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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
Wednesday, February 28, 2018, Vol. 21, No. 042
Headlines
A U S T R A L I A
BEDROCK OFFSITE: First Creditors' Meeting Set for March 7
CIVIL LOGIC: Second Creditors' Meeting Set for March 7
FOCUS BUILDING: Second Creditors' Meeting Set for March 7
FOGO BRAZILIA: Second Creditors' Meeting Set for March 7
PRAKRITI HOLDINGS: Second Creditors' Meeting Set for March 9
ZACHARY THE LABEL: First Creditors' Meeting Set for March 7
C H I N A
SHANDONG HI-TECH: Fitch Assigns BB Long-Term IDR; Outlook Stable
H O N G K O N G
NOBLE GROUP: Top Shareholder Steps Up Criticism on Expected Loss
I N D I A
ADINO TELECOM: ICRA Keeps B+ Rating in Not Cooperating Category
ALFANSO VITRIFIED: ICRA Withdraws B Rating on INR31.5cr Loan
AMIYA STEEL: Ind-Ra Migrates B- Issuer Rating to Non-Cooperating
ASTER PRIVATE: Ind-Ra Migrates D Issuer Rating to Non-Cooperating
BHANDARI AGROFEEDS: CARE Moves B+ Rating to Not Cooperating Cat.
BHAVNABEN C: CARE Assigns B Rating to INR5.31cr LT Loan
BINARY APPAREL: Ind-Ra Migrates B+ Rating to Non-Cooperating
CHANAKYA TECHNOS: Ind-Ra Migrates BB- Rating to Non-Cooperating
COTTON BLOSSOM: Ind-Ra Affirms BB Issuer Ratings, Outlook Stable
DASHMESH AGRO: ICRA B Rating Remains in Not Cooperating Category
DIVINE CERA: Ind-Ra Migrates B- Issuer Rating to Non-Cooperating
DNS ELECTRONICS: Ind-Ra Raises Long Term Issuer Rating to BB-
DREAM DIGITAL: ICRA Moves B- Rating to Not Cooperating Category
ECOKRIN HYGIENE: Ind-Ra Lowers Rating on INR27.5MM Capital to BB-
ESWARI GREEN: Ind-Ra Rates INR200MM Term Loan 'B', Trend Stable
EVAN MULTISPECIALTY: ICRA Assigns D Rating to INR25.70cr Loan
GSK INFRASTRUCTURES: Ind-Ra Lowers LT Issuer Rating to 'D'
JAGANNATH RICE: Ind-Ra Assigns BB- Rating to INR125.5MM Loan
JP AGRO: CARE Lowers Rating on INR10cr LT Loan to D
KALINDI ISPAT: Ind-Ra Hikes Rating on INR117.5MM Loan to BB
KANNAPPAN IRON: Ind-Ra Migrates BB+ Rating to Non-Cooperating
KULDEVI COTTON: ICRA Reaffirms B Rating on INR4.75cr Cash Loan
LAKSHMI TEA: CARE Assigns B+ Rating to INR6cr Long Term Loan
LASA CERA: ICRA Reaffirms B+ Rating on INR6.24cr Term Loan
M S AGRO: CARE Assigns B+ Rating to INR8.70cr Long Term Loan
M.S. ENGINEERING: CARE Assigns B+ Rating to INR4.48cr LT Loan
MAN TUBINOX: Ind-Ra Raises LT Issuer Rating to 'B+'
MR DIAMOND: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
OVERSEAS TIMBER: Ind-Ra Raises Rating on INR20MM Capital to B
QUALITY INDUSTRIES: Ind-Ra Affirms BB+ Ratings, Outlook Stable
QUALITY TEA: Ind-Ra Affirms BB- Rating on INR135MM Loan
RAJATHADRI JEWELLERS: Ind-Ra Assigns 'B' LT Issuer Rating
SHREE NAVKAR: ICRA Keeps B+ Rating in Not Cooperating Category
SHREE SUKHAKARTA: Ind-Ra Cuts Rating on INR3500MM Debentures to D
SIGMA BUILDCON: CARE Assigns B+ Rating to INR5cr LT Loan
SIR BIOTECH: Ind-Ra Affirms BB+ Long Term Issuer Rating
SREE VEERABHADRESHWARA: CARE Reaffirms B+ Rating on INR10cr Loan
SREE VENKATESWARA: ICRA Reaffirms B+ Rating on INR3.15cr Loan
SUNEJA SONS: Ind-Ra Affirms 'BB' LT Issuer Rating, Outlook Stable
SUNGOLD PROCESSED: ICRA Lowers Rating on INR18cr ST Loan to D
SURA LEATHERS: ICRA Assigns D Rating to INR8.50cr ST LOC
TAPTI AGRO: ICRA Keeps B Rating in Not Cooperating Category
TRIVENI WIRES: CARE Assigns B+ Rating to INR26.60cr LT Loan
USHA MARTIN: Ind-Ra Maintains 'BB+' Issuer Rating on RWN
YOGESH CONSTRUCTION: ICRA Moves B+ Rating to Not Cooperating Cat.
ZIGMA LAMINATES: CARE Cuts Rating on INR8.50cr LT Loan to B-
I N D O N E S I A
SAKA ENERGI: Fitch Affirms BB+ IDR; Changes Outlook to Stable
TOBA BARA: Fitch Assigns B- Long-Term IDR, Outlook Stable
TOBA BARA: Moody's Assigns B3 Corporate Family Rating
M A L A Y S I A
KINSTEEL BHD: Appoints Ernst & Young as Liquidator
N E W Z E A L A N D
CBL CORPORATION: Enters Voluntary Administration
DOMINO'S PIZZA: 5 Franchisees in Auckland Placed in Liquidation
FARGHER CONSTRUCTION: Up to 40 Families Caught in Collapse
S O U T H K O R E A
KUMHO TIRE: Creditors to Hold Meeting Today on Fate of Tiremaker
- - - - -
=================
A U S T R A L I A
=================
BEDROCK OFFSITE: First Creditors' Meeting Set for March 7
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Bedrock
Offsite Pty Ltd will be held at Level 27, 259 George Street, in
Sydney, NSW, on March 7, 2018, at 11:30 a.m.
Sule Arnautovic and Amanda Young of Jirsch Sutherland appointed
as administrators of Bedrock Offsite on Feb. 23, 2018.
CIVIL LOGIC: Second Creditors' Meeting Set for March 7
------------------------------------------------------
A second meeting of creditors in the proceedings of Civil Logic
Pty Ltd has been set for March 7, 2018, at 12:00 p.m. at the
offices of Veritas Advisory, Level 5, 123 Pitt Street, in Sydney
NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by March 6, 2018, at 4:00 p.m.
David Iannuzzi and Vincent Pirina of Veritas Advisory were
appointed as administrators of Civil Logic on Jan. 31, 2018.
FOCUS BUILDING: Second Creditors' Meeting Set for March 7
---------------------------------------------------------
A second meeting of creditors in the proceedings of Focus
Building Repairs Pty Ltd has been set for March 7, 2018, at 10:30
a.m. at the offices of Worrells Solvency & Forensic Accountants,
8th Floor, 102 Adelaide St, in Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Feb. 6, 2018, at 5:00 p.m.
Christopher Richard Cook of Worrells Solvency was appointed as
administrator of Focus Building on Jan. 31, 2018.
FOGO BRAZILIA: Second Creditors' Meeting Set for March 7
--------------------------------------------------------
A second meeting of creditors in the proceedings of Fogo Brazilia
Franchise Holdings Pty Ltd has been set for March 7, 2018, at
11:00 a.m. at the Boardroom of Servcorp, Level 26, 44 Market
Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by March 6, 2018, at 4:00 p.m.
Henry Kwok and Gavin Moss of Chifley Advisory Pty Ltd were
appointed as administrators of Fogo Brazilia Franchise on
Jan. 31, 2018.
PRAKRITI HOLDINGS: Second Creditors' Meeting Set for March 9
------------------------------------------------------------
A second meeting of creditors in the proceedings of Prakriti
Holdings Pty Limited has been set for March 9, 2018, at 3:00 p.m.
at the offices of Vincents, Level 7, 1 Hobart Place, in Canberra
ACT.
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 8, 2018, at 4:00 p.m.
Anthony Lane and Steven Staatz of Vincents were appointed as
administrators of Prakriti Holdings on Jan. 31, 2018.
ZACHARY THE LABEL: First Creditors' Meeting Set for March 7
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Zachary
The Label Pty Ltd will be held at Level 12, 460 Lonsdale Street,
in Melbourne, on March 7, 2018, at 10:30 a.m.
Glenn Anthony Crisp and Liam William Paul Bellamy of Jirsch
Sutherland were appointed as administrators of Zachary The Label
on Feb. 26, 2018.
=========
C H I N A
=========
SHANDONG HI-TECH: Fitch Assigns BB Long-Term IDR; Outlook Stable
----------------------------------------------------------------
Fitch Ratings has assigned Shandong Hi-tech Innovation
Construction Investment Group Co., Ltd. (SDHIC) Long-Term
Foreign- and Local-Currency Issuer Default Ratings of 'BB'. The
Outlook is Stable.
Fitch has also assigned SDHIC's proposed senior unsecured US
dollar notes an expected rating of 'BB(EXP)'. The offshore notes
will be a direct issuance by SDHIC and will constitute its
direct, general, unconditional, unsubordinated and unsecured
obligations. The notes will at all times rank pari passu among
themselves and at least equally with all of SDHIC's other present
and future unsecured and unsubordinated obligations. Proceeds
will be used for debt refinancing, replenishing working capital
and general corporate purposes.
The final rating on the proposed US dollar notes is contingent
upon the receipt of final documents conforming to information
already received.
KEY RATING DRIVERS
Links to Weifang HTIDZ: SDHIC is a government-related entity
(GRE) whose ratings are credit linked to, but not equalised with,
Fitch's internal assessment of Weifang Hi-Tech Industrial
Development Zone (Weifang HTIDZ), a district of Weifang
municipality in Shandong province. The linkage is reflected in
dominant state ownership, tight municipal control, a strong
support record and the financial impact on government from a
default. These factors result in a high likelihood of
extraordinary support, if needed.
Weifang HTIDZ's Creditworthiness: Weifang HTIDZ was established
in 1992 and was among China's first batch of national level
HTIDZs. Weifang HTIDZ's gross regional product (GRP) per capita
is the highest of all districts and counties within Weifang
municipality. The zone has a stable budgetary performance and
diversified socio-economic profile. Its economy is backed by a
strong secondary segment, which accounted for around 57% of total
GRP in 2016. Weifang HTIDZ has experienced a robust GRP growth
rate over the previous few years; its 8.8% yoy growth rate in
2016 was higher than that of the national and municipal level.
Very Strong Legal Status and Control: SDHIC is directly owned by
Weifang HTIDZ government via Weifang HTIDZ State-owned Asset
Administration Bureau, which has a 95% stake. The government aims
to repurchase the minority shareholding by end-2018. The
government supervises SDHIC's operations and appoints board
members and senior management. All major decisions and projects,
financing and investment plans require government approval. SDHIC
is required to regularly report its operational and financial
results to the government, which also set audit criteria and
conducts annual assessments of SDHIC's performance.
Strong Support Funding Record: SDHIC has received support via
capital and asset injections, project funds, subsidies and share
transfers. Fiscal support aims to partly fund SDHIC's capital
expenditure and debt servicing. Government support of all forms
amounted to around CNY4.5 billion during2013-2017.
Moderate Social and Strategic Importance: SDHIC is Weifang
HTIDZ's major urban developer and is responsible for urban
infrastructure development and shanty-town renovation, as well as
centralised heating facility construction and real-estate
development. The company's failure could jeopardise Weifang
HTIDZ's policy duties and services, although SDHIC may be
substituted by a competing GRE outside the zone.
Indirect Consequences of Default: Weifang HTIDZ is a major engine
of Weifang municipality's economic development, accounting for
about 7% of the municipality's GRP in 2016. SDHIC is a proxy
funding vehicle for Weifang HTIDZ's and a failure of timely
government support leading to a default could cause some
financial difficulty for the government, limiting its financing
options.
Weak Standalone Credit Profile: SDHIC's capex burden has caused a
high total debt/Fitch-calculated EBITDA as well as a weak
FFO/debt and interest coverage in the previous few years,
similarly to other urban developers. Fitch expects the trend of
large capex, high leverage and low debt and interest servicing
ability to continue in the medium term, driven by the
municipality's ongoing infrastructure investments
RATING SENSITIVITIES
An upgrade of Fitch's internal assessment of Weifang HTIDZ and a
stronger or more explicit commitment of support from the
government may trigger positive rating action on SDHIC. A
significant weakening of SDHIC's strategic importance to the
municipality, dilution of the municipal government's shareholding
or reduced municipal support may result in a downgrade.
A downgrade may also stem from weaker municipal fiscal
performance or increased indebtedness, leading to deterioration
to Fitch's assessment of the municipality's creditworthiness.
Rating action on SDHIC would lead to similar action on the
proposed US dollar notes.
Fitch will monitor both the application of existing and any new
central government laws, regulations and directives that will
effectively prohibit or restrict support by local and regional
governments to government-related entities (GREs) such as SDHIC,
which may have a practical impact on the entities' ability to
service their debts. Fitch interprets such initiatives as the
central government's efforts to disentangle GREs from public-
sector balance sheets, address indiscriminate GRE debt growth and
encourage greater market discipline.
Depending on the degree of certainty and the extent of the
prohibitions, the agency will take rating action that could
result in a widening of the notching or the adoption of a bottom-
up ratings approach, possibly even to the extent of the removal
of all support expectations.
================
H O N G K O N G
================
NOBLE GROUP: Top Shareholder Steps Up Criticism on Expected Loss
----------------------------------------------------------------
Bloomberg News reports that one of Noble Group Ltd.'s largest
shareholders has stepped up criticism of the embattled commodity
trader, describing losses as "shocking" and warning the billions
in red ink will pile more pressure on investors to agree to a
controversial debt-for-equity rescue plan that it opposes.
The losses will "erode what little cash Noble has left, and puts
further pressure on stakeholders to accept the restructuring
proposal," Goldilocks Investment Co. said in a statement,
referring to derivative-contract writedowns and fourth-quarter
losses on its core business, Bloomberg relays. "These figures are
extremely shocking."
Bloomberg relates that the trader, which reports earnings on
Feb. 28, warned last week it will post a loss for the final three
months of last year, which would bring the total for 2017 to
almost $5 billion. While the company wants to get investors to
agree to the rescue, which will hand control of the group to
creditors and give management a holding of up to 20 percent,
Goldilocks is leading opposition to the proposal, Bloomberg says.
In its attack, Goldilocks also raised questions about Noble
Group's accounts, echoing earlier criticism by long-time foe
Iceberg Research.
An external media representative for Noble Group in Singapore
referred to a 2015 report by PricewaterhouseCoopers on the
company's valuation methodology, and declined to comment further,
according to Bloomberg.
"The profit warning indicates that Noble's remaining core
business is still hemorrhaging cash," Goldilocks, as cited by
Bloomberg, said. "We urge all stakeholders -- shareholders and
creditors -- to join Goldilocks in opposing the proposed
restructuring and work together for a more equitable and
meaningful turnaround."
Noble Group shares were level on Feb. 27, trading at 17.9
Singapore cents in the city-state at 1:13 p.m.; they are 92
percent lower over the past year, Bloomberg discloses. The 2020
notes rose 0.2 cent on the dollar to 48.2 cents, after gaining
0.93 cent on Monday for biggest gain since Jan. 30, according to
Bloomberg-compiled prices.
Under the rescue proposal, which has been backed by some
creditors, about half of the Hong Kong-based company's $3.5
billion in debt, including bonds, will be switched into new
equity, while perpetual bondholders are being offered a few cents
on the dollar, according to Bloomberg. All existing shareholders
will get a 10 percent stake. Goldilocks has complained of
"massive dilution".
In its statement, Goldilocks questioned the magnitude of the non-
cash losses that Noble Group announced on derivatives contracts,
and its accounting. "This seems to suggest that Noble has
consistently overstated the value of its derivative contracts
over this financial year," it said, Bloomberg relays.
As Noble Group's crisis has unfolded over the past three years,
the company has repeatedly defended its financial statements,
especially when parrying criticism from Iceberg, Bloomberg says.
In addition, founder Richard Elman has refuted claims made by a
former chief executive officer about the accounting.
According to Bloomberg, Goldilocks also queried a plan to sell an
offtake agreement for petrochemicals for $10.1 million, below
book value. "We find the terms of the proposed disposal highly
questionable," it said, highlighting the discount offered on the
sale, which was announced on Feb. 26.
Goldilocks has an 8.1 percent stake in Noble Group, making it the
fifth-largest holder, according to Bloomberg data. In January,
the investor urged the Singapore regulator to probe the trader's
actions over the past two years, Bloomberg adds.
About Noble Group
Hong Kong-based Noble Group Limited (SGX:N21) --
http://www.thisisnoble.com/-- engages in supply of agricultural,
industrial and energy products. The Company supplies agricultural
and energy products, metals, minerals and ores. Agriculture
products include grains, oilseeds and sugar to palm oil, coffee,
and cocoa. Energy business includes coal, gas and liquid energy
products. In metals, minerals and ores (MMO), it supplies iron
ore, aluminum, special ores and alloys. The Company operates
nearly in 140 locations. It supplies growth demand markets in
Asia and Middle East. Alcoa World Alumina and Chemicals is the
subsidiary of this company.
As reported in the Troubled Company Reporter-Asia Pacific on
Feb. 5, 2018, Fitch Ratings has downgraded Noble Group Limited's
Long-Term Foreign-Currency Issuer Default Rating (IDR) and the
ratings on all its outstanding senior unsecured notes to 'C' from
'CC'. The Recovery Rating of the notes is 'RR5'.
The downgrade follows Noble's announcement on Jan. 29, 2018 of a
debt restructuring plan that Fitch views as a distressed debt
exchange (DDE) as it involves a material reduction in principal,
and the restructuring is necessary to avoid a traditional payment
default due to the liquidity shortfall of the company. Fitch will
downgrade the IDR to Restricted Default (RD) upon the completion
of the debt restructuring and following that, may assign an
appropriate IDR for the issuer's post-exchange capital structure,
risk profile and prospects.
The TCRAP reported on Feb. 2, 2018, that S&P Global Ratings
lowered its long-term corporate credit rating on Noble Group to
'CC' from 'CCC-'. The outlook is negative. S&P also lowered the
long-term issue rating on the company's outstanding senior
unsecured notes to 'CC' from 'CCC-'.
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I N D I A
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ADINO TELECOM: ICRA Keeps B+ Rating in Not Cooperating Category
---------------------------------------------------------------
ICRA Ratings said the rating for the INR12.00 crore bank
facilities of Adino Telecom Limited (ATL) continues to remain in
the 'Issuer Not Cooperating' category. The rating is now denoted
as "[ICRA]B+ (Stable)/[ICRA]A4 ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Cash
Credit 4.00 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Non-Fund based-
Letter of Credit 1.00 [ICRA]A4 ISSUER NOT
COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Non-Fund based-
Bank Guarantee 4.00 [ICRA]B+ (Stable)/[ICRA]A4
ISSUER NOT COOPERATING;
Rating continues to remain in
the 'Issuer Not Cooperating'
category
Unallocated Limit 3.00 [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 company so as
to monitor its performance, but despite repeated requests by
ICRA, the company's management has remained non-cooperative. The
current rating action has been taken by ICRA basis best
available/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 company.
Incorporated in the year 1992, Adino Telecom Ltd (ATL) is engaged
in various business verticals such as wireless integration
business for 'last mile' connectivity, sale & installation of
Closed Circuit Television (CCTV) systems, execution of DIAL 100
projects for police force and networking solutions for various
clients. The company is mainly promoted by Mr. Vijay Mansukhani
and other family members, who have a long track record in
wireless integrations service & networking solutions business.
ALFANSO VITRIFIED: ICRA Withdraws B Rating on INR31.5cr Loan
------------------------------------------------------------
ICRA Ratings has withdrawn the long-term rating of [ICRA]B with a
Stable outlook and the short-term rating of [ICRA]A4 assigned to
the INR45.50 crore bank facilities of Alfanso Vitrified Private
Limited (AVPL).
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term
Loan 31.50 [ICRA]B (Stable); Withdrawn
Fund based-Cash
Credit 10.00 [ICRA]B (Stable); Withdrawn
Non-fund based-
Bank Guarantee 4.00 [ICRA]A4; Withdrawn
Rationale
The long-term and short-term ratings assigned to Alfanso
Vitrified Private Limited have been withdrawn at the request of
the company, based on the no-objection certificate provided by
its banker.
Outlook: Not applicable
Key rating drivers
Not Applicable
Incorporated in November 16, 2015, Alfanso Vitrified Private
Limited (AVPL) is a private limited company engaged in
manufacturing of double charged vitrified tiles with its plant
situated at Sapar (Dist: Morbi), Gujarat havinf factory land of
around 600,000 sq.ft. The installed capacity for the proposed
project is 85,000 MTPA.
The company is promoted by six directors having experience of
more than a decade in the line of ceramic business through
several other associate companies i.e. Alfa Vitrified Private
Limited (rated at CRISIL BB-/Stable/A4+), Xpert Ceramic (rated at
CARE BB/A4) and Livent Ceramic. Alfa Vitrified Pvt. Ltd. is
engaged in the business of manufacturing vitrified tiles whereas
the other two associate companies are engaged in manufacturing of
wall tiles of different sizes.
AMIYA STEEL: Ind-Ra Migrates B- Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Amiya Steel
Private Limited's (ASPL) 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:
-- INR177 mil. Fund-based limits migrated to Non-Cooperating
Category with IND B- (ISSUER NOT COOPERATING) rating;
-- INR23 mil. Proposed fund-based limits migrated to Non-
Cooperating Category with Provisional IND B- (ISSUER NOT
COOPERATING) rating;
-- INR40 mil. Non-fund-based limits migrated to Non-Cooperating
Category IND A4 (ISSUER NOT COOPERATING) rating; and
-- INR30 mil. Proposed non fund-based limits migrated to Non-
Cooperating Category with Provisional IND A4 (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 24, 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 2002, ASPL manufactures sponge iron at its 60,000
metric tonnes per annum facility in Bankura, West Bengal. It is
also engaged in the trading of other related materials such as
coal, iron ore, thermo mechanical treatment bars and others.
ASTER PRIVATE: Ind-Ra Migrates D Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Aster 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 the rating. The rating will now
appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR2,250 mil. Fund-based limits (long- and short-term)
migrated to Non-Cooperating Category with IND D (ISSUER NOT
COOPERATING) rating; and
-- INR11,039.5 mil. Non-fund-based limits (short-term) migrated
to Non-Cooperating Category with IND D (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
September 2, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Aster is a Hyderabad-based tower fabricating and engineering
procurement and construction company undertaking works in the
power, telecom and engineering segments.
BHANDARI AGROFEEDS: CARE Moves B+ Rating to Not Cooperating Cat.
----------------------------------------------------------------
CARE has been seeking information from Bhandari Agrofeeds Private
Limited (BAPL) to monitor the rating vide e-mail
communications/letters dated Aug. 18, 2017, Nov. 22, 2017,
Jan. 24, 2018 and numerous phone calls. However, despite CARE's
repeated requests, the firm has not provided the requiste
information for monitoring the rating. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating. The rating on
Bhandari Agrofeeds Private Limited's bank facilities will now be
denoted as CARE B+; Stable; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 11.50 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING; Based on best
available information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings take into account BAPL's nascent stage of operations,
highly competitive and fragmented industry, volatility of input
prices, raw material availability risks coupled with exposure to
a highly price sensitive consumer segment and working capital
intensive nature of operations. However, the aforesaid
constraints are partially offset by its experienced promoters and
high growth prospects of the industry.
Detailed description of the key rating drivers
Updated for the information available from Registrar of
Companies.
Key Rating Weaknesses
Nascent Stage of operations: The company has commenced its
commercial operations from October 2016 and has achieved a
turnover of INR24.9 Crore in 4 months of its completed operations
ending Feb.28, 2017. The small scale restricts the financial
flexibility of the company in times of stress.
Highly competitive & fragmented industry: The animal feed
industry is highly competitive and fragmented with many regional
unorganized players. BAPL is expected to face severe competition
from unorganized players apart from availability of cheaper
substitutes exposing it to pricing and profitability pressures.
Volatile input prices and raw material availability risks coupled
with exposure to a highly price sensitive consumer segment: The
prices of major inputs like soya feed, maize, mustered oil cake,
etc. are mostly agricultural products and dependent on vagaries
of nature. Accordingly, any volatility in input prices due to
vagaries of nature may adversely affect the profitability of the
company. Moreover there may be a negative impact of adverse
climate conditions on the availability of raw materials. The
finished products of BAPL will mainly be consumed by the poultry
farms, who are highly price sensitive which also forces the
company to sell their products at a relatively lower price other
than because of competition.
Working Capital Intensive nature of operations: Average CC
utilisation during last 12 months ending on Dec 2017, was
80%.
Key Rating Strengths
Experienced promoters: BAPL is managed by Mr Rajesh Bhandari
(Director), having close to two decades of experience in the
animal feed industry. The day to day operations of the company
are looked after by Mr Rajesh Bhandari with the help of other
directors and a team of experienced personnel.
High growth prospects of the industry: India is currently among
the largest livestock-producing countries in the world. Poultry
feed is given to chicken as a better substitute of traditional
feeds (i.e. Oil cakes, Cereals etc). In view of the expected rise
in per capita consumption of chicken meat, eggs and milk,
livestock production and productivity will grow. This indicates
high growth potential for livestock industry. Accordingly, the
growth in livestock industry coupled with increase in level of
education of farmers will have a positive impact on the poultry
feed industry.
Bhandari Agrofeeds Private Limited (BAPL) was incorporated on
February 21, 2014 to set up a unit for manufacturing on animal
and cattle feeds at Uluberia, Howrah. The unit has started
commercial operations from October 2016.The day-today affairs of
the company are looked after by Mr Rajesh Bhandari (Managing
Director) along with the help of other directors and a team of
experienced personnel.
BHAVNABEN C: CARE Assigns B Rating to INR5.31cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Bhavnaben C Khanpara (BCK), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.31 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of BCK is constrained
on account of proprietorship nature of its constitution coupled
with the inherent risk associated with renewal and cancellation
of lease contracts. The rating is further constrained on account
of its small scale of operations, highly leveraged capital
structure and weak debt coverage indicators along with modest
liquidity position during FY17 (refers to the period April 1 to
March 31). The rating, however, derives strength from its
operating model mechanism which yields healthy profit margins
along with favourable demand outlook for agri-warehousing
capacities in the country.
The ability of BCK to expand its storage capacity base by
establishing new storage facilities, while continuation/renewal
of its existing lease agreement at envisaged terms coupled with
timely receipts from the lessee are the key rating sensitivities.
Further, improvement in its capital structure and debt coverage
indicators would also remain crucial.
Detailed description of the key rating drivers
Key Rating Weaknesses
Proprietorship nature of constitution: The constitution as a
proprietorship firm restricts BCK's overall financial flexibility
as there is inherent risk of possibility of withdrawal of capital
and dissolution of the firm in case of death/insolvency of
proprietor.
Inherent risk associated with renewal and cancellation risk of
lease contracts The lease agreement will be renewed after the
expiry of the agreed period only at the discretion of all the
parties, while the same will be cancelled in case of breach
committed by any party or cancelled by lessee/sub-lessee by
giving prior notice.
Small scale of operations, highly leveraged capital structure and
weak debt coverage indicators along with modest liquidity
position: The TOI of BCK remains pre-determined up to a major
extent. During FY17, the turnover registered by BCK remained
small at INR0.77 crore against INR0.43 crore in FY16.
Furthermore, the capital structure as marked by overall gearing
ratio, remained highly leveraged at 12.15 times as on March 31,
2017 as against 12.91 times as on March 31, 2016. The debt
coverage indicators also remained weak owing to high debt level
and very low cash accruals. Interest coverage ratio also stood
low at 1.09x in FY17. During FY17, liquidity position remained
moderate as indicated by high utilization of working capital
borrowings which stood at 90% during past twelve months ended
December, 2017.
Key Rating Strengths
Operating model mechanism yielding healthy profit margins: BCK
follows the lease-based revenue model, wherein majority of the
operational expenses are incurred by the lessee owing to which
operating profits remained healthy at INR0.76 crore (i.e.98.23%)
in FY17. While the major expenses of BCK included bank interest
and finance charges, the APAT margin remained at 8.35% in FY17.
Established in 2013 as a proprietorship firm, BCK is engaged in
providing storage facilities on lease basis to different
companies. It currently leases warehouses to companies like Star
Agri Warehousing Collateral Management Ltd, Edelweiss Agri Chain
Value Limited, Kalyx Warehousing Private Limited and Exotic And
Speciality Fats Private Limited for a period of 11 months and
gets the contract renewed after the completion of the contracted
period. The firm commenced its commercial operations from
December 2013 with one warehouse and thereafter expanded to two
warehouses, with total 9 chambers spread over 101,439 square feet
at Bhalodi, Gondal; Gujarat. The warehouses primarily stores agri
products such as grains, spices, oil seeds, soya beans etc.
BINARY APPAREL: Ind-Ra Migrates B+ Rating to Non-Cooperating
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Binary Apparel
Park Private Limited's (BAPPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+ (ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR120 mil. Term loan due on March 2020 migrated to Non-
Cooperating Category with IND B+ (ISSUER NOT COOPERATING
ratings.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 19, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
BAPPL is setting up an apparel manufacturing park in a land
parcel of around 25.42 acres in Chitradurga district, Karnataka.
Around 55% of the land would be developed into 21 industrial
plots, which is planned to be sold, while the remaining 45% would
be for roads and other common infrastructure.
CHANAKYA TECHNOS: Ind-Ra Migrates BB- Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Chanakya Technos
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:
-- INR21.5 mil. Fund-based limits migrated to Non-Cooperating
Category with IND BB- (ISSUER NOT COOPERATING) rating; and
-- INR81.5 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 24, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Patna-based Chanakya Technos was incorporated as a partnership
firm in 1990 and then reconstituted as a private limited company
in 2002. The company executes civil construction contracts for
government entities.
COTTON BLOSSOM: Ind-Ra Affirms BB Issuer Ratings, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Cotton Blossom
(India) Private Limited's (CBIPL) Long-Term Issuer Rating at
'IND BB'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR210.9 (reduced from INR319.36) mil. Long-term loans due on
June 2024 affirmed with IND BB/Stable rating;
-- INR900 (increased from INR804) mil. Fund-based facilities
Affirmed with IND BB/Stable/IND A4+ ratings; and
-- INR80 mil. Non-fund-based facilities assigned with IND A4+
rating.
KEY RATING DRIVERS
The affirmation reflects CBIPL's continued moderate credit
profile, due to intense competition and forex risks. EBITDA
interest coverage (operating EBITDA/gross interest expense) was
1.9x in FY17 (FY16: 2x) and the net leverage (Ind-Ra adjusted net
debt/operating EBITDAR) was 5.2x (5.1x). The slight deterioration
in metrics was because of additional debts availed for a capex
incurred. Ind-Ra expects metrics to improve in the near term on
account of scheduled term loan repayments. EBITDA margin
fluctuated in the range of 7.3%-10.6% during FY14-FY17, on cotton
price movements. CBIPL derives 76% of its total revenue from
exports, and mitigates forex risks by using forward contracts.
However, revenue improved to INR3,454 million in FY17 (FY16:
INR2,900 million) on account of the execution of more number of
orders. CBIPL achieved a turnover of INR2,472.6 million during
9MFY18. Revenue is likely to grow further in the near term on
account of an increase in order inflow from new market segments
such as Japan and Australia. As of December 2017, the company had
outstanding export orders of INR 1,451.4 million which will be
executed by end-April 2018 and domestic orders of INR119.6
million will be executed by end-March 2018.
The ratings remain constrained by the company's tight liquidity
position due to high working capital intensity. Its use of the
working capital facilities was 94.4% on average over the 12
months ended January 2018.
The ratings are supported by the promoter's over 10 years of
experience in the garment manufacturing business.
RATING SENSITIVITIES
Positive: A substantial increase in the scale of operations along
with an improvement in the profitability leading to a sustained
improvement in the credit metrics will be positive for the
ratings.
Negative: Deterioration in the profitability leading to sustained
deterioration in the credit metrics could be negative for the
ratings.
COMPANY PROFILE
CBIPL was established as a partnership firm in 1999 and was
reconstituted as a private limited company in 2004. It
manufactures garments and revenues are generated mostly from
direct exports to countries such as Germany, US, UK, Dubai. CBIPL
is backward integrated with spinning, knitting, dyeing, printing
and embroidery divisions.
DASHMESH AGRO: ICRA B Rating Remains in Not Cooperating Category
----------------------------------------------------------------
ICRA Ratings said the rating for the INR26.00 crore bank
facilities of Dashmesh Agro Industries (DAI) continues to remain
in the 'Issuer Not Cooperating' category. The rating is denoted
as "[ICRA]B(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 26.00 [ICRA]B(Stable) ISSUER NOT
COOPERATING; Rating continues
to remain in 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 Agro Industries is a partnership firm promoted by Mr.
Ashwani Sidana and his family members. The firm is primarily
involved in the milling of basmati rice and also converts semi-
processed rice into parboiled basmati rice. DAI's milling unit is
based out of Jalalabad in Ferozpur district, Punjab, which is in
close proximity to the local grain market.
DIVINE CERA: Ind-Ra Migrates B- Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated M/s Divine Cera
Wool India LLP'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:
-- INR67.81 mil. Long-term loan due on October 31, 2024 migrated
to Non-Cooperating Category with IND B- (ISSUER NOT
COOPERATING) rating;
-- INR20 mil. Fund-based working capital facility migrated to
Non-Cooperating Category with IND B-(ISSUER NOT
COOPERATING)/ IND A4(ISSUER NOT COOPERATING) rating; and
-- INR10 mil. Non-fund-based working capital facility migrated
to Non-Cooperating Category IND A4 (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 20, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established on January 28, 2015, M/s Divine Cera Wool India LLP
manufactures and sells ceramic fiber related products, such as
ceramic fiber bulk, blankets, modules, ropes and boards.
DNS ELECTRONICS: Ind-Ra Raises Long Term Issuer Rating to BB-
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded DNS Electronics
Private Limited's (DEPL) Long-Term Issuer Rating to 'IND BB-'
from 'IND B+ (ISSUER NOT COOPERATING)'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR152 mil. Fund-based working capital limit upgraded with
IND BB-/Stable/IND A4+ rating;
-- INR8 mil. Non-fund-based working capital limit upgraded with
IND A4+ rating;
-- INR78 mil. Proposed fund-based working capital limit*
upgraded with Provisional IND BB-/Stable/Provisional IND A4+
rating; and
-- INR2 mil. Proposed non-fund-based working capital limit*
upgraded with Provisional IND A4+ rating.
* The ratings are provisional and shall be confirmed upon the
sanction and execution of the loan documents for the above
facilities by DEPL to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The upgrade reflects an increase in revenue, albeit the scale of
operations remains moderate, and an improvement in credit metrics
(to comfortable from weak). Revenue increased 192% yoy to
INR4,578.85 million in FY17, driven by healthy smartphone demand.
In FY17, net leverage was 2.99x in FY17 (FY16: 5.61x) and
interest coverage was 3.15x (1.33x). The improvement in credit
metrics was mainly due to a substantial increase in operating
profit (FY17: INR87.83 million; FY16: INR32.63 million), driven
by an increase in revenue.
The ratings also continue to be supported by the promoter's
experience of over three decades in the trading business and
DEPL's well-established market presence as an electronics and
home appliance distributor in Delhi.
The ratings, however, continue to be constrained by a tight
liquidity position, indicated by about 98% utilization of its
fund-based limits during the 12 months ended December 2017.
The ratings are also constrained by a concentration risk. DEPL
derived 90% revenue in FY17 from mobile phone sales. Moreover,
the company continues to be dependent on the sale of phones
manufactured by Vivo Mobile India Private Limited ('IND
BB'/Stable). About 83% of revenue in FY17 (FY16: 34.78%) was
derived from the sale of Vivo Mobile's phones.
The ratings also reflect a low EBITDA margin, which is inherent
in the mobile handset distribution business. EBITDA margin
declined to 1.92% in FY17 (FY16: 2.08%), primarily owing to
higher retailer margins extended by DEPL to stimulate off take
and lower distributor margins extended by Vivo Mobile.
RATING SENSITIVITIES
Negative: Any deterioration in the liquidity leading to any
deterioration in the credit metrics could result in a negative
rating action.
Positive: Any improvement in the liquidity while maintaining the
credit metrics could result in a positive rating action.
COMPANY PROFILE
DEPL is an exclusive distributor of products such as mobile
phones, home appliances, water geysers, lubricants and tires for
companies such as LG Electronics Limited, VIP Industries Limited,
Shell Lubricants India Private Limited, Ceat Tires Limited,
Philips India Limited, Samsung India Electronics Private Limited,
Sony India Private Limited and Lenovo (India) Private Limited. It
supplies to several wholesalers in Delhi. It was incorporated in
2006 by Mr. Rajan Dhingra and Mr. Vikas Dhingra.
DREAM DIGITAL: ICRA Moves B- Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA Ratings said the ratings of INR5.18 crore bank facilities of
Dream Digital has been moved to 'Issuer Not Cooperating'
category. The ratings are now denoted as "[ICRA]B- (Stable)/ A4;
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Term 3.56 [ICRA]B- (Stable); ISSUER NOT
Loan COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
Fund based-Cash 1.50 [ICRA]B- (Stable); ISSUER NOT
Credit COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
Non-fund based- 0.12 [ICRA]A4; ISSUER NOT
Bank Guarantee COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity 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 best
available/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.
Established in the year 2015, Dream Digital is a Gujarat-based
partnership firm promoted by Mr. Parimal Vakharia and Mr. Vinay
Patel. The firm is involved in the business of digital printing
on greige fabrics. The firm commenced its commercial production
on July 29, 2015 and has completed its first year of operation in
FY2016. It has its printing unit in GIDC, Surat which has an
installed capacity of printing 1.08 lac metres of cloth per
month.
ECOKRIN HYGIENE: Ind-Ra Lowers Rating on INR27.5MM Capital to BB-
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Ecokrin
Hygiene Pvt Ltd's (EHPL) Long-Term Issuer Rating to 'IND BB-'
from 'IND BB'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR27.5 mil. Fund-based working capital limit downgraded with
IND BB-/Stable rating; and
-- INR30 mil. Non-fund-based limit affirmed with IND A4+ rating.
KEY RATING DRIVERS
The downgrade reflects a substantial deterioration in EHPL's
credit metrics in FY17, due to a decline in absolute EBITDA
resulting from a rise in purchase cost, despite an increase in
revenue. Interest coverage (operating EBITDA/gross interest
expense) deteriorated to 2.5x in FY17 (FY16: 3.3x) and net
financial leverage (total adjusted net debt/operating EBITDAR) to
7.4x (4.8x) owing to a decline in operating EBITDA margin to 2.2%
(3.8%). The company sold some of its products at a lower margin
due to intense competition, leading to the decline in the
margins. However, revenue grew to INR341.44 million in FY17
(FY16: INR290.92 million) because of higher orders.
The ratings also factor in the company's moderate liquidity
position as reflected by 54.55% average use of its fund-based
limits during the 12 months ended January 2018.
However, the ratings continue to benefit from the founders' more
than three decades of experience in the chemical trading
business.
RATING SENSITIVITIES
Positive: An improvement in the scale of operations along with an
improvement in the liquidity position leading to an improvement
in the overall credit metrics will be positive for the ratings
Negative: A decline in revenue and operating profitability or a
stretch in the liquidity position leading to deterioration in the
overall credit metrics will be negative for the ratings.
COMPANY PROFILE
Incorporated in 2001, EHPL trades various types of chemicals and
additives mainly used in food. The entity belongs to the Mumbai-
based Lakdawala family and has its registered office in Mumbai.
ESWARI GREEN: Ind-Ra Rates INR200MM Term Loan 'B', Trend Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has rated Eswari Green Energy
LLP's (EGEL) bank facilities as follows:
-- INR200 mil. Term loan due on FY24 assigned with IND B/Stable
rating.
KEY RATING DRIVERS
The rating reflects delays in extending tariff approval by
Karnataka Electricity Regulatory Commission (KERC) and EGEL's
stressed liquidity due to the non-receipt of payments from Hubli
Electricity Supply Company Limited (HESCOM), lack of a structured
waterfall mechanism in the loan agreement and thin coverage
ratios. Although EGEL signed a power purchase agreement with
HESCOM on March 24, 2017 for a period of 25 years from the
commercial operation date (31 March 2017) for a tariff of
INR4.50/kWh, KERC's revised guideline indicate a possible tariff
of INR3.70/kWh for projects in September 2017. The government of
Karnataka through a letter has directed KERC to approve the
tariff invoking Section 108 of Electricity Act. Nevertheless,
there is no clarity on the same.
The project company has to rely on sponsor support as HESCOM has
not made payments since the commissioning date. Also, Inox Wind
Limited is yet to transfer the land in the name of project.
According to the management, the process is underway and would be
completed by end-March 2018.
The project recorded an average plant load factor of 23% during
May 2017-January 2018.
RATING SENSITIVITIES
Negative: Lower-than-expected operating and financial
performance and/or any significant payment delays by the off-
taker on a sustained basis could result in a rating downgrade.
Positive: Approval of tariff combined with receipt of payments
from the counterparty and sustained improvements in the coverage
ratios could result in a rating upgrade.
COMPANY PROFILE
EGEL is a limited liability partnership firm;
Mr.R.Balasubramaniam, Mr.Baskaran and Mrs. B. Sundarambhal are
the partners. Eswari Knitting Works is the parent firm of
EGEL.The project is located at Basavanbagawadi village, Karnataka
with two wind turbine generators of capacity 2MW each. The
project cost of INR271.4 million was funded through a debt of
INR200 million and equity of INR71.4 million.
EVAN MULTISPECIALTY: ICRA Assigns D Rating to INR25.70cr Loan
-------------------------------------------------------------
ICRA Ratings has assigned the long-term rating of [ICRA]D to the
INR27.05-crore (enhanced from INR20.00 crore) fund-based
facilities of Evan Multispecialty Hospital and Research Centre
Private Limited (Evan).
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund
Based-Term Loans 25.70 [ICRA]D; Assigned/Outstanding
Long-term Fund
Based-Cash Credit 1.35 [ICRA]D; Assigned
Rationale
The rating factors in the delay in debt servicing by Evan owing
to weak operational performance and high repayment obligations.
The company suffered cash loss of INR3.57 crore in FY2017 in its
first full year of operations. The actual revenues are lower than
what was envisaged at the project stage, thus impacting the
profitability and liquidity. Going forward, the ability to
demonstrate a track record of timely debt servicing will be the
key rating sensitivity.
Key rating drivers
Credit strengths
Experienced promoters with established track record in different
medical fields: Evan has been promoted by eight doctors
specializing in different medical fields.
Credit weaknesses
Delay in debt servicing: Irregularities in debt servicing with
delay in the principal repayment owing to weak operational
performance and high repayment obligations.
Low number of operational beds despite two years of operations:
Evan operates a 140-bedded multi-specialty hospital and started
operations in September 2015. However out of total beds, only 65
beds have been pressed into service as of now depicting slow pick
up in occupancy.
Single asset concentration risk: Evan operates one single
hospital in Muzaffarnagar and entire revenues of the company are
dependent on this single asset.
Incorporated in December 2012, Evan is a closely-held company
that operates a 65-bedded multi-specialty hospital in
Muzaffarnagar (Uttar Pradesh). Amongst ten promoters of the
company, eight are qualified doctors having relevant experience
across different medical fields. The hospital commenced its OPD
operations in July 2015 and the IPD operations initiated in
September 2015.
The hospital has been set up in Kiran City - an upcoming
residential project - located on state-highway 12/ Bhopa Road in
Muzaffarnagar. Although situated in the outskirts of the city,
the project enjoys good connectivity with the rest of the city
being located on Bhopa Road.
GSK INFRASTRUCTURES: Ind-Ra Lowers LT Issuer Rating to 'D'
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded GSK
Infrastructures' Long-Term Issuer Rating to 'IND D' from 'IND
BB'. The Outlook was Stable. The instrument-wise rating actions
are as follows:
-- INR10 mil. Fund-based facilities (long-/short-term)
downgraded with IND D rating; and
-- INR60 mil. Non-fund-based facilities (short-term) downgraded
with IND D rating.
KEY RATING DRIVERS
The downgrade reflects over-utilization of the working capital
limits for over 30 days during the three months ended
December 2017 by GSK due to a tight liquidity.
RATING SENSITIVITIES
Positive: Three consecutive months of timely debt servicing could
be positive for the ratings.
COMPANY PROFILE
Incorporated in 2007, GSK is an engineering, procurement and
construction contractor that undertakes government projects. The
firm undertakes civil construction of sewage and water pipelines.
GSK operates in Andhra Pradesh, Karnataka and Telangana.
JAGANNATH RICE: Ind-Ra Assigns BB- Rating to INR125.5MM Loan
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Jagannath Rice
Mill (JRM) a Long-Term Issuer Rating of 'IND BB-'. The Outlook is
Stable. The instrument-wise rating action is:
-- INR125.5 mil. Fund-based working capital limit assigned with
IND BB-/Stable ratings.
KEY RATING DRIVERS
The ratings reflect JRM's moderate scale of operations and
moderate credit metrics, as it operates in a highly fragmented
and competitive flour milling space. In FY17, revenue was INR881
million (FY16: INR943.62 million) and EBITDA margin was 2.9%
(FY16: 2.4%). The decline in revenue was due to a fall of prices
of the finished goods, while the improvement in EBITDA margin was
driven by a decrease in the price of the raw materials. According
to interim financials for 8MFY18, revenue was INR716 million.
In FY17, interest coverage (operating EBITDA/gross interest
expense) was 1.6x (FY16: 1.5x) and net financial leverage (total
adjusted net debt/operating EBITDAR) was 5.1x (6.6x). The
improvement in net financial leverage was due to a rise in
operating EBITDA (FY17: INR26 million; FY16: INR22 million).
The ratings also reflect JRM's tight liquidity position,
indicated by an average utilization of 94% of the working capital
limits during the 12 months ended January 2018.
The ratings, however, draw comfort from the partners' three
decades of experience in the flour milling industry.
RATING SENSITIVITIES
Negative: A negative rating action may result from any
deterioration in revenue and credit metrics.
Positive: A positive rating action may result from any
substantial improvement in revenue and credit metrics.
COMPANY PROFILE
JRM is one of the oldest roller flour mills in Bhubaneswar,
Odisha. Founded in 1972, it operates as a partnership firm
engaged in the flour milling business. The unit sells its produce
under the brand Rishta Foods, which is a part of the JRG Group.
JP AGRO: CARE Lowers Rating on INR10cr LT Loan to D
---------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
JP Agro, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 10.00 CARE D Revised from CARE B
Facilities ISSUER NOT COOPERTAING
Due to absence of adequate information and cooperation from JP
Agro, CARE had earlier reviewed the rating and denoted it as CARE
B,ISSUER NOT COOPERATING. However, the entity has now submitted
the requisite information to CARE. CARE has carried out a full
review of rating and rating stands at CARE D.
Detailed Rationale & Key Rating Drivers
The revision in rating assigned to the bank facilities of JP Agro
is constrained on account of irregularity in repayment of
interest of cash credit limit, which has been overdue since past
two months.
The ability of the entity to regularize the payments is the key
rating sensitivity.
Detailed description of the key rating drivers
Key rating Weaknesses
Irregularity in repayment of installments and interest of term
loan: There are continuous delays in the repayment of interest of
cash credit limit on account of inadequate cash flow generation.
JP Agro (JPA) was established as a proprietorship concern in the
year 2015. The firm is engaged in trading of agro commodities as
wheat, soyabean, pulses and rice. The group companies JPK
Constructions Private Limited and Pardeshi Constructions Private
Limited, are engaged in construction business, whereas Desire is
distributor of consumer electronic products.
KALINDI ISPAT: Ind-Ra Hikes Rating on INR117.5MM Loan to BB
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Kalindi Ispat
Pvt Ltd.'s (KIPL) Long-Term Issuer Rating to 'IND BB' from 'IND
BB-(ISSUER NOT COOPERATING)'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR117.5 mil. Fund-based limits upgraded with IND BB/Stable
rating; and
-- INR10 mil. Non-fund-based limits affirmed with IND A4+
rating.
KEY RATING DRIVERS
The upgrade reflects an increase in KIPL's revenue (albeit its
scale of operations continued to be small owing to high
competition) and EBITDA margin, and an improvement in credit
metrics to moderate from weak during FY17. In FY17, revenue
increased to INR528 million in FY17 from INR322 million in FY16,
driven by favorable market rate of sponge iron. EBITDA margin was
moderate at 7.7% in FY17 (FY16: 3.0%). The improvement in EBITDA
margin was due to a decrease in cost of raw materials consumed.
In FY17, gross interest coverage (operating EBITDA/gross interest
expense) was 2.2x (FY16: 0.6x) and net financial leverage (total
adjusted net debt/operating EBITDAR) was 2.7x (11.3x). The
improvement in credit metrics was driven by a rise in operating
EBITDA margin (FY17: 7.7%; FY16: 3.0%). According to provisional
financials for 9MFY18, revenue was INR558 million.
The ratings continue to be supported by the founders' experience
of more than a decade in sponge iron manufacturing.
The ratings, however, continue to be constrained by KIPL's tight
liquidity, indicated by an average utilization of 95.13% of the
fund-based facilities for the 12 months ended January 2018, and a
high customer concentration risk faced by the company. Ten
customers contributed 51% to 9MFY18 revenue.
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 significant revenue growth, along with sustained or
improved credit metrics, could lead to a positive rating action.
COMPANY PROFILE
Incorporated in 2004, KIPL manufactures sponge iron at its 60,000
metric tons per annum facility in Bilaspur, Chhattisgarh.
KANNAPPAN IRON: Ind-Ra Migrates BB+ Rating to Non-Cooperating
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kannappan Iron
and Steel Company Pvt Ltd'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:
--INR300 mil. Fund-based working capital limit migrated to Non-
Cooperating Category with IND BB+ (ISSUER NOT
COOPERATING)/IND A4+ (ISSUER NOT COOPERATING) ratings; and
-- INR334 mil. Non-fund-based working capital limit migrated to
Non-Cooperating Category with IND A4+ (ISSUER NOT COOPERATING)
ratings.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 30, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated as a private limited company in 1999, Kannappan Iron
and Steel Company Pvt Ltd manufactures TMT bars, CTD rods and MS
ingots in Tamil Nadu. The company is managed by T.S.P.Kannappan,
K.P.Thirumalai Raja, and K.Pushpavalli.
KULDEVI COTTON: ICRA Reaffirms B Rating on INR4.75cr Cash Loan
--------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B to
the INR6.00 crore fund-based bank facilities of Kuldevi Cotton
Industries. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash
Credit 4.75 [ICRA]B (Stable); Reaffirmed
Fund-based Term
Loan 1.25 [ICRA]B (Stable); Reaffirmed
Rationale
The rating reaffirmation continues to take into account KCI's
small scale of operations and its weak financial risk profile as
marked by low profitability, leveraged capital structure, below
average debt coverage indicators and high working capital
intensity. The rating also factors in the vulnerability of the
firm's profitability to any fluctuations in raw material prices,
the inherently low value-adding ginning business and its exposure
to stiff competition in a fragmented industry, caused by numerous
small and unorganised players in the field.
The rating, however, draws comfort from the experience of KCI's
partners in the cotton industry, because of their earlier
association with other entities involved in the same business
sector. The logistical advantages from its location in the cotton
producing belt of India, providing it easy access to quality raw
material, also support the credit profile.
Outlook: Stable
ICRA expects Kuldevi Cotton Industries to continue to benefit
from the extensive experience of its partners. The outlook may be
revised to Positive if substantial growth in revenue and
profitability, and better working capital management, strengthen
the financial risk profile. The outlook may be revised to
Negative if the scale of operations declines substantially and
cash accrual is lower than expected, or if any major debt funded
capital expenditure, or stretch in the working capital cycle,
weakens liquidity.
Key rating drivers
Credit strengths
Experience of partners in the cotton industry: KCI was
established in 2013 by Mr. Mahesh Ghodasara, along with family
and friends, for cotton ginning and pressing as well as
cottonseed crushing. The partners have extensive experience of
this business through their earlier association with entities
engaged in the same sector.
Locational advantages: The firm benefits in terms of lower
transportation cost and easy access to quality raw material due
to its proximity to raw material suppliers.
Credit challenges
Small scale of operations: The firm has a small scale of
operations and has witnessed marginal revenue de-growth of ~3% in
FY2017. The operating income declined from INR19.07 crore in
FY2016 to INR18.58 crore in FY2017.
Weak financial risk profile: The profit margins remained thin
with operating margin of 4.91% and net margin of 1.45% in FY2017
due to low value addition. The capital structure stood leveraged
with gearing of 2.36 times as on March 31, 2017, owing to high
debt levels and a relatively lower net-worth base. The debt
coverage indicators also stood below average with interest
coverage of 2.81 times and Total Debt/OPBDITA of 6.28 times in
FY2017.
Vulnerability of profitability to any fluctuation in raw cotton
prices - The profit margins are exposed to fluctuations in raw
material (raw cotton) prices, which depend upon various factors
like seasonality, climatic conditions, international demand and
supply situation, export policy, etc. Further, it is also exposed
to regulatory risks with regards to the minimum support price
(MSP) set by the Government.
Intense competition and fragmented industry: The firm faces stiff
competition from other small and unorganised players in the
industry, which limits its bargaining power with customers and
suppliers, and hence, exerts pressure on its margins.
Established in 2013 as a partnership firm, Kuldevi Cotton
Industries is engaged in cotton ginning and pressing as well as
in cottonseed crushing. Its manufacturing facility in Rajkot,
Gujarat, is equipped with 24 ginning machines and a pressing
machine with a cotton processing capacity of 12,096 metric tonnes
per annum (MTPA) and three oil expellers with a cottonseed
processing capacity of ~8,460 MTPA. The firm was promoted by Mr.
Mahesh Ghodasara, along with his family and friends, who enjoy
extensive experience in the cotton industry.
In FY2017, the company reported a net profit of INR0.27 crore on
an operating income of INR18.58 crore, as compared to a net
profit of INR0.01 crore on an operating income of INR19.07 crore
in the previous year.
LAKSHMI TEA: CARE Assigns B+ Rating to INR6cr Long Term Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Lakshmi Tea Factory (LTF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of LTF take into
account the small scale of operations, status of being a
partnership firm, agro-climatic risk and weak debt protection
metrics of the firm with leveraged capital structure. However,
financial support through promoter funding eases the pressure on
debt servicing to an extent.
The rating, however, derive strength from experience of promoters
and support of group companies, moderate operational parameters
with satisfactory capacity utilization and moderate financial
performance.
Improvement of the capital structure, improvement in capacity
utilization and efficient management of working capital are the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Weak debt protection metrics with leveraged capital structure:
The total debt/GCA remained stretched at 16.57x as on March 31,
2017. The interest coverage of the firm witnessed slight
improvement during the last three years and remained moderate at
1.84x during FY17. The capital structure of LTF is marked with
high gearing on account of low net worth. The gearing stood at
5.61x as on March 31, 2017 which also includes unsecured loan of
INR 1.75 crore from related parties.
Small scale of operations: In November 2017, LTF has increased
its annual tea manufacturing capacity from 6 lac kg to 12 lac kg.
Despite this expansion, the firm's scale of operations continues
to remain small with a turnover of INR4.56 crore and capital
employed of INR9.27 crore as on March 31, 2017.
Status of being a partnership firm: LTF is exposed to the risks
associated with the status of being a partnership firm, including
the risk of withdrawal of capital by the partners. However, the
past record of the promoters mitigates the risks to an extent.
Agro-climatic risk: LTF has its operation in Assam, a region
known for its erratic weather conditions. It has experienced
drought during October 2008, pest attack in 2010, heavy rainfall
in 2012, and a delay in monsoon during CY14. This apart, Assam
experienced heavy torrential rains in July 2016 that led to in
the flooding and waterlogging in some regions of the state.
However, LTF's concentrated operational area, make its
profitability susceptible to the vagaries of nature.
Tea production in Assam declined by 27% (Y-o-Y) in September
because of unseasonal torrential rain. While industry officials
reported a 5-6% crop recovery in these areas in October as the
rain subsided. The production loss is, however, is likely to be
mitigated to an extent by the expected price surge of 10%.
Key Rating Strengths
Experience of promoters and support of group companies: The
Agarwal group has moderate experience in the business of tea
processing and planting, while they have significant experience
in the manufacturing of pre-stressed concrete poles and rural
electrification work in Assam. Under the new promoters, FY17 was
the first year of operations for LTF. The firm receives
managerial support from its promoters and its group companies and
operational support from the experienced staff and managers of
TTCL.
Moderate operational parameters with satisfactory capacity
utilization: The capacity utilization of the firm remained
moderate during FY16 and FY17. The decline in utilization level
during FY17 is primarily due to change of firm ownership during
the year. The Agarwal family took over the ownership of LTF in
July 2016 and as such FY18 will be the first full year of
operation under the management of the new partners. Also, LTF has
increased its installed capacity from 6 lac kgs to 12 lac kgs in
the month of November 2017.
Moderate financial performance: The operating income of LTF has
witnessed nominal growth with a CAGR of around 5% in the last
three years (FY15-FY17). However, the firm expanded its
production capacity in the current year (commenced operation in
November 2017) which is likely to impact the revenue growth
positively. The PBILDT margin of the firm remained healthy in the
range of 22%-26% during FY15 to FY17. However, the PAT margin
remained subdued at around 0.6%-0.8% during the same period due
to relatively high interest expense (12.37% of the total
operating income in FY17) given the small scale of operation. In
9MFY18, the firm reported a turnover of Rs 4.95 crore.
Lakshmi Tea Factory (LTF) was established in 2010 as a
partnership firm with three partners viz. Shri Benudhar Nath,
Smt. Runumi Devi and Sri Bhargav Nath. Since its inception, the
firm has been engaged in the manufacturing of tea and its
manufacturing facility is located in Dhekiajuli in Sontipur
District, Assam. However, the firm is currently being promoted by
new partners, Mr. Anil Agarwal and Mrs. Mamta Agarwal, who took
over the management of the firm in July 2016. LTF sells CTC
(Curl, Tear and Crush) variety of tea in bulk in India. It
manufactures tea by processing bought tea leaves procured from
the indigenous tea garden owners. In November 2017, the firm has
increased its annual tea manufacturing capacity from 6 lac kgs to
12 lac kgs.
LASA CERA: ICRA Reaffirms B+ Rating on INR6.24cr Term Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed a long-term rating of [ICRA]B+ to the
INR10.24-crore fund based facilities of Lasa Cera Private
Limited. ICRA has also reaffirmed a short-term rating of [ICRA]A4
to the INR3.00 crore non-fund based bank facility of LCPL. The
outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 4.00 [ICRA]B+(Stable); Reaffirmed
Fund-based-Term
Loan 6.24 [ICRA]B+(Stable); Reaffirmed
Non Fund-based-
Bank Guarantee 3.00 [ICRA]A4; Reaffirmed
Rationale
The reaffirmation of ratings takes into account LCPL's relatively
small scale of operations and average financial risk profile,
marked by moderation in operating profitability, leveraged
capital structure and average debt-coverage indicators. The
ratings also take into account the highly fragmented nature of
the tiles industry resulting in intense competitive pressures,
cyclical nature of the real estate industry, which is the main
consuming sector, and the exposure of the company's profitability
to fluctuations in prices of raw materials and fuel.
The ratings, however, take comfort from the past experience of
the promoters in the ceramic industry and the company's
competitive advantage in raw material procurement on account of
its favourable location in Morbi, Gujarat.
Outlook: Stable
ICRA believes LCPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if substantial growth in revenue and profitability
strengthens the financial risk profile. The outlook may be
revised to 'Negative' if significant moderation in profitability
or stretch in the working capital cycle, weakens liquidity.
Key rating drivers
Credit strengths
Extensive experience of promoters in the ceramic industry: LCPL
is promoted by Manvar family, and the key promoters have been
engaged in the ceramic industry for more than 15 years. The
existing group of promoters and their relatives have also been
associated with two other ceramic firm, namely Anil Ceramics and
Silicon Ceramics, engaged in manufacturing of crockery and
ceramic tiles respectively based out of Morbi.
Proximity to sources of raw material and labour: LCPL's location
in Morbi, Gujarat, which is a ceramic hub ensures easy
availability of raw materials, fuel and skilled labour.
Credit weaknesses
Weak financial risk profile: LCPL's scale of operations remained
small as reflected by operating income of INR13.98 crore in
FY2017, first full year of operations, as against INR5.96 crore
in FY2016, around eight months of operations. The operating
profitability has moderated from 21.06% in FY2016 to 17.40% in
FY2017 with increase in raw material expenses and the company's
limited ability to pass on the same to the customers. However
with increase in scale, LCPL has reported net profit of INR0.08
crore as against net loss of INR0.53 crore. The capital structure
remained leveraged as reflected by gearing at 2.66 times as March
31, 2017, because of initial debt funded capital expenditure and
modest net-worth base. The coverage indicators remained weak
following the higher debt levels.
Profitability to remain susceptible to volatility in raw material
and fuel price: The raw materials along with the fuel (coal)
forms around 80 to 85 % of total cost for the ceramic player.
Further, LGL being a small player in the intensely competitive
ceramic industry, its ability to pass on major hike in raw
material and fuel price to the customers remains very limited
keeping the margins under pressure.
Vulnerability of profitability and cash flows to cyclicality
inherent in the real estate industry: The demand for ceramic
tiles is highly influenced by cyclicality inherent in the real
estate industry, which is the main consuming sector. Hence, the
profitability and cash flows of the company are expected to
remain vulnerable to the inherent cyclicality of the real estate
industry.
Intense competition and fragmentation in ceramic industry: The
ceramic industry is highly fragmented with competition both from
both the organised and the unorganised segments, which creates
pressure on pricing.
Incorporated in April 2014 by Manvar family along with other
promoters, LCPL is engaged in manufacturing of digital wall tiles
at its manufacturing facility located at Morbi, Gujarat. The
company has total installed capacity of producing around 9,000
boxes per day (~35,000 MTPA) and is currently engaged in
manufacturing of wall tiles in size of 18"X 12" and 12"X 12". The
company commenced commercial production from July 2015.
In 6M FY2018 (provisional financials), the company reported net
profit of INR0.28 crore on an operating income of INR7.79 crore
as against net profit of INR0.08 crore on an operating income of
INR13.98 crore in FY2017.
M S AGRO: CARE Assigns B+ Rating to INR8.70cr Long Term Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of M S
Agro Industries (MSAI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.70 CARE B+; Stable Assigned
Detailed Rationale& Key Rating Drivers
The rating assigned to the bank facilities of MSAI are tempered
by short track record and small scale of operations with moderate
net worth base, seasonal nature of availability of paddy
resulting in working capital intensive nature of operations,
fragmented nature of industry and low entry barriers and
constitution of the entity as a partnership firm with inherent
risk of withdrawal of capital. The ratings, however, derive
benefit from experience of partners for more than one decade in
rice milling industry, satisfactory profitability margins,
comfortable capital structure and debt coverage indicators,
locational advantage and healthy demand outlook for rice.
Going forward, ability of the firm to increase its scale of
operations, improve its profitability margins in competitive
environment and to maintain the capital structure and debt
coverage indicators while managing its working capital
requirements effectively are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Short track record and small scale of operations with moderate
net worth base: The firm started its commercial operations from
January 2017 and FY17 was the first year of operations. The firm
has small scale of operations i.e., the total operating income
(TOI) of the firm remained small at INR7.35 crore in FY17 with
moderate net worth base of INR8.46 crore as on March 31, 2017 as
compared to other peers in the industry. Furthermore during the
FY18, the company generated the sales of INR29.43 crore in 9
months period ending December 31, 2017.
Seasonal nature of availability of paddy resulting in working
capital intensive nature of operations: Paddy in India is
harvested mainly at the end of two major agricultural seasons
Kharif (June to September) and Rabi (November to April). The
millers have to stock enough paddy by the end of the each season
as the price and quality of paddy is better during the harvesting
season. During this time, the working capital requirements of the
rice millers are generally on the higher side. Majority funds of
the firm are blocked in inventory and with customers. During this
season the firm keeps a stock of 2-3 months. The paddy is
procured from the farmers generally against cash payments or with
a credit period of 7-20 days. The firm makes sales through
intermediaries and receives payment within 1-15 days. The average
utilization of fund based working capital limits of the firm was
utilized (70%) during the last 12 months period ended December
31, 2017. The company has also utilized the adhoc Cash Credit
limit of INR2 crore in the month of July, 2017 for purchasing of
paddy to avoid price fluctuations on account of decrease in
availability of paddy in the following months.
Fragmented nature of industry and low entry barriers: The rice
milling business requires limited quantum of investment in
machinery, however has high working capital needs. Further, rice
milling is not very technology intensive and as a consequence the
industry is highly fragmented with large number of players
operating in the organized and unorganized segments. The high
level of competition has ensured limiting bargaining power, as a
consequence of which rice mills are operating at low to moderate
profitability margins.
Constitution of the entity as a partnership firm with inherent
risk of withdrawal of capital: MSAI, being a partnership firm, is
exposed to inherent risk of the partner's capital being withdrawn
at time of personal contingency and firm being dissolved upon the
death/retirement/insolvency of the partners. Moreover,
partnership firm business has restricted avenues to raise capital
which could prove a hindrance to its growth.
Key Rating Strengths
Experience of partners for more than one decade in rice milling
industry: M S Agro Industries (MSAI) was established in 2016 as a
partnership firm and promoted by Mr. M. Laxminarayana, Mr. M.
Narasimha Murthy, Mr. M. Raghavendra and their family members.
The operations of the firm started in the year 2017. Mr. M.
Laxminarayana is a qualified graduate (B.Com) by qualification
and has 15 years of experience in rice milling business and 10
years of experience in trading of rice. Mr. M. Narasimha Murthy
is a post graduate (M.Tech) by qualification and has more than 25
years of experience in rice milling business. Mr. M. Raghavendra
is charted accountant by qualification and has 6 years of
experience in rice milling business. Through their experience in
the rice milling business, they have established healthy
relationship with key suppliers, customers, local farmers,
dealers and also with the brokers facilitating the rice business
within the state.
Satisfactory profitability margins, comfortable capital structure
and debt coverage indicators: In FY17, the firm has satisfactory
profitability margins marked by PBILDT margin and PAT margin of
17.16% and 6.84% respectively. The capital structure of the firm
remained comfortable and below unity marked by debt equity and
overall gearing ratios of 0.04x and 0.92x respectively as on
March 31, 2017. Furthermore, the firm has interest coverage ratio
of 5.22x and total debt to GCA at 2.10x in FY17.
Locational Advantage: The mill is located in Raichur district in
Karnataka which is one of the major paddy cultivation areas in
this State. This ensures easy raw material access and smooth
supply of raw materials at competitive prices and lower logistic
expenditure. MSAI procures paddy from the local farmers.
Healthy demand outlook of rice: Rice is consumed in large
quantity in India which provides favorable opportunity for the
rice millers and thus the demand is expected to remain healthy
over medium to long term. India is the second largest producer of
rice in the world after China and the largest producer and
exporter of basmati rice in the world. The rice industry in India
is broadly divided into two segments- basmati (drier and long
grained) and non-basmati (sticky and short grained). Demand of
Indian basmati rice has traditionally been export oriented where
the South India caters about one-fourth share of India's exports.
However, with a growing consumer class and increasing disposable
incomes, demand for premium rice products is on the rise in the
domestic market. Demand for non-basmati segment is primarily
domestic market driven in India. Initiatives taken by government
to increase paddy acreage and better monsoon conditions will be
the key factors which will boost the supply of rice to the rice
processing units. Rice being the staple food for almost 65% of
the population in India has a stable domestic demand outlook. On
the export front, global demand and supply of rice, government
regulations on export and buffer stock to be maintained by
government will determine the outlook for rice exports.
M S Agro Industries (MSAI) was established in 2016 as a
partnership firm and promoted by Mr. M. Laxminarayana, Mr. M.
Narasimha Murthy, Mr. M. Raghavendra and their family members.
MSAI is engaged in milling and processing of rice. The rice
milling unit of the company is located at Raichur district of
Karnataka. Apart from rice processing, the firm is also engaged
in selling by-products such as broken rice, husk and bran. The
main raw material, paddy, is directly procured from local farmers
located in and around Raichur district and the firm sells rice
and other by-products mainly to customers in Kerala, Tamil Nadu
and Karnataka through intermediaries. MSAI also sells rice to
merchant exporters (M/s Vishnu Kumar Traders). The firm started
its operations in the month of January 2017.
M.S. ENGINEERING: CARE Assigns B+ Rating to INR4.48cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of M. S.
Engineering (MSE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 4.48 CARE B+; Stable Assigned
Short-term Bank
Facilities 1.50 CARE A4 Assigned
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of MSE are
constrained by small scale of operations, volatility in input
prices, partnership nature of constitution, low order book
position, client concentration as well as geographical
concentration risk, high competitive intensity on account of low
complexity of work involved with sluggish economic scenario. The
ratings, however, derive strength from its experienced partners
with long track record of operations, satisfactory profit margins
and comfortable capital structure with strong debt coverage
indicators.
Going forward, the ability of the firm to fetch new orders &
increase the scale of operations by timely execution of the
same coupled with regular & timely receipt of contract proceeds
and ability to manage its working capital efficiently shall
be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations: The scale of operations of the firm
remained small marked by its total operating income of INR13.71
crore (FY16:Rs.14.43 crore) with a PAT of INR0.79 crore (FY16:
INR0.78 crore) in FY17 (refers to the period April 1 to March
31).
Volatility in input prices: The major inputs for the firm are
bitumen, stone aggregate, murram and steel. Bitumen is a
derivative of crude the price of which is linked to crude oil
prices. The prices of these items are highly volatile. This
apart,
it does not enter into any agreement with contractees to
safeguard its margins against any increase in labour prices and
being present in a highly labour intensive industry, it remains
susceptible to the same.
Partnership nature of constitution: MSE, being a partnership
firm, is exposed to inherent risk of withdrawal of capital by the
partners, restricted access to funding and risk of dissolution on
account of poor succession planning. Furthermore, partnership
firms have restricted access to external borrowing as credit
worthiness of partners would be the key factors affecting credit
decision for the lenders.
Low order book position: The value of orders in hand (including
on-going projects) was low at INR9.85 crore as on Dec. 31,
2017, being 0.72x of TOI in FY17 which are to be executed by
December 2018. The low order book position reveals low revenue
visibility in near terms. However, it has an L1 status for tender
worth INR17.10 crore as on Dec. 31, 2017.
Client concentration as well as geographical concentration risk:
Client base of MSE is skewed towards government departments in
West Bengal only. Thus it has client concentration risk. However,
considering the client profile of MSE, the risk of default is
very minimal since the firm works only for various Government
project only. Furthermore, MSE is a regional player and all the
projects are executed in West Bengal only which reflects
geographical concentration risk.
High competitive intensity on account of low complexity of work
involved with sluggish economic scenario: The firm has to bid for
the contracts based on tenders opened by various Government
entities. Upon successful technical evaluation of various
bidders, the lowest bid is awarded the contract. Since the type
of work done by the firm is mostly commoditized, the firm faces
intense competition from other players. The firm receives
projects which majorly are of a short to medium tenure (i.e., to
be completed within maximum period of 1-2 years).
Key Rating Strengths
Experienced partners and long track record of operations: The
firm started its commercial operations since 1986 and thus has
long track record of operations. Due to long track record of
operations, the partners have established relationship with its
clients. Currently the firm is managed by two partners namely,
Mr. Debabrata Das and Mr. Satyabrata Das, are having an
experience of more than 3 decades in the construction business.
They look after the overall management of the firm, with adequate
support from a team of experienced personnel.
Satisfactory profit margins: The profitability margins of the
firm remained satisfactory marked by PBILDT margin of 11.43%
(FY16: 12.47%) and PAT margin of 5.73% (FY16: 5.37%) in FY17.
Comfortable capital structure with strong debt coverage
indicators: The capital structure of MSE remained comfortable
marked by overall gearing ratio of 0.54 (FY16: 1.24x) during
FY17.
Further, the debt coverage indicators also remained strong marked
by interest coverage 2.36x (FY16: 2.03x) and total debt to GCA of
4.79x (FY16: 7.23x) in FY17.
MSE was established on November 30, 1986 as a partnership firm by
two partners Mr. Debabrata Das and Mr. Satyabrata Das. The
registered office of the firm is situated at Purba Medinipur,
West Bengal. Since its inception, the firm has been engaged in
civil construction business in the segments like construction of
road, bridges etc. The firm procures orders through tenders and
executes orders floated by the various Govt. entities. MSE has an
unexecuted order book position of INR9.85 crore as on Dec. 31,
2017, being 0.72x of TOI in FY17 which are to be executed by
December 2018.
MAN TUBINOX: Ind-Ra Raises LT Issuer Rating to 'B+'
---------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Man Tubinox
Limited's (MTL) Long-Term Issuer Rating to 'IND B+' from 'IND D'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR95 mil. Fund-based working capital upgraded with IND
B+/Stable rating;
-- INR230 mil. Non-fund based facilities upgraded with
IND A4 rating; and
-- INR1,070 mil. (reduced from INR1250 mil.) Term loan* upgraded
with IND B+/Stable rating.
*Not disbursed
KEY RATING DRIVERS
The upgrade reflects MTL's improved liquidity leading to the
regularization of the cash credit account and letter of credit
facility since November 2017. The company's use of the bank
limits was 87% over the nine months ended January 2017. It has
also received in-principal sanction of a term loan of INR1,070
million from its banker.
The ratings, however, continue to reflect the high project risk
associated with MTL's ongoing capex. Of its total project cost of
INR220 million (revised from INR209 million), the company had
incurred only INR750 million of the total construction cost till
December 2017, funded by unsecured loan from promoters.
The ratings are supported by the company's promoters over 40
years of experience in the steel pipe industry.
RATING SENSITIVITIES
Negative: Any time/cost overrun or deterioration of liquidity
could lead to a negative rating action.
Positive: A strong improvement in capacity utilization and
generation of cash flows as expected could result in a positive
rating action.
COMPANY PROFILE
Incorporated in 2006, MTL is a part of J.C. Man Group and trades
steel products. The promoter and group chairman Mr. J.C.
Mansukhani is also a co-promoter of Man Industries (India)
Limited, a leading manufacturer and exporter of submerged arc
welding pipes in India.
MR DIAMOND: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned M R Diamond
(MRD) a Long-Term Issuer Rating of 'IND BB'. The Outlook is
Stable. The instrument-wise rating action is as follows:
-- INR120 mil. Fund-based limits assigned with IND BB/Stable/IND
A4+ ratings.
KEY RATING DRIVERS
The ratings reflect MRD's moderate scale of operations and weak
margins on account of limited operational track record as it
commenced operations in mid FY15. FY17 is the first full year of
operations. Revenue surged to INR881.8 million in FY17 (FY16:
INR66.5 million) on account of higher orders from customers. Ind-
Ra expects revenue to improve in FY18 as MRD booked revenue of
INR1,196 million in 10MFY18 and had a strong order book of INR414
million, to be executed by March 2018. However, the EBITDA
margins stood low at 2.35% in FY17 (FY16: 5.27%) due to high
direct expenses.
The ratings also factor in MRD's moderate liquidity position as
indicated by 92% average maximum utilization of its fund-based
limits during the three months ended January 2018. Net cash
conversion cycle improved to 23 days in FY17 (FY16: 123 days) on
account of improvement in inventory and debtor days.
However, the ratings are supported by the firm's strong credit
metrics as reflected by interest coverage (operating EBITDA/gross
interest expense) of 44.36x in FY17 (FY16: 16.62x) and net
leverage (total adjusted net debt/operating EBITDAR) of 0.48x
(2.86x). Ind-Ra expects the credit metrics to improve marginally
in the near term on account of the improvement in revenue and the
consequent improvement in the operating profitability.
The ratings also benefit from the promoters' experience of more
than a decade in the diamond industry.
RATING SENSITIVITIES
Positive: Sustained improvement in revenue and EBITDA margins,
while maintaining credit metrics and liquidity position could be
positive for the ratings.
Negative: Substantial decline in top line along with a decline in
EBITDA margin and/or deterioration in working capital cycle and
liquidity position would be negative for the ratings.
COMPANY PROFILE
Established in 2015 as a partnership firm in Surat, MRD
manufactures cut and polished diamonds. Mr. Rajeshbhai Chetta,
Mrs. Sheetalben Chetta, Mr. Hiteshbhai Navadiya and Mrs. Ashaben
Kevadiya are the partners.
OVERSEAS TIMBER: Ind-Ra Raises Rating on INR20MM Capital to B
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Overseas Timber
Corporation's (OTC) Long-Term Issuer Rating to 'IND B' from 'IND
B-'. The Outlook is Stable. The instrument-wise rating actions
are as follows:
--INR20 mil. Fund-based working capital limit upgraded with
IND B/Stable rating; and
-- INR30 mil. Non-fund-based limit affirmed with IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects OTC's improved scale of operations and
credit profile in FY17. During the demonetization period, the
company could sell higher volumes as it had the stock.
Revenue improved to INR80.20 million (FY16: INR68.7 million),
operating EBITDA margin to 8.2% (4.95%), interest coverage to
1.8x (0.9x) and net financial leverage to 5.3x (17.21x). The
metrics improved due to reduced debt level coupled with increased
EBITDA because of the substantial revenue growth.
However, the scale of operations remains small, while margins and
credit metrics moderate due to the trading nature of operations.
The ratings continue to be constrained by the partnership nature
of OTC's business.
The liquidity profile of the company is satisfactory as reflected
from its average working capital utilization of 55.2% during the
12 months ended January 2018.
RATING SENSITIVITIES
Positive: An improvement in the scale of operations while
maintain the margins and credit metrics would be positive for the
ratings.
Negative: A decline in the revenue and margins leading to
deterioration in the overall credit metrics would be negative for
the ratings.
COMPANY PROFILE
OTC is engaged in timber trading. It is a partnership firm formed
in 2002 between Kirti Manilal Lakdawala, Akhilesh Kantilal
Parekh, Deepak Visanji Patel, Skyline Holdings Pvt Ltd and
Jignesh M Lakdawala. The firm is managed by Kirti Manilal
Lakdawala. OTC imports timber logs from African countries and
sells them to sawmill owners all over India.
QUALITY INDUSTRIES: Ind-Ra Affirms BB+ Ratings, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Quality
Industries' (QI) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable. The instrument-wise rating actions are:
-- INR2.73 mil. (reduced from INR3.33 mil.) term loans due on
February 2020 affirmed with IND BB+/Stable rating;
-- INR150 mil. (increased from INR81.5 mil.) fund-based working
capital limit affirmed with IND BB+/Stable/IND A4+ rating;
and
-- INR100 mil. (reduced from INR150 mil.) non-fund-based working
capital limit affirmed with IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects QI's continued moderate scale of
operations, as revenue remained stagnant during FY15-FY17 due to
the exit of a major customer, Khaitan Electricals Ltd. Revenue
was INR2,380.25 million in FY17 (FY16: INR2,013.59 million; FY15:
INR2,295.93 million). Moreover, EBITDA margin was moderate at
3.44% in FY17 (FY16: 3.56%). The fall in EBITDA margin was driven
by the firm foregoing its margins to push sales.
The ratings also reflect a high customer concentration risk,
given two customers contributed 55% to revenue in FY17, and QI's
continued tight liquidity position, indicated by about 96%
utilization of its fund-based limits during the 12 months ended
January 2018.
The ratings factor in the partnership nature of the business.
The ratings, however, continue to be supported by comfortable
credit metrics. Interest coverage, albeit marginally declined
from the FY15 level, was comfortable at 3.04x in FY17 (FY16:
2.84x; FY15: 3.69x). It declined owing to a substantial increase
in overall interest obligations. On the other hand, net leverage
improved to 2.44x (FY16: 2.56x; FY15: 2.82x) on account of a rise
in operating profit to INR81.95 million (INR71.77 million;
INR66.51 million).
The ratings also continue to be supported by the partners'
experience of over two decades in the consumer electronics
industry.
RATING SENSITIVITIES
Negative: Any decline in the operating profitability leading to
any deterioration in the overall credit metrics could be negative
for the ratings.
Positive: Any improvement in revenue and operating profitability
leading to any improvement in the credit metrics would be
positive for the ratings.
COMPANY PROFILE
QI commenced operations in 2008. It is a partnership firm engaged
in the manufacture of consumer electronics such as fans, clothing
irons, heat convectors, immersion rods and toasters at its plant
in Solan, Himachal Pradesh.
QUALITY TEA: Ind-Ra Affirms BB- Rating on INR135MM Loan
-------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Quality Tea
Plantations Private Limited's Long-Term Issuer Rating at
'IND BB-'. The Outlook is Stable.
The instrument-wise rating actions are:
--INR135 mil. (increased from INR105.4 mil.) fund-based working
capital limit affirmed with IND BB-/Stable rating;
-- INR7.5 mil. Non-fund-based limit affirmed with IND A4+
rating; and
-- INR25.2 mil. (reduced from INR26.4 mil.)term loan due on
September 2021 affirmed with IND BB-/Stable rating.
KEY RATING DRIVERS
The affirmation reflects the company's continued low revenue and
moderate credit profile due to low price realization and high
debt.
Revenue was INR260 million in FY17 (FY16: INR274 million),
interest coverage was 1.6x (1.8x) and net financial leverage
(adjusted debt/operating EBITDAR was 6.2x.(4.7x). The revenue
decline in FY17 was mainly due to lower price realization during
the year. The credit metrics deteriorated mainly on account of an
increase in debt coupled with higher interest payments.
Moreover, the liquidity of the company remains tight due to high
working capital requirements, with its average utilization of the
working capital limits being 99% during the 12 months ended
January 2018.
The ratings, however, are supported by the company's strong
operating profitability, with margins increasing year-on-year
(FY17: 14.2%; FY16: 13%; FY15: 10.4%) due to the execution of
high-margin orders and a fall in employee benefit expenses. Also,
its directors have more than two decades of experience in the tea
business.
RATING SENSITIVITIES
Positive: An improvement in the overall credit profile could be
positive for the ratings.
Negative: A decline in the operating EBITDA margins leading to
deterioration in the entire credit profile could be negative for
the ratings.
COMPANY PROFILE
Quality Tea Plantations was incorporated in 1989 and has a tea
garden in the Jalpaiguri district of West Bengal. The company
primarily produces CTC variety of tea and sells in the domestic
market. It is managed by Mr. Balkrishna Dalmia and Rajat Dalmia
and has its registered office in Kolkata.
RAJATHADRI JEWELLERS: Ind-Ra Assigns 'B' LT Issuer Rating
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Rajathadri
Jewellers Private Limited (RJPL) a Long-Term Issuer Rating of
'IND B'. The Outlook is Stable. The instrument-wise rating action
is as follows:
-- INR180 mil. Fund-based working capital limits assigned with
IND B/Stable/IND A4 ratings.
KEY RATING DRIVERS
The ratings factor in RJPL's low revenue because of a small scale
of operations, and weak margins and credit metrics because of
intense competition and market disruptions.
Revenue declined to INR249 million in FY17 (FY16: INR485 million)
on account of a lower number of orders received and executed due
to the demonetization impact and GST implementation. Ind-Ra
expects an improvement in revenue during FY18, in view of the
INR117 million recorded in revenue in 9MFY18. As of February
2018, RJPL had an order book of INR20 million, which will be
executed within 15 days.
Profitability margins fluctuated in the range of 4.8%-7.8% from
FY14-FY17 due to volatility in raw material prices. Net leverage
(total adjusted net debt/operating EBITDAR) deteriorated to 9.0x
in FY17 (FY16: 7.2x) and interest coverage (operating
EBITDA/gross interest expense) to 0.9x (1.2x), mainly due to a
fall in operating profitability.
The ratings reflect RJPL's tight liquidity, with its use of the
fund-based facilities being 99.2% on average for the 12 months
ended December 2017.
The ratings, however, are supported by the company's promoters'
over 30 years of experience in the jewellery business.
RATING SENSITIVITIES
Negative: Deterioration in the scale of operations along with a
decline in the profitability margins leading to deterioration in
the overall credit metrics would be negative for the ratings.
Positive: An improvement in the scale of operations while
maintaining the profitability margins leading to a sustained
improvement the credit metrics would be positive for the ratings.
COMPANY PROFILE
RJPL was established in 1905 as a manufacturing unit. The company
sells gold and jewellery. It has a retail showroom in Bangalore.
SHREE NAVKAR: ICRA Keeps B+ Rating in Not Cooperating Category
--------------------------------------------------------------
ICRA Ratings said the rating for the INR10.0 crore bank
facilities of Shree Navkar Tex Creations (SNTC) continues to
remain in the 'Issuer Not Cooperating' category. The rating is
denoted as "[ICRA] B+ (Stable) ISSUER NOT COOPERATING". 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 best available/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.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Cash 10.0 [ICRA]B+ (Stable) ISSUER NOT
Credit COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Shree Navkar Tex Creations is a proprietorship firm based in
Pali, Rajasthan which is engaged in processing and trading of
grey cloth into woven fabric. The firm deals in 'rubia' fabric
which is mainly used in ladies saree blouses. The firm procures
grey fabric from nearby mandis and mandis in Maharashtra and gets
its processed in Pali where it is based. Pali is known for its
textile industry mainly fabric processing. It is also home of
Maharaja Shree Umaid Mills, one of the large composite cotton
mills of the country. The water and environment in this area is
conducive for such fabric processing. This has led to the
presence of many processors and traders of this cotton fabric.
SHREE SUKHAKARTA: Ind-Ra Cuts Rating on INR3500MM Debentures to D
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shree
Sukhakarta Developers Private Limited's (SSDPL) Long-Term Issuer
Rating to 'IND D' from 'IND BB-'. The Outlook was Stable.
Simultaneously, the agency has migrated the rating to the non-
cooperating category. The rating will now appear as 'IND D
(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating action is:
-- INR3,500 mil. Non-convertible debentures (Long-term) due
on September 2020 downgraded and migrated to Non-Cooperating
Category with IND D (ISSUER NOT COOPERATING) ratings.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information
KEY RATING DRIVERS
The rating action reflects delays in debt servicing by SSDPL in
December 2017, details of which are not available.
The ratings have been migrated to the non-cooperating category as
the issuer did not participate in the surveillance exercise,
despite continuous requests and follow-ups by the agency. Thus,
the rating is based on the best available information. Investors
and other users are advised to take appropriate caution while
using these ratings.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months
could result in a rating upgrade.
COMPANY PROFILE
SSDPL, incorporated in 2013, is an SPV of Ruparel Group for the
execution of project Ariana at Sewri in Mumbai. Ruparel is a
Mumbai-based real estate developer, engaged primarily in the
projects pertaining to slum rehabilitation and redevelopment of
dilapidated buildings.
SIGMA BUILDCON: CARE Assigns B+ Rating to INR5cr LT Loan
------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Sigma
Buildcon (SB), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.00 CARE B+; Stable Assigned
Detailed rationale and key rating drivers
The rating assigned to the bank facilities of SB is primarily
constrained on account of project implementation risk associated
with it, moderate customer advances coupled with low booking
status and salability risk associated for un-booked units. The
rating is, further, constrained on account of cyclicality nature
of the real estate industry.
The rating, however, derives strength from experienced management
in the real estate industry.
The ability of complete to successfully complete its on-going
real estate project without any time and cost overrun along with
the timely booking of un-booked flats are the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Moderate customer advances: The flow of customer advances in the
project is moderate as indicated by receipt of INR5.77crore till
January 20, 2018. Till January 20, 2018, booking advances forms
29.10% of total envisaged customer advances and 48.28% of total
sales value of booked flats. The company has envisaged 55.86%
funding of the project cost through customer advances, hence as
against 52.76% completion of the project cost, it has received
29.10% of total envisaged customer's advances till date.
Hence, the company has risk related to timely receipt of customer
advances.
Project implementation risk coupled with low booking status along
with saleability risk for un-booked units: The project includes
54 residential flats and 32 villas and has started construction
work on project from September 2015. The company has envisaged
total project cost of INR35.50crore to be funded through term
loan of INR5crore, customer advances of INR19.83crore, unsecured
loans from promoters of INR5.34crore and remaining through
partner's own capital. As on January 20, 2018, the firm has
incurred total cost of INR18.73crore towards the project. The
project is envisaged to
be completed by March, 2019 and hence, risk for project
implementation is associated with SB to complete the project
within envisaged time and cost parameters.
Till January 20, 2018, the firm has booked 17 flats and 2 villas
(23.17% of total flats) thereby indicating moderate booking
status in the project. Hence, there will be contingency regarding
the generation of revenue from the un-booked portion which is
76.83% of project.
Subdued outlook for the cyclical real estate sector: The real
estate industry in India is highly fragmented with most of the
real estate developers having a city-specific or region-specific
presence. Real estate investments worldwide have been driven by
one or several themes based on the economic growth. The major
drive in India is expected to come from housing, organized
retailing, hospitality etc. The risks associated with real estate
industry are - cyclical nature of business (linked to economic
cycle), interest rate risk, roll back of income tax benefits etc.
Further, in light of the on-going economic downturn, the sector
is facing issues on many fronts. These include subdued demand,
curtailed funding options, rising costs, restricted supply due to
delays in approvals etc. thereby resulting in stress on cash
flows.
Key Rating Strengths
Experienced partners: Mr Sankalp Parwani has around 8 years of
experience in industry and look after overall affairs of the
firm. He gets support from his father, Mr Suresh Kumar Parwani,
who has more than four decades of experience in civil
construction industry from his company S K B Projects India
Private Limited (SPIPL). The promoters of the firm also promoted
SKB Projects India Private Limited which is engaged in the civil
construction and Shri Kalyanika Promoters & Developers Private
Limited, engaged in the same line of business.
Jabalpur (Madhya Pradesh) based Sigma Buildcon (SB) was formed as
a partnership concern in December 2015 by Mr Sankalp Parwani, Mrs
Shail Parwani, Mrs Saanvi Parwani, Mr Vinod Kumar Raithani, Mr
Tarun Kumar Raithani and Mr Ramesh Kumar Valecha to share profit
& loss sharing in 20:20:25:7.5:7.5:20. Subsequently, in September
2016, Mr Vinod Kumar Raithani, Mr Tarun Kumar Raithani and Mr
Ramesh Kumar Valecha had retired and shared profit and loss by
remaining partners in a ratio of 30:40:30. SB was formed with a
purpose to construct a residential project named 'Shivaarth
Elanza' having saleable area of 20336.40 Sq Mtr., situated at
Beside Dr. Sahani's Bunglow, Tihari Mandla Road, Jabalpur. The
project is registered under Real Estate Regulatory Authority with
RERA Number P-JBP-17-1026. The project was started in September
2015 and will get completed in March 2019.
SIR BIOTECH: Ind-Ra Affirms BB+ Long Term Issuer Rating
-------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Sir Biotech
India Limited's (SBTIL) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable.
The instrument-wise rating actions are:
--INR15 mil. (reduced from INR61.8 mil.) Term loan-1 due on
March 2018 affirmed with IND BB+/Stable rating;
-- INR506.25 mil. (increased from INR350.0 mil.) Term loan-2 due
on March 2028 affirmed with IND BB+/Stable rating;
-- INR568.75 mil. (increased from INR250.0 mil.) Term loan-3 due
on March 2028 affirmed with IND BB+/Stable rating;
-- INR325.0 mil. (increased from INR200.0 mil.) Term loan-4 due
on March 2027 affirmed with IND BB+/Stable rating;
-- INR23 mil. Fund-based facility withdrawn (paid in full); and
-- INR150 mil. Non-fund-based facility affirmed with IND A4+
rating.
KEY RATING DRIVERS
The affirmation reflects SBTIL's continued small scale of
operations and moderate credit metrics due to the company's
increased focus on the hospitality business. The company runs the
trading and real estate businesses and has shut all manufacturing
activities from FY17. It is constructing a 170-room five-star
hotel in Dehradun, funded by a loan of INR800 million. The hotel
is likely to commence commercial operations from FY19. SBTIL has
entered into an operations tie-up for the hotel with the Hyatt
group. Moreover, it has commenced the construction of a 139-room
five-star hotel in Goa that involves a cost of INR1,000 million,
funded by an INR500 million promoter contribution and an INR500
million of bank debt.
Revenue declined to INR370 million in FY17 from INR463 million in
FY16 owing to a decrease in orders and low real estate sales due
to demonetization. SBTIL recorded an interim revenue of INR300
million for 9MFY18 and expects to register INR400 million in
revenue for FY18. As of January 2018, SBTIL had an order book of
INR270 million that will be executed before end-May 2018.
EBITDA interest coverage improved to 12.9x in FY17 from 7.5x in
FY16, driven by an increase in EBITDA margin. SBTIL took the
loans for the hotel projects in 4QFY17; thus, FY17 has less
interest debit. Net leverage deteriorated to 2.6x in FY17 from
2.0x in FY16, as additional debt was taken for the hotel projects
in Goa and Dehradun. Ind-Ra expects net leverage to exceed 3.0x
and EBITDA interest cover to reduce below 3.0x in FYE18 due to
debt-funded capex.
The ratings reflect a moderate liquidity position. Cash flow from
operations declined to INR168 million in FY17 (FY16: INR207
million) because of a stretch in the working capital cycle, which
is elongated, to 679 days from 567 days.
The ratings, however, continue to be supported by the promoter's
over two decades of experience in multiple businesses such as
manufacturing, trading and real estate.
The ratings are also supported by a rise in EBITDA margin to
16.1% in FY17 from 10.1% in FY16, driven by increased revenue
from the high-margin realty segment.
RATING SENSITIVITIES
Negative: A substantial decline in revenue or EBITDA margin and
deterioration in the overall credit metrics on a sustained basis
will lead to a negative rating action.
Positive: A significant increase in revenue or EBITDA margin
leading to an improvement in the overall credit metrics on a
sustained basis could be positive for the ratings.
COMPANY PROFILE
Incorporated in 1995, SBTIL is engaged in the trading of iron
ore, plastic polymer, raw cotton, copper rods, alkaline battery
and metal products, and the processing of peanuts. Moreover, it
is engaged in the hospitality and real estate businesses.
SREE VEERABHADRESHWARA: CARE Reaffirms B+ Rating on INR10cr Loan
----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Sree Veerabhadreshwara Rice & Flour Mill (SVRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.00 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SVRM continues to
be tempered by modest scale of operations, leveraged capital
structure, working capital intensive nature of operations, highly
fragmented and competitive nature of industry and constitution of
entity as a partnership firm. However, the rating continues to
derive benefits from experience of partners in rice industry,
locational advantage, satisfactory debt coverage indicators and
healthy demand outlook for rice. The rating also takes into
account increase in total operating income and improved PBILDT
margin albeit decline in PAT margin in FY17 (refers to period
April 1 to March 31).
Going forward, the ability of the firm to improve its scale of
operations, capital structure and and manage its working capital
requirements efficiently are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations: Despite presence of the firm in the
industry for 7 years the scale of operations remained moderate
marked by total operating income of INR64.37 crore as compared to
peers in the industry.
Deterioration of capital structure: The overall gearing ratio
declined from 6.19x as on March 31, 2016 to 9.79x as on March 31,
2017 due to increase in working capital loans on account closing
date.
Working Capital intensive nature of operations: Paddy in India is
harvested mainly at the end of two major agricultural seasons
Kharif (June to September) and Rabi (November to April). The
millers have to stock enough paddy by the end of the each season
as the price and quality of paddy is better during the harvesting
season. During this season, the firm keeps a stock of 3 months.
The paddy is procured from the farmers generally with a credit
period of 1-30 days. The firm purchases rice from other mills and
makes payment in 1-90 days. The firm makes sales through
intermediaries and receives payment within 15-30 days. The
average utilization of fund based working capital limits of the
firm was utilized (95%) during the last 12 months period
ended December 31, 2017. The firm also availed adhoc limit of
INR0.90 crore in the month of March 2017 for 30 days for
purchase of paddy and rice.
Fragmented nature of industry and low entry barriers: The rice
milling business requires limited quantum of investment in
machinery, however has high working capital needs. Further, rice
milling is not very technology intensive and as a consequence the
industry is highly fragmented with large number of players
operating in the organized and unorganized segments. The high
level of competition has ensured limiting bargaining power, as a
consequence of which rice mills are operating at low to moderate
profitability margins.
Constitution of the entity as a Partnership firm with inherent
risk of withdrawal of capital and limited access to funding:
Constitution as a partnership firm has the inherent risk of
possibility of withdrawal of the partner's capital at the time of
personal contingency which can adversely affect its capital
structure. Furthermore, partnership firms have restricted
access to external borrowings as credit worthiness of the
partners would be key factors affecting credit decision for the
lenders.
Key Rating Strengths
Experience of partners in rice industry: Sree Veerabhadreshwara
Rice & Flour Mill (SVRM) was established by Mr. B.
Mallikarjunappa and Mr. B. Chidanandappa in the year 2011. The
partners have more than 3 decades of experience in rice milling
and trading business.
Locational advantage: The mill is located in Davangere district
of Karnataka state which is one of the major paddy cultivation
areas in this State. This ensures easy raw material access and
smooth supply of raw materials at competitive prices and lower
logistic expenditure.
Healthy demand outlook for rice: Rice is consumed in large
quantity in India which provides favorable opportunity for the
rice millers and thus the demand is expected to remain healthy
over medium to long term, India is the second largest producer of
rice in the world after China and the largest producer and
exporter of basmati rice in the world. With growing consumer
class and increasing disposable incomes, demand for premium rice
products is on the rise in the domestic market. Demand for non-
basmati segment is primarily domestic market driven in India.
Initiatives taken by government to increase paddy acreage and
better monsoon conditions will be the key factors which will
boost the supply of rice to the rice processing units. Rice being
the staple food for almost 65% of the population in India, it has
a stable domestic demand outlook.
Increase in total operating income: The total operating income
(TOI) of the firm has increased from INR54.62 crore in FY16 to
INR64.37 crore in FY17, due to increase in sales at the back of
increase in quality of rice production due to installation of new
machine costing INR1.63 crore imported from England in FY17.
Improved PBILDT margin albeit marginal decline in PAT margin:
During FY17, the firm purchased paddy from the local farmers when
the prices were relatively low and also received trade discount
on purchase of increased quantities of rice for trading. The
PBILDT margin improved from 5.62% in FY16 to 6.84% in FY17 due to
the above mentioned fact. However, the PAT margin of the firm has
marginally declined from 2.94% in FY16 to 2.54% in FY17 due to
increase in depreciation cost at back of installation of new
machinery costing INR1.63 crore and increase in interest cost at
the back of high utilisation of working capital limits.
Sree Veerabhadreshwara Rice Mill (SVRM) is a partnership firm
established in 2011. The partners of the firm are Mr.
Mallikarjunappa and Mr. Chidanandappa. The partners have
experience of over 3 decades in the rice industry. SVRM receives
major orders for rice milling from its associate concern Sree
Veerabhadreshwara drier (SVD). SVRM has an installed capacity of
milling 12 tons of rice per hour at its manufacturing plant
located at Davangere district in Karnataka. The firm also has
wind power business in Sangli (Maharashtra) having a capacity of
0.6 megawatts. It generates power and sells to Maharashtra
Electricity Board.
SREE VENKATESWARA: ICRA Reaffirms B+ Rating on INR3.15cr Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating of [ICRA]B+
assigned to INR3.15 crore cash credit limits of Sree Venkateswara
Motors (India) Private Limited. ICRA has also reaffirmed the
short-term rating of [ICRA]A4 assigned to the INR5.00 crore
inventory funding limits and ratings of [ICRA]B+/[ICRA]A4
assigned to the INR2.85 crore unallocated limits of SVMPL. The
outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash 3.15 [ICRA]B+ (Stable) reaffirmed;
Credit removed from Issuer not
cooperating
Fund Based- 5.00 [ICRA]A4 reaffirmed; removed
Inventory Funding from Issuer not cooperating
Limits
Unallocated Limits 2.85 [ICRA]B+ (Stable)/[ICRA]A4
reaffirmed; removed from
Issuer not cooperating
Rationale
The reaffirmation of ratings is constrained by the small scale of
operations in the automobile dealership business with revenues of
INR38.01 crore for FY2017; thin profitability levels in the
passenger vehicle (PV) dealership business with commissions being
determined by the principal; and intense competition from other
Original Equipment Manufacturers (OEMs). The ratings are also
constrained by leveraged capital structure with gearing of 3.87
times as on March 31, 2017, and moderate coverage indicators for
FY2017; and vulnerability of sales and profits to the cyclicality
inherent in the Indian PV industry. The ratings, however,
positively factor in the long track record of the management in
the car dealership business; significant increase in operating
income by 13% to INR38.01 in FY2017 from INR33.72 crore in FY2016
owing to 14% increase in sales volume on the back of improved
performance of Tata Motors Limited(TML) in PV segment; and
SVMPL's established position as the dealer of TML's passenger
vehicles in the Nizamabad, Kamareddy, Nirmal and Adilabad
districts of Telangana.
Outlook: Stable
The stable outlook reflects ICRA belief that Sree Venkateswara
Motors (India) Private Limited will continue to benefit from its
extensive experience in the automobile dealership business. The
outlook may be revised to 'Positive' if substantial growth in
revenues and liquidity position improves. The outlook may be
revised to 'Negative' if there is decline in operating income,
dip in operating margins and deteriorated capital structure and
coverage metrics and further weakening of liquidity position
Key rating drivers
Credit strengths
Experienced promoters in the automobile dealership business: The
promoters have more than 3 decades of experience in the
dealership business with the company receiving passenger car
dealership of TML in 2008. The management is also involved in two
wheelers dealership of Hero Motors Limited through group company
Venkateswara Enterprises.
Established position as authorised dealer of TML PV in Telangana:
SVMPL is an established dealer of TML passenger vehicles
operating through a single Sales-Spares-Service (3S) facility
along with five sale points in the Nizamabad, Kamareddy, Nirmal
and Adilabad districts of Telangana.
Improved performance of TML with launch of new models supported
revenue growth: TML has seen increase in sales and improved its
market share to ~5.66% in FY2017 in the passenger vehicles space
becoming the fourth largest player. The growth continued in
9MFY2018 with growth in sales of TML by 14.7% during 9MFY2018
mainly on account of launch of four new models in FY2017 and
9MFY2018. SVMPL has witnessed an increase in sales volumes from
532 vehicles in FY2016 to 607 vehicles in FY2017 and further to
684 vehicles in 9MFY2018.
Credit weaknesses
Moderate scale of operations: The operating income of the company
is moderate at INR38.01 crore for FY2017 as the sales are
geographically concentrated in four districts of Telangana.
Leveraged capital structure and moderate coverage indicators: The
gearing is high at 3.87 times as on March 31, 2017 on account of
high working capital borrowings and coverage indicators are
moderate with OPBDITA/Interest of 1.33 times and NCA/TD of 3% for
FY2017.
Thin margins and low bargaining power: The margins on vehicles,
spares, service and accessories are thin and mostly controlled by
principal TML.
High competition: SVMPL faces competition amongst other dealers
in vehicles of the other OEMs.
Sree Venkateswara Motors (India) Pvt. Ltd. was incorporated in
April 2008 by Mr. N. Mahipal Reddy and Ms. N. Jayaprada Reddy.
SVMPL is the sole authorised dealer of Tata Motors Limited (TML)
in Nizambad, Kamareddy and Adilabad region. The commercial
operations of TML dealership began in September 2008. The company
currently operates through a single Sales-Spares-Service (3S)
facility with five sale points in Nizamabad, Kamareddy, Nirmal
and Adilabad districts.
SUNEJA SONS: Ind-Ra Affirms 'BB' LT Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Suneja Sons'
(SUNEJA) Long-Term Issuer Rating at 'IND BB'. The Outlook is
Stable. The instrument-wise rating actions is:
-- INR197.5 mil. Fund-based working capital limit affirmed with
IND BB/Stable/IND A4+ ratings.
KEY RATING DRIVERS
The affirmation reflects SUNEJA's continued small scale of
operations, and moderate margins and credit metrics owing to the
trading nature of business. Revenue declined to INR1,130.19
million in FY17 (FY16: INR1,227.83 million) on account of the
demonetization impact. The firm derives more than 70% of its
revenue from distribution of ITC Limited's products in northern
India. However, interest coverage (operating EBITDA/gross
interest expense) improved to 1.62x in FY17 (FY16: 1.26x) and
total leverage (total adjusted debt/operating EBITDAR) to 3.96x
(4.48x) owing to an improvement in operating margins to 2.44% in
FY17 (1.56%).
The ratings also factor in the risk associated with the
partnership structure of the firm.
However, the ratings are supported by the firm's comfortable
liquidity position as reflected by around 10% of average maximum
utilization of the fund-based working capital limits during the
12 months ended January 2017.
The ratings are also supported by partners' experience of more
than three decades in the paper trading business.
RATING SENSITIVITIES
Negative: A decline in the EBITDA margins leading to
deterioration in the credit metrics could be negative for the
ratings.
Positive: Diversification in product portfolio leading to a
substantial improvement in revenue and credit metrics could lead
to a positive rating action.
COMPANY PROFILE
Established in 1971, SUNEJA is engaged in the trading of various
varieties of paper. The firm is also an authorized distributor
for ITC's paperboards and specialty papers division since 2009.
SUNGOLD PROCESSED: ICRA Lowers Rating on INR18cr ST Loan to D
-------------------------------------------------------------
ICRA Ratings has downgraded the short-term rating from [ICRA]A4
to [ICRA]D assigned to the INR24.00-crore short-term bank
facilities of Sungold Processed Foods.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Short-term-Fund-
Based 18.00 [ICRA]D; revised from [ICRA]A4
Short-term-Non
fund based 6.00 [ICRA]D; revised from [ICRA]A4
Rationale
The rating revision takes into account the recent delays in
servicing of debt obligations, owing to the stretched liquidity
position of the firm.
Key rating drivers Credit strengths
Extensive experience of the promoter: The managing partner of the
firm, Mr. Sashidharan Alanghat, has been in the food processing
industry since 1983. The firm benefits from the rich experience
of the promoter in the industry.
Strategic location of manufacturing facility: The firm's
manufacturing facility is strategically located in Chittoor
district of Andhra Pradesh. The proximity of the plant to major
mango-production belt in South India ensures availability of
better quality mangoes.
Credit challenges
Intense competition results in limited pricing flexibility: As a
result of the fragmented nature of fruit pulp industry
characterised by existence of large number of players, the firm
has limited pricing flexibility.
Vulnerability of margins to foreign exchange fluctuations: With
the Group deriving a major portion of its revenues from exports,
the margins are susceptible to fluctuations in foreign exchange
rates.
Risks associated with the firm's partnership nature: Given the
partnership nature of the firm, any substantial cash withdrawals
by the partners is likely to have an adverse impact on the
capital structure.
Sungold Processed Foods (SPF) was established as a partnership
firm in 2006 by Mr. Sashidharan Alanghat along with his wife Ms.
Geetha Sashidharan and his son Mr. Abhishek Sashidharan as
partners. The manufacturing facility of SPF is located at
Chittoor in Andhra Pradesh with a processing capacity of 120
MT/day. The firm is primarily engaged in manufacturing of fruit
pulp on a job-work basis. SPF has two group entities: Tropic
Fruit Products (TFP), a partnership firm established in 2006, is
into similar line of operations. TFP also has its manufacturing
plant located in Chittoor with a capacity of 120 MT/day. The
other group entity is Sungold Tropic Fruit Products Private
Limited (STFPPL), incorporated in 2011 for exports of fruit pulp
with Middle Eastern countries including Saudi Arabia and Kuwait
as major export destinations. The fruit pulp requirements of the
STFPPL were met through the two job work units in the Group, SPF
and TFP. From May 2017 onwards, the Group started exporting
processed pulp through SPF.
SURA LEATHERS: ICRA Assigns D Rating to INR8.50cr ST LOC
--------------------------------------------------------
ICRA Ratings has assigned the long-term/short-term rating of
[ICRA]D for the INR18.85-crore fund-based/non-fund based
facilities of Sura Leathers Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund
Based-Cash Credit 6.50 [ICRA]D; Assigned
Short-term-Fund
Based-Standby Line
of Credit 1.50 [ICRA]D; Assigned
Short-term-Fund
Based-Foreign
Documentary Bill
Purchase 1.50 [ICRA]D; Assigned
Short-term-Non
Fund based-
Letter of Credit 8.50 [ICRA]D; Assigned
Long-term/Short-
term Unallocated 0.85 [ICRA]D; Assigned
Rationale
The assigned rating takes into account the ongoing delays in
servicing debt obligations by the company owing to strained
liquidity position. The company has delayed the interest payments
and there has been instance of devolvement of letter of credit
owing to the delay in sanctioning of the term-loans as required
by the company for the capital expenditure towards setting up a
new manufacturing unit. The liquidity remains stretched due to
high working capital requirement, high interest cost and
impending repayment obligations arising from debt-funded capex
undertaken in recent past. The delay in the sanctioning of the
term loans has resulted in over-utilisation of working capital
facilities and increased reliance on funding support from
promoters.
Key rating drivers
Credit strengths
Long track record of operations of the company and the promoters
in leather-manufacturing business: The company is engaged in the
business of leather tanning for over 25 years. The promoters of
the company also run Supreme Overseas Exports India Private
Limited, which is involved in leather jackets manufacturing and
export for more than four decades.
Credit weaknesses
Deteriorating scale of operations: The company reported y-o-y de-
growth in operating income from FY2015 to FY2017. The operating
income declined from INR70.66 crore in FY2014 to INR38.23 crore
in FY2017, owing to significant drop in revenues from the export
markets. Weak liquidity position has also restricted the ability
of the company to execute additional orders.
Stretched liquidity position: There has been instances of delays
in the interest payments and over-utilisation of fund based
working-capital limits for the past few months, which has been
confirmed by the lender. Increase in working capital requirements
coupled with the debt-funded capex during FY2016, has resulted in
high interest cost and repayment obligations, which has strained
the cash flow position of the company. There also has been
devolvement of letter of credit owing to delay in sanctioning of
the term-loans as required by the company for the capital
expenditure incurred.
Leveraged capital structure: Capital structure of the company is
stretched with a gearing of 2.96 times as on March 31, 2017.
However, the unsecured loans from directors and related parties
of ~INR8.34 crore (~35% of total debt) provides comfort to the
capital structure of the company to certain extent.
High competition in the industry limits the bargaining power of
the exporters; slowdown in European markets impact demand outlook
for leather exports: 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. Also, in the last
two fiscals, the leather exports from India showed continued
negative growth of 10% in FY2016 and 3% in FY2017 owing to
slowdown in demand from the European countries.
Incorporated in 1992, Sura Leathers Private Limited is involved
in the business of leather tanning and runs a tannery unit
located at Ambur, Vellor District of Tamil Nadu, with a
production capacity of 20 million sq. ft. per annum. The company
processes raw-leather into usable finished leather for
manufacturing final leather products such as jackets, hand bags,
shoes, belts upholstery etc. The company also started
manufacturing leather shoes, mainly for exports, from 2007.
However, the same has been discontinued from FY2018, owing to
subdued demand. The company has its own effluent plant for waste
treatment. The promoter of the company also owns Supreme Overseas
Exports Private Limited which is involved in manufacturing and
exporting of leather jackets, from its manufacturing unit in
Bangalore. The company undertakes outsourcing work on job-work
basis for Supreme Overseas Exports Private Limited.
In FY2017, the company reported a net profit of INR0.38 crore on
an operating income of INR38.23 crore, as compared to a net
profit of INR0.18 crore on an operating income of INR54.35 crore
in the previous year.
TAPTI AGRO: ICRA Keeps B Rating in Not Cooperating Category
-----------------------------------------------------------
ICRA Ratings said the rating for the INR10.0 crore bank facility
of Tapti Agro Industries (TAI) continues to remain in the 'Issuer
Not Cooperating' category. The rating is denoted as "[ICRA]B
(Stable) ISSUER NOT COOPERATING"
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Proposed Term 14.50 [ICRA]B (Stable) ISSUER NOT
Loan COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the firm so as to
monitor its performance, but despite repeated requests by ICRA,
the firm's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/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
firm.
M/s Tapti Agro Industires (TAI) incorporated in 2015 is setting
up a Khandsari (semi-white centrifugal sugar) manufacturing
facility having crushing capacity of 1,500 Tonnes of Cane per Day
(TCD) at Betul District of Madhya Pradesh. The firm plans to
commence the operations of the facility by December 2016.
The firm is promoted by Mr. Rahul Kumar Sao and Mr. Dharmveer
Juneja who have significant experience in the sugar industry
through their association with other firms which are also engaged
in sugar manufacturing.
TRIVENI WIRES: CARE Assigns B+ Rating to INR26.60cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Triveni Wires Private Limited (TWPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facility 26.60 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of TWPL is constrained
due to project stabilization risk, susceptibility of margins to
fluctuation in raw material prices and presence in fragmented
industry. The rating is further constrained on account the modest
scale of operations, low profitability, leveraged capital
structure and weak debt coverage indicators.
The rating however, derives strength from the experience of the
promoters in metal coating and wire drawing industry,
diversified clientele, and use of niche patented technology for
manufacturing.
Ability of the company to increase the scale of operation,
profitability and solvency position, while efficiently managing
working capital requirements are the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Project stabilisation risk: The company has set up a
manufacturing unit during FY18 which has enhanced the installed
capacity from 12000 MTPA to 36000 MTPA. The stabilization of the
cap-ex and commercialization of the same will be critical for the
overall financial risk profile of the company.
Susceptibility of margins to fluctuation in raw material prices:
The major raw materials required by the company are zinc and
steel, prices of which are highly volatile in nature and are
dependent on global scenario. Any adverse movement in the prices
will directly impact the profitability of the company.
Presence in highly fragmented industry: The company operates in
steel industry which is highly fragmented in nature due to the
presence of large number of unorganized players. Fragmented
nature of industry results in intense competition and limits the
bargaining of the company.
Modest scale of operations with low profitability: The total
operating income (TOI) of the company grew at a CARG of
approximately 19% over the last three years ended FY17. Further,
the tangible net-worth of the company stood at INR10.53 crore as
on March 31, 2017. Despite the growth, scale of operations
remains small with low capitalization.
Leveraged capital structure and weak debt coverage indicators:
The capital structure of the entity remained leveraged with an
overall gearing of 2.65x as on March 31, 2017. Furthermore, owing
to high gearing level and low profitability the debt coverage
indicators remained weak.
Key Rating Strengths
Experienced promoters: The promoters have an average experience
of around 3 decades in the industry which has helped them in
gaining
adequate acumen about the business and might aid in the smooth
operations.
Diversified customer base: During the year the company was able
to receive repetitive orders from its customer base and also add
new customers. The top five customers contributed around 17% to
the income from operations in FY17. Furthermore, the company is
dealing with these customers from the past 3-4 years.
Modest working capital cycle, despite capital intensive nature of
operations: The operating cycle of the company stood comfortable
in the range of 20-30 days as at the end of the last three years.
The company offers a credit period of around 30 days to its
customers and receives the same from the suppliers.
Niche patented technology used for manufacturing: The company has
developed and patented the technology for coating vide
registration no 202418. The technology is known as Electro Plasma
Technology (EPT) to clean and coat metals which uses electricity
and benign electrolytes for cleaning thereby eliminating the need
for strong acids.
Incorporated in the year 1981, TWPL is engaged in the
manufacturing of galvanized iron wires, barbed wires, and chain
links amongst others. The manufacturing facility of the company
will be located at Butibori, Nagpur with an installed capacity to
manufacture 36000 MTPA. TWPL has two associate concerns namely
Tensile Wires (India) Private Limited (TWIPL) and Plasma Metal
Processing Private Limited (proposed to be engaged in
manufacturing and cleaning and coating of re-bars, wire rods and
wires).
USHA MARTIN: Ind-Ra Maintains 'BB+' Issuer Rating on RWN
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Usha Martin
Limited's (UML) Long-Term Issuer Rating of 'IND BB+' on Rating
Watch Negative (RWN). The instrument-wise rating actions are:
-- INR33,392.5 mil. Term loan due on February 2018 to October
2029 maintained on Rating Watch Negative (RWN) with IND
BB+/RWN rating;
-- INR6,000 mil. Fund-based limits Maintained on Rating Watch
Negative (RWN) with IND BB+/RWN rating; and
-- INR1,500 mil. Non-fund-based limits Maintained on Rating
Watch Negative (RWN) with IND BB+/RWN rating.
KEY RATING DRIVERS
Ind-Ra has maintained UML's ratings on RWN on the back of delays
in finalization of sale transaction of its wire and wire rope
business, including subsidiaries and joint ventures, for which it
has appointed a consultant. According to management, it could
take four-to-five months for the transaction to finalize. Ind-Ra
believes failure to conclude the transaction by end-June 2018 may
lead to a stress on the company's liquidity as it has repayment
of around INR850 million due in July 2018. However, if the
transaction is finalized and a majority of the sale proceeds are
used for retirement of debt, it may ease UML's liquidity
position, depending on the final sale consideration.
Further, as per management, the improvement in prices of
intermediary steel products such as sponge iron, pellets and
rolled products, the company is likely to meet its interest
expense from EBITDA in the near term. Ind-Ra expects UML to
benefit from increase in prices, driven by a surge in raw
material prices (iron ore and coking coal) as it has captive iron
ore mines, and will not be impacted by the increase in iron ore
price. The agency expects the company's liquidity to improve
marginally over the next three-to-four months, considering the
improved market scenario for integrated steel players. Also, UML
has low repayment obligations of around INR203.8 million until
May 2018.
The RWN indicates that the ratings may be downgraded or affirmed
upon resolution.
Ind-Ra will resolve the rating watch as and when there is clarity
on the sale of wire rope division and use of proceeds, which will
be crucial in deciding UML's future prospects.
RATING SENSITIVITIES
Ind-Ra is likely to resolve the RWN once there is clarity on the
likely impact of the asset sale transaction on UML's liquidity
and credit profile. Ind-Ra will review the ratings in June 2018.
COMPANY PROFILE
Founded by Kolkata-based Jhawar family, UML commenced operations
in 1960. It is an integrated steel producer with captive iron ore
mines in Jharkhand.
YOGESH CONSTRUCTION: ICRA Moves B+ Rating to Not Cooperating Cat.
-----------------------------------------------------------------
ICRA Ratings said the ratings of INR9.00 crore bank facilities of
Yogesh Construction has been moved to 'Issuer Not Cooperating'
category. The ratings are now denoted as "[ICRA]B+ (Stable) / A4;
ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based-Cash 4.00 [ICRA]B+ (Stable); ISSUER NOT
Credit COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
Non-fund based- 5.00 [ICRA]A4; ISSUER NOT
Bank Guarantee COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity 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 best
available/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.
The Mumbai-based Yogesh Construction was established in 2007 by
Mr. Yogesh Shah and his father, Mr. Pravin Shah, as a family
partnership firm to execute civil construction work for the
Municipal Corporation of Greater Mumbai (MCGM). Prior to 2007, it
was engaged in similar operations through a proprietorship firm
of Mr. Pravin Shah. Yogesh Construction primarily undertakes
Government contracts for drainage, sewerage construction and road
repair work for MCGM and Surat Municipal Corporation (SMC). The
firm is registered as 'AA' grade contractor with MCGM. The firm
also receives operational synergies through a group company,
Ridhi Enterprises, which is also engaged in executing civil
contract works for MCGM.
ZIGMA LAMINATES: CARE Cuts Rating on INR8.50cr LT Loan to B-
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Zigma Laminates & Systems Private Limited (ZLPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.50 CARE B-; Negative
Facilities Revised from CARE B; Stable
Short-term Bank
Facilities 3.50 CARE A4 Reaffirmed
Rating Rationale
The revision in the ratings assigned to the bank facilities of
ZLPL is mainly on account significant decline in scale of
operations with operating loss incurred in FY17 (refers to
April 1, 2016 to March 31, 2017), sharp deterioration in capital
structure, debt coverage indicators and stretched liquidity
position.
Further, ratings continue to be constrained by small scale of
operations with low networth base, fluctuating profit margins
with losses incurred during past two years ended FY17, leveraged
capital structure & weak debt coverage indicators and stretched
liquidity position. The ratings further continue to be
constrained by customer & supplier concentration risk and ZLPL's
presence in a highly competitive and fragmented industry.
However, the ratings continue to derive strength from the
experience of the promoters and operational synergies with
associates companies.
The ability of ZLPL to increase the overall scale of operations
and improvement in the profitability and capital structure
coupled with efficient management of working capital requirement
are the key rating sensitivities.
Outlook: Negative
The outlook is 'Negative' on account of significant deterioration
in capital structure, debt coverage indicators, stretched
liquidity position due to sharp decline in total operating income
with operating loss incurred in FY17. The outlook may be revised
to 'Stable' if ZLPL is able to scale up its operations, earn
profits and improve its financial parameters.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small and declining in scale of operations: During FY17, the
scale of operations of ZLPL has declined by 41.06% owing to less
demand in the real estate and soft luggage industry which was
further impacted by demonetization undertaken by Govt. of India.
Moreover, on account of net loss incurred in FY17, the tangible
networth has significantly eroded as on March 31, 2017 with
further limits the financial flexibilities of the company.
Decline in profitability margins with loss incurred at PBILDT
level: On account of significant decline in scale of operations,
the company suffered losses at PBILDT and PAT level to the tune
of INR1.58 crore and INR4.29 crore in FY17 respectively.
Furthermore, the company had company has continuously incurred
net loss during past three years ended FY17.
Stretched liquidity position: The liquidity position of the
company has stretched during FY17 on account of significant
portion blocked in inventory and debtors. During FY17, the
inventory days increased to 241 days (as compared to 165 days in
FY16) due to lower off take in sales resulted in high inventory
holding. The collection period also deteriorated significantly
from 66 days to 131 days due to delayed payment from its
customers which primarily consists receivables from group
entities. On account of the same creditor days have stretched
significantly to 329 days in FY17 as against 133 days in FY16.
Leveraged capital structure and weak debt coverage indicators:
The overall capital structure of the company significantly
deteriorated on account of significant decline in the networth
owing to losses incurred in FY17 along with higher utilization of
its working capital limits during FY17 to fund the working
capital requirements of the company. Furthermore, debt coverage
indicators have also deteriorated significantly on account of the
operating losses incurred in FY17.
Customer and supplier concentration risk: During FY17, the
company earned 95% of its revenue from its one major customer
Zenith Metaplast Pvt. Ltd. (ZMPL) [vis-a-vis 96% in FY16] which
is the group company of ZLPL.
Foreign exchange fluctuation risk: The company exposed to foreign
exchange fluctuation risk as it about 23% of its raw material
requirements meet through imports. Moreover, the company does not
undertake any hedging for its un-hedged foreign currency
exposure, nor do its business operations serve a natural hedge.
Key Rating Strengths
Experience of the promoters in the industry: The promoters of the
company Mr. C G Ramesh and Mr Venu Gopal possesses significant
experience of around three decades in the industry through their
entities Zenith Metaplast Pvt Ltd. and Zigma Modular Systems Pvt
Ltd. which are into manufacturing of modular furniture, soft
luggage, writing instruments and electrical components.
Operational synergies with related entities: ZLPL continues to
sell around 95% of its products to its group company viz.
Zenith Metaplast Pvt. Ltd. which has a reputed clientele base
comprising of major OEMs in different sectors like furniture,
luggage, writing instruments and electrical components. The
clientele base of ZMPL consists of companies like Samsonite
South Asia Private Limited, VIP Industries, Godrej, Future Group
and Kores India Limited. ZLPL acts as the backward
integration for the group and therefore derives operational
synergies from group companies.
Zigma Laminates & Systems Private Limited (ZLPL) is engaged in
the manufacturing of particle board, foil lamination board and
kitchen trollies which are used in the manufacturing of the
modular furniture. The company primarily supplies its products to
its associate entities Zenith Metaplast Private Limited and Zigma
Modular Private Limited engaged in manufacturing of modular
furniture. The company had started its commercial operation from
April 2011 and has its sole manufacturing unit is located in
Nasik (Maharashtra).
=================
I N D O N E S I A
=================
SAKA ENERGI: Fitch Affirms BB+ IDR; Changes Outlook to Stable
-------------------------------------------------------------
Fitch Ratings has revised the Outlook on Indonesia-based PT Saka
Energi Indonesia's Long-Term Issuer Default Ratings (IDR) to
Stable from Positive, and affirmed the IDR at 'BB+'. The agency
has also affirmed Saka's USD625 million 4.45% senior notes due
2024 at 'BB+'.
The Outlook revision follows Fitch now linking Saka's ratings to
its parent - PT Perusahaan Gas Negara Tbk's (PGN, BBB-/Stable)
standalone credit profile of 'BBB-' rather than PGN's IDR. Fitch
believe that Saka's linkages with PGN continue to remain strong
under Fitch's Parent and Subsidiary Rating Linkage criteria. The
linkage arises largely from Saka's mandate to improve the
vertical integration of PGN, together with the substantial
financial assistance provided to Saka by PGN to expand its scale
since its inception in 2011. The one-notch downward differential
in Saka's ratings to PGN's standalone credit profile reflects its
small size of operations, currently limited contribution to PGN's
revenues, and minor share of PGN's gas volume requirements.
The Indonesian government plans to transfer PGN's shareholding to
PT Pertamina (Presero) (BBB/Stable) to consolidate state-owned
enterprise holdings, with Pertamina identified as the holding
company for the oil and gas sector. Fitch do not anticipate any
immediate change to the linkages between PGN and Saka from these
proposed changes. However, any further restructuring involving
PGN and Saka, which could weaken linkages between the two
entities, will be treated as event risk.
KEY RATING DRIVERS
Strong Linkages with Parent: Fitch uses a top-down approach in
line with Fitch Parent Subsidiary Linkage Criteria, with Saka
notched down by one notch from PGN's standalone credit profile of
'BBB-'. Saka is PGN's largest subsidiary and the only one engaged
in the upstream oil and gas (exploration and production)
business. Fitch believe Saka plays a key role in PGN's vertical
integration strategy. Saka has also tried to acquire and develop
oil and gas fields closer to PGN's infrastructure to improve
operational integration. Fitch expects increasing integration
between to boost Saka's contribution to PGN's profit over the
medium term.
Small-but-Diversified Operations: Saka's small operating scale
reflects its short existence. Proven reserves of around 66
million barrels of oil equivalent (mmboe) are small, as are
proven and probable reserves of around 92 mmboe as of end-
September 2017, and production of 53.2 million barrels of oil
equivalent per day (mmboepd) during the nine months ending
September 2017 (9M17) (9M16: 37.9 mmboepd); similar to most 'B'
category oil and gas peers. However, the operations are
diversified across Indonesia with 10 concessions and one asset in
the US.
The company has expanded its reserves and production largely
through acquisitions in the past three years. Fitch expect the
company to continue expanding organically and inorganically,
although its reserves and production size are likely to remain
small and in line with other 'B' rated upstream peers over the
medium term.
Robust Cost Structure: The cost of operations has improved
significantly, supported by its rising production levels from
expanding operations, better operational efficiencies and cost
optimisation. Production costs remained at USD 8.4/barrel (bbl)
during 9M17 (9M16: USD8.3/bbl). Fitch expect Saka's production
costs to remain competitive and to benefit from greater scale in
the near- to medium-term.
Lower Price Volatility: Saka's domestic gas output, barring one
field, is subject to fixed prices under the concession terms,
which include certain escalation terms over the contract's life.
Overall, broadly 45% of Saka's 2016 oil and gas output on a boe
basis was subject to fixed pricing, significantly cutting margin
volatility from global oil and gas price changes against many
peers.
Improving Financial Profile: Fitch expects the financial profile
to be driven by higher operating profit. Fitch see rising
production, a gradual oil and gas price recovery and competitive
production costs to expand EBITDA and operational cash flow. This
is likely to improve FFO net leverage to below 3.5 by 2018 (2016:
10.0x), and further to around 2x by 2019. Fitch see FCF as
positive, based on the planned organic growth profile. However,
Fitch believe Saka may continue to seek M&A opportunities that
will slow its deleveraging profile. Fitch expect greater
financial independence from PGN as it has achieved scale, but
continue to believe that PGN will still provide assistance for
any large M&A in the medium term.
'B+' Standalone Profile: Saka's small scale, when balanced
against its diversification, lower price volatility and strong
liquidity, places its standalone profile at 'B+'. Any positive
movement in this standalone assessment will be predicated on Saka
substantially increasing its scale while maintaining a financial
profile appropriate for the 'BB' category.
DERIVATION SUMMARY
Saka's ratings are notched down from the standalone credit
profile of its parent, PGN (BBB-/Stable proposed). Fitch assesses
PGN's standalone credit profile at 'BBB-'. The ratings are driven
by Saka's strong operating and strategic linkages with PGN, and
result in a top-down approach - in line with Fitch's Parent
Subsidiary Linkage Criteria. Saka provides vertical integration
for PGN's transmission and distribution operations by providing
and improving the supply of gas. PGN has extensively supported
Saka since its creation in 2011, including most of its funding
requirements. The notch-down reflects Saka's small size of
operations, which result in a limited portion of PGN's gas volume
requirement being addressed by Saka. This is set to improve with
its organic and probable inorganic expansion over the medium
term.
Fitch expects Saka will be required to finance its operations
more independently, although PGN is still likely to provide
financial support for larger mergers and acquisitions. There are
some legal linkages arising from cross-default language in PGN's
debt that involve Saka, but there are no guarantees from PGN.
Saka's standalone rating of 'B+' reflects its stable gas prices,
competitive cost position, growing scale, healthy liquidity and
improving financial profile compared with peers such as Kosmos
Energy Ltd. (B/Positive) and Kuwait Energy Plc (CCC). Fitch
Positive Outlook on Kosmos reflects its improving diversification
and rising oil & gas production. PT Medco Energi Internasional
Tbk's (Medco, B/Stable) business risk profile is similar to that
of Saka. Medco has a larger production base and proved reserves,
longer reserve life, and a similar mix of operating cash flows
stemming from fixed-price gas contracts compared with Saka.
However, Fitch expect Saka's production base and reserves to
catch up with Medco's in the next two years. Medco's leverage is
higher than that of Saka, resulting in Saka's standalone rating
being one notch higher than Medco.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Fitch Rating Case for the Issuer
- Oil price of USD52.5/bbl and USD55/bbl for 2018 and 2019
respectively and USD57.5/bbl thereafter. Natural gas prices of
USD3 million British thermal units (mmbtu) in 2018 and 2019
and a long-term price of USD3.3/mmbtu, in line with Fitch's
oil price deck.
- Oil & gas production to fall marginally in 2018 due to
expiring PSCs. Oil & gas production volumes to register 5%
average growth over the following three years
- Extension of production sharing contracts for Sanga-Sanga in
2018, although at a lower share.
- No major acquisitions in the medium term.
- Capex of around USD250 million - USD300 million per annum over
the next three years.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Further strengthening of linkages with PGN, particularly legal
linkages that are sustainable in the long term.
- Fitch do not expect any improvement in PGN's standalone credit
profile, while an improvement in PGN's standalone credit
profile to 'BBB' will result in a upgrade provided that Saka's
linkages with PGN remain intact.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Any significant weakening of linkages with PGN.
- Any weakening in PGN's standalone credit profile provided
there are no changes in linkages between Saka and PGN.
LIQUIDITY
Comfortable Liquidity: Fitch expect no debt maturities in the
next three years. Furthermore, the company has access to around
USD200 million in undrawn bank facilities which along with
improving operating cash flows which should be sufficient to meet
its planned investments. The company has a policy of maintaining
cash of USD100 million at all times, and has strong access to
domestic banks - driven by its linkages with its parent.
TOBA BARA: Fitch Assigns B- Long-Term IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has assigned Indonesia-based PT Toba Bara Sejahtra
Tbk (TOBA) a 'B-' Long-Term Issuer Default Rating (IDR). The
Outlook is Stable. The agency has also assigned an expected
rating of 'B-(EXP)' and a Recovery Rating of 'RR4' to the
proposed USD250 million notes to be issued by the coal mining
company.
The notes are rated at the same level as TOBA's IDR as they
constitute direct, unsubordinated and unsecured obligations of
the company. The final rating on the notes is contingent upon the
receipt of final documents conforming to information already
received. Part of the proceeds will be used to fund potential
acquisitions and equity contributions to its power projects. The
notes will be guaranteed by two of TOBA's 99.99%-owned
subsidiaries, PT Indomining and PT Trisena Mineral Utama. TOBA's
shares in its largest subsidiary, PT Adimitra Baratama Nusantara
(ABN) will be pledged to the noteholders; however ABN will not be
guaranteeing the notes.
TOBA's ratings reflect its relatively small scale and the
declining reserve base of its coal operations, risks related to
its investment programme and financial profile.
KEY RATING DRIVERS
Small Scale of Coal Operations: TOBA's production and EBITDA are
modest compared with Fitch-rated coal mining peers. TOBA has
reduced its operating costs during coal price downturns in the
past. However, Fitch expects EBITDA per tonne from existing coal
operations to decrease from 2020 due to the expected weakening of
its reserve profile As a result, the sensitivity of TOBA's EBITDA
to coal prices will be higher compared with other Fitch-rated
coal mining peers.
TOBA's profitability per tonne is also likely to weaken, although
it is currently healthy compared with Fitch-rated coal peers.
Fitch factors in the benefit of contracted price visibility for
over 60% of TOBA's coal production in its 2018 forecasts and
assumes the price for Newcastle 6,000 kcal coal at USD72/tonne in
2018 and USD67/tonne thereafter.
Multiple Planned Investments: TOBA plans to spend over USD200
million on a coal mine and power generation assets, which would
be operational or brownfield assets. Most of these investments
are to be funded via the proposed note issue, so TOBA's interest
coverage is likely to remain low until 2020, though coverage will
still be at a level commensurate with the rating. Fitch ratings
case forecasts assume TOBA will be able to raise USD250 million
via the note issue, which will be invested in the proposed
investments. Fitch subject the forecast earnings of these
investments provided by TOBA's management to a sizeable discount
because of uncertainties over their execution.
Significant Minority, Dividend Leakage: ABN is 51% owned by TOBA
and accounted for over 75% of TOBA's consolidated EBITDA in 2017,
excluding the potential earnings of its new investments. Fitch
expect ABN to maximise its dividend payouts as it does not have
material capex requirements or debt. ABN also has an established
track record of high dividend payouts. Fitch adjusts for the
dividend to minority shareholders in Fitch calculations of EBITDA
and funds from operations (FFO).
Credit Metrics to Weaken: Fitch expect FFO interest coverage to
remain under 2x until 2020, after which it should improve if its
two greenfield power projects, PT Gorantalo Listrik Persada (GLP)
and PT Minahasa Cahaya Lestari (MCL), start to generate earnings
as expected. Fitch expects TOBA's FFO adjusted leverage to be
over 9x from 2018 to 2020, due to the largely debt-funded
acquisitions as well as its share of debt taken on for its power
projects.
Power Projects, Largely Neutral: GLP is currently under
construction and is largely funded through project financing.
Fitch view the execution risks of the power projects as
relatively well-managed given the quality of the engineering,
procurement and construction (EPC) contractor, the robust terms
of the EPC contract, the nature of the project-funding debt, and
the long-term offtake agreement with PT Perusahaan Listrik Negara
(Persero) (BBB/Stable).
The project funding debt is guaranteed by TOBA. The principal
payments for the loans start a year after commercial operations
and 80% of interest due on the loans till operations commence is
rolled back as a loan. Fitch expect the nature of the EPC
contractor, EPC contract and project funding terms for MCL to be
similar to GLP.
Cyclical Coal Industry Exposure: TOBA's earnings are vulnerable
to the cycles of the thermal coal industry, although the planned
investments in power generation are part of the company's
strategy to diversify into the more stable power business.
Thermal coal prices are now at their highest in the past five
years (Newcastle 6,000 kcal at over USD100/tonne). Fitch expects
production to rise in response to higher prices, which should
lead to price declines over the medium term and is reflected in
Fitch price assumptions. Fitch also expect Asian thermal coal
prices to be highly dependent on demand from the region,
particularly China, and policies relating to the coal sector.
DERIVATION SUMMARY
TOBA's scale in terms of production, EBITDA and reserves is
smaller than those of PT Indika Energy Tbk (B+/Positive), Golden
Energy and Resources Limited (B+/Positive) and Geo Energy
Resources Limited (B+/Stable). TOBA's profitability per tonne is
healthier than those of Indika, Geo Energy or Golden Energy,
although this will weaken with a decline in TOBA's reserves over
the coming few years. TOBA's credit metrics will also be
materially weaker than those of its coal mining peers because its
investments in power projects will be largely debt funded and it
has plans for multiple investments.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Fitch Rating Case for the Issuer
- Index coal prices as per Fitch's mid-cycle commodity price
assumptions, adjusted for differences in calorific value
(average Newcastle 6,000kcal FOB: USD72/tonne in 2018 and
USD67/tonne thereafter).
- TOBA has sold about 3.3 million tonnes of its expected 5.4
million tonne output on contracted fixed prices for 2018. The
prices that have been locked in correspond to a Newcastle coal
price of about USD84-85/tonne. This has been factored in Fitch
forecasts.
- Coal production volumes of 5 million tonnes in 2017, 5.3
million tonnes in 2018, 6.0 million tonnes in 2019 and 5.6
million tonnes in 2020.
- EBITDA per tonne of USD17.4 in 2017, which will rise to USD21
in 2018 as 61% of 2018 production are fixed through contracts.
EBITDA per tonne to gradually decline from 2019 due to an
expected decline in reserves.
- Capex of USD381 million to be incurred on the two power
projects until 2020; about 85% of which will be funded by
project debt.
- Capex on existing coal operations of less than USD10 million
per year.
- USD250 million to be raised via a note issue, which will be
invested in coal assets and power assets, and used to settle
some of its bank facilities
- Management's projections of cash flows from the new
investments are discounted in Fitch ratings case.
Fitch's key assumptions for bespoke recovery analysis include:
- The recovery analysis assumes that TOBA would be considered
liquidated in bankruptcy. Fitch have assumed a 10% administrative
claim. The liquidation estimate reflects Fitch's view of the
value of its assets that can be realized in reorganisation and
distributed to creditors
- The liquidation estimate is based on TOBA's proportionate
ownership of its subsidiaries, and as a result incorporates 51%
of the asset value at ABN, 80% of the proposed total investment
in GLP and 90% of the proposed total investment at MCL.
- Fitch assume capex on GLP and MCL to be fully incurred and
project financing debt to be fully drawn down upon default. Fitch
have used a 70% advance rate of the total capex to be incurred on
the power projects (GLP and MCL)
- Fitch assume USD225 million of investments to be made after the
proposed bond issuance and use a 70% advance rate of the total
proposed investments
- Fitch have used an advance rate of 50% for the property, plant
and equipment of its existing coal operations
- The waterfall results in a 41% recovery for the noteholders of
the proposed USD250 million notes, which corresponds to a
Recovery Rating of 'RR4'.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Fitch may consider positive rating action if there is an
improvement in the business profile of TOBA, which would be
brought about through its proposed investments in coal mine and
power generation assets, while maintaining forecast FFO coverage
above 2x on a sustained basis.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Fitch will consider negative ratings action if TOBA's forecast
FFO coverage declines to below 1.5x on a sustained basis.
- Negative ratings action would also be considered if there are
any major cost or time overruns on the two greenfield power
projects under development.
LIQUIDITY
Additional Funding for Investments: TOBA's internal cash
generation will not be adequate to finance its new investments
and TOBA intends to issue notes to raise funds. Liquidity could
come under pressure if these investments do not generate earnings
as expected, require more capex than anticipated to become
operational, or if the start of its power projects' operations
are delayed, which could impact its cash flows. Fitch expect TOBA
will breach the incurrence covenants proposed under the USD250
million note issue over the next 4 years. The bond documentation
provides carve outs, including USD372 million for power projects,
USD50 million for coal acquisitions, an additional USD20 million
for working capital, USD10 million for equipment purchases and
USD15 million of acquired debt from power investments.
At end-September 2017, TOBA has USD65 million of debt, which
mostly comprised bank loans, with long repayment schedules. TOBA
intends to refinance USD50 million of bank facilities with the
proceeds of the proposed US dollar note issue. The draw down on
project financing debt related to GLP was not significant at end-
September 2017.
TOBA BARA: Moody's Assigns B3 Corporate Family Rating
-----------------------------------------------------
Moody's Investors Service has assigned a B3 corporate family
rating (CFR) to Toba Bara Sejahtra Tbk (P.T.).
At the same time, Moody's has assigned a B3 rating to the
proposed senior secured bond issued by Toba Bara.
The outlook on all ratings is stable.
Toba Bara will use the net bond proceeds to refinance bank debt,
fund its equity contribution in two power projects, and make
acquisitions in the coal mining and power sectors.
This is the first time that Moody's has assigned a rating to Toba
Bara.
RATINGS RATIONALE
"Toba Bara's B3 rating is supported by its track record of
maintaining a solid operating performance through the coal price
cycle, supported by its low-cost operations and steady production
volumes," says Maisam Hasnain, a Moody's Analyst.
Toba Bara, through its majority ownership in its three coal
subsidiaries, has maintained solid cost controls and generated
positive EBITDA per ton even during the coal price declines in
2015-2016.
The company also benefits from a logistical advantage, as its
three mining subsidiaries are adjacently located in East
Kalimantan within close proximity to jetties and transshipment
points. The three mines also operate under a joint mine plan
which helps maximize consolidated reserves and capacity for
overburden removal.
"However, Toba Bara's B3 rating is constrained by the modest
scale of its business, with consolidated revenue of around $300
million in 2017, relative to rated peers and current reliance on
dividends from one mine to service debt at the holding company,"
adds Hasnain, also Moody's lead analyst for Toba Bara.
As a holding company, Toba Bara is reliant on cash distributions
from subsidiaries to service its debt, and its principal cash
flow generating asset is a 51% stake in PT Adimitra Baratama
Nusantara (ABN), which contributed around 70% of total
consolidated revenue in 2017, and has been the primary cash
contributor in recent years. However, Moody's expects modest
contributions from other mining subsidiaries from 2018.
Toba Bara's B3 rating also incorporates its evolving acquisition
strategy. The company plans to use around $150 million of its
proposed bond proceeds to make brownfield acquisitions in the
coal and power sectors.
"Moody's expect the company to remain acquisitive in the near
term in order to increase its coal reserve base and accelerate
its growth as coal reserves at its existing mine sites will be
fully mined by 2026 - 2027 ," adds Hasnain.
Toba Bara's B3 rating also reflects Moody's expectation that its
two greenfield power plants will be completed on time and within
budget. The company is developing two 2 x 60 MW gross capacity
coal -fired power plants in Gorontalo and North Sulawesi under
25-year agreements with Perusahaan Listrik Negara (P.T.) (Baa3
positive) as a single off-taker under a build, own, operate,
transfer (BOOT) scheme.
Once operational, the plants will provide Toba Bara with stable
earnings and a more diversified business profile from 2020-2021.
Nevertheless, the development of the plants -- at a cost of
around $430 million -- raises execution risk over the next two to
three years.
Accordingly, coal sales will remain the predominant contributor
to Toba Bara's earnings and cash flows over the next few years
until the power projects become fully operational.
Given these large planned capital expenditure and acquisition
plans, Toba Bara's financial metrics will weaken from their
current levels.
"Under Moody's expectations for Newcastle thermal coal prices to
average $68-$80 per ton, Toba Bara's adjusted consolidated
debt/EBITDA will increase considerably to 5.0x-6.5x through 2020
from around 1.2x as of September 30, 2017, while holding company
interest coverage will fall below 1.0x in the absence of
incremental cash flows from planned acquisitions," adds Hasnain.
The stable outlook reflects Moody's expectation that Toba Bara
will effectively execute its growth strategy while maintaining
prudent operating and financial policies, including minimal
shareholder returns.
What Could Change the Rating -- Up
Upward ratings pressure over the next 12-18 months is unlikely,
given Toba Bara's current scale and the elevated integration and
execution risk associated with potential acquisitions and the
construction of its power plants.
Nevertheless, upward ratings pressure could emerge over time if
Toba Bara improves its business profile though earnings-accretive
acquisitions, and remains on track to complete its power projects
on time and within budget. A track record of acquiring new mines
and ramping up production, while improving its mine reserve life
and increasing liquidity at the holding company, would also be
positive for the rating.
What Could Change the Rating -- Down
Downward pressure on the rating could emerge if industry
fundamentals deteriorate, leading to a decline in Toba Bara's
ability to generate free cash flow and grow its business; or if
Toba Bara adopts shareholder return policies that weaken its
liquidity or cause it to incur additional debt.
Indicators Moody's would consider for a downgrade are (1)
adjusted consolidated debt/EBITDA rising above 6.5x; and (2) an
adjusted EBIT margin below 15% on a sustained basis.
In addition, any weakness in debt serviceability at the holding
company, such that interest cover from dividend receipts falls
below 1.0x on a sustained basis would also lead to negative
ratings pressure.
The principal methodology used in these ratings was Global Mining
Industry published in August 2014.
Toba Bara Sejahtra Tbk (P.T.), through its majority ownership in
three coal subsidiaries, is an Indonesian thermal coal producer
with three adjacent coal mines with combined annual production
volume of around 5 million tons. As of February 1, 2018, the
company was 61.79% owned by Highland Strategic Holding Pte. Ltd,
Singapore-based passive private investment trust comprised of
institutional and high net worth investors.
===============
M A L A Y S I A
===============
KINSTEEL BHD: Appoints Ernst & Young as Liquidator
--------------------------------------------------
Sangeetha Amarthalingam at The Edge Financial Daily reports that
Kinsteel Bhd, whose shares have been suspended from trading on
Bursa Malaysia, said it has appointed Messrs Ernst & Young as its
liquidator after being served a notice to do so on Feb. 20, said
the steel manufacturer in a filing with Bursa Malaysia yesterday.
The Edge relates that the liquidator who was appointed on Jan. 22
would take into custody or under his control all the property
belonging to Kinsteel including cash at its bank or registered
trademarks, intellectual property or patents.
Kinsteel's balance sheet as at June 30, 2017, shows its property,
plant and equipment stood at MYR1.03 billion, while its
inventories were at MYR111.1 million. The company's accumulated
losses ballooned to MYR479.3 million, the Edge discloses.
However, the company's directors have yet to handover control of
the company's books, records and assets to the liquidator,
according to the filing cited by the Edge.
According to the Edge, the notice follows the granting of a
winding-up order by the Kuantan High Court on Jan. 22 after
Kinsteel and its wholly-owned Kin Kee Marketing Sdn Bhd failed to
settle an outstanding payment of MYR20.07 million, including
interest and costs, to Knusford Marketing Sdn Bhd.
The report says the sum was for the failure of delivering steel
bars in the agreed quantity Knusford had paid for.
Kinsteel is appealing the winding-up order. The next court
hearing is on March 8, the Edge discloses.
"The financial and operational impact of the winding-up
proceedings on the company is that it would be wound up and
dissolved. At this moment, Kinsteel is unable to ascertain the
extent of the effect of the winding-up of the company on the
group. The company will provide updates on this matter in due
course," it said, notes the report.
Kinsteel had been classified as a PN17 company since Oct 27,
2016, after its auditors expressed a disclaimer of opinion in its
audited financial statements for the financial year ended
June 30, 2016, when its current liabilities exceeded current
assets, while it continued to incur losses.
====================
N E W Z E A L A N D
====================
CBL CORPORATION: Enters Voluntary Administration
------------------------------------------------
KordaMentha New Zealand partners Brendon Gibson and Neale Jackson
were appointed Voluntary Administrators by the Board of CBL
Corporation Ltd (and certain of its subsidiaries) on February 23,
2018.
Administrator Brendon Gibson said: "We are working closely with
CBL's management and its directors to execute strategies that
preserve the CBL group's various operating units."
Voluntary administration allows the group to continue trading
through a formal process at the parent-company level, to
determine the best way forward for all stakeholders. CBL is a
credit and financial risk specialist insurer listed on the New
Zealand and Australian stock exchanges.
This administration relates to New Zealand-domiciled companies.
It does not affect any other companies that are ultimately owned
by CBL Corporation Ltd. Other CBL Group companies that are
unaffected include Assetinsure and DepositPower in Australia and
Europe-based PfP, SFS and European Insurance Services.
The CBL Group companies Messrs Gibson and Jackson have been
appointed to as Administrators are:
* CBL Corporation Limited
* LBC Holdings New Zealand Ltd
* LBC Holdings Americas Ltd
* LBC Holdings UK Ltd
* LBC Holdings Europe Ltd
* LBC Holdings Australasia Ltd
* LBC Treasury Company Ltd
* Deposit Power Ltd
* South British Funding Ltd
* CBL Corporate Services Ltd
CBL Corporation Limited (NZE:CBL), together with its
subsidiaries, provides insurance and reinsurance products and
services primarily in New Zealand. It offers financial risk
products, builders' risks, sureties, guarantees, and contractor
bonds primarily in Europe and Scandinavia; deposit guarantees in
Australia; and bonding and fiduciary services to the Mexican
commercial sector. The company also provides a range of specialty
products, such as credit enhancement, surety bonds, specialized
property insurance, aviation, and rural risk in Australia, as
well as distributes construction-sector insurance products in
France through a network of brokers.
DOMINO'S PIZZA: 5 Franchisees in Auckland Placed in Liquidation
---------------------------------------------------------------
Madison Reidy at Stuff.co.nz reports that five Domino's pizza
stores in Auckland have been placed in liquidation after a
franchisee failed to pay tax.
Franchisee Siddharth Sharma is the majority owner and director of
Domino's stores on Auckland's Queen Street, Quay Street,
Shortland Street, Hobsonville Road and Mount Eden Road, the
report says.
Inland Revenue filed applications to liquidate the stores, at the
Auckland High Court on December 13, Stuff discloses.
Sharma did not appear at the application hearing on Feb. 23 at
which Associate Judge Hannah Sargisson appointed KPMG liquidator
Vivian Fatupaito.
Sharma told Stuff he missed some tax payments last year because
he "was doing too many things for one person".
He would not say how much money he owed Inland Revenue because he
did not want to damage the Domino's brand.
He had been a New Zealand franchisee for the pizza chain for 10
years, the report notes.
Domino's New Zealand general manager Scott Bush said Sharma's
franchisee license was terminated on Feb. 23, Stuff relates. The
stores would stay open, operated by Domino's management "until
further notice".
"Our franchisees are independently-owned small businesses, and
they are aware of their legal obligations as business owners,"
the report quotes Mr. Bush as saying.
FARGHER CONSTRUCTION: Up to 40 Families Caught in Collapse
----------------------------------------------------------
Sophie Rishworth at The Gisborne Herald reports that the
financial collapse of Fargher Construction Limited has affected
almost 40 families around the central North Island.
Pricewaterhouse Coopers on Feb. 23 was appointed as liquidator
for the housing contruction company, which had the licence to
build A1homes in Gisborne, Hawke's Bay and Taupo, the report
says.
According to the report, liquidator John Fisk said they were
aware of 18 contracts so far that had been started but not
completed in those three regions. The building stage of each
house ranged from 13 to 95 percent complete.
There were another 10 contracts with deposits paid but no
building work started, and another 10 contracts where payment for
plans had been made but no work started, the Gisborne Herald
relates.
"We've tried to contact just about every customer," the report
quotes Mr. Fisk as saying. "We spoke to quite a number of them
yesterday morning to let them know we've been appointed as
liquidators and will consider each of their positions and get
back to them early next week."
He could not estimate how long the liquidation process would take
as they had only just been appointed.
"What we are trying to do is get an understanding of each of the
contracts. We have a meeting with A1homes on Monday in Hawke's
Bay to see how we can best progress and, from their point of
view, if they can satisfy FCL customers, where they can."
The two people behind FCL are husband and wife directors and
shareholders Rob and Sue Fargher, the report says. Mr. and Mrs.
Fargher have five companies registered with the New Zealand
companies office.
FCL and Fargher Development Limited were incorporated in April
2010 and February 2006, respectively. Both companies also list
accountant Denis Woods of Whanganui as sharing 98 percent of the
shareholding.
FCL is the only company placed in liquidation, the Gisborne
Herald adds.
Three new companies were incorporated in June and July last year
without Mr. Woods as a shareholder -- Fargher Electrical Limited,
Fargher Construction-Gisborne Limited and Fargher Construction-
Taupo Limited. Mr. and Mrs. Fargher own 50 percent shares each in
those three companies, according to the report.
The Gisborne Herald relates that A1homes general manager Matt
Cunliffe said they would be working with the liquidator next week
with the intention of finding a way to ensure homeowners' builds
were completed.
"We understand that Master Builders will also be involved in this
process," the report quotes Mr. Cunliffe as saying. "It is up to
the liquidator to determine what the assets and liabilities of
FCL are and this is a process that may take some time."
====================
S O U T H K O R E A
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KUMHO TIRE: Creditors to Hold Meeting Today on Fate of Tiremaker
----------------------------------------------------------------
Yonhap News Agency reports that creditors of Kumho Tire Co. will
hold a meeting this week to discuss the fate of the troubled
tiremaker as its management and labor union failed to agree on a
turnaround plan, the state-run creditor bank said.
Korea Development Bank said it will hold the meeting today,
Feb. 28.
Yonhap says to help revive Kumho Tire, creditors have agreed to
extend KRW1.3 trillion (US$1.21 billion) worth of debt. In
return, they asked Kumho Tire's management and labor union to
accept concessions and agree on a plan to save the company by
Feb. 26.
Creditors extended the Feb. 26 deadline by one day, but Kumho
Tire has not submitted a letter of agreement on the self-help
plan.
The fate of Kumho Tire was thrown into uncertainty after a deal
to sell a majority stake in the tiremaker to China's Qingdao
Doublestar collapsed last September, Yonhap notes.
Kumho Tire was placed under a creditor-led workout program in
2009 after its parent company was hit by a liquidity problem
following its takeover of Daewoo Engineering and Construction Co.
Kumho Tire Co. Ltd. manufactures tire. The company's offerings
include tires for sports utility vehicles, passenger cars,
various sizes of trucks and buses and racing cars. In addition,
the company provides batteries for automobiles. The company is
part of the Kumho Asiana Group.
*********
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 ***