materially
subordinated to the interests of secured or prior ranking
creditors. Fitch therefore rate the notes at the same level as
WIKA's Long-Term Local-Currency Issuer Default Rating (IDR) of
'BB'. The final rating is contingent upon the receipt of final
documents conforming to information already received.
'AA' National Ratings denote expectations of very low default
risk relative to other issuers or obligations in the same
country. The default risk inherent differs only slightly from
that of the country's highest-rated issuers or obligations.
KEY RATING DRIVERS
Robust Order-Book Growth: By end-October 2017, WIKA achieved 80%
of its IDR43 trillion full-year 2017 target for new contracts.
The company expanded its order-book in 2016 to IDR83 trillion,
surpassing Fitch expectations. Fitch expect new contract wins
over the medium term to ease gradually as the company focuses
more on executing its existing order-book to improve its revenue
recognition and cash flows. Nevertheless, construction order-
book/revenue should remain high at between 3.5x-4.0x in 2018-
2020.
Large Flagship Projects: The strong order-book growth has been
supported by large strategically important flagship projects as
part of the government's infrastructure development program, such
as the IDR15.7 trillion Jakarta-Bandung High Speed Railway (HSR),
which contributed new orders of IDR54 trillion during 2016.
However, execution of the contracts has been slower than Fitch
expected, resulting in weaker cash generation and revenue
recognition.
Its projects were held up by delays in land acquisition. However,
the government recently announced new regulations (Peraturan
Pemerintah (PP) No 13/2017) to help expedite the land-clearing
process for national strategic projects, and this may help to
mitigate further delays in the execution of the HSR project. WIKA
also had to prioritise the delivery of the Balikpapan-Samarinda
toll road, the Kelapa Gading LRT project and a few others over
the HSR, as these other projects need to be completed ahead of
the Asian Games, which will be held in Jakarta in 2018.
Small Scale, Cash Flow Deficit: WIKA's standalone credit profile
of 'B+'/'A+(idn)' reflects its small operating scale relative to
global and national peers, as well as its negative free cash flow
(FCF) due to a requirement to fund the government's
infrastructure programme. Fitch see WIKA remaining in a high-
growth phase over the next few years as it executes its strong
order-book. Therefore, Fitch expect WIKA to post negative FCF
(after planned investments in joint operations and associates)
over the medium term, due to the high working capital needed to
fund the government's infrastructure projects and WIKA's
investment commitments.
Several strategic national projects, including the IDR5.9
trillion Balikpapan-Samarinda toll-road project, require the
company to pre-finance them. Fitch also expect WIKA to invest the
remaining IDR4 trillion from its 2016 rights issue into several
projects in 2018, such as the Serang-Panimbang Toll Road. The
negative FCF is supported by WIKA's strong access to domestic
credit markets because of its association with government and
government-sponsored construction projects and as well as its
track record.
Strategic Importance to Government: WIKA's ratings benefit from a
two-notch uplift over its standalone profile, based on Fitch's
Parent and Subsidiary Rating Linkage criteria. Fitch assesses
that WIKA has strong operational and strategic linkages, but a
weak legal link, with its parent, the government of Indonesia,
which owns a 65.05% stake. Fitch do not expect any change to
WIKA's rating uplift after the finalisation of Fitch rating
criteria on government-related entities following the publication
of an exposure draft in November 2017. Upon finalisation, a
strengthening of WIKA's standalone credit profile may not lead to
a positive rating action. .
DERIVATION SUMMARY
WIKA's standalone IDR of 'B+' compares well with international
peers such as Italy's Astaldi S.p.A (B/Negative) and Spain's
Grupo Aldesa (B/Stable). WIKA's standalone National Long-Term
Rating of 'A+(idn)' compares well with PT Sri Rejeki Isman Tbk
(Sritex, A+(idn)/Stable) and PT Waskita Karya (Persero) Tbk
(WSKT, standalone rating of BBB+(idn)/Stable).
Aldesa's operations are more geographically diverse than WIKA's.
However, WIKA has a larger operating scale, as reflected in its
leading market position in Indonesia, and a substantially
stronger financial profile than Aldesa, leading to WIKA's higher
standalone IDR of 'B+' compared with Aldesa's 'B' IDR. Aldesa
faces multiple challenges in its end-markets and limited growth
prospects, while growth prospects for WIKA are brighter.
Astaldi's operating scale is larger than that of WIKA, although
its project-concentration risk is significantly higher. Its
larger scale is reflected in Astaldi's broader geographical
diversity than WIKA. However, Astaldi's heavy investments in
toll-road concessions have led to substantially higher leverage
and cash outflow due to working-capital increases compared with
WIKA. Therefore, Astaldi is rated one notch lower compared with
WIKA's 'B+' standalone IDR.
WIKA's cash flows would be more cyclical than those of Sritex's
as they are leveraged to the pace at which the government
executes its infrastructure programme. The company's order-book
and cash flows have expanded strongly in the last eight years due
to Indonesia's infrastructure investments. WIKA has a
considerably stronger financial profile than Sritex to compensate
for its more cyclical cash flows and is therefore rated at the
same National rating level as Sritex on a standalone basis.
WSKT is the largest Indonesian construction company and its
recent business growth has been due largely to a rapid increase
in toll-road investments and related order-book in 2016. Both are
equally strategically important to the state, albeit in different
infrastructure segments. However, WSKT's financial profile is
significantly weaker than that of WIKA, which drives its three-
notch lower standalone rating.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch rating case for the issuer
include:
- WIKA's order-book to increase to more than IDR100 trillion in
2017, and around IDR120 trillion in 2018
- EBITDA margins to hover between 10% and 11% in 2017-2020
- Aggregate capex and investments of around IDR9 trillion in
2017 and IDR2.5 trillion in 2018
- Dividend payout ratio of 30% in 2017-2020
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
- Stronger linkages between WIKA and the government of Indonesia
- A strengthening in WIKA's standalone profile, as reflected in a
substantial increase in its operating scale combined with the
ability to generate neutral FCF after investments in projects, on
average, while maintaining a stable credit profile.
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
- Weakening credit profile of the Republic of Indonesia and/or
weakening linkages between WIKA and the government
- Weakening in WIKA's standalone credit profile, as reflected by
an increase in its net adjusted debt/EBITDAR to more than 2.0x,
or EBITDAR fixed-charge cover to less than 2.5x, both on a
sustained basis
LIQUIDITY
Adequate Liquidity: WIKA had readily available cash of IDR7.2
trillion at 30 September 2017, which was supported by its IDR6.1
trillion rights issue in end-2016. With the addition of the
upcoming bond issuance, Fitch believe WIKA has adequate liquidity
to cover its maturing term loans and Fitch projected negative FCF
after investments in 2018. WIKA also has strong access to
domestic credit markets, particularly to state-owned banks, given
its association with the state and its strong operating record,
which further underpin its liquidity profile.
====================
N E W Z E A L A N D
====================
GOOD FOOD: Former Owners Ordered to Pay Sacked Worker NZ$17K
-------------------------------------------------------------
Radio New Zealand reports that the former owners of Good Food
Trading, a Bay of Plenty grocery store, have been order to pay
NZ$17,000 dollars to a worker who was unfairly sacked.
Radio NZ relates that in a ruling, the Employment Relations
Authority said Stacey Sisson's bosses at the Nosh store in Mount
Maunganui failed to properly investigate the customer complaints
that they said were the reason she lost her job.
Ms. Sissons was 19 at the time she was working at the store, in
the deli, in 2016, the report says.
According to Radio NZ, the Authority said the store received
emailed complaints from customers about a person who was working
in the deli serving food with no gloves on.
But there was no evidence that the complaints were properly
investigated, or that Ms. Sissons was given all the information
and a chance to respond, it said.
Because of that, a reasonable employer could not come to the
conclusion that Ms. Sissons was to blame, the Authority said,
Radio NZ relays.
"As a result the employer's actions in terminating her
employment, in the way it was done and for the supposed reasons
it was done, were unjustified."
The company that owned the store, Good Food Trading, went into
liquidation last month, but the authority has ruled that the
company's owners are personally liable to pay the amount awarded,
which covers reimbursement of lost wages, compensation for
humiliation, loss of dignity and injury to feelings, and arrears
of wages and holiday pay, the report adds.
MOSSGREEN-WEBB'S: Auction House to Close if Buyer Can't be Found
----------------------------------------------------------------
Hamish Fletcher at NZ Herald reports that Auckland auction house
Mossgreen-Webb's will close if a buyer can't be found.
The Herald relates that Mossgreen-Webb's is in liquidation after
its Australian owner was put into voluntary administration just
before Christmas.
Melbourne-headquartered Mossgreen, which bought Webb's auction
house in Parnell in 2015, owes AUD12 million (NZ$13.1m) to 400
creditors, notes the report.
Liquidators of the New Zealand arm of the business, Andrew
Bethell and Andrew McKay, have yet to file their first report but
are expected to by the end of this week, the Herald says.
"The New Zealand staff of Mossgreen-Webb's have achieved
significant sales in the market last year and are all experts
within their fields. While it is the intention of the liquidators
to close the business, a sale would be considered and expressions
of interest are sought for this successful Auckland auction
house," Messrs. Bethell and McKay said on Jan. 16, according to
the Herald. "The liquidators and Mossgreen-Webb's staff will
work to ensure the swift and orderly return of vendors' property.
To that end vendors are asked to contact Mossgreen-Webb's
immediately to arrange collection of their items," they said.
When purchasing Webb's, chief executive Paul Sumner described
Mossgreen as "Australia's largest and highest-grossing auction
house and the most favored avenue for collectors when they are
selling complete collections," the Herald relays.
Set up in the 1970s, Webb's has exhibited work by some of the
country's best-known artists, including Colin McCahon and
Gottfried Lindauer.
*********
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
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about which we report.
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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
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*** End of Transmission ***