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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
Friday, February 23, 2018, Vol. 21, No. 039
Headlines
A U S T R A L I A
BACCHUS REX: Second Creditors' Meeting Set for March 5
CMT CONTRACTORS: Second Creditors' Meeting Set for March 2
DIB CIVIL: First Creditors' Meeting Slated for March 2
KCT SERVICES: First Creditors' Meeting Set for March 2
OGGWAMI PTY: First Creditors' Meeting Set for March 2
QUINTIS GROUP: Sandalwood Growers Want Group Out of MIS
RALEIGH DAIRY: Second Creditors' Meeting Set for March 1
SIX STAR: Second Creditors' Meeting Set for March 2
VERILUMA: Accepts AUD660,000 Acquisition Offer From Canary
C H I N A
HNA GROUP: Pledges 41% Stake in HK Unit as Collateral for Loan
I N D I A
ALAPATT JEWELS: ICRA Reaffirms B Rating on INR5.50cr Cash Loan
ANUPAM INDUSTRIES: CRISIL Lowers Rating on INR160MM Loan to D
AVINASH BUILDCON: CARE Assigns B+ Rating to INR6cr LT Loan
BHAGAWATI FRONTLINE: CARE Assigns B+ Rating to INR12cr LT Loan
BHUSHAN POWER: Lenders Reject Liberty House's Late Bid
BRIGHT BROTHERS: ICRA Keeps MB+ Rating in Not Cooperating Cat.
C. S. INFRACONSTRUCTION: ICRA Reaffirms D Rating on INR125cr Loan
CAPITAL VENTURES: Ind-Ra Migrates BB- Rating to Non-Cooperating
CARREG COMMODITIES: CRISIL Moves B+ Rating to Not Cooperating
CHETAN OVERSEAS: Ind-Ra Affirms BB Long Term Issuer Rating
DASHMESH RICE: ICRA Moves B Rating to Not Cooperating Category
GREENPIECE LANDSCAPES: Ind-Ra Puts 'BB' Rating to Non-Cooperating
HARAGOURI HIMGHAR: CARE Reaffirms B Rating on INR8.22cr LT Loan
HELIOS AND MATHESON: CRISIL Moves D Rating to Not Cooperating
HERITAGE DISTILLERIES: CRISIL Moves B Rating to Not Cooperating
J.K. FISHERIES: CRISIL Removes B- Rating From Not Cooperating
JAYANTH COTTON: CRISIL Assigns 'B' Rating to INR6MM Cash Loan
KAILASH MOTORS: ICRA Assigns B Rating to INR24cr Fund Based Loan
KOTTIYOOR METALS: CRISIL Assigns B Rating to INR10MM LT Loan
MADHUCON GRANITES: ICRA Lowers Rating on INR82.06cr Loan to B-
NATURAL AGRITECH: Ind-Ra Migrates B- Rating to Non-Cooperating
PADMA LAXMI: CARE Moves B+ Rating to Not Cooperating Category
PANDIT AUTOMOTIVE: ICRA Cuts Rating on INR75cr Cash Loan to D
PARAMOUNT TEXTILE: Ind-Ra Assigns BB LT Issuer Rating
PATRON INDUSTRIES: ICRA Keeps B+/A4 Rating in Not Cooperating Cat
R M METALS: CARE Reaffirms B+/A4 Rating on INR8cr Bank Loan
RADHE COTTON: CRISIL Lowers Rating on INR7.5MM Cash Loan to D
RADIANT POLYMERS: CARE Confirms B+ Rating on INR41.30cr NCD
SAI MAITHILI: Ind-Ra Cuts INR630MM Bank Loan Rating to 'B+'
SAMARTH SAI: ICRA Removes B Rating From Not Cooperating Category
SASWAD MALI: Ind-Ra Lowers Long Term Issuer Rating to 'D'
SEPAL CERAMIC: ICRA Reaffirms B+ Rating on INR3.40cr Cash Loan
SHAKTI VEGETABLES: CRISIL Moves B Rating to Not Cooperating Cat.
SHUBHAM COTTON: CRISIL Moves B Rating to Not Cooperating Cat.
SUPREME OVERSEAS: ICRA Assigns C+ Rating to INR20cr Cash Loan
TIRUPATI COLD: CARE Assigns B+ Rating to INR4cr LT Loan
UNIFOUR DEVELOPERS: CRISIL Moves B+ Rating to Not Cooperating
VARDHMAN ENTERPRISE: CRISIL Moves B+ Rating to Not Cooperating
ZEARS DEVELOPERS: CARE Raises Rating on INR12.30cr Loan to BB-
N E W Z E A L A N D
MUSE EATERY: Catering Placed Into Liquidation
P H I L I P P I N E S
RURAL BANK OF BASAY: Deposit Claims Deadline Set For March 5
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=================
A U S T R A L I A
=================
BACCHUS REX: Second Creditors' Meeting Set for March 5
------------------------------------------------------
A second meeting of creditors in the proceedings of Bacchus Rex
Pty Ltd has been set for March 5, 2018, at 11:00 a.m. at the
offices of Worrells Solvency & Forensic Accountants, 5/58
Riverwalk Avenue, in Robina, 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 March 2, 2018, at 5:00 p.m.
Dominic Cantone and Jason Bettles of Worrells Solvency were
appointed as administrators of Bacchus Rex on Jan. 29, 2018.
CMT CONTRACTORS: Second Creditors' Meeting Set for March 2
----------------------------------------------------------
A second meeting of creditors in the proceedings of CMT
Contractors Pty Ltd has been set for March 2, 2018, at 9:00 a.m.
at Collie Ridge Motel, Coalfields Highway, 185-195 Throssell
Street, in Collie, Western Australia.
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 March 1, 2018, at 4:00 p.m.
Jeremy Joseph Nipps and Cliff Rocke of Cor Cordis were appointed
as administrators of CMT Contractorson Jan. 25, 2018.
DIB CIVIL: First Creditors' Meeting Slated for March 2
------------------------------------------------------
A first meeting of the creditors in the proceedings of Dib Civil
Pty Ltd will be held at the offices of Cor Cordis, One Wharf Lane
Level 20, 161 Sussex Street, in Sydney, NSW, on March 2, 2018, at
11:00 a.m.
Jason Tang and Andre Lakomy of Cor Cordis were appointed as
administrators of Dib Civil on Feb. 20, 2018.
KCT SERVICES: First Creditors' Meeting Set for March 2
------------------------------------------------------
A first meeting of the creditors in the proceedings of KCT
Services Pty Ltd, trading as Metro Air, will be held at the
offices of Hall Chadwick Chartered Accountants, Level 11, 77 St
Georges Terrace, in Perth, WA, on March 2, 2018, at 11:00 a.m.
Brent Kijurina, Richard Albarran and Carl Huxtable of Hall
Chadwick Chartered were appointed as administrators of KCT
Services on Feb. 21, 2018.
OGGWAMI PTY: First Creditors' Meeting Set for March 2
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Oggwami
Pty Ltd, trading as Amanti Pizza, will be held at the offices of
Hrvatin Koch, Unit 2, 23-25 Beulah Road, in Norwood, SA, on
March 2, 2018, at 11:00 a.m.
Tarquin Koch of Hrvatin Koch was appointed as administrator of
Oggwami Pty on Feb. 20, 2018.
QUINTIS GROUP: Sandalwood Growers Want Group Out of MIS
-------------------------------------------------------
Sean Smith at The West Australian reports that sandalwood growers
have opened a new front in their campaign against Quintis Group
by moving to take management control of two of the failed
company's managed investment schemes.
According to The West Australian, the Sandalwood Growers Co-op
said Feb. 12 growers would vote next month to install the Co-op
as manager of the 2002 and 2003 sandalwood projects after filing
notices of termination to dump Quintis from the role.
The Co-op, whose board includes former Quintis chief executive
Frank Wilson, is already leading a push by the 2002 growers to
replace Quintis as the responsible entity of the project with
Sydney group Huntley, the report says.
While an RE usually acts as both trustee and manager of an MIS,
Co-op chairman and spokesman Teague Czislowski said the growers
were better qualified to manage the projects, the West Australian
relates.
"We're damn sure growers can do a lot better," the report quotes
Mr. Wilson as saying. "The growers are the main game, they
control the bulk of the trees (to be harvested) over the next few
years. . . so we just can't understand why the (Quintis)
noteholders, the receivers and other parties haven't been more
co-operative."
By managing the two schemes, the Co-op would gain sales and
marketing rights over about 60ha of sandalwood to be harvested by
Quintis this year, the report notes.
The West Australian says the dissident growers are smarting over
what they say was the mismanagement of the 2002 scheme, most of
which was harvested last year.
The member meeting to vote on the change of RE was again
postponed on Feb. 12 because Huntley is still waiting on the
corporate regulator's approval of its appointment, according to
the West Australian.
Receivers from McGrathNicol, which was put into Quintis last
month, said they would support a replacement RE if it alleviated
growers' concerns, the report adds.
About Quintis
Quintis is Australia's largest sandalwood forestry management
company and manages 17 separate managed investment schemes.
Quintis employs approximately 500 staff at various locations
throughout Australia. Quintis manages nearly 13,000 hectares of
sandalwood plantations in northern Australia and owns a
distillery and pharmaceutical company to process the sandalwood
for the cosmetics, well-being and pharmaceutical industries. The
company was formed in 1997 and listed in 2007.
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 23, 2018, KordaMentha Restructuring partners Richard Tucker,
Scott Langdon, and John Bumbak have been appointed as Voluntary
Administrators of the Quintis Group.
The Voluntary Administrators were appointed on January 20 after
Asia Pacific Investments DAC exercised an option requiring
Quintis to acquire 400 hectares of plantations at a pre-
determined price of AUD37 million, with settlement required to
take place on Feb. 2, 2018. Quintis did not have the financial
resources to pay the put option.
As a result of the appointment of Administrators, on Jan. 23,
2018, the secured bondholders have appointed Jason Preston, Shaun
Fraser and Robert Brauer of McGrathNicol as Receivers and
Managers.
RALEIGH DAIRY: Second Creditors' Meeting Set for March 1
--------------------------------------------------------
A second meeting of creditors in the proceedings of Raleigh Dairy
Holdings Pty Ltd has been set for March 1, 2018, at 10:00 a.m. at
C.ex Coffs, 2-6 Vernon Street, in Coffs Harbour, 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 Feb. 28, 2018, at 3:00 p.m.
Quentin Olde and John Park of FTI Consulting were appointed as
administrators of Raleigh Dairy on Jan. 29, 2018.
SIX STAR: Second Creditors' Meeting Set for March 2
---------------------------------------------------
A second meeting of creditors in the proceedings of Six Star
Project Solutions Pty Ltd has been set for March 2, 2018, at
11:00 a.m. at the Level 12, 460 Lonsdale Street, in Melbourne,
Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by March 1, 2018, at 5:00 p.m.
Malcolm Kimbal Howell of Jirsch Sutherland was appointed as
administrators of Six Star on Jan. 26, 2018.
VERILUMA: Accepts AUD660,000 Acquisition Offer From Canary
----------------------------------------------------------
CRN reports that creditors of capsized Sydney analytics software
vendor Veriluma have accepted a $660,000 acquisition proposal
from wholesale investor Canary Capital.
Canary was one of several potential suitors for Veriluma's two
entities, Veriluma Limited and Veriluma Software, the report
says. According to CRN, administrators had been sizing up their
rival bids to recapitalise the ASX-listed company, which fell
over in late 2017 after ongoing cash-flow difficulties and
millions in losses.
CRN relates that Veriluma revealed it had received proposals to
recapitalise the company through a deed of company arrangement
(DOCA) from Bennelong Capital, Canary Capital, CPS Capital,
Panorama Technology Services and IT Capital.
The proposals had different - and somewhat complicated -
structures, and each was amended at least once over the course of
negotiations, the report says.
CRN notes that during Veriluma's voluntary administration period,
Canary Capital advanced AUD100,000 into the company's creditors
trust, which it proposed was not refundable to them as long as
their total acquisition bid was accepted. Canary also agreed to
absorb responsibility for chief executive and director creditor
Elizabeth Whitelock's entitlements if successful.
Panorama Technology offered AUD720,000 but did not have an
arrangement for Whitelock's entitlements, valuing their offer at
AUD620,000 in the eyes of the administrators, the report says.
Bennelong Capital offered AUD475,000 to buy Veriluma Limited
only, which constituted fewer supported creditors, including
Whitelock, across the two Veriluma entities. CPS Capital also
sought just to buy the single entity for AUD520,000, CRN
discloses.
CRN says administrators also received a proposal from Cube
Capital on behalf of IT Capital to buy the intellectual property,
software and other assets of both companies for AUD200,000, which
it recommended against.
Once Canary's deed proposal is signed off, the company will
provide an additional AUD560,000 into the creditors' pool, to
obtained by a capital raising in which 366 million Veriluma
shares will be issued at no less than AUD0.003 to raise AUD1.1
million, according to CRN.
Veriluma will then fall under the control of a new director
structure, the report notes.
Veriluma entered administration when its board forecast it was
insolvent or likely to become insolvent due to financial strain
following the company's September 2016 reverse listing on the
ASX, CRN discloses.
In its 2017 financial year report, Veriluma reported a
consolidated loss of AUD14.4 million, of which AUD12.56 million
was the one-off expense of its reverse takeover of Parmelia
Resources, CRN says. Its revenue was AUD146,266.
During the listing process, the company raised AUD3.5 million in
new capital, however, by Nov. 15, 2017, the company's cash
balance had substantially reduced to about AUD200,000 and it had
liabilities of about AUD700,000, the company revealed to the ASX,
CRN relays.
According to CRN, company directors also pinned the companies'
demise on the failure of the board to agree on direction and
strategy, according to administrator Jirsch Sutherland.
Veriluma initially appointed Jamieson Louttit of Jamieson Louttit
& Associates as its administrator on Nov. 15, 2017. A month
later, Louttit was replaced by Sule Arnautovic and Amanda Young
of Jirsch Sutherland following a court order, instigated by
Veriluma's Whitelock, the report discloses.
CRN relates that Jamieson Louttit & Associates' replacement
followed shareholder unrest when an annual general meeting held
by the administrator was cut short after just two minutes.
Shareholders argued there were conflicts of interest related to
the board's appointment of Louttit & Associates, CRN says citing
a report by the Australian Financial Review.
Unsecured creditors of Veriluma Limited included the ATO,
Computershare Investor Services, KPMG, Banki Haddock Fiona
Lawyers, Gibraltar Capital and Wolfstar Group to name a few,
while Veriluma Software's unsecured creditors included Amazon Web
Services, the ATO, Cisco WebEx, Internode, MYOB and Condev
Properties among a score of others, CRN discloses.
Jirsch Sutherland estimates creditor claims across both entities
to total AUD591,617.
Estimated employee claims as of Nov. 15, 2017 total AUD89,512,
comprising wages, superannuation, accrued leave and payment in
lieu of notice and redundancy, CRN discloses.
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C H I N A
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HNA GROUP: Pledges 41% Stake in HK Unit as Collateral for Loan
--------------------------------------------------------------
Sandy Li at The South China Morning Post reports that debt-laden
mainland conglomerate HNA Group has pledged 40.98% of its stake
in its Hong Kong-listed Hong Kong International Construction
Investment Management Group (HKICIM) to PAG Holdings as security
for a loan, according to the company's disclosure to the Hong
Kong stock exchange on Feb. 21.
The Post relates that the move comes amid fundraising efforts by
the group to pay down debt, including the sale of two plots of
land in Hong Kong to Henderson Land Development last week.
The company did not reveal the loan amount or its purpose, the
report says.
However, the pledged shares could provide HNA between HK$1
billion (US$127.7 million) to HK$1.5 billion, according to people
close to the deal.
According to the Post, Liu Junchun, vice-chairman of HKICIM, said
it was the controlling shareholder HNA Group, which owns 74.66
per cent, that had pledged the shares. He too did not provide
details.
"This obviously shows the group is having difficulties in
arranging syndicated loans from banks on the mainland and in Hong
Kong," the report quotes Li Kwok-suen, fund manager at Phillip
Capital Management, a saying.
Pledging shares could have been the group's last resort to raise
funds, he added, the Post relays.
In the stock exchange filing, HNA Group said it had pledged more
than 1.39 billion shares in HKICIM on February 14, the Post
discloses.
The Post says the shares were worth HK$2.96 billion based on the
closing price of HK$2.12 on Feb. 21, down 3.2 per cent from Feb.
20's close. HKICIM's shares have lost about 10 per cent of their
value in the last 30 days.
Last week, the group sold two of its four residential plots at
the site of Hong Kong's former airport in Kai Tak to Henderson
Land for nearly HK$16 billion, about HK$1.7 billion more than it
had paid for the plots in 2016, according to the Post.
"The group may not generate profit from the land disposal after
taking into account the interest expenses," the Post quotes one
analyst requesting anonymity as saying.
In November 2016, the Lands Department awarded New Kowloon Inland
Lot No 6565 to HNA's subsidiary, Total Thrive, for HK$8.84
billion. A month later, the group's Sky Hero Development secured
the adjacent site, Lot No 6562, for HK$5.41 billion.
HNA owns 83 per cent in the two sites, while the remaining 17 per
cent is owned by HKICM.
The group paid HK$27.2 billion in total for the four sites, which
it acquired in November 2016, the Post adds.
About HNA
China-based 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.
Bloomberg News said HNA has been facing increasing pressure --
some banks are said to have frozen some unused credit lines to
HNA units after they missed payments -- after a debt-fueled
acquisition spree that left it with global assets ranging from
hotels and refrigerated trucks to aviation and car rentals.
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I N D I A
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ALAPATT JEWELS: ICRA Reaffirms B Rating on INR5.50cr Cash Loan
--------------------------------------------------------------
ICRA has reaffirmed long -term rating of [ICRA]B to the INR5.50
crore fund based facilities of Alapatt Jewels. The outlook on the
long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
LT-Fund Based-CC 5.50 [ICRA]B (Stable); Reaffirmed
Rationale
The rating reaffirmation factors in the extensive experience of
the promoters in the jewellery retail business for nearly two
decades, AJ's established market presence in a prominent location
in Cochin (Kerala) and strong brand name enjoyed by brand
'Alapatt' in the region supporting footfalls. The rating also
considers the favourable demand scenario for gold jewellery
industry in FY2018 led by revival in rural demand, improved
liquidity with fading demonetisation impact, higher number of
auspicious days, strong wedding demand and large pre-buying ahead
of Goods and Service Tax (GST).
However, the rating remains constrained by the firm 's modest
scale of operations and geographical concentration risk due to
its single showroom presence, increasing competition from other
renowned jewellery retailers in the Cochin region and possible
cannibalization of sales among other family-owned Group entities
sharing the 'Alapatt' brand name. The rating also takes into
account the weak financial profile characterized by stretched
debt coverage metrics net losses (in FY2017), high working
capital intensity driven by higher stocking of inventory over
years, and lack of formal hedging mechanism to manage volatility.
Outlook: Stable
Driven by a favorable demand scenario and operating on a lower
base, ICRA expects AJ's revenues to double in FY2018 and grow at
5-7% per annum for FY2019 and FY2020. The outlook may be revised
to 'Positive' with healthy growth in the firm's accruals and debt
indicators. The outlook may be revised to 'Negative' with
inventory levels maintained at over a year's requirement and/or
adverse impact on the liquidity profile of the firm.
Key rating drivers
Credit strengths
Experience of promoters and strong brand name: The firm is part
of the Manuel Alapatt group, which has been in existence since
2000 and the brand Alapatt is well known in Cochin market for
over six decades. Strong brand recall and continued patronage of
its target customers in Cochin region is expected to support the
revenues going forward.
Favourable demand outlook to aid strong growth in FY2018:
Following subdued demand in FY2017, demand for gold jewellery has
been strong in H1FY2018 led by revival in rural demand, improved
liquidity with fading demonetisation impact, higher number of
auspicious days, strong wedding demand and large pre-buying ahead
of Goods and Service Tax (GST). Stable festive demand and the
regular wedding demand is expected to keep the demand sentiments
strong during H2FY2018. For the firm, the revenues increased from
INR9.8 crore in FY2017 to INR15.1 crore in H1 FY2018 supported by
revival in demand. The firm's performance in FY2016 and FY2017
was affected by metro-rail construction works in the outlet's
vicinity; the metro work was completed in June 2017.
Credit challenges
Small scale of operations with high geographical concentration to
Cochin market: With a topline of INR9.8 crore in FY2017 and a
single showroom in Cochin, the firm's scale of operations is
small which restricts its flexibility with respect to product
pricing and negotiating favorable terms with suppliers. With a
single showroom in Cochin and no expansion plans, AJ also faces
risk of geographical concentration. Given the low value addition
and high fixed operating costs in the business, lower scale and
high geographical concentrations impacts the firm's earnings
especially during periods of demand slowdown.
High competitive intensity: Gold jewellery retailing is highly
fragmented and competitive with major store expansions by larger
retailers in the recent years intensifying competition and
limiting the pricing flexibility amongst the players. While the
firm enjoys strong brand equity ("Alapatt"), ambiguity owing to
similar names of separate family entities has also led to
cannibalization of sales among different showrooms in Cochin
region.
Financial profile characterised by leveraged capital structure
and weak debt coverage indicators: The financial profile is
characterized by leveraged capital structure with weakening of
gearing from 2.3x as on March 31, 2016 to 3.1x as on March 31,
2017 due to operating and net losses in FY2017. The working
capital intensity remained high with NWC/OI at 157.5% in FY2017
due to high stock levels of the firm. AJ does not employ any
formal hedging mechanism to mitigate gold price volatility and
hence any sharp volatility in gold prices will impact firm's
earnings.
Alapatt Jewels is a Cochin based partnership firm established by
Mr.Manuel Alapatt in the year 2000. The firm is engaged in the
manufacturing and selling of gold and diamond jewellery through
its 10,000 square feet retail showroom in Ernakulam, Cochin. The
firm sources gold in the form of bullion from banks and old gold
from customers and outsources the same to gold smiths in the
region for converting them into ornaments. The firm also deals in
traded jewellery procured from merchants based out of Mumbai and
Bangalore.
In FY2017, the firm reported a net loss of INR1.6 crore on an
operating income of INR 9.8 crore, as compared to a net profit of
INR 0.2 crore on an operating income of INR8.3 crore in the
previous year.
ANUPAM INDUSTRIES: CRISIL Lowers Rating on INR160MM Loan to D
-------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Anupam Industries Limited (AIL) to 'CRISIL D/CRISIL D' from
'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 160 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Cash Credit 108 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Corporate Loan 40.42 CRISIL D (Downgraded from
'CRISIL A4')
Inland/Import 30 CRISIL D (Downgraded from
Letter of Credit 'CRISIL B-/Stable')
Proposed Long Term 11.58 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B-/Stable')
The downgrade reflects delay in servicing instalments on
corporate loan on account of weak liquidity, which is in turn due
to large working capital requirement.
Key Rating Drivers & Detailed Description
Weakness
* Stretched liquidity on account of working capital-intensive
operations: Liquidity remained stretched on account of elongated
working capital cycle with expected higher GCA of around 500 days
in fiscal 2018. It is higher on account of inventory days of
around 300 days as it is order backed and being a manufacturer of
capital goods it needs time manufacture the crane and also due to
stretched debtors days of around 200 as major clients are PSU's
it payment cycle getting delayed and includes delay in project
execution by the clients . Stretch is also reflected in lower
expected accruals against repayment obligations in fiscal 2018.
* Below-average financial risk profile: Gearing was moderate at
1.67 times and total outside liabilities to tangible networth
ratio high at 2.58 times, as on March 31, 2017 On account of
lower cash accruals, gearing is expected to remain around 1.54
times and interest coverage & net cash accrual to total debt to
remain around 1.21 times and 0.03 times respectively in medium
term. However, financial risk profile is partially supported by
healthy networth of INR170 crore as on March 31, 2017.
Strengths
* Extensive experience of promoters and : Presence of over four
decades in the cranes manufacturing segment has enabled the
promoters to establish a strong clientele comprising a mix of
public sector undertakings (PSUs) and multinational companies
(MNCs), which is reflected in the healthy order book worth INR400
crore, providing near-term revenue visibility.
AIL was set up by JC Patel as a proprietorship concern in Anand
(Gujarat) in 1973; it was reconstituted as a closely public
limited company in 1998. AIL manufactures different types of
cranes (including the electric overhead, gantry, and tower
variants), which are used in the steel, power, construction,
ports, and defence segments. It is one of the largest overhead
crane suppliers in India.
AVINASH BUILDCON: CARE Assigns B+ Rating to INR6cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Avinash Buildcon Infrastructure Private Limited (ABPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.00 CARE B+; Stable Assigned
Short-term Bank Facilities 2.00 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of ABPL are
constrained by its small scale of operation along with moderate
profitability margins, low order book position, significant
geographical concentration with single state operation,
volatility associated with input prices, working capital
intensive nature of business and high competitive intensity on
account of low complexity of work involved with sluggish economic
scenario. However, the aforesaid constraints are partially offset
by its experienced promoters, reputed clientele and comfortable
capital structure and moderate debt coverage indicators. The
ability of the company to maintain healthy order book position,
timely receipt of contract proceeds, ability to execute orders
within stipulated time period and ability to manage working
capital effectively would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operation along with moderate profitability
margins: ABPL is a relatively small player in the construction
business, with total operating income and net profit of INR6.28
crore and INR0.38 crore, respectively, in FY17. Further, the net
worth base and total capital employed was low at INR3.06 crore
and INR5.29 crore, respectively, as on March 31, 2017. As such,
the entity has a limited cushion in times of stress. This apart,
the profitability of the company has been moderate over the years
due to volatility in the prices of input materials. The PBILDT
margin was 15.74% and PAT margin was 6.02% during FY17. This
apart, the company has achieved total operating income of
INR13.98 crore during 9MFY18. The small size restricts the
financial flexibility of the company in times of stress and it
suffers on account of economies of scale.
Low order book position: ABPL has low order book position with a
order book aggregating to INR6.05 crore (0.96x of FY17 revenue)
as on December 31, 2017, executable within the next six months,
providing a moderate long term revenue visibility.
Significant geographical concentration with single state
operation: ABPL operates in the state of Chhattisgarh with
majority of the projects executed for structural fabrication,
erection, and commissioning works. In view of its presence in
a single state, the company is exposed to geographical
concentration risk to a large extent.
Volatility associated with input prices: Steel, bitumen, cement
and pipes are the major inputs for ABPL, the prices of which are
highly volatile. Moreover, the company does not have any long
term contracts with the suppliers for the purchase of the
aforesaid input materials. Hence, the profitability margins of
the company are exposed to sudden spurt in the input prices. In
absence of escalation clauses in the majority of contracts, any
increase in input prices will affect the profitability of the
company.
Working capital intensive nature of business: ABPL's business
being civil construction projects is working capital intensive by
nature. The average collection period remained in the range of
61-138 days during FY15-FY17 as the company majorly executes
contracts for PSU's and state government. Accordingly, the
average utilization of the cash credit limit remained high at
about 95% during the last 12 months ended December, 2017.
High competitive intensity on account of low complexity of work
involved with sluggish economic scenario: The Company has to bid
for contracts based on tenders and upon successful technical
evaluation of various bidders, the lowest bid is awarded the
contract. Since the type of work done by ABPL is mostly
commoditised, the company faces intense competition from other
players. The company 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 company.
Key Rating Strengths
Experienced promoters: The key promoter, Mr. Ashok Kumar Tiwari
(aged about 43 years) having around two decades of experience in
the construction industry. He looks after the overall management
of the company, with adequate support from other director and a
team of experienced personnel. The long experience of the
directors has supported its business risk profile to a large
extent.
Reputed clientele: ABPL has an established relation with the
state government departments and focus largely on government
tenders only. Accordingly, the counter party risk remained
minimal for the company.
Comfortable capital structure and moderate debt coverage
indicators: The capital structure of the company remained
comfortable marked by debt equity and overall gearing ratios of
0.13x and 0.73x, respectively, as on March 31, 2017. Further, the
interest coverage ratio also remained satisfactory at 4.05x in
FY17. Total debt to GCA, although deteriorated as on March 31,
2017 to 3.62x as against 3.10x as on March 31, 2016 due to lower
cash accruals during FY17, remained moderate.
Incorporated in October 2008, Avinash Buildcon Infrastructure
Private Limited (ABPL) is engaged in the business of providing
construction services such as building and road construction for
state and local government agencies in Bilaspur, Chhattisgarh.
ABPL secures all its contracts through tender driven open bidding
process and has an order book position of INR6.05 crore as on
December 31, 2017 which is 0.96x of FY17 revenue.
Mr. Ashok Kumar Tiwari (aged, 43 years), having around two
decades of experience in the construction industry, looks after
the day to day operations of the company. He is supported by
other directors Mr. Avinash Kumar Tiwari (aged, 39 years) and a
team of experienced professionals.
BHAGAWATI FRONTLINE: CARE Assigns B+ Rating to INR12cr LT Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Bhagawati Frontline Motorizer Private Limited (BFMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 12.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BFMPL is primarily
constrained on account of its nascent stage of operations and
limited bargaining power with principal automobile manufacturer.
The rating is, further, constrained on account of volume driven
business with high competition in auto dealership industry which
also exhibits high degree of cyclicality. The rating, however,
derives strength from the wide experience of the promoters and
established presence of the group in the automobile dealership
business and various other business segments within Madhya
Pradesh (MP).
The ability of the company to increase its scale of operations
while maintaining profitability along with efficient management
of working capital would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Nascent stage of operations: The operation of BFMPL started in
March, 2017 and has reported Total Operating Income (TOI) of
INR2.42 crore in FY17 with net worth base of INR1.79 crore as on
March 31, 2017. As the FY18 is the first full year of operations
and till December 25, 2017 BFMPL has achieved a turnover of
INR59.21 crore.
Limited bargaining power with principal automobile manufacturer:
BFMPL's business model is largely in the nature of trading
wherein profitability margins are very thin. 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.
Volume driven business with high competition in auto dealership
industry which also exhibits high degree of cyclicality: 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. Further, the auto industry is
inherently vulnerable to the economic cycles and is highly
sensitive to the interest rates and fuel prices.
Key Rating Strengths
Wide experience of the promoters: Mr. Vikram Singh Kirar is the
Chairman of BFMPL and has a diploma in Engineering. He has more
than 25 years of experience in business and looks after the
overall operations of the company. Further he is supported by
qualified management personnel like Mrs Suman Verma, finance head
having experience of 15 years. Being engaged in a family business
all the key management positions are being held by family members
of the promoter.
Established presence of the group in the automobile dealership
business and various other business segments within Madhya
Pradesh (MP) The group also manages Bhagawati India Motorizer
Private Limited which undertakes 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. Further promoters have also promoted another entity,
Bhagawati Development Services Private Limited, which is into
warehousing and trading of commodities, dealership of Mahindra &
Mahindra and Indo farm tractors through Bhagawati Cools Private
Limited and Bhagawati Estate Warehouse is another group concern
which is engaged in the trading of agro commodities and providing
agro-warehousing facilities.
Bhopal (Madhya Pradesh) based Bhagawati Frontline Motorizer
Private Limited (BFMPL) was incorporated in June 2016 to take up
the dealership of Mahindra & Mahindra (M&M) vehicles and
servicing in Singrauli & Sidhi districts of Madhya Pradesh (MP).
BFMPL is a part of Gwalior based Bhagawati group which has varied
business interests in the state of MP.
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
agrocommodities like wheat, potato, soya etc. The group also
manages Bhagawati India Motorizer Private Limited which
undertakes the dealership of Mahindra & Mahindra (M&M) vehicles
and servicing in four districts of Madhya Pradesh (MP) namely
Shahdol, Mandla, Dindori and Anuppur. Another group entity named
Bhagawati Estate Warehouse, Ashoknagar is also engaged in
warehousing and trading of agro-commodities like potatoes and
wheat.
BHUSHAN POWER: Lenders Reject Liberty House's Late Bid
------------------------------------------------------
Bhanvi Arora at BloombergQuint reports that lenders rejected the
bid submitted by U.K.-based metals and engineering firm Liberty
House to acquire insolvent Bhushan Power & Steel Ltd., two people
aware of the matter said requesting anonymity.
The resolution plan received last evening was disqualified by the
committee of creditors because it was submitted after the
deadline ended, one of the people quoted above told
BloombergQuint. Banks will continue negotiation with the highest
bidder Tata Steel Ltd. and the final decision will be taken by
March 6, he said.
Liberty House, which had acquired some of the U.K. assets of Tata
Steel, submitted a sealed bid to the resolution professional of
the debt-laden Bhushan Power & Steel. It owes more than INR47,000
crore to lenders, according to information on its website,
BloombergQuint relays. The company was among the first 12
stressed accounts identified by the the Reserve Bank of India for
resolution under the Insolvency and Bankruptcy Code.
Besides Tata Steel, JSW Steel Ltd. is the other bidder in the
fray. Tata Steel is the frontrunner with its INR24,500 crore
offer compared with JSW Steel's INR13,000 crore, BloombergQuint
reported earlier.
About Bhushan Power
Bhushan Power and Steel Limited manufactures and markets steel
products. It offers flat products, such as coated products,
galvanized/galvalume, color coated products, cable tapes, and
cold rolled products; and long products, including iron making
and sponge iron products. The company also provides steel pipes,
hollow steel sections, grooved pipes, and carbon steel tubes.
Mahendra Kumar Khandelwal was appointed as the IRP in the case
under an order passed by the National Company Law Tribunal (NCLT)
on July 26.
Bhushan Power, which owes over INR37,000 crore to a consortium of
lenders led by Punjab National Bank, was among 12 large companies
identified by the Reserve Bank of India against which banks were
directed to initiate insolvency proceedings, according to
LiveMint.com. Barring Era Infra Engineering Ltd, petitions have
been admitted in all other cases, LiveMint.com notes.
BRIGHT BROTHERS: ICRA Keeps MB+ Rating in Not Cooperating Cat.
--------------------------------------------------------------
ICRA Ratings said the rating for the INR1.86 crore fixed deposit
programme of Bright Brothers Limited continues to remain in the
'Issuer Not Cooperating' category. The rating is denoted as "MB+
(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Medium-term: Fixed 1.86 MB+ (Stable) ISSUER NOT
Deposit Programme COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated/limited
information on the issuers' performance. Accordingly the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Bright Brothers Limited (BBL) was incorporated in the year 1947
and is engaged in the manufacturing of injection-moulded plastic
products. The company caters primarily to white goods
manufacturing companies like Whirlpool of India Limited, Aqua
Mall Water Solutions (Eureka Forbes), Carrier Midea India Pvt.
Ltd. etc. and also manufactures toothbrush handles for Procter &
Gamble on job work basis. Further, the company also manufactures
and markets material handling plastic crates under its own brand
name and is also engaged in trading of hair care and beauty
products procured from China and Taiwan. The company currently
has four manufacturing units: two in Puducherry, and one each in
Faridabad (Haryana) and Bhimtal (Uttarakhand). The company has
further leased a new manufacturing facility in Dehradun.
C. S. INFRACONSTRUCTION: ICRA Reaffirms D Rating on INR125cr Loan
-----------------------------------------------------------------
ICRA has reaffirmed long-term rating of [ICRA]D to the INR 160.0
crore bank lines of C. S. Infraconstruction Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Loan 5.0 [ICRA]D; Reaffirmed
Fund Based Limits 30.0 [ICRA]D; Reaffirmed
Non fund Based limits 125.0 [ICRA]D; Reaffirmed
Rationale
The assigned ratings take into account ongoing delays in debt
servicing owing to the continuing stretched liquidity of the
company. ICRA also takes note of the company's exposure to
political and geographic risks emanating from CSIL's order book
being primarily concentrated towards the road sector, in Uttar
Pradesh. The rating continues to draw comfort from CSIL's
promoters' experience in the road construction business and
healthy operating margins.
Key rating drivers
Credit strengths
Experience of promoters in road construction spanning around 15
years: CSIL has been engaged in road construction for around 15
years; however, the size of the projects executed had remained
smaller during the initial years. Since FY2009, the company's
scale has improved as CSIL started executing larger-sized
projects in the road sector.
CSIL continues to witness healthy operating profitability levels:
The operating profitability of the company has improved in FY2017
as compared to FY2016 supported by its strong equipment base;
OPBDITA/OI was 19% in FY2017 as compared to 16% in FY2016.
Credit challenges
Continuing delays in debt servicing on account of stretched
liquidity position: Stretched liquidity position of CSIL due to
non-receipt of payment from clients for orders executed in FY2017
has led to ongoing delay in servicing of term loan obligations
and overutilization of its fund based limits. Part payment of the
pending dues was received in January 2018 post which a portion of
the outstanding dues was cleared, however, the balance payment is
yet to be received.
Most of the orders are awarded from the State government clients:
The dependence on State Government clients exposes CSIL to
political risk as the change in Government impacts new order
inflow for the company.
Exposure to geographic concentration risks: The entire order book
of CSIL is concentrated on execution of road projects in the
State of Uttar Pradesh thereby exposing it to geographic
concentration risks.
CSIL was set up as a partnership firm (Chhatrashakti Construction
Company) in 2002 by Shri Umashanker Singh and his friends. The
partnership firm was converted into its present form of a limited
company on November 10, 2009. CSIL is involved in the road
construction business and has executed multiple projects in Uttar
Pradesh offered by State Government bodies, primarily Public
Works Department (PWD).
In FY2017 the company reported a net profit of INR 31.90 crore on
an operating income of INR 406.24 crore, as compared to a net
profit of INR 35.67 crore on an operating income of INR 498.5
crore in the previous year.
CAPITAL VENTURES: Ind-Ra Migrates BB- Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Capital Ventures
Private Limited's (CVPL) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is as follows:
-- INR180 mil. Fund-based working capital limit migrated to Non-
Cooperating Category with IND BB-(ISSUER NOT
COOPERATING)/IND A4+(ISSUER NOT COOPERATING) ratings.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
February 2, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
CVPL was founded as a partnership firm by Mr. Vivek Aggarwal and
Mr. Naresh Aggarwal in 2000. It was reconstituted as a private
limited company in 2013. CVPL is engaged in the trading of FMCG
manufactured by Indian and multinational companies. In addition,
the firm trades rice under its Parliament brand.
CARREG COMMODITIES: CRISIL Moves B+ Rating to Not Cooperating
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Carreg
Commodities Private Limited (Carreg) for obtaining information
through letters and emails dated December 29, 2017 and
January 12, 2018 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Migrated)
Proposed Long Term 5 CRISIL B+/Stable (Issuer Not
Bank Loan Facility 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 Carreg Commodities Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Carreg Commodities 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 Carreg Commodities Private Limited to 'CRISIL
B+/Stable Issuer not cooperating'.
Carreg was incorporated in November 2010, promoted by Ms Jacintha
Panickeer. The company, based in Mangaluru, Karnataka, trades in
diverse commodities such as coal, rice, and spices.
CHETAN OVERSEAS: Ind-Ra Affirms BB Long Term Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Chetan Overseas
(Delhi) Private Limited's (CODPL) Long-Term Issuer Rating at 'IND
BB'. The Outlook is Stable. The instrument-wise rating actions
are as follows:
-- INR200 mil. Fund-based limits affirmed with IND BB/Stable/
IND A4+ rating; and
--INR120 mil. Non-fund-based limits affirmed with IND A4+
rating.
KEY RATING DRIVERS
The affirmation reflects CODPL's continued moderate scale of
operations, EBITDA margins and credit metrics, which are inherent
in the trading industry. In FY17, revenue was INR1,032.31 million
(FY16: INR1,207.62 million), interest coverage (operating
EBITDA/gross interest expense) was 1.31x (1.52x), net financial
leverage (total adjusted net debt/operating EBITDAR) was 5.00x
(5.05x) and EBITDA margin was 3.30% (2.72%). Revenue declined on
account of the demonetization impact and interest coverage ratio
declined on account of an increase in interest expense. EBITDA
margin improved due to a fall in raw material prices.
The ratings, however, continue to be supported by the promoters'
over two decades of experience in the non-ferrous metal industry
and a comfortable liquidity, indicated by about 94% average
utilization of the working capital limits for the 12 months ended
January 2018.
RATING SENSITIVITIES
Negative: Any decline in EBITDA margin leading to any
deterioration in the credit metrics could lead to a negative
rating action.
Positive: Any revenue growth and any improvement in the credit
metrics could lead to a positive rating action.
COMPANY PROFILE
CODPL is engaged in the trading of non-ferrous metals.
DASHMESH RICE: ICRA Moves B Rating to Not Cooperating Category
--------------------------------------------------------------
ICRA has moved the long-term rating for the bank facilities of
Dashmesh Rice Mills (DRM) to the 'Issuer Not Cooperating'
category. The rating is now denoted as [ICRA]B(Stable) ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 30.00 [ICRA]B(Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
ICRA has been seeking information from the entity so as to
monitor its performance. Despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA on the basis of the best
available/dated/limited information on the issuers' performance.
Accordingly, lenders, investors and other market participants are
advised to exercise appropriate caution while using this rating
as it may not adequately reflect the credit risk profile of the
entity.
Dashmesh Rice Mills is a partnership firm promoted by Mr. Raman
Sidana and his family members, primarily involved in milling of
basmati rice. The firm also converts semi-processed rice into
parboiled basmati rice. DRM's milling unit is based out of
Jalalabad, District in Punjab's Ferozpur, in close proximity to
the local grain market.
GREENPIECE LANDSCAPES: Ind-Ra Puts 'BB' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Greenpiece
Landscapes India Private Limited's Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise, despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR62.5 mil. Fund-based working capital limit migrated to
Non-Cooperating Category with IND BB(ISSUER NOT COOPERATING)
rating; and
-- INR87.5 mil. Non-fund-based working capital limit migrated
to Non-Cooperating Category with IND A4+(ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 17, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 2008, Bangalore-based Greenpiece Landscapes India
Private Limited executes landscaping design and contracting
projects. The scope of operations include providing design and
consultancy services in the field of landscape architecture, hard
landscaping, soft landscaping, irrigation, lighting and other
allied activities. The company also undertakes annual maintenance
contracts which comprise activities related to the maintenance of
various landscape installations.
HARAGOURI HIMGHAR: CARE Reaffirms B Rating on INR8.22cr LT Loan
---------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Haragouri Himghar Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 8.22 CARE B; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Haragouri Himghar
is constrained by its small scale of operations with low profit
margins, regulated nature of business, seasonality of business
with susceptibility to vagaries of nature, risk of delinquency in
loan extended to farmers, competition from other players, working
capital intensive nature of business and leveraged capital
structure with weak debt service coverage indicators. However,
the aforesaid constraints are partially offset by its experienced
promoters and proximity to potato growing areas. Going forward,
ability to increase its scale of operation, improve profitability
margins and ability to manage working capital effectively would
remain as the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced management: The main promoter of HHPL, Shri Haradhan
Samanta (M.D, aged about 63 years) has more than three decades of
experience in similar line of business and is involved in the
strategic planning and running the day to day operations of the
company. He is being duly supported by the other director Smt.
Tapasi Samanta and a team of experienced personnel.
Proximity to potato growing area: HHPL's storage facility is
located at Hooghly, West Bengal which is one of the major potato
growing regions of the state. The favorable location of the
storage unit, in close proximity to the leading potato growing
areas provides it with a wide catchment and making it suitable
for the farmers in terms of transportation and connectivity.
Key Rating Weaknesses
Small scale of operations with low profit margins: Haragouri
Himghar Private Limited (HHPL) is a relatively small player in
the cold storage business having total operating income and PAT
of INR3.70 crore and INR(0.64) crore, respectively, in FY17. This
apart, the company has achieved turnover of INR1.60 crore during
9MFY18. The total capital employed was at around INR5.01 crore as
on March 31, 2017. Small scale of operations with low net worth
base limits the credit risk profile of the company in an adverse
scenario.
Regulated nature of business: In West Bengal, the basic rental
rate for cold storage operations is regulated by state government
through West Bengal State Marketing Board. Due to ceiling on the
rentals to be charged it is difficult for cold storage units like
HHPL to pass on sudden increase in operating costs leading to
downward pressure on profitability.
Seasonality of business with susceptibility to vagaries of
nature: The cold storage business is seasonal in nature as potato
is a winter season crop with its harvesting period commencing in
February. The loading of potatoes in cold storages begins by the
end of February and lasts till March. Additionally, with potatoes
having a perceivable life of around eight months in the cold
storage, farmers liquidate their stock from the cold storage by
end of season i.e., generally in the month of November. The unit
remains non-operational during the period from December to
January. Moreover, lower agricultural output may have an adverse
impact on the rental collections as the cold storage units
collect rent on the basis of quantity stored and the production
of potato is highly dependent on vagaries of nature.
Risk of delinquency in loans extended to farmers: Against the
pledge of cold storage receipts, HHPL provides advances to
farmers. Before the close of the season in November, the farmers
are required to pay their outstanding dues, including repayment
of the loan taken. In view of this, there exists a risk of
delinquency in loans extended to farmers as significant amount of
working capital remained blocked in advances given to the
farmers. In case of downward correction in potato or other stored
goods prices as all such goods are agro commodities which may
affect the financial risk profile of the company.
Competitive and fragmented nature of industry: Despite the nature
of business being capital intensive, the entry barrier for new
cold storage is low, backed by capital subsidy schemes of the
government. As a result, the potato storage business in the
region has become competitive, forcing cold storage owners to
lure farmers by providing them interest bearing advances against
stored potatoes which augments the business risk profile of the
companies involved in the trade. HHPL is mainly into storage of
potatoes which is highly fragmented and competitive in nature due
to presence of many small players with low entry barriers. In
such a competitive scenario smaller companies like HHPL in
general are more vulnerable on account of its limited pricing
flexibility.
Working capital intensive nature of business: HHPL is engaged in
the cold storage business; accordingly its operation is working
capital intensive. The company also provides advances to farmers
who have stored their agriculture commodities with them.
Accordingly the company requires more working capital.
Leveraged capital structure with weak debt service coverage
indicators: Capital structure of the company remained leveraged
as marked by debt equity ratio and overall gearing ratio of
17.22x and 29.53x, respectively, as on March 31, 2017. Moreover,
the debt coverage indicators also remained weak as marked by high
total debt to GCA ratio of 533.61x in FY17. Interest coverage
ratio remained low at 1.01x in FY17.
Haragouri Himghar Private Ltd. (HHPL), incorporated on September
19, 2012, was initially established as a partnership firm named
M/s Hara Gouri Himghar in 2008 by Shri Haradhan Samanta and Smt.
Tapasi Samanta of Hooghly, West Bengal. The partnership firm was
converted to Private Limited Company on September 19, 2012. HHPL
is currently engaged in the business of providing cold storage
facility at Mukhtarpur village of Hooghly, West Bengal, primarily
for potatoes and is operating with a storage capacity of 1,43,470
quintals. Besides providing cold storage facility the unit also
works as a mediator between the farmers and marketers of potato
to facilitate sale of potatoes stored and it also provides
interest bearing advances to farmers for farming of potatoes.
Further, HHPL is also engaged in trading of potatoes and the same
accounted for around 20% of the total income in FY17. Shri
Haradhan Samanta is the main promoter and he looks after the day
to day operations of the company.
HELIOS AND MATHESON: CRISIL Moves D Rating to Not Cooperating
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Helios and
Matheson Information Technology Ltd for obtaining information
through letters and emails dated December 4, 2017, and January
17, 2018, among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 156 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Long Term Loan 44 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 Helios. 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 Helios is consistent with 'Scenario 1' outlined in
the 'Framework for Assessing Consistency of Information. As per
the bankers' feedbacks, the company's account classification
continues to reflect irregularities and delays in interest
servicing and term loan repayments. Therefore on account of
continued overdues, inadequate information and lack of co-
operation by the company, CRISIL has migrated the ratings on the
bank facilities at 'CRISIL D Issuer Not Cooperating'.
Analytical Approach
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of Helio and its subsidiaries, Helios &
Matheson IT (Bangalore) Ltd, Jayamaruthi Software Systems Pvt
Ltd, The Laxmi Group Inc (US-based subsidiary), Maruthi
Consulting Inc, and Helios and Matheson Analytics Inc. This is
because all these entities, collectively referred to as the
Helios group, have significant business and operational
synergies.
The Helios group was set up by Mr G K Muralikrishna and Mr V
Ramachandran in 1991. It offers IT services, including
application and development, application validation, consulting
and package implementation, and related services
HERITAGE DISTILLERIES: CRISIL Moves B Rating to Not Cooperating
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Heritage
Distilleries Private Limited (HDPL) for obtaining information
through letters and emails dated January 30, 2018 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Term Loan 14 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 Heritage Distilleries Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Heritage Distilleries 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 Heritage Distilleries 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.
HDPL was incorporated in 1999 by Mr. Kartick Swain and his
family. It owns a manufacturing facility with area of 1.3 acres
and capacity of 0.12 million cases per month, which it has leased
to United Spirits Ltd (USL) for manufacturing Indian-made foreign
liquor. The lease is for 5 years and is renewable for 5 years.
HDPL plans capital expenditure for expanding its facility, which
will also be leased to USL.
J.K. FISHERIES: CRISIL Removes B- Rating From Not Cooperating
-------------------------------------------------------------
Due to inadequate information, CRISIL Ratings, in line with
Securities and Exchange Board of India guidelines, had migrated
the rating on the bank facilities of J.K. Fisheries to 'CRISIL
B+/Stable/CRISIL A4/Issuer Not Cooperating'. However, management
subsequently started sharing information necessary for carrying
out a comprehensive review of the ratings. Consequently, CRISIL
is migrating the rating from 'CRISIL B+/Stable/CRISIL A4/Issuer
Not Cooperating' to 'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 5 CRISIL A4 (Migrated from
under Letter of 'CRISIL A4' Issuer Not
Credit Cooperating)
Cash Credit 4.75 CRISIL B-/Stable (Migrated
from 'CRISIL B+/Stable'
Issuer Not Cooperating)
Proposed Cash 0.25 CRISIL B-/Stable (Migrated
Credit Limit from 'CRISIL B+/Stable'
Issuer Not Cooperating)
The downgrade factors in the firm's stretched liquidity,
reflected in fully utilised bank limit, weakening of business
risk profile, below average financial risk profile marked by
modest networth, high gearing and below average debt protection
metrics, and large working capital requirement.
The ratings reflect JKF's modest scale of operations and customer
concentration. These weaknesses are partially offset by the
extensive experience of its promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and customer concentration in
revenue profile: With turnover of INR22.62 crore for fiscal 2017,
scale remains small in the intensely competitive seafood
industry, which limits bargaining power with customers and
suppliers. Also, 80-90% of revenue comes from the Star group,
which exposes operations to any change in purchasing policy of
its main client. Though this risk is mitigated by established
relationship with the Star group, business risk profile will
remain constrained by customer concentration, over the medium
term.
* Working capital-intensive operations: Gross current assets were
234 days as on March 31, 2017, due to stretched receivables of
233 days; inventory is negligible and payables 107 days. Large
working capital requirement has led to fully utilised working
capital limit in the 8 months ended December 2017, with frequent
availing of ad hoc limit.
* Below-average financial risk profile: Networth was small at
INR3.01 crore as on March 31, 2017, while gearing was moderate at
1.75 times (majority of debt comprises working capital
borrowing). Total outside liabilities to adjusted networth ratio
was high at 3.8 times and is expected to remain weak over the
medium term. Also, debt protection metrics were muted, with net
cash accrual to total debt and interest coverage ratios of 3% and
1.45 times, respectively, for fiscal 2017. Financial risk profile
is expected to remain weak over the medium term.
Strengths
* Extensive experience of promoters: The promoters have around 10
years of experience in the seafood industry. Before setting up
JKF, they acted as purchase agents for the Star group, which has
diversified presence in the shrimp processing and export
business. JKF was set primarily to cater to the group's raw
shrimp requirement. Promoters also have healthy relationship with
suppliers.
Outlook: Stable
CRISIL believes JKF will continue to benefit over the medium term
from promoters' extensive experience. The outlook may be revised
to 'Positive' if significant increase in cash accrual improve
capital structure. The outlook may be revised to 'Negative' if
lower-than expected accrual, any large, debt-funded capital
expenditure, or sizeable withdrawal further weakens financial
risk profile.
JAYANTH COTTON: CRISIL Assigns 'B' Rating to INR6MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facilities of Jayanth Cotton Industries (JCI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B/Stable (Assigned)
Long Term Loan 5 CRISIL B/Stable (Assigned)
The rating reflects the modest scale of operations amidst intense
competition, the below-average financial risk profile, and
susceptibility to volatile raw material prices. These weaknesses
are partially offset by the extensive experience of the partners.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations amidst intense competition in the
cotton ginning industry: Intense competition, especially from
small, unorganised players, and limited value addition in the
cotton ginning business, have kept the scale of operations
modest, and limit the pricing and bargaining power against
customers and suppliers. The modest scale, as reflected in net
sales of INR47.69 crore in fiscal 2017, limits benefits from
economies of scale and resilience to external shocks, in
comparison to large to players. Networth of INR3.68 crore as on
March 31, 2017, further limits the financial flexibility to raise
additional debt in case of any adverse business conditions.
* Below-average financial risk profile: Financial risk profile is
marked by modest networth, high gearing and below-average debt
protection metrics. Networth and gearing were around INR3.68
crore and 3.44 times, respectively, as on March 31, 2017. Debt
protection metrics were weak, as indicated by the net cash
accrual to total debt and interest coverage ratios of around 0.05
time and 1.67 times, respectively, as on March 31, 2017.
* Susceptibility volatile raw material prices and unfavourable
regulatory changes: Operating margin of cotton ginners like JCI
remains susceptible to change in cotton prices. Key raw material,
raw cotton accounts for 90-95% of the production cost. Cotton
prices may continue to be volatile, as in the past, and thus, the
firm will remain susceptible to price risk. Cotton prices are
dependent on the monsoon, and affected by international demand.
Apart from demand and supply factors, cotton prices are also
influenced by government policies. The Government of India fixes
a minimum support price (MSP) for cotton every crop year. When
prices of any variety drop below the MSP, the Cotton Corporation
of India and National Agricultural Co-operative Marketing
Federation intervene to purchase cotton at the MSP, without any
quantitative limits. Hence, any abrupt changes in regulations can
distort market prices and affect profitability of various players
in the cotton value chain, including ginners. Moreover, in case
of increase in cotton prices, inability on the part of the firm
to pass on the full impact to customers, either due to intense
competition and/or an oversupply situation, can impact
profitability.
Strength:
* Extensive experience of the partners: The decade-long
experience of the partners, in the cotton industry, their grasp
over local market dynamics, and established relationships with
farmers and customers, will continue to support the business risk
profile.
Outlook: Stable
CRISIL believes JCI will continue to benefit from the extensive
experience of its partners in the cotton industry. The outlook
may be revised to 'Positive' if the firm reports substantial
growth in revenue, better profitability and a stronger capital
structure. The outlook may be revised to 'Negative' in case of a
decline in revenue or profitability, or if any large capital
expenditure, weakens the financial risk profile.
Incorporated in 2015, JCI gins and presses cotton. The firm
processes raw cotton (kappas) into cotton bales and seeds, and
caters to demand from Andhra Pradesh, Tamil Nadu, Gujarat,
Maharashtra, and Haryana. The unit at Adhoni (AP), has an
installed capacity of 250 bales per day. Mr Sridhar Reddy, Mr
Rajender Kumar Reddy and Mr Surya Pratap Reddy are the partners.
Profit after tax of INR(0.09) crore was reported on revenue of
INR47.69 crore in fiscal 2017, against INR(0.04) crore and
INR15.89 crore, respectively, in fiscal 2016.
KAILASH MOTORS: ICRA Assigns B Rating to INR24cr Fund Based Loan
----------------------------------------------------------------
ICRA has assigned its long-term rating of [ICRA]B to INR6.11
crore (earlier rated INR1.11 crore) unallocated limits. ICRA has
an outstanding rating of [ICRA]B for INR25.04 crore fund based
limits. ICRA also has an outstanding rating of [ICRA]B and
[ICRA]A4 for the INR13.85 crore1 fund-based working capital
facilities of Kailash Motors (KM)2. The outlook on the long-term
rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Working
Capital Facilities 24.00 [ICRA]B (Stable); Outstanding
Fund Based-Working
Capital Facilities 13.85 [ICRA]B (Stable)/[ICRA]A4;
Outstanding
Fund Based-Term
Loan 1.04 [ICRA]B (Stable); Outstanding
Unallocated 6.11 [ICRA]B (Stable); Assigned
/Outstanding
Rationale
The rating reaffirmation factors in the decline in operating
income (OI) in FY2017 due to demonetisation and ban on sand
mining by the National Green Tribunal (NGT) in Kanpur.
Nonetheless, the company recorded an improvement in operating
margins. Also, the scale of operations increased in the current
fiscal on account of the favourable tax rate for commercial
vehicles (CV) post Goods & Service Tax (GST) implementation and
partial lifting of the ban on sand mining in Kanpur.
ICRA's ratings continue to take into account the cyclicality
inherent in the CV industry as the business prospects of KM are
closely linked to the demand for CVs. The profitability and
coverage indicators remain weak due to intense competition in the
auto-dealership business. The firm faces intense competition from
other Tata Motors Limited (TML) dealers and other OEM3
dealerships in the vicinity.
ICRA's ratings continue to positively factor in the strength the
firm derives from its dealership of TML, which is the market
leader in India's CV industry. ICRA also favourably factors in
the firm's wide network comprising one 3S (sales, service and
spares) facility and five sales outlets in Uttar Pradesh.
Further, the extensive experience of the promoters in the
automobile dealership business continues to provide comfort to
the rating.
The firm's ability to increase its scale of business in a
profitable manner as well as maintain optimal working-capital
intensity and attain sustained improvement in its coverage
indicators will be the key rating sensitivities.
Outlook: Stable
ICRA believes that KM continues to benefit from the healthy
demand of TML CVs in the domestic market and its established
track record in auto-dealership business. The outlook may be
revised to Positive if substantial growth in revenue and
profitability, and better working-capital management strengthen
the financial risk profile. The outlook may be revised to
Negative if cash accrual is lower than expected, or if any major
sales turnover or stretch in the working-capital cycle weakens
liquidity.
Key rating drivers:
Credit strengths
Extensive experience of promoters in dealership business: KM
started auto dealership business in 1958 as a dealer of the then
Tata Engineering & Locomotive Co. Ltd. (now TML) commercial
vehicles. The Gupta and Chandra families, partners in KM, also
manage various auto-dealership businesses in Uttar Pradesh,
Madhya Pradesh and Chhattisgarh.
Brand value of TML CV in domestic market: KM is the authorised
dealer of TML's medium and heavy commercial vehicles (M&HCV) and
small commercial vehicles (SCV) segments for six districts of
Uttar Pradesh. It, however, has coverage in eight districts of
the state, namely Kanpur, Kanpur Dehat, Fatehpur, Banda,
Farrukhabad, Lalitpur, Mahoba, and Kannauj. The brand presence of
TML in Uttar Pradesh is expected to drive KM's revenue growth
going forward.
Credit challenges
Decline in FY2017 revenue due to demonetisation and ban on sand
mining in Kanpur: The company posted lower sales turnover in
FY2017, mainly due to the impact of demonetisation and ban on
sand mining. The NGT had banned the illegal extraction of minor
minerals through mechanised mining on the Yamuna riverbed in
Kanpur.
Intense competition from other OEMs limits pricing flexibility:
KM faces intense competition from various TML dealers in Uttar
Pradesh and dealers of other OEMs in the M&HCV and SCV segment
such as Ashok Leyland Limited (ALL), Mahindra & Mahindra Limited
(M&M) etc. The company's margins remain thin, as is inherent to
the automotive-dealership business.
Weak financial profile: The company's financial profile is weak
due to its low profitability and high interest payments. Debt-
protection metrics remain subdued as reflected by Total
Debt/OPBITDA of ~14.21 times, interest cover of 0.52 times and
NCA/Total Debt of 0.61% in FY2017.
KM was founded as a partnership firm in 1958 with the dealership
of Tata Engineering & Locomotive Company Ltd. (now TML). At
present, it deals with the entire range of heavy CVs of TML, in
addition to some of its multi-utility vehicles (MUVs) and spare
parts. KM's TML dealerships are spread across six districts of
Uttar Pradesh - Kanpur, Kanpur Dehat, Fatehpur, Banda,
Farrukhabad, and Kannauj. The business is managed by two
partners, Dr. Ishwar Chandra and Mr. Vineet Chandra.
KOTTIYOOR METALS: CRISIL Assigns B Rating to INR10MM LT Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facility of Kottiyoor Metals Private Limited
(KMPL). The rating reflects the company's modest scale of
operations and large working capital requirement. These
weaknesses are partially offset by its promoters' extensive
experience in the construction material sector.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 10 CRISIL B/Stable
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: KMPL's scale of operations will
remain modest over the medium term. Revenue is expected at INR25
crore in fiscal 2018. The small scale limits the company's
ability to exploit benefits associated with economies of scale,
and exposes it to competitive pressures leading to limited
bargaining power with customers.
* Large working capital requirement: The company had gross
current assets of 60-80 days, as it provides credit of 45-60 days
to customers and receives credit of 45 days from its suppliers.
The company does not maintain any inventory. CRISIL believes
working capital requirement will increase with revenue growth
over the medium term.
Strength
* Promoters' industry experience: The promoters' experience of
more than two decades has helped them establish longstanding
relationships with customers, suppliers, and other stakeholders.
Outlook: Stable
CRISIL believes KMPL will benefit from its promoters' industry
experience. The outlook may be revised to 'Positive' if higher-
than-expected revenue and profitability lead to high cash accrual
or if financial risk profile improves. The outlook may be revised
to 'Negative' if financial risk profile weakens because of large
working capital requirement or sizeable, debt-funded capital
expenditure.
KMPL was incorporated in July 2017 by Mr M M Thomas and Mr Sunny
Cyraic. Its stone crushing plant at Kanoon, Kerala, has capacity
of 50,000 CFT per day, and its products are used in various local
infrastructure projects.
MADHUCON GRANITES: ICRA Lowers Rating on INR82.06cr Loan to B-
--------------------------------------------------------------
ICRA has downgraded the long-term rating assigned to the
INR82.06-crore term loan facility of Madhucon Granites Limited
from [ICRA]BB+ to [ICRA]B-. ICRA has also downgraded the short-
term rating assigned to the INR42.57-crore fund-based and the
INR9.10-crore non-fund based facilities of MGL from [ICRA]A4+ to
[ICRA]A4. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Term Loan 82.06 [ICRA]B-(Stable); Revised
from [ICRA]BB+ (Stable)
Short Term-Fund Based 42.57 [ICRA]A4; Revised from
[ICRA]A4+
Short Term-Non-Fund 9.10 [ICRA]A4; Revised from
Based [ICRA]A4+
Rationale
The rating downgrade takes into account the delays in debt
servicing by the company in the recent past, on a credit line
which is not rated by ICRA. ICRA also takes note of the
restructuring of the said credit line that took place on
December 15, 2017.
Key rating drivers
Credit strengths One of the largest granite exporters in the
country; long track record of the company's operations and
extensive experience of the promoters in the granite quarrying
and processing industry: Incorporated in 1994, MGL, a part of
Madhucon Group, is currently owned and managed by Mr. N.
Krishnaiah and his family. The company is one of the largest
granite exporters from the country, contributing to ~29% of the
total polished granite export from India during FY2017. With more
than two decades of presence, the company benefits from the rich
experience of its promoters, its established presence in the
export market and the long-standing relationships with the export
customers.
Cost advantages stemming from strong raw material linkage through
captive quarries which also ensure steady supply of raw-material:
The company obtains 70% of its rough blocks requirement from
captive quarries which are cut and polished at its processing
unit. Thus, unlike other granite manufacturers which procure raw
materials at market prices from independent suppliers, MGL enjoys
strong raw material linkages which enable it to achieve better
margins than other players. The company owns and operates
thirteen granite quarries in Tamil Nadu, Andhra Pradesh and
Telangana.
Healthy operating profitability and robust cash accruals: Given
the cost differential enjoyed by the company owing to sourcing of
raw material from its own quarries, its operating profitability
and cash accruals have remained healthy despite intense
competition from both domestic and international players.
Credit weaknesses
Significant financial support to the group companies; MGL has
raised substantial debt in its book in the past to meet the
funding requirement of the group: The company has extended huge
financial support to the group companies through deployment of
surplus funds and external debt. MGL has invested in the flagship
company of the Group- Madhucon Projects Limited (MPL) which is
primarily engaged in the road construction and irrigation
projects businesses. MPL along with its subsidiaries has one
operational power plant of 600 MW capacity, five BOT road
projects of which three are operational toll road projects and
two are annuity projects under execution. Poor operational
performance of power plant due to absence of long term power
purchase agreements and low toll collections on account of the
weak traffic flow for the BOT toll road projects has adversely
impacted the financial profile of MPL and its subsidiaries which
are currently unable to meet their debt servicing obligations in
a timely manner.
High working capital intensity of operations: The working capital
position of the company is stressed with large inventory holding
and stretched export receivables.
Highly fragmented industry resulting in strong competition
witnessed from domestic players and also from other granite
exporting countries (China and Brazil): ICRA also takes note of
the fragmented nature of the industry and the strong competition
faced by the company from both domestic and international granite
traders. In recent years, the Indian granite industry has been
affected due to rising competition from other granite exporting
nations like Brazil and China. The overall Indian exports of
polished granite slabs declined at a CAGR of ~15% for the last
four years (FY2013 to FY2017) in terms of value. High
geographical concentration risk; vulnerability to foreign
exchange fluctuations: Being an export oriented unit, the company
derives ~85% of its revenue from the exports, with US
contributing to ~41% of the total revenue during FY2017. High
concentration in the US market exposes the company to the
economic cyclicality in the region. Further, the company's
profitability remains vulnerable to foreign exchange fluctuations
associated with the exports as the exposure remained un-hedged.
MGL, a part of Madhucon Group, was incorporated in 1994 as a
private limited company and is closely held by the promoters. The
company is involved in manufacturing of polished granite slabs.
It has one processing unit at Hosur (Tamil Nadu) with an
installed capacity of 6.5 lakh sq. mtr. The company also has 13
operational quarries mainly located in Andhra Pradesh, Tamil Nadu
and Karnataka. Madhucon Group has diversified interests across
industries including construction, granite, coal, sugar and
power. MGL has three subsidiaries, namely, Madhucon Sugar and
Power Industries Limited (MSPIL), Nama Granites Private Limited
(NGPL- not operational) and Nama Holdings Pte Limited (NHPL).
MSPIL has a sugar plant in Khammam (Andhra Pradesh) with an
installed capacity of 3500 tons of canes per day and a power
plant with a capacity of generating 24.2 MW from baggase and
coal. MSPIL has also established a distillery unit in 2015 with a
capacity of 65 kilo litres per day. NHPL is a Singapore based
entity which has in turn invested in the Group's Indonesian
entities for the procurement of imported coal; however, the same
is currently not operational.
NATURAL AGRITECH: Ind-Ra Migrates B- Rating to Non-Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Natural Agritech
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B-(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are as follows:
-- INR73.7 mil. Term loans due on May 30, 2021 migrated to
Non-Cooperating Category with IND B-(ISSUER NOT COOPERATING)
rating;
-- INR40 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B-(ISSUER NOT COOPERATING) rating; and
-- INR22.5 mil. Non-fund-based limits migrated to Non-
Cooperating Category with IND A4 (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 19, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2014 by Krishna Kumar Modi, Sangita Agarwal,
Harish Saraogi and Sourav Saraogi, Natural Agritech Private
Limited is engaged in the production and milling of rice. The
company has a 160MT per day manufacturing facility in Dhenkanal,
Orissa. The company mainly sells its products under the brand
names Babaji and Shivam Gold.
PADMA LAXMI: CARE Moves B+ Rating to Not Cooperating Category
-------------------------------------------------------------
CARE has been seeking information from Padma Laxmi Sree Rice Mill
Pvt. Ltd (PLSRM) to monitor the ratings vide e-mail
communications/ letters dated Aug. 18, 2017, Nov. 22, 2017,
Jan. 1, 2018, Jan. 15, 2018 and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided
the requiste information for monitoring the rating. In the
absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating. In line
with the extant SEBI guidelines CARE's rating on Padma Laxmi Sree
Rice Mill Pvt. Ltd's bank facilities will now be denoted as CARE
B+/A4; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 12.35 CARE B+; ISSUER NOT COOPERATING
Short term Bank
Facilities 0.30 CARE A4; ISSUER NOT COOPERATING
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating in March 6, 2017 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Project stabilization risk: The project has been completed during
December 2016 and commercial operation started from Feb 2017. The
bank facilities have been sanctioned during January 2017.
However, as the operation has started in recent past, the project
stabilization risks lies with the company. However,
provisionally, the company has been doing a trading business of
rice during the last two financial years ending on FY16.
High government regulations: The Government of India (GOI), every
year decides a minimum support price (MSP-to be paid to paddy
growers) for paddy which limits the bargaining power of rice
millers over the farmers. The sale of rice in the open market is
also regulated by the GoI through the levy of quota, depending on
the target laid by the central government for the central pool.
Given the market determined prices for finished product vis-a-vis
fixed acquisition cost for raw material, the profitability
margins are highly vulnerable.
Seasonal nature of availability of paddy resulting in high
working capital intensity and exposure to vagaries of nature:
Rice milling is a working capital intensive business as the rice
millers have to stock rice by the end of each season till the
next season as the price and quality of paddy is better during
the harvesting season. Furthermore, the millers are required to
extend a credit period of around 2-3 weeks to its customers.
Also, paddy cultivation is highly dependent on monsoons, thus
exposing the fate of the company's operation to vagaries of
nature.
Fragmented and competitive nature of industry: PLSRM's plant is
located in Vaishali district, Bihar which is one of the hubs for
paddy/rice cultivating region. Owing to the advantage of close
proximity to raw material sources, large number of small units is
engaged in milling and processing of rice in the region. This has
resulted in intense competition which is also fuelled by low
entry barriers. Given that the processing activity does not
involve much of technical expertise or high investment, the entry
barriers are low.
Key Rating Strengths
Experienced promoters: The promoters of PLSM have long experience
in agro industry, chemical industry and engineering line of
business. Mr Chittaranjan Ghosh (aged 63 years, M.Com) having an
experience of more than four decades in the agro-commodity and
chemical business, will look after the overall affairs of the
company. He will be adequately supported by his son, Mr Sanjoy
Ghosh (aged 34 years, Engineer & MBA), having experience of
around a decade in agro commodity, chemical and engineering line
of business, will look after the marketing activities. Prior to
setting up of this company, both of them were engaged in same
activity through its associate concern namely Laxmisree Ricemill
Pvt. Ltd. Proximity to raw material sources: PLSRM's plant is
located in Vaishali District, Bihar which is in the midst of
paddy growing region. The entire raw material requirement is met
locally from the farmers (or local agents) which helps the
company to save substantial amount of transportation cost and
also procure raw materials at effective price.
Padma Laxmi Sree Rice Mill Pvt. Ltd. (PLSM) was incorporated in
June, 2010 by Ghosh family of Birbhum District, West Bengal. The
company has been engaged to setup a rice milling unit at Vaishali
district of Bihar with a processing capacity of 48,000 metric
tonne per annum (MTPA), which is in the vicinity to a major rice
growing area. The project has been completed in December 2016 and
the commercial operation has started from February 2017. However,
provisionally, the company has been doing a trading business of
rice during the last two financial years ending on FY16.
During FY16, the company reported a total operating income of
INR0.93 crore (FY15: INR1.89 crore) and a PAT of INR0.01
crore (in FY15: INR0.02 crore). Furthermore, the company has
achieved a total operating income of INR0.91 crore during
9MFY17 (refers to the period April 1 to December 31).
PANDIT AUTOMOTIVE: ICRA Cuts Rating on INR75cr Cash Loan to D
-------------------------------------------------------------
ICRA has downgraded the long-term rating to [ICRA]D ISSUER NOT
COOPERATING from [ICRA]C- ISSUER NOT COOPERATING for the INR
75.00 crore long-term fund-based facilities and INR22.60 crore
term loan facilities of Pandit Automotive Private Limited (PAPL).
The rating continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash credit 75.00 [ICRA]D ISSUER NOT
COOPERATING; Revised from
[ICRA]C- and continues to
remain in the 'Issuer Not
Cooperating' category
Term Loans 22.60 [ICRA]D ISSUER NOT
COOPERATING; Revised from
[ICRA]C- and continues to
remain in the 'Issuer Not
Cooperating' category
ICRA has limited information on the entity's performance since
the time it was last rated in May 2017.
As part of its process and in accordance with its rating
agreement with PAPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Rationale
The rating downgrade follows the delay in debt servicing by PAPL
to the lender, as confirmed by the lender to ICRA. The company's
liquidity position has remained stretched, resulting in delay in
debt repayments.
Pandit Automotive Private Ltd. (PAPL) was incorporated in 1980.
The present business was taken over in the year 1987 from
Automotive Services, a proprietary firm established in 1956, then
run by Mr. R. H. Pandit. PAPL is in the business of retailing
passenger vehicles and commercial vehicles for TATA Motors
Limited (TML) and spare parts. The Company retails the whole
range of vehicles produced by TML in three districts in
Maharashtra viz. Pune, Satara and Sangli.
PARAMOUNT TEXTILE: Ind-Ra Assigns BB LT Issuer Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Paramount
Textile Mills Private Limited (PTMPL) a Long-Term Issuer Rating
of 'IND BB'. The Outlook is Stable. Instrument-wise rating
actions are given below:
-- INR190 mil. Fund-based facilities assigned with
IND BB/Stable/IND A4+ rating;
-- INR75 mil. Non-fund-based facilities assigned with IND A4+
rating;
-- INR101.78 mil. Term loan due on March 2023 assigned with
IND BB/Stable rating; and
-- INR20 mil. Proposed fund-based limits* assigned with
Provisional IND BB/Stable/Provisional IND A4+ rating.
*The ratings are provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facility
by PTMPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect by PTMPL's moderate credit profile, due to
stiff competition in the export market and its vulnerability to
raw material prices and forex movements.
The revenue grew 27.6% yoy to INR1,179 million in FY17, primarily
because of an increase in sales volume. The EBITDA margins were
volatile in the range of 8.2%-11.7% during FY14-FY17 because of
fluctuations in raw material prices. The management expects that
there will be a dip in revenue in FY18, as some of the export
customers have asked to make a deferred delivery. As of November
2017, PTMPL achieved revenue of INR600 million and had orders of
around INR800 million, of which orders worth around INR300
million would be completed by end-FY18.
The net leverage (net debt/operating EBITDA) deteriorated to 3.2x
in FY17 (FY16: 1.9x) on account of an increase in the total debt
to INR305 million (INR156 million), led by a debt-funded capex
towards the modernization of machineries. The interest coverage
(operating EBITDA/gross interest expense) improved to 3.0x in
FY17 (FY16: 2.5x) because of decrease in the interest expenses to
INR 32 million (FY 16: INR 33 million).
The ratings also continue to factor in the company's tight
liquidity. Its maximum utilization of the fund-based was 92% on
average during the 12 months ended January 2017. Moreover, its
net cash conversion cycle increased to 51 days in FY17 (FY16: 45
days), primarily on account of an increase in inventory and
debtor days.
The ratings, however, are supported by PTMPL's experience of over
30 years in the textile industry which enables the company to
maintain strong customer relationships.
RATING SENSITIVITIES
Negative: A further decline in the revenue, EBITDA margin and
stretch in liquidity will lead to a negative rating action.
Positive: An improvement in the revenue, EBITDA margin and
liquidity will lead to a positive rating action.
COMPANY PROFILE
Established in 1979, PTMPL manufactures grey fabrics and made-ups
and exports them to the US and European countries. The company is
located in Madurai, south India and is managed by Mr. Ramu
Murugesan.
PATRON INDUSTRIES: ICRA Keeps B+/A4 Rating in Not Cooperating Cat
-----------------------------------------------------------------
The ratings for the INR20.00 crore bank facilities of Patron
Industries Private Limited continues to remain in the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA] B+
(Stable)/ [ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short-
term: Fund Based
limits 12.00 [ICRA]B+ (Stable)/[ICRA]A4
ISSUER NOT COOPERATING;
Rating continues to remain
in the 'Issuer Not
Cooperating' category
Short-term: Non-
fund-based limits 7.50 [ICRA]A4 ISSUER NOT
COOPERATING; Rating
continues to remain in
the 'Issuer Not Cooperating'
category
Long-term/Short-
term: Unallocated 0.50 [ICRA]B+ (Stable)/[ICRA]A4
ISSUER NOT COOPERATING;
Rating continues to remain
in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated/limited
information on the issuers' performance. Accordingly the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
R M METALS: CARE Reaffirms B+/A4 Rating on INR8cr Bank Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
R M Metals (RMM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 8.00 CARE B+; Stable/CARE A4
term Bank Reaffirmed
Facilities
Short-term Bank
Facilities 4.00 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of RMM continue to be
constrained by modest scale of operations and low profitability
margins, leveraged capital structure and weak debt coverage
indicators, working capital intensive nature of operations. The
rating further continues to be constrained by its presence in the
highly competitive and fragmented textile industry and
susceptibility of operating margins to the raw material price
fluctuation. The rating, continue to derive strength from
experienced and resourceful promoters, operational support from
group entities with presence across textile value chain and
location advantage. Ability of RMM to increase its overall scale
of operations along with an improvement in profitability and
capital structure and efficient management of the working capital
are the key rating sensitivities.
Detailed description of Key rating drivers
Key rating Weakness
Small scale of operations coupled with low net worth base and Low
profit margins: The total operating income has declined by 15.04%
in FY17 vis-a-vis FY16 on account of increased competition in the
market as well as subdued demand from end user industry thereby
leading to decline in the demand from the end customers. Further
the networth base of the firm remained low at INR4.61 crore as on
March 31, 2017. Nevertheless the scale of operations continued to
remain small thereby limiting financial flexibility of the
company. The operating margins it remained fluctuating in the
range of 2.68% to 3.76% during last three financial years ending
FY17, moreover owing to lower depreciation the profit margin
improved by 69bps and remained low at 1.16% in FY17, Nevertheless
the profitability margins have remained low due to its trading
nature of business.
Leveraged capital structure and weak debt coverage indicators:
The overall gearing remained moderately leveraged owing to high
dependence on external borrowings to support the operations.
Further the debt coverage indicators remained weak owing to the
same and low profit margins. The capital structure of the company
stood moderately leveraged marked by on account of high reliance
on external debt and low networth base.
Working capital intensive nature of operations: The operations
continue to remain working capital intensive in nature with funds
blocked in receivables as the company offers its customers an
extended credit period owing to an established relationship as
well as intense competition prevalent in the industry. On account
of this, the utilization of the working capital limit remained
high.
Presence in the highly competitive and fragmented industry: The
firm operates in a highly fragmented and unorganized market for
its products with presence of large number of small and mid-sized
players. The industry is characterized by low entry barriers due
to minimal capital required and easy access to clients and
suppliers. Also, the presence of big sized players with
established marketing & distribution network results into intense
competition in the industry.
Exposure to material price volatility: The firm is into trading
of ferrous and non- ferrous metals where the prices of major
inputs like steel, copper, etc. is highly volatile in nature.
Thus, the firm is exposed to the risk of volatility in prices of
raw materials due to absence of any price variation clause for
change in raw material prices in the contracts. Accordingly, any
volatility in input prices may adversely affect the margins.
Partnership constitution: RRM being a partnership firm is exposed
to inherent risk of partner's capital being withdrawn at time of
personal contingency as also it has limited ability to raise
capital and poor succession planning may result in dissolution of
the firm. Due to the partnership constitution, it has restricted
access to external borrowings.
Key rating Strengths
Experienced and resourceful promoters: The management of the firm
is vested in the hands of Mr. Ravi Ramniklal Kothari and Mr.
Deepak Kothari, the partners of the firm having combine
experience of more than two decade in the business of trading of
ferrous and nonferrous metals and is supported by an experienced
second line of management. Further along with high experience of
promoters in present line of business and long track record of
firm, RM has established strong relationship with its customers
and suppliers leading to easy availability of raw materials and
receives repeated orders from its wide range of customers.
R M Metals (RMM) was set up as a proprietorship concern by Mr.
Ravi Ramniklal Kothari in 2000. In 2003, its legal status was
changed to a partnership firm and Mrs. Manjula Kothari and Mr.
Deepak Kothari were introduced as partners. RMM is engaged in
trading of ferrous and nonferrous metals viz. brass foils, brass
sheets, copper foils, copper tubes, stainless steel sheet,
stainless steel rounds, and nickel alloy pipes. RMM procures its
trading material from domestic markets and sales to domestic
traders and manufacturers. Further RMM also has one group company
namely, Mukesh Enterprises which is also engaged in same line of
business.
RADHE COTTON: CRISIL Lowers Rating on INR7.5MM Cash Loan to D
-------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facilities of Radhe Cotton (RC) to 'CRISIL D' from 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 7.5 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Proposed Long Term
Bank Loan Facility 1.09 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Term Loan 0.57 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects RC's weak liquidity resulting in recent
overutilization of fund-based limit for over 30 days due to a
stretch in the working capital cycle.
Analytical Approach
The unsecured loans extended to RC by the partners have been
treated as neither debt nor equity. That's because these loans
are expected to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Stretched liquidity owing to large working capital requirement:
Liquidity remained constrained by a stretched working capital
cycle; resulting in the bank limits being over utilised in the
recent past due to high inventory built up and slowdown in sales.
Gross current assets were high at 447 days as on March 31, 2017,
due to large inventory of 453 days during the cotton season.
* Below-average financial risk profile: Financial risk profile is
marked by a moderate networth and high gearing of INR3.52 crore
and 2.29 times, respectively, as on March 31, 2017, because of
large working capital debt. Interest coverage and net cash
accrual to total debt ratios were weak at 1.53 times and 0.06
time, respectively, for fiscal 2017.
Strengths
* Experience of partners and proximity to cotton-growing belt: RC
benefits from its partners' experience of over a decade, their
understanding of the local market dynamics, and healthy relations
with farmers. It is based at Visavadar in Junagadh, which is a
part of the cotton-growing belt in Gujarat thereby giving it
locational advantage from procurement.
RC, set up in 2013 at Junagadh, is a partnership between Mr Kirit
Akheniya, Mr Mukesh Limbani, Mr Parakash Kantilal Popat, Mr Uday
Limbani and Mr Viral Akheniya. The firm gins and presses cotton;
it started commercial operations in May 2014.
RADIANT POLYMERS: CARE Confirms B+ Rating on INR41.30cr NCD
-----------------------------------------------------------
CARE confirms the rating assigned to the above-mentioned Non-
convertible Debentures (NCDs) of Radiant Polymers Private Limited
(RPPL) following the receipt of documents to the satisfaction of
CARE.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Proposed Non-
Convertible
Debenture issue
(Series A) 33.70 CARE B+; Stable
Proposed Non-
Convertible
Debenture issue
(Series B) 41.30 CARE B+; Stable
The rating assigned to Radiant Polymers Private Limited factor in
experienced promoters, reputed clientele and diversified revenue
streams in automotive segment and lighting. However, the rating
is constrained by working capital intensive nature of operations,
profitability being susceptible to volatility in prices of
finished goods and raw materials, moderate scale of operations,
highly competitive and fragmented nature of the industry and
leveraged capital structure with moderate debt protection
matrices.
Going forward, the ability of the company to sustain its scale of
operations with improvement in profit margins and managing its
working capital effectively shall be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters: RPPL started its operation of
manufacturing of plastic engineering moulded components in 1988
and therefore, RPPL has 29 years of operational track record in
this segment of the industry. RPPL is jointly managed by Mr.
Nalin Bahl, Director, who has more than two decades of experience
in this industry and Mr. Kumud Jayee (Director) who is also
having over two decades of experience in this industry.
Reputed clientele: RPPL's client list includes reputed automobile
OEMs and lighting companies like Honda Motorcycle & Scooter India
Pvt. Ltd and other reputed companies in the automotive and
lighting segment. RPPL has established long term relationship
with its clients leading to repeat orders. The top five customers
of RPPL contributed about 52.5% of net sales during FY17.
Diversified Revenue Streams in automotive segment and lighting:
RPPL has diversified revenue streams with majority of their
revenue coming from the automotive segment (81% in FY17). RPPL
further has an established relationship with leading 4 wheeler
and 2 wheeler players from which it has been getting repeat
orders. In FY17, 4 wheeler segment contributed 49% to the overall
revenue whereas 2 wheelers contributed 32%. Apart from the
automotive segment, RPPL has also ventured into lighting segment
and is a supplier to major players. The lighting segment
contributed 17% to the overall revenue in FY17.
Key Rating Weaknesses
Working capital intensive nature of operations: The business of
RPPL is marked by large working capital requirements in view of
its elongated operating cycle due to high inventory holding
period and moderate collection period. The working capital
intensity is high, as large amount of funds remained blocked in
inventory and debtors. Furthermore, the average working capital
utilization of RPPL has mostly been fully utilized during past 12
months. However, the working capital requirement is partially
backed by credit period availed from its supplier.
Raw material price volatility risk: Raw material is the major
cost driver for the company and formed around 63-66% of the cost
of sales during the last three years (FY15-FY17). The primary raw
material required by RPPL is plastic granules. The prices of
plastic granules are volatile and dependent on crude oil prices.
Although the company is safeguarded with respect to raw material
price fluctuation on account of a tri-party agreement between the
end customer, RPPL and the raw material supplier which allows
RPPL to reset prices. However, any sharp adverse movement in the
raw material prices might impact the profitability of the
company.
Moderate scale of operations
Though the company is in existence for more than two decades, the
operations of the company are modest with a total operating
income of INR 168.49 crore in FY17. Also, the capital employed
and net worth was moderate at INR53.97 crore and 6.06 crore
respectively as on March 31, 2017. The modest size restricts the
financial flexibility of the company in times of stress and
deprives it from scale benefits.
Highly competitive and fragmented nature of the industry: The
plastic components industry is highly fragmented with a large
number of small to medium scale organized and unorganized players
owing to low entry barriers with no visible differentiators in
product profile. High competition in the operating spectrum and
moderate size of the company limits the scope for margin
expansion.
Leveraged capital structure with moderate debt protection
matrices: The capital structure of the company remained leveraged
marked by its high debt equity of 1.64x and overall gearing of
7.91x as on March 31, 2017. The overall gearing remained high on
account of low net worth base of INR6.06 crore as on March 31,
2017. Out of the total debt of INR47.91 crore, majority of the
debt (Rs.32 cr) was towards working capital facilities. The debt
protection metrics has remained moderate marked by interest
coverage ratio of 1.32 times in FY17.
Radiant Polymers Private Ltd (RPPL) was incorporated on Aug. 5,
1988 by Mr. Nalin Bahl and Mr. Kumud Jayee. Both the promoters
have over two decades of experience in same line of business.
RPPL has been engaged in manufacturing of plastic moulded
components and draws majority of revenue from automotive
components. However, the entity is also engaged in the production
of lighting components which majorly involves components for LED
lamps. RPPL has three manufacturing facilities: two in Ghaziabad
(Uttar Pradesh) and one in Uttarakhand. During FY17, RPPL has
earned 98.4% of its revenue from the domestic market and balance
from overseas market. RPPL exports its products in the countries
like Argentina, Dubai, Japan and China.
SAI MAITHILI: Ind-Ra Cuts INR630MM Bank Loan Rating to 'B+'
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Sai Maithili
Power Company Private Limited's (SMPCPL) bank loans rating as
follows:
--INR630 million (INR420.6 million outstanding as on October 31,
2017)loan shave ratings downgradedto IND B+/Negative.
KEY RATING DRIVERS
The rating action reflects deterioration in SMPCPL's financial
coverage's due to higher debt than anticipated in Ind-Ra's base
case scenario. The company received the required sanction for
refinancing its existing loans along with a top-up in July 2016,
which shall be used as advances for corporate purposes. SMPCPL
drew down around one-third under its new facility (INR680 million
term loan and INR100 million subordinated non-convertible
debentures) but did not utilize the funds to repay its existing
facility, thus resulting in an increase in leverage.
The rating also reflects SMPCPL's continuing high operating
expenses, including operations and maintenance (O&M), and other
general expenses, which are denting its cash flow available for
debt servicing. The company reported operating expenses of
INR2.28 million/MW in FY17 (FY16: INR3.32 million/MW) compared
with the observed operating expenses of less than INR2 million/MW
across Ind-Ra's portfolio. SMPCPL terminated its O&M contract
with Refex Energy Limited in light of unsatisfactory performance
in FY15 and FY16. The company has assumed the O&M
responsibilities in-house.
The rating also factors in non-availability of a six-month debt
service reserve account (DSRA), exposing the project to possible
operational or grid-related disturbances. The loan agreement
stipulates the creation of a DSRA covering six months' of
principal and interest payments. SMPCPL incurred INR27.92 million
of forex losses in FY16 in relation to the buyer's credit.
Therefore, the foreign currency denominated buyer's credit
facility was fully repaid in July 2015 and closed using the
initially created DSRA. SMPCPL has created a partial DSRA of
INR12.3 million, which can support two to two and a half months
of debt servicing.
The rating also factors in SMPCPL's moderate performance risk.
Copper indium gallium diselenide-based thin film photovoltaic
(PV) panels used for the project have a limited operating history
at the utility scale than crystalline silicon-based PV panels.
Copper indium gallium diselenide-based thin film was deployed on
a utility scale in 2005 and is considered to be a promising
technology in the PV industry with a potential to emerge as an
alternative to the silicon-based PV technology. Ind-Ra has relied
on the independent engineer's opinion that the module's
efficiency and response to the ambient temperature are comparable
with other modules based on thin-film technology. However, the
agency opines that absent the long-term performance data from the
existing installations in India, there is a risk that performance
efficiency under ambient conditions may differ from management's
expectations.
However, the rating benefits from an improvement in the project's
net plant load factor (PLF) to 20.33% in FY17 (FY16: 18.94%,
FY15: 17.76%). Gross PLF was about 20.62% in FY17 (FY16: 19.22%),
close to the P90 estimate of 20.70%. According to SMPCPL, the
corrective measures taken to resolve transmission and cabling
related issues due to bad weather, besides assuming the O&M
responsibilities in-house, have resulted in improved PLFs.
The rating is also supported by the project's low revenue risk as
it has a 25-year long-term power purchase agreement with NTPC
Vidyut Vyapar Nigam Limited (a wholly-owned subsidiary of NTPC
Limited ('IND AAA'/Stable/'IND A1+') at a fixed tariff of
INR8.28/unit. The presence of a strong counterparty mitigates
revenue and counterparty risks. SMPCPL signed the power purchase
agreement on January 27, 2012.
RATING SENSITIVITIES
Positive: Better-than-expected operating and financial
performance on a sustained basis, creation of full debt service
reserve and successful refinancing of the existing facility or
repayment of additional debt drawn (deleveraging) could result in
a rating upgrade.
Negative: Significant negative deviation in the operating
performance of the plant leading to a continued increase in O&M
costs, non-creation of full debt service reserve for a prolonged
period of time and draw down of additional debt could lead to a
further rating downgrade.
COMPANY PROFILE
SMPCPL is jointly sponsored by VS Lignite Power Private Limited
(52%), KSK Mineral Resources Private Limited (24%) and KSK Surya
Photovoltaic Venture Private Limited (24%), all step-down
subsidiaries of KSK Energy Ventures. The project is located at
Gurha, Bikaner district of Rajasthan, which has a strong solar
potential. SMPCPL had secured the right to construct a 10MW solar
power plant in Rajasthan as a qualified bidder in round II of the
Jawaharlal Nehru National Solar Mission Phase 1 scheme. This
project is the first operating asset of the group in the solar
energy space. The project cost of INR1,010 million was funded in
a debt-equity ratio of 63:37. The plant commenced commercial
operations in February 2013.
SAMARTH SAI: ICRA Removes B Rating From Not Cooperating Category
----------------------------------------------------------------
ICRA has removed its earlier rating of [ICRA]B (Stable) and
[ICRA]A4 from the 'ISSUER NOT COOPERATING' category as Samarth
Sai Logistics Private Limited has now submitted its 'No Default
Statement' ("NDS") which validates that the company is regular in
meeting its debt servicing obligations. The company's rating was
moved to the 'ISSUER NOT COOPERATING' category in November, 2017.
The current ratings derive comfort from the past experience of
the promoters in the coal trading and other businesses and group
support in terms of logistics services.
SASWAD MALI: Ind-Ra Lowers Long Term Issuer Rating to 'D'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded The Saswad
Mali Sugar Factory Ltd's (SMSFL) Long-Term Issuer Rating to 'IND
D' from 'IND B+(ISSUER NOT COOPERATING)'. The instrument-wise
rating actions are given below:
-- INR764.7 mil. Cash credit limits (Long-term) rating
Downgraded to IND D rating; and
-- INR864.23 (reduced from INR868.4) mil. Term loans (Long term)
due on March 2019toAugust 2025 downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects SMSFL's delays in debt servicing during
September-November 2017 due to a tight liquidity position, post
which there have been no overdue payments as confirmed by the
banker.
The financial performance of the company deteriorated
significantly in FY17 on account of lower volumes of cane
crushed/ sugar produced, because of droughts and poor rainfall in
Maharashtra in the sugar season SS 2016-17.
The revenues of the company declined about 32.5% yoy to INR1,730
million in FY17 and EBITDA fell to about INR173 million (FY16:
INR329 million). Interest coverage (EBITDA/gross interest
expense) and net leverage (adjusted net debt/Operating EBITDAR)
thus deteriorated to 0.88x in FY17 (FY16: 1.41x) and 9.2x (5.9x),
respectively. Further, at the net level, the losses widened to
INR145 million in FY17 (FY16: negative INR5 million) which
resulted in the net worth turning negative on March 31, 2017
(negative INR25 million).
RATING SENSITIVITIES
Positive: Timely servicing of debt for three consecutive months
would be positive for the ratings.
COMPANY PROFILE
SMSFL, located at Malinagar in Solapur district, Maharashtra was
incorporated in 1932. The company has daily sugarcane crushing
capacity of 3,500 metric tonnes. In addition, it has 60,000
litres/day distillery capacity and 14.8MW installed co-generation
capacity.
SEPAL CERAMIC: ICRA Reaffirms B+ Rating on INR3.40cr Cash Loan
--------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ (pronounced
ICRA B plus) to the INR1.24-crore term loan facility and the
INR3.40-crore cash credit facility of Sepal Ceramic. ICRA has
also reaffirmed the short-term rating of [ICRA]A4 (pronounced
ICRA A four) to the INR2.00-crore non-fund based bank guarantee
facility of SC. ICRA has further reaffirmed the long-term rating
of [ICRA]B+ and short-term rating of [ICRA]A4 to the INR1.49-
crore unallocated limits of SC. The outlook on the long-term
rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term
Loan 1.24 [ICRA]B+ (Stable); Reaffirmed
Fund-based-Cash
Credit 3.40 [ICRA]B+ (Stable) ; Reaffirmed
Non-fund Based-
Bank Guarantee 2.00 [ICRA]A4; Reaffirmed
Unallocated Limits 1.49 [ICRA]B+ (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The reaffirmation of ratings continues to favourably factor in
the experience of the promoters spanning more than a decade in
the ceramic industry and the locational advantage, which ensures
easy availability of raw materials.
The ratings are, however, constrained by the firm's small scale
of operations in an intensely competitive industry and below
average financial risk profile marked by volatile profitability,
small net-worth base, modest debt coverage indicators and high
working capital intensity of operations. The ratings also factor
in the exposure of the firm's profitability to volatility in
fluctuations in the raw material and fuel prices and cyclicality
associated with the real estate industry, which is the main
consuming sector. ICRA notes the potential adverse impact on the
firm's net-worth and the gearing levels in case of any
substantial withdrawal from its capital accounts.
Outlook: Stable
ICRA expects Sepal Ceramic to continue to benefit from the
extensive experience of its promoters. The outlook may be revised
to Positive if substantial growth in revenue and profitability,
and better working capital management, strengthen the financial
risk profile. The outlook may be revised to Negative if cash
accrual is lower than expected, or if any major capital
expenditure, or stretch in the working capital cycle, weakens
liquidity.
Key rating drivers
Credit strengths
Experience of promoters in the ceramic industry: The key
promoters, Mr. Paresh Vilpara and Mr. Paresh Loriya, have more
than a decade's experience in the ceramic industry, which helps
the company in securing repeat orders.
Favourable location for raw material: The manufacturing facility
of the firm is located in the ceramic tiles manufacturing hub of
Morbi (Gujarat), which provides easy access to quality raw
materials.
Credit weaknesses Small scale of operations amid intense
competition: The firm has a small scale of operations with an
operating income of INR12.53 crore in FY2017, witnessing YoY
decline of ~12% in FY2017. The firm faces stiff competition from
organised as well as a large number of unorganised players in the
tile manufacturing industry, which limits its pricing flexibility
and bargaining power with customers, thereby putting pressure on
its revenues and margins.
Below average financial risk profile: The operating margins
remained volatile, which declined from 13.53% in FY2016 to 10.54%
in FY2017 with increasing raw material cost and selling expenses
as a percentage of operating income. The financial risk profile
of the firm remained below average, backed by modest debt
coverage indicators, as reflected by interest coverage of 2.26
times, Total Debt/OPBDITA of 4.14 times and TOL/TNW of 2.82 times
in FY2017. The working capital intensity also remained high as
depicted by NWC/OI (~40% as on March 31, 2017) due to elongated
receivables and increase in inventory level.
Vulnerability of profitability and cash flows to cyclicality
inherent in the real estate industry: The real estate industry is
the main consuming sector for tiles, and hence the demand for
tiles is exposed to cyclicality in the realty sector.
Nevertheless, the risk is mitigated to some extent by increasing
export volumes.
Vulnerability of profitability to any adverse fluctuations in raw
material and gas/coal prices: The margins of the firm are largely
affected by the raw material price and piped natural gas/coal
price fluctuations. Any adverse movement in the prices of raw
materials and fuel could have an adverse impact on the firm's
margins, considering its limited ability to pass on the price
hike owing to high competitive intensity. The price fluctuations
also impact the realisations of the firm.
Sepal Ceramic was established as a partnership firm in 2007 by
Mr. Paresh Vilpara and family. The commercial operations of the
firm commenced from April 2008. SC manufactures digitally printed
ceramic wall tiles from its unit in Morbi, Gujarat, with an
installed production capacity of 38,500 metric tonnes per annum.
In FY2017, the firm reported a net profit of INR0.06 crore on an
operating income of INR12.53 crore, as compared to a net profit
of INR0.40 crore on an operating income of INR14.31 crore in the
previous year.
SHAKTI VEGETABLES: CRISIL Moves B Rating to Not Cooperating Cat.
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with Shakti
Vegetables and Fruits Storage (SVFS) for obtaining information
through letters and emails dated January 18, 2018 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
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.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit .25 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
Term Loan 9.75 CRISIL B/Stable (Issuer Not
Cooperating; Rating Migrated)
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 Shakti Vegetables and Fruits
Storage which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Shakti Vegetables and Fruits Storage 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 Shakti Vegetables and Fruits Storage to 'CRISIL
B/Stable Issuer not cooperating'.
Set up in 2014, SVFS provides cold storage facilities for
potatoes and fruits on rent. Its facility is in Palanpur
(Gujarat), with 5000 tonne capacity, and is promoted by Mr
Shamalbhai Patel and his family. The facility started operations
in March 2015.
SHUBHAM COTTON: CRISIL Moves B Rating to Not Cooperating Cat.
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Shubham
Cotton Mills Private Limited (SCMPL) for obtaining information
through letters and emails dated November 23, 2017 and
January 10, 2018 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 17.5 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 Shubham Cotton Mills Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Shubham Cotton Mills 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 Shubham Cotton Mills 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.
SCMPL, incorporated in 1988, gins cotton, extracts oil from
cotton seeds, and manufactures guar gum and its by-products,
churi and korma. The company's processing and manufacturing unit
is in Ellenabad (Sirsa; Haryana). It was acquired by the current
promoters, Mr Vinod Kumar, Mr Naresh Kumar, and Mr Mukesh Kumar,
in 2003, from Mr Ajay Kumar, Mr Raj Kumar, and Mr Prem Kumar.
SUPREME OVERSEAS: ICRA Assigns C+ Rating to INR20cr Cash Loan
-------------------------------------------------------------
ICRA has assigned the long-term rating of [ICRA]C+ and short-term
rating of [ICRA]A4 for the INR53.00-crore fund-based/non-fund
based facilities of Supreme Overseas Exports India Private
Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund
Based-Cash Credit 20.00 [ICRA]C+; Assigned
Short-term-Fund
Based-Standby
Line of Credit 3.00 [ICRA]A4; Assigned
Short-term-Fund
Based-Foreign
Documentary Bill
Purchase 5.00 [ICRA]A4; Assigned
Short-term-Non
Fund based-Letter
of Credit 25.00 [ICRA]A4; Assigned
Rationale
The assigned rating takes into account the stretched financial
performance of the company marked by modest scale of operations,
decline in profitability, leveraged capital structure and weak
coverage indicators. Furthermore, the rating is constrained by
stretched liquidity position as evidenced by high utilisation of
sanctioned fund-based limits due to high receivable and inventory
days. The rating also takes into account the susceptibility of
profit margins to continuity of various export incentives
extended by the Government of India, high geographical
concentration and high client concentration risks with the top-
three customers accounting for around 50% of the revenue during
FY2017. ICRA also takes note of the sensitivity of the company's
profitability to fluctuations in foreign currency exchange rates,
although the same is mitigated to a considerable extent by
natural hedging and forward contract hedging practices adopted by
the company. The rating positively factors in the experience of
the promoter in the leather business, the established track
record of the company's operations and established relationships
with the customers. The rating derives comfort from the benefits
of backward integration enjoyed by the company as the sister
concern, Sura Leathers Private Limited, is involved in
manufacturing of finished leather. Going forward, the ability of
the company to scale up the operations, improve its
profitability, while managing its working-capital requirements
efficiently, would be the key rating sensitivities.
Key rating drivers
Credit strengths
Long track record of operations of the company and the promoters
in leather-manufacturing business: The company was incorporated
in 1976 and is involved in leather-jackets manufacturing and
export for more than four decades. Over the years, the company
has steadily increased its manufacturing capacities and garment
product portfolio. The promoters of the company also own Sura
Leathers Private Limited, which is involved in leather
processing. As a result the company benefits from backward
integration with in-house tannery and effluent plant for waste
treatment and enjoys cost and process efficiencies.
Benefits from favourable government policies: The leather
industry has been classified as a focus product under the Market
Linked Focus Product Scheme and the policies, procedures and
regulatory aspects have been rationalized by the government in
order to promote investment in the segment. Several fiscal
incentives offered include interest subvention, duty drawback,
and special lines of credit. These policies incentives are
important for maintenance of competence in the international
markets. Accordingly, any reduction in such incentives may affect
the margins of the company as they might not be able to pass on
the cost increase to their customers.
Credit weaknesses
Modest financial profile with thin profitability and stretched
coverage indicators: The operating margins deteriorated to 3.46%
during FY2017 owing to high raw material consumption expenses.
The net margin of the company also is low at 0.11% due to the low
operating margins coupled with high interest burden. The
company's debt levels increased from INR24.62 crore in the
previous year to INR37.01 crore in FY2017 due to increased
working capital requirement. The rising inventory levels have
resulted in a stretched operating cycle entailing higher reliance
on working capital borrowings. Increase in Total Debt has
resulted in increase in the gearing level from 1.51 times to 2.26
times. Low profitability has kept the coverage indicators at
subdued levels, with Interest coverage of 0.48 times, NCA/TD at
1.13% and TD/OPBDITA at 20.83 times in FY2017. The leveraged
capital structure and moderate debt coverage indicator exposes
the company to high financial risk.
Highly working-capital intensive operations and limited accruals
result in stretched liquidity profile: The receivables days
increased as the company provided longer credit period to its
customers due to poor market conditions. Overall, due to a long
receivable and inventory cycle, the working capital intensity is
on the higher side. The working capital intensity increased to
77.77% in FY2017. The average utilisation of the cash credit
limits availed by the company relative to its monthly sanctioned
limit remained high at around 98% during the period April, 2016
to November, 2017. The company has limited liquidity cushion
available in the form of undrawn working capital limits. Going
forward, the liquidity position could remain stretched due to
burden of interest payments and incremental funding requirement
towards future capex. The company has applied for additional term
loans and the sanctioning of the same could ease the liquidity
profile.
Exposure to foreign exchange rate fluctuation; however, the risk
is mitigated to an extent by the benefit of natural hedge and
through forward contracts: The company's profitability is
susceptible to adverse changes in foreign currency. Since the
company engages in both import and export activities, the forex
risk is naturally hedged to some degree. The balance foreign
currency exposure is hedged by forward cover. The company books
forward contracts for its receivables and for this it has
INR20.00-crore forward contract limit with the bank. However, it
reported forex loss of INR0.24 crore in FY2017.
Susceptibility of revenue to demand in export markets: The high
geographical concentration with continued dependence on European
nations exposes the company to risk arising from adverse regional
developments. Also, the customer concentration remains high with
top-five customers accounting for up to 60% of the company's
total revenue. The loss of any of these major customers or
reduction in the volume of the apparels they source from the
company, would adversely affect its revenue and profitability.
However, over the years, the company has developed strong
linkages with its customer resulting in repeat orders.
High competition in the industry limits the bargaining power of
the exporters: Leather industry is characterised by high
competition due to presence of large number of small to medium
sized players. The company has to compete not only with other
domestic players, but also with Chinese, Pakistani and
Bangladeshi manufacturers in the overseas market. The intense
competition limits the ability of the company to pass on the
volatility of the raw material prices and forex loss to its
customers entirely while pricing the products.
Supreme Overseas Exports India Pvt. Ltd. is involved in
manufacturing and exporting of finished leather and leather
garments, mainly leather jackets. The company was incorporated in
1976 by Mr. M.S. Sudhindra the chairman of the group. It has four
units, located in Bangalore with an installed capacity to produce
1.60 lac leather garments per annum. The company outsources
leather processing to its sister concern: Sura Leathers Pvt. Ltd
which operates tanneries in Ambur, Vellor District of Tamil Nadu.
Supreme Overseas's products are exported to over 20 countries
including Germany, France, Canada, USA, etc.
In FY2017, the company reported a net profit of INR0.06 crore on
an operating income of INR51.38 crore, as compared to a net
profit of INR0.11 crore on an operating income of INR48.13 crore
in the previous year.
TIRUPATI COLD: CARE Assigns B+ Rating to INR4cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Tirupati Cold Storage Private Limited (TCSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 4.00 CARE B+; Stable Assigned
Short-term Bank
Facility 1.98 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of TCSPL are
constrained by its small size of operations, regulated nature of
business, seasonality of business and susceptibility to vagaries
of nature, risk of delinquency in loans extended to farmers,
competition from local players, and working capital intensive
nature of business. However, the aforesaid constraints are
partially offset by its experienced management and long track
record of operations, proximity to potato growing area.
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 Strengths
Experienced promoters & satisfactory track record of operations:
TCSPL is into cod storage services since 1978 and thus has long
operational track record. Due to long track record of operations
of the company, the promoters have gained significant experience
in the cold storage industry. The Key promoter, Mr. Sheo Prakash
Bhatter has 35 years of experiences in cold storage business,
looks after the overall management of the company supported by
other director.
Proximity to potato growing area: TCSPL's storage facility is
located at Bardhaman, West Bengal which is one of the major
potato growing regions of the state. The favorable location of
the storage unit, in close proximity to the leading potato
growing areas provides it with a wide catchment and making it
suitable for the farmers in terms of transportation and
connectivity.
Key Rating Weaknesses
Small size of operation and low profitability margin: TCSPL is a
relatively small player in the cold storage business having total
operating income and PAT of INR3.01 crore and INR0.15 crore in
FY17. The total capital employed was also low at around INR2.56
crore as on March 31, 2017. Small scale of operations with low
net worth base limits the credit risk profile of the company in
an adverse scenario.
Seasonality of business with susceptibility to vagaries of
nature: The cold storage business is seasonal in nature as potato
is a winter season crop with its harvesting period commencing in
February. The loading of potatoes in cold storages begins by the
end of February and lasts till March. Additionally, with potatoes
having a perceivable life of around eight months in the cold
storage, farmers liquidate their stock from the cold storage by
end of season i.e., generally in the month of November. The unit
remains non-operational during the period from December to
January. Moreover, lower agricultural output may have an adverse
impact on the rental collections as the cold storage units
collect rent on the basis of quantity stored and the production
of potato is highly dependent on vagaries of nature.
Regulated nature of business: In West Bengal, the basic rental
rate for cold storage operations is regulated by state government
through West Bengal State Marketing Board. Due to ceiling on the
rentals to be charged it is difficult for cold storage units like
TCSPL to pass on sudden increase in operating costs leading to
downward pressure on profitability.
Risk of delinquency in loans extended to farmers: Against the
pledge of cold storage receipts, TCSPL provides advances to
farmers. Before the close of the season in November, the farmers
are required to pay their outstanding dues, including repayment
of the loan taken. In view of this, there exists a risk of
delinquency in loans extended to farmers as significant amount of
working capital remained blocked in advances given to the
farmers. In case of downward correction in potato or other stored
goods prices as all such goods are agro commodities which may
affect the financial risk profile of the company.
Leveraged capital structure with weak debt coverage indicators:
The capital structure of the company remained leveraged marked by
overall gearing ratio of 1.93x (2.07x as on March 31, 2016) as on
March 31, 2017. However, the overall gearing ratio has improved
marginally as on March 31, 2017 due to lower utilization of fund
based limit. The debt coverage indicators also remained weak
marked by interest coverage below unity in FY17
Competitive and fragmented nature of industry: In spite of being
capital intensive, the entry barrier for new cold storage is low,
backed by capital subsidy schemes of the government. As a result,
the potato storage business in the region has become competitive,
forcing cold storage owners to lure farmers by providing them
interest bearing advances against stored potatoes which augments
the business risk profile of the companies involved in the trade.
TCSPL is mainly into storage of potatoes which is highly
fragmented and competitive in nature due to presence of many
small players with low entry barriers. In such a competitive
scenario smaller companies like TCSPL in general are more
vulnerable on account of its limited pricing flexibility.
Working capital intensive nature of business: TCSPL is engaged in
the cold storage business; accordingly its operation is working
capital intensive. The same is reflected by the moderately higher
working capital requirement for the company and the average
utilization for the same remained at about 70% during the last 12
months ended October 31, 2017.
Tirupati Cold Storage Private Limited (TCSPL) was incorporated in
1978. The company is promoted by Mr. Sheo Prakesh Bhatter. The
company provides cold storage services primarily for potatoes to
the farmers and traders on a rental basis. The cold storage unit
of the company is located at Rasulpur village of Bishnupur area
of Bardhaman District with a storage capacity of 19600 metric
tons. Besides providing cold storage facility the unit also works
as a mediator between the farmers and marketers of potato, to
facilitate sale of potatoes stored and it also provides interest
bearing advances to farmers for farming purpose against potatoes
stored. The day to day operations of the company are look after
by Mr. Sheo Prakash Bhatter (Director) and Mr. Santosh Bhatter
(Director) who both have experience around 35 years and 15 years
respectively in the similar line of business.
UNIFOUR DEVELOPERS: CRISIL Moves B+ Rating to Not Cooperating
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Unifour
Developers Private Limited (UDPL) for obtaining information
through letters and emails dated December 30, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 9.5 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 Unifour Developers Private
Limited which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Unifour Developers 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 Unifour Developers Private Limited to 'CRISIL
B+/Stable Issuer not cooperating'.
UDPL, incorporated in 2012, is constructing a residential
building, AAMANTRAN, at Morabadi in Ranchi. The company is a part
of Ranchi-based Unifour group, the promoters of which have
extensive experience in the real estate industry. Mr Suraj Singh
Pratap, Mr Sunil Kumar Singh, Mr Gangesh Singh, and their family
members are promoters of UDPL.
VARDHMAN ENTERPRISE: CRISIL Moves B+ Rating to Not Cooperating
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Vardhman
Enterprise - Ahmedabad (VE) for obtaining information through
letters and emails dated December 30, 2017 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
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.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.8 CRISIL B+/Stable (Issuer
Not Cooperating; Rating
Migrated)
Drop Line Overdraft 4.45 CRISIL B+/Stable (Issuer
Facility Not Cooperating; Rating
Migrated)
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 Vardhman Enterprise -
Ahmedabad which restricts CRISIL's ability to take a forward
looking view on the entity's credit quality. CRISIL believes
information available on Vardhman Enterprise - Ahmedabad 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 Vardhman Enterprise - Ahmedabad to 'CRISIL
B+/Stable Issuer not cooperating'.
Established in 2008, VE is an Ahmedabad-based partnership
firmpromoted by Mr Pannalal Jain and his family. It trades in
sugar in the domestic market. Operations aremanaged by Mr
Mahavirprasad Jain, who has an industry experience of more than
three decades.
ZEARS DEVELOPERS: CARE Raises Rating on INR12.30cr Loan to BB-
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Zears Developers Private Limited (ZDPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loan 12.30 CARE BB-; Stable Revised from
CARE B+, Issuer Not
Cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of ZDPL continues to
be constrained on account of the marketing risk, presence in a
highly competitive environment and cyclical nature of the real
estate industry.
The rating, however, derives strength from experienced promoters
and location advantage of the project and successfully completion
of the project within due course of time.
The ability of the company to book the unsold units and thereby
enabling timely inflow to meet its debt obligation are the key
rating sensitivities.
Detailed description of Key rating drivers
Key rating Weakness
Moderate Marketing Risk: As on December 31, 2017, the company has
already booked 13 flats and received customer advances amounting
to INR55.08 crore and INR2.50 crore is yet to be received. Thus
going forward, its ability to book the balance 8 flats and
generate sufficient funds to timely repay its debt obligation
shall be critical from credit perspective. However comfort can be
drawn from the fact that, ZDPL has prepaid term loan amounting to
INR12.70 crore till January 25, 2018 and for balance repayment
which will commence from January, 2018 (as per the revised
repayment schedule), its ability to monetize its already
developed property shall be critical. However the marketing risk
is partially mitigated given the prime location of the already
complete project coupled with the successful track record of the
group. Also it has surplus funds amounting to INR23.40 crore.
Cyclical nature of the real estate industry: The firm is exposed
to the cyclicality associated with the real estate sector which
has direct linkage with the general macroeconomic scenario,
interest rates and level of disposable income available with
individuals. In case of real estate companies, the profitability
is highly dependent on property markets. A high interest rate
scenario could discourage the consumers from borrowing to finance
the real estate purchases and may depress the real estate market.
Presence in highly competitive environment: The real estate
industry in India is highly fragmented with most of the real
estate developers having region-specific presence. However, the
promoters have a good understanding of the region and its
dynamics which partly mitigates this risk.
Key rating Strengths
Experience Promoters: The promoters have been engaged in real
estate business since more than a decade. The overall operations
are being looked after by Mr. Ziauddin Siddique, promoter, is a
graduate by qualification having experience of about a decade,
looks after the execution of the projects and business
development aspect of the company.
Location advantage: The project is located in Bandra (W) and has
location advantage in terms of being located in a premium
location, good connectivity to south Mumbai, close proximity to
railway station.
Successful completion of project: The estimated cost of the
project was INR75.00 crore, which has increased to INR86.60
crore however the same was entirely funded through funds from
promoters. Moreover, the company has had no time over-run due to
increase in cost. Nevertheless, comfort can be drawn from the
fact that as on January 31, 2017 entire cost has been incurred
and received Occupation certificate on January 17, 2017.
Incorporated in 2004, Zears Developers Private Limited (ZDPL) is
engaged into development of residential and commercial projects
in Mumbai. ZDPL has completed the construction of a redevelopment
residential project in Bandra, West under the name Shiv Asthan
Heights in January 2017. The project includes construction of
single residential building with 17 floors comprising of 59 units
of which 38 units redevelopment (including 11 shops) and 21
saleable flats). The project includes 2/3/4 BHK and Duplex flats
with the average size of saleable flats in the range of 753 sq ft
to 2896 sq ft.
====================
N E W Z E A L A N D
====================
MUSE EATERY: Catering Placed Into Liquidation
---------------------------------------------
Kevin Stent at Stuff.co.nz reports that the former owner of a
fine dining restaurant in Wellington has struck financial trouble
with his latest establishment.
Catering, which trades as Muse Eatery & Bar and is owned by chef
Samuel North, has been put into liquidation, Stuff says. This
comes after Mr. North's previous business collapsed in 2016.
Muse Eatery & Bar closed on Feb. 2, and Catering was put into
liquidation on Feb. 21.
According to the report, liquidator Heath Gair of Palliser
Insolvency, said there were no staff employed at the time of his
appointment. It was unclear how much money the company owed to
creditors, he said.
Stuff relates that Mr. Gair's first report on the state of
company's affairs was due on Feb. 19.
Mr. North said heavy restrictions on his liquor licence led to
cashflow problems, Stuff relays.
"It was a hard decision as we had a lot of regular customers, won
many awards, and had great reviews," Stuff quotes Mr. North as
saying. "But there was no point in continuing as a large amount
of our revenue stream was cut off with restricted hours and live
music being unavailable."
The restrictions had been in place since the middle of last year,
Mr. North said.
Stuff notes that Mr. North opened Muse Eatery & Bar in Victoria
St in 2015 amidst a four-year battle between him and the
directors of his previous business Muse on Allen. Chef Jozsef
Szekely and Mr. North, as well as Mr. North's parents, had been
arguing in court since 2013, after Mr. Szekely was cut out of
their business.
Stuff adds that Mr. Szekely was seeking NZ$97,500 in compensation
after North transferred Szekely's shares into his own name
without his permission, the report says.
In May 2017, Justice Jillian Mallon ruled in the High Court in
Wellington that as the business was running at a loss,
Mr. Szekely's shares had no value, and his application was
dismissed, according to Stuff.
The company was put into liquidation in September 2016, adds
Stuff.
=====================
P H I L I P P I N E S
=====================
RURAL BANK OF BASAY: Deposit Claims Deadline Set For March 5
------------------------------------------------------------
The Philippine Deposit Insurance Corporation (PDIC) urges
depositors of the closed Rural Bank of Basay (Negros Oriental),
Inc. to file their deposit insurance claims on or before the last
day of filing claims for insured deposits on March 5, 2018 either
through mail addressed to the PDIC Public Assistance Department,
6th Floor, SSS Bldg., 6782 Ayala Avenue corner V.A. Rufino
Street, Makati City, or personally during business hours at the
PDIC Public Assistance Center, 3rd Floor, SSS Bldg., 6782 Ayala
Avenue corner V.A. Rufino Street, Makati City.
The PDIC Charter provides that depositors have until two years
from bank closure to file their deposit insurance claims. Rural
Bank of Basay was ordered closed by the Monetary Board of the
Bangko Sentral ng Pilipinas on March 3, 2016.
According to PDIC, deposit insurance claims for 47 deposit
accounts with aggregate insured deposits amounting to
PHP67,042.73 have yet to be filed by depositors. Data showed that
as of December 31, 2017, PDIC had paid depositors of the closed
Rural Bank of Basay the total amount of PHP87,059.39,
corresponding to 56.0% of the bank's total insured deposits
amounting to PHP155,312.08.
After March 5, 2018, PDIC shall no longer accept any deposit
insurance claims from depositors of Rural Bank of Basay. Their
recourse is to file claims against the assets of the closed bank
through PDIC as liquidator. Payment of claims shall depend on
available assets of the bank for distribution to creditors and
the approval of the Liquidation Court.
In filing their claims personally, depositors are required to
submit their original evidence of deposit and present one (1)
valid photo-bearing ID with signature of the depositor. It is
recommended, however, to bring at least two (2) valid IDs in case
of discrepancies in signature. Depositors may also file their
claims through mail and enclose their original evidence of
deposit and photocopy of one (1) valid photo-bearing ID with
signature together with a duly accomplished Claim Form which can
be downloaded from the PDIC website,www.pdic.gov.ph..
Depositors who are below 18 years old should submit either a
photocopy of their Birth Certificate issued by the Philippine
Statistics Authority (PSA) or a duly certified copy issued by the
Local Civil Registrar. Claimants who are not the signatories in
the bank records are required to submit an original copy of a
notarized Special Power of Attorney of the depositor or parent of
a minor depositor. The format of the Special Power of Attorney
may also be downloaded from the PDIC website.
The PDIC also reminded depositors who have been notified of their
documentary deficiencies to comply with the requirements
indicated in the letter.
The procedures and requirements for the filing of deposit
insurance claims are posted in the PDIC website,
www.pdic.gov.ph..
PDIC, as Deposit Insurer, requires personal data from depositors
to be able to process their claims and protects these data in
compliance with the Data Privacy Act of 2012.
Depositors who have outstanding loans or payables to the bank
will be referred to the duly designated Loans Officer prior to
the settlement of their deposit insurance claims. For more
information, depositors and depositor-borrowers may contact the
Public Assistance Department at telephone numbers (02) 841-4630
to 31, or e-mail at pad@pdic.gov.ph. Those outside Metro Manila
may call the PDIC toll free at 1-800-1-888-PDIC or 1-800-1-888-
7342. Inquiries may also be sent as private message at Facebook
through www.facebook.com/OfficialPDIC.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***