/raid1/www/Hosts/bankrupt/TCRAP_Public/180813.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, August 13, 2018, Vol. 21, No. 159
Headlines
A U S T R A L I A
ALLANS BILLY: Second Creditors' Meeting Set for August 20
ANNE STREET: First Creditors' Meeting Set for August 20
FASTRACK DEALER: Second Creditors' Meeting Set for August 17
JUMPCLIMB PTY: Owes Creditors AUD672,000
LAKESHORE GROUP: First Creditors' Meeting Set for Aug. 21
TEA CENTRE: First Creditors' Meeting Set for August 21
VALIDUS ADVISORY: First Creditors' Meeting Set for August 20
C H I N A
CHINA COMMERCIAL: Wins US$1.5M Arbitration Award Against Sorghum
TONGYI INDUSTRIAL: Moody's Withdraws Caa1 Corporate Family Rating
ZOOMLION HEAVY: Fitch Affirms 'B-' LT IDR, Outlook Stable
H O N G K O N G
NOBLE GROUP: Shareholders to Vote on Aug 27 on Restructuring Plan
WTT HK: Moody's Reviews B1 CFR for Upgrade on Proposed Merger
I N D I A
AMAR ALLOYS: CARE Assigns B+ Rating to INR10cr LT Loan
ANCHOR AGRITECH: CARE Lowers Rating on INR5.45cr LT Loan to D
ANIKA APPARELS: CRISIL Maintains 'D' Rating in Not Cooperating
APOGEE SERVICES: CARE Assigns 'B' Rating to INR6.17cr LT Loan
AZAFRAN INNOVACION: Ind-Ra Affirms 'B-' LT Rating, Outlook Stable
BABA ISPAT: CARE Lowers Rating on INR10.97cr LT Loan to 'B+'
BALAJI FOOD: CARE Assigns B+ Rating to INR7cr LT Loan
BHAGWAN MAHAVEER: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
BHUSHAN STEEL: Ex-Managing Director Arrested Over Alleged Fraud
BONCON TRADE: CARE Lowers Rating on INR15cr LT Loan to B-
CMC TEXTILES: Ind-Ra Assigns BB+ LT Issuer Rating, Outlook Stable
COSMIC FERRO: CARE Maintains D Rating in Not Cooperating Category
DIVINE CONSTRUCTIONS: CRISIL Keeps B Rating in Not Cooperating
ELECTROSTEEL STEEL: NCLAT Upholds Sale to Vedanta
GALLUS CV: Ind-Ra Affirms 'BB+' LT Rating on INR20.8MM Loan
GRAMCO INFRATECH: CARE Reaffirms 'B' Rating on INR9.32cr Loan
HANWANT FASTENERS: CARE Lowers Rating on INR5.41cr Loan to B
ICON CABLES: CRISIL Maintains 'B' Rating in Not Cooperating
ILASAKAA STEELS: CRISIL Maintains 'B' Rating in Not Cooperating
JAYESH INDUSTRIES: CRISIL Maintains B- Rating in Non-Cooperating
K D INFRA: CRISIL Maintains 'B' Rating in Non-Cooperating
K.B. GEMS: Ind-Ra Affirms 'BB+' LT Issuer Rating, Outlook Stable
KANMANI POULTRY: CARE Assigns 'B' Rating to INR10.15cr Loan
L N CONSTRUCTIONS: CRISIL Maintains B- Rating in Non-Cooperating
MAHALAXMI PADDY: CRISIL Maintains 'B' Rating in Non-Cooperating
MAIMOON IMPEX: CRISIL Maintains 'B' Rating in Nn-Cooperating
MARUTHI CONSTRUCTIONS: CRISIL Keeps B Rating in Not Cooperating
MARUTI EDUCATIONAL: CRISIL Maintains B Rating in Non-Cooperating
MUTHULAXMI SPINNING: CRISIL Maintains B Rating in Non-Cooperating
NAKSHTRA: Ind-Ra Maintains B- LT Issuer Rating in Non-Cooperating
NEELAM DYEING: CARE Assigns 'B' Rating to INR7.39cr LT Loan
NILACHAL CARBO: CARE Assigns B Rating to INR6cr LT Loan
NORTECH POWER: CARE Migrates 'C' Rating to Non-Cooperating
OPPO MOBILES: Ind-Ra Affirms BB LT Issuer Rating, Outlook Stable
PADMESH BEVERAGES: CRISIL Maintains 'B' Rating in Not Cooperating
PANKAJ STEEL: CARE Assigns B+ Rating to INR8cr LT/ST Loans
PRATUL ENTERPRISES: CRISIL Maintains B Rating in Non-Cooperating
R.S. ENTERPRISES: CRISIL Maintains D Rating in Not Cooperating
REGENT BEERS: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
RIO CERAMIC: CRISIL Maintains 'B' Rating in Non-Cooperating
ROSA POWER: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
SAI CONSTRUCTION: CRISIL Maintains B Rating in Non-Cooperating
SAR SENAPATI: CARE Reaffirms B- Rating on INR265.79cr Loan
SBA EDUCATION: CRISIL Maintains 'D' Rating in Non-Cooperating
SBS TRANSPOLE: CARE Reaffirms D Rating on INR116cr ST Loan
SHIVPRASAD FOODS: Ind-Ra Lowers Long Term Issuer Rating to 'D'
SHREE RAJ: CARE Reaffirms B+ Rating on INR4.96cr LT Loan
SIDDHARTH INDUSTRIES: CRISIL Keeps B Rating in Not Cooperating
SKS BUILDTECH: CARE Lowers Rating on INR26cr LT Loan to 'B'
SREE KARPAGAMOORTHY: CARE Assigns B+ Rating to INR7cr LT Loan
SREENATH ENG'G: CRISIL Maintains 'B' Rating in Not Cooperating
STRAIGHT EDGE: CARE Moves B Rating to Not Cooperating Category
SWACHHA BEVERAGES: CRISIL Maintains D Rating in Non-Cooperating
SWADESHI ALUMINIUM: CARE Lowers Rating on INR18cr Loan to B
YSG CABS: CARE Lowers Rating on INR40cr LT Loan to B-
M A L A Y S I A
UTUSAN MELAYU: Defaults on MYR1.18 Million Loan Payments
X X X X X X X X
FIJI: S&P Affirms 'B+/B' Sovereign Credit Ratings, Outlook Stable
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A U S T R A L I A
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ALLANS BILLY: Second Creditors' Meeting Set for August 20
---------------------------------------------------------
A second meeting of creditors in the proceedings of:
* Allans Billy Hyde Pty Ltd
* Gallin's Musicians Pro Shop
* Brandiston Pty Ltd
* Benzen Pty Ltd
has been set for Aug. 20, 2018, at 2:00 a.m. at the offices of
Ferrier Hodgson, Level 43, 600 Bourke Street, in Melbourne, VIC.
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 Aug. 17, 2018, at 4:00 p.m.
John Ross Lindholm and George Georges of Ferrier Hodgson were
appointed as administrators of Allans Billy on June 20, 2018.
ANNE STREET: First Creditors' Meeting Set for August 20
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Anne Street
Partners Holdings Pty Ltd will be held at the offices of
Ernst & Young, 200 George Street, in Sydney, NSW, on Aug. 20,
2018, at 10:00 a.m.
Brett Lord and Marcus Ayres of EY were appointed as administrators
of Anne Street on Aug. 8, 2018.
FASTRACK DEALER: Second Creditors' Meeting Set for August 17
------------------------------------------------------------
A second meeting of creditors in the proceedings of Fastrack
Dealer Net Pty Ltd has been set for Aug. 17, 2018, at 1:00 p.m. at
the offices of SV Partners, 22 Market Street, in Brisbane,
Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Aug. 14, 2018, at 4:00 p.m.
Terry Grant Van der Velde of SV Partners was appointed as
administrator of Fastrack Dealer on May 11, 2018.
JUMPCLIMB PTY: Owes Creditors AUD672,000
----------------------------------------
Rebecca Trigger and Damian Smith at ABC News report that artists
and performers left tens of thousands of dollars out of pocket
after the collapse of a Perth-based management firm have been told
it is unlikely they will see any of the money owed.
Perth-based event promoters JumpClimb, who were responsible for
booking acts at the wildly popular Perth Fringe Festival and
running other large-scale festival events, such as the Beaufort
Street, BeauVine Food and Wine and Kegs by the Key festivals, went
into liquidation in May, ABC says.
Directors Paul Fletcher and Aaron Rutter were behind the Noodle
Palace venue at the Perth Fringe.
ABC relates that three months on from the collapse of four firms
associated with the duo, a report from liquidators said there were
"limited assets" in all companies.
"At this stage, I consider that there is unlikely to be a return
to unsecured creditors," the report by liquidator Bob Jacobs said,
ABC relays.
According to ABC, the report found unsecured creditors for Noodle
Palace were owed a total of AUD672,000.
These included performers and the Australian Taxation Office. The
amount JumpClimb estimated it could not pay back was AUD610,600.
ABC says performer Matt Tarrant, a magician who was booked for the
Noodle Palace venue this year, said he was owed about AUD35,000
and had to scale back his wedding plans as a result.
"Fortunately we haven't had to cancel, it hasn't been that
drastic, but it probably meant . . . there have been some budget
restrictions, there were probably a few people cut off the guest
list that we would have liked to have there," ABC quotes Mr.
Tarrant as saying. "A few family members haven't been invited so
there's more drama than maybe you'd expect at a normal wedding,
and I know there's a lot of drama at most weddings."
He said he was given no sense the firm was experiencing financial
difficulty when they booked him.
He said it had soured his experience of Fringe and the city, but
he was considering coming back after festival organisers reached
out.
Perth Fringe Festival books performers directly, as well as
allowing third-party management firms like JumpClimb to book acts.
Ticket sales are paid to the management firms, who are then
supposed to pay the performers.
According to ABC, the liquidator's report cited Noodle Palace's
spiralling debts in part from the last festival when they entered
into a contract with the City of Swan to run "Midlandia", a comedy
festival in Perth's east, about 30-minutes' drive from the city
centre.
"I am advised that this event made losses of around AUD250,000,"
the report said.
JumpClimb Pty Ltd also received a garnishee notice from the
Australian Tax Office for AUD296,6000 of unpaid BAS and
superannuation guarantee charges.
After this, the directors restructured the company, setting up
three other firms and transferring large sums between them in an
apparent bid to remain solvent, according to ABC.
The liquidator noted JumpClimb appeared to cease trading around
October 2017, ABC says. Perth's Fringe Festival ran from January
25 to February 25 this year.
Perth Fringe Festival organisers in May announced they would give
back AUD85,000 they made from ticket sales so artists could be
paid some of the money owed, adds ABC.
LAKESHORE GROUP: First Creditors' Meeting Set for Aug. 21
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Lakeshore
Group Pty Ltd will be held at BGC Conference Centre, 28 The
Esplanade, in Perth, WA, on Aug. 21, 2018, at 10:00 a.m.
Jeremy Joseph Nipps and Clifford Stuart Rocke of Cor Cordis were
appointed as administrators of Lakeshore Group on Aug. 9, 2018.
TEA CENTRE: First Creditors' Meeting Set for August 21
------------------------------------------------------
A first meeting of the creditors in the proceedings of The Tea
Centre Pty Ltd will be held at Level 3, 1 Castlereagh Street, in
Sydney, NSW, on Aug. 21, 2018, at 11:00 a.m.
Hugh Armenis and Katherine Elizabeth Barnet of Bentleys Corporate
Recovery were appointed as administrators of Tea Centre on Aug. 9,
2018.
VALIDUS ADVISORY: First Creditors' Meeting Set for August 20
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Validus
Advisory Group Pty Ltd will be held at the offices of Hall
Chadwick, Level 40, 2 Park Street, in Sydney, NSW, on Aug. 20,
2018, at 11:00 a.m.
Brent Trevor-Alex Kijurina of Hall Chadwick was appointed as
administrator of Validus Advisory on Aug. 8, 2018.
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C H I N A
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CHINA COMMERCIAL: Wins US$1.5M Arbitration Award Against Sorghum
----------------------------------------------------------------
China Commercial Credit, Inc., has received a favorable final
arbitration award from the International Arbitration Tribunal of
the American Arbitration Association on July 31, 2018 in its
previously disclosed arbitration with Sorghum Investment Holdings
Limited. In the Award, the Tribunal found that Sorghum willfully
breached the certain Share Exchange Agreement dated Aug. 9, 2017
by and among Sorghum, the Sorghum shareholders and the Company.
The Tribunal awarded the Company damages of US$1,436,521 against
Sorghum and denied Sorghum's counterclaims against the Company in
all aspects with prejudice. The Tribunal also awarded pre-award
interest of 9% per annum from Dec. 19, 2017, the date of breach to
July 30, the date of Award. The Award is final.
The management team of the Company stated, "We are very pleased
with the Tribunal award in our favor. The Tribunal was very
thorough and it is gratifying that it agreed with the Company. We
will use our best effort to enforce the award to make up the loss
to our shareholders resulting from Sorghum's willful breach. We
look forward to putting that money to work to help us grow our
operations for the benefit of our company and its stockholders."
About China Commercial Credit
Founded in 2008, China Commercial Credit --
http://www.chinacommercialcredit.com/-- currently engages in used
luxurious car leasing. The used luxurious car business is
conducted under the brand name "Batcar" by the Company's VIE
entity, Beijing Youjiao Technology Limited.
China Commercial incurred a net loss of US$10.69 million for the
year ended Dec. 31, 2017, compared to a net loss of US$2.58
million for the ended Dec. 31, 2016. As of March 31, 2018, China
Commercial had US$7.31 million in total assets, US$11.76 million
in total liabilities and a total shareholders' deficit of US$4.45
million.
The report from the Company's independent accounting firm Marcum
Bernstein & Pinchuk LLP on the consolidated financial statements
for the year ended Dec. 31, 2017, includes an explanatory
paragraph stating that the Company has incurred significant losses
and needs to raise additional funds to meet its obligations and
sustain its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
TONGYI INDUSTRIAL: Moody's Withdraws Caa1 Corporate Family Rating
-----------------------------------------------------------------
Moody's Investors Service has withdrawn Tongyi Industrial Group
Co., Ltd.'s Caa1 corporate family rating and the negative outlook
on the rating.
Moody's has decided to withdraw the rating for its own business
reasons.
Established in 1997, Tongyi Industrial Group Co., Ltd. is a
private chemical company that engages in the production and
trading of commodity petroleum chemicals. The company is based in
Fushun, Liaoning Province.
ZOOMLION HEAVY: Fitch Affirms 'B-' LT IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings has affirmed Zoomlion Heavy Industry Science and
Technology Co. Ltd's Long-Term Foreign-Currency Issuer Default
Rating, senior unsecured rating and the rating of its USD600
million 6.125% senior unsecured notes due 2022, issued by
subsidiary Zoomlion H.K. SPV Co. Ltd, at 'B-' with a Recovery
Rating of 'RR4'. The Outlook is Stable.
KEY RATING DRIVERS
Cyclical Recovery Continues: Fitch expects Zoomlion to continue
reporting strong operational performance in 2018. China's
construction machinery sales increased strongly in 1H18, despite
the government's deleveraging measures imposed since mid-2017.
Zoomlion reported 1Q18 revenue growth of 21% when stripping out
the contribution from its discontinued operations in 1Q17; like-
for-like revenue increased by more than 50%. However, Fitch sees
the current industry strength as cyclical rather than structural
and believes it may not be sustainable on a multi-year basis.
Used Machinery Disposal on Track: Zoomlion has taken steps to
clear the backlog of second-hand machinery disposals and the
company expects this to be largely completed by end-2018, which
should benefit its margin. Profitability of the construction
machinery segment has historically been hampered by Zoomlion's
financial commitments to customers, whereby it offered guarantees
to some customers who borrowed from other financial institutions
to finance their purchases. Zoomlion was required to repossess
machinery collateralising the borrowings if the customer
defaulted, which cut into the company's working capital and
margin.
Meaningful Deleveraging not Expected: Fitch expects Zoomlion's FFO
adjusted net leverage to improve to 7.8x in 2018, from 18.1x in
2017, driven by a recovery in EBITDA. However, leverage is not
likely to drop meaningfully beyond that, given low visibility on
medium-term earnings and the company's dividend policy, which saw
a dividend pay-out ratio of well above 100% over the previous few
years. Fitch understands the company plans to continuing paying
dividends of CNY1.0 billion -1.5 billion annually, which is likely
to keep free cash flow negative and net leverage high in the
medium term.
Disposal Weakens Business Profile: Zoomlion's disposal of its
stable and high-margin environmental machinery business in 2017
improved the company's balance sheet, but weakened its business
profile, leaving the remaining business exposed to a highly
cyclical domestic construction industry.
DERIVATION SUMMARY
Zoomlion has weaker cash-flow generation and a substantially
higher net-leverage ratio than 'B' category rated peers, such as
Tunghsu Group Co., Ltd. (B/Rating Watch Negative) and Hilong
Holding Limited (B+/Stable). It is similar in terms of coverage
and net leverage metrics to Honghua Group Limited (B-/Stable), but
has a larger operational scale and superior funding access.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Capex in the range of CNY400 million-600 million per annum in
2018-2021
- Gross margin ranging between 22%-24% in 2018-2021, against a
historical range of 21%-28% in 2014-2017
- CNY500 million acquisition in 2018 based on management's
communication
- High dividend payout based on management's communication
Recovery Rating Assumptions:
Its recovery analysis is based on liquidation value, as it is
higher than the going-concern value derived from post-
restructuring EBITDA and a valuation multiple. Fitch has assumed a
10% administrative claim, 50% recovery rate for inventory, 30%
recovery rate for account receivables and 50% recovery rate on net
property, plant and equipment.
The recovery rating is capped at 'RR4' according to Fitch's
Country-Specific Treatment of Recovery Ratings Criteria, as
Zoomlion is based in China.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Sustained deleveraging and commitment to a less aggressive
financial policy
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Increasing liquidity pressure
LIQUIDITY
Adequate Liquidity: Zoomlion had CNY12 billion in readily
available cash and CNY63 billion in unused banking facilities as
of end-2017. The company has CNY11 billion in short-term debt due
within one year and continues to have secure access to banking
facilities and the capital market.
================
H O N G K O N G
================
NOBLE GROUP: Shareholders to Vote on Aug 27 on Restructuring Plan
-----------------------------------------------------------------
The Strait Times reports that Noble Group on Aug. 10 announced
that a special general meeting (SGM) to approve the company's
proposed restructuring has been convened for Aug. 27, at
2:30 p.m.
Noble said to date, the restructuring has received support from a
number of the company's stakeholders in line with the board's
objective to conclude a consensual restructuring process, the
Strait Times relays.
According to the report, Noble Holdings (the company's largest
shareholder, holding 17.9 per cent of shares in the company),
Goldilocks Investment Company (holding 8.1 per cent of the shares
in the company) and a consortium including Value Partners and
Pinpoint Asset Management (holding about 4.4 per cent of the
shares in the company) have signed irrevocable undertakings to
vote in favour of the resolutions to be proposed at the SGM. All
parties' shareholdings collectively comprise over 30 per cent of
Noble's issued share capital.
The Strait Times relates that the consortium (holding about 42.9
per cent of the existing perpetual capital securities) have also
signed irrevocable undertakings to vote in favor of the Existing
Perpetual Capital Securities Resolutions.
Moreover, over 86 per cent of existing note creditors and existing
RCF lenders (in aggregate) have acceded to the restructuring
support agreement (RSA), the report says.
"If shareholders vote in favour of the RSA, Noble will enter the
final procedural stages of its restructuring and the establishment
of New Noble. The board believes that the RSA represents the best
and most fair deal for all parties and the best way to preserve
the residual value in the company for all stakeholders," the
report quotes Noble chairman Paul Brough as saying.
He added that it is "critical" that Noble completes the
restructuring as soon as possible, to enable the group to "once
again operate with a sustainable capital structure" and "focus on
capitalising on the growing opportunities in the Asian commodities
markets," the Strait Times relays.
The report says Noble added it has convened an SGM to approve the
disposal of vessels (the proposal of which was announced in June)
on Aug. 27, at 3:00 p.m.
In addition, the company has convened the adjourned 2018 Annual
General Meeting (AGM) on the same day, at 3:30 p.m., to be held
after the two SGMs in relation to the restructuring and vessels,
the Strait Times relays.
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
March 23, 2018, S&P Global Ratings lowered its long-term issuer
credit rating on Noble Group to 'D' from 'CC'.
S&P said, "We lowered the ratings because Noble has missed the
principal and coupon payment for its 2018 notes due March 20,
2018. Noble also missed the coupon payment on its 2022 notes due
March 9, 2018. In addition, the company said it would not make
the payments despite being given 30-day grace periods to meet
both obligations. The failure to make these payments will
trigger cross-defaults on the company's other obligations. We do
not expect Noble to meet any outstanding obligations as the
company preserves its assets during the restructuring process."
Noble is undergoing a debt restructuring, which management
expects to be completed by the end of July. S&P will conduct
another review the company's credit profile after the
restructuring is complete.
WTT HK: Moody's Reviews B1 CFR for Upgrade on Proposed Merger
-------------------------------------------------------------
Moody's Investors Service has placed on review for upgrade the B1
corporate family rating of WTT HK Limited, and the B1 rating on
the senior unsecured notes issued by WTT Investment Ltd and
guaranteed by WTT HK Limited.
The review follows HKBN Ltd.'s announcement on August 7 that it
has entered into an agreement with TPG Wireman, LP (indirectly
owned by TPG) and Twin Holding Ltd. (indirectly owned by MBK
Partners), which indirectly jointly own 100% of WTT, to merge with
WTT.
RATINGS RATIONALE
"The rating action reflects our expectation that the proposed
merger, if completed successfully, will lead to a significant
improvement in WTT's credit profile," says Gloria Tsuen, a Moody's
Vice President and Senior Analyst.
"The merger will strengthen WTT's business profile, making it part
of a larger and more integrated telecom service provider in Hong
Kong, with lower leverage than currently reported by WTT," adds
Tsuen.
HKBN plans to merge with WTT for a consideration of around HKD5.5
billion in new HKBN shares and equity-like vendor loan notes, and
it will also assume WTT's existing $670 million USD senior notes.
The merged company will be more strongly positioned in WTT's core
fixed-line enterprise solutions market, with wider network
coverage in Hong Kong and a larger, more diversified customer
base.
HKBN generated HKD1.3 billion in revenue from enterprise solutions
(or 37% of its total revenue of HKD3.6 billion) for the 12 months
ended February 2018, with a focus on small and medium-sized
enterprises. WTT generated HKD2.1 billion in total revenue for the
12 months to end of June 2018, with a focus on medium and large-
sized enterprises.
The merged company will be more than double the current size of
WTT in terms of revenue, and provide more diversified
telecommunications service offerings, including residential fixed-
line services, and mobile services (HKBN is a mobile virtual
network operator).
In addition, with its increased scale, the merged company will
benefit from cost and revenue synergies, as well as capital
spending savings.
Moody's estimates that the merged company will record adjusted
debt/EBITDA of around 4.2x, based on HKBN's financial performance
for the 12 months ended February 2018 and WTT's performance for
2017. This level will be significantly lower than the 5.9x
reported for WTT in 2017, and would be strong for the B1 rating
category given the company's high profitability and stability in
cash flow generation.
The transaction is subject to HKBN shareholder and regulatory
approvals, and is expected to close by 1Q 2019. The agreement also
contains a HKD350 million break fee payable to WTT's owners if
HKBN's shareholders reject the transaction.
Moody's review will focus on the progress and completion of the
proposed transaction as well as the potential synergies arising
from the merger. The ratings could be upgraded by more than one
notch if the transaction closes on the proposed terms and
conditions, given the extent of the expected improvement in WTT's
credit quality.
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
Established in 1995, WTT HK Limited (formerly known as Wharf T&T)
is an enterprise-focused fixed-line telecom operator in Hong Kong.
WTT offers a full range of products, including data connectivity,
broadband, fixed-line voice and IP-based voice telephony, cloud
services and systems integration solutions. WTT is owned by two
private-equity firms (50% MBK Partners and 50% TPG Capital).
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I N D I A
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AMAR ALLOYS: CARE Assigns B+ Rating to INR10cr LT Loan
------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Amar
Alloys Private Limited (AAP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Amar Alloys Private
Limited is constrained by its small scale of operations, low
PAT margin & weak solvency position. The rating is further
constrained by working capital intensive nature of operations,
volatility in the raw material prices and highly competitive and
fragmented industry. The rating, however, derives strength from
experienced promoters, long track record of operations, favorable
location of operation and positive outlook for the industry.
Going forward, the ability of the company to profitably scale up
its operations and improve its overall gearing would remain its
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with low net worth base and PAT margin
The company's scale of operations has remained small marked by
total operating income (TOI) of INR60.00 crore in FY18 (refers to
the period April 01 to March 31) and tangible net worth of INR2.74
crore as on March 31, 2018. The small scale limits the company's
financial flexibility in times of stress and deprives it from
scale benefits. Furthermore, the scale of operations of the
company witnessed a fluctuating trend during FY15-FY18 period.
The PBILDT margin stood moderate at 7.06% in FY18. However, PAT
margin stood at below unity level during last four financial years
owing to high interest and depreciation costs.
Weak solvency position: The capital structure of the AAP stood
weak with overall gearing ratio of 12.46x as on March 31, 2018
mainly on account of company's high reliance on bank borrowings to
fund various requirements of business. Further, the debt coverage
indicators of the company stood weak marked by interest coverage
ratio of 1.22x in FY18 and total debt to GCA of 44.22x for FY18.
Working capital intensive nature of operations: The operating
cycle of the company stood elongated at 173 days for FY18. The
company is required to maintain inventory in the form of raw
material for smooth production process as well as in the form of
finished goods to meet demand of customers resulting in average
inventory period of 88 days for FY18. The company offers a credit
period of upto 3 months to its customers. On the other hand, the
procurement of raw material is done on cash and advance basis.
Volatility in the raw material prices: The main raw material for
production of wheat flour is wheat. Prices of wheat are subject to
government intervention since it is an agricultural produce and
staple food. The price of wheat is also influenced by the supply
scenario which is susceptible to the agro-climatic conditions.
Thus, any volatility in wheat prices can have direct impact on the
profitability margins of the company.
Fragmented and competitive nature of industry: The commodity
nature of the product makes the industry highly fragmented with
numerous players operating in the unorganized sector with very
less product differentiation. In addition, launch of innovative
strategy (such as competitive pricing, aggressive advertisement
campaign, celebrity endorsements, etc.) by large multinationals to
gain market share has increased the competition intensity as well.
This results in limited flexibility over product pricing for the
players in the industry.
Key Rating Strengths
Experienced promoters and long track record of operations: The
company is managed by Mr. Rakesh Kumar and Mr. Brij Bhushan
collectively. Both the promoters have around two decades of
experience in processing of wheat. Besides this, they are also
associated with group concerns (Amar Food Plaza and Goyal Trading
Company). The promoters have adequate acumen about various aspects
of business which is likely to benefit AAP in the long run. The
long track record has aided the company in establishment of strong
relationships with suppliers as well as customers.
Reputed customer base though concentrated: AAP is engaged in
processing of wheat and is supplying to reputed market players
such as ITC Limited (CRISIL AAA; Stable/CRISIL A1+), Jubilant
FoodWorks Limited, Britannia Industries Ltd (CRISIL AAA; Stable/
CRISIL A1+), Nestle India Limited (CRISIL AAA; Stable/ CRISIL
A1+), etc. However, the sales to these top 4 customers constituted
80% of total operating income in FY18. Thus, the company is
exposed to customer concentration risk. However, the company has
able to receive repetitive orders from its customers which
demonstrates its ability to provide quality products.
Favorable location of plant: AAP is engaged in processing of wheat
which is easily available in the areas of Haryana in proximity to
company's location. Hence, AAP's presence in this region results
in benefit derived from easy availability of commodities with
lower transportation cost. Thus, AAP's presence in the wheat
growing region ensures regular supply of goods at low
transportation cost.
Positive outlook of the industry: The flour milling industry has
witnessed consistent growth in the past few years, largely driven
by FMCG companies and dictated by the lifestyle changes in the
urban and semi-urban regions of the country, people are being
exposed to the wheat-based western cuisines, in place of rice-
based local cuisines. This is expected to act as a steady and
sustained growth driver for the wheat flour milling industry. Also
since the industry mainly caters to the basic needs of the
consumer, the industry is relatively insulated from the economic
cycles.
Amar Alloys Private Limited (AAP) was incorporated as a private
limited company in August 1989 and was engaged in the
manufacturing of TMT bars. However, in 1997, the company changed
its nature of business. AAP is currently being managed by Mr.
Rakesh Kumar and Mr. Brij Bhushan as its directors namely. From
1997 onwards, the company is engaged in the processing of wheat
and sale of its byproducts under the name of "Amar Roller Flour
Mills" at its manufacturing facility located in Panchkula, Haryana
with an installed capacity of processing 54000 metric tonne of
wheat per annum as on June 30, 2018. The major products include
wheat flour, maida flour, semolina flour and wheat bran. AAP sells
its products directly to various food products manufacturing
companies including reputed customers such as ITC Limited,
Jubilant FoodWorks Limited, Britannia Industries Ltd, Nestle India
Limited, etc Besides AAP, the directors are also associated with
another group concern namely Amar Food Plaza and Goyal Trading
Company.
ANCHOR AGRITECH: CARE Lowers Rating on INR5.45cr LT Loan to D
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Anchor Agritech (ARG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.45 CARE D Revised from CARE B;
Facilities Stable
Detailed rationale
The revision in the rating assigned to the bank facilities of ARG
is primarily due to irregularity in servicing its debt obligations
owing to weak liquidity position. Establishing a clear debt
servicing track record with improvement in the liquidity position
remains the key rating sensitivity.
Detailed Description of the Key Rating Drivers
Key Rating Weaknesses
Ongoing delay in debt servicing: Owing to weak liquidity position,
the firm has been irregular in servicing its debt obligation and
there are on-going delays in servicing interest on its bank
facilities.
M/s. Anchor Agritech (ARG) was initially setup by Mrs. Kalpana
Desai as a sole proprietorship firm in 2013 under the name of M/s.
Anchor Chemicals. It was reconstituted into a partnership firm in
September 2015, under its current name by adding Mrs. Kalpana
Desai, Mr. Jayesh Desai as a partner in the firm. The firm is
engaged in storage and handling of fruit and vegetables and their
ripening, packaging and distribution.
ANIKA APPARELS: CRISIL Maintains 'D' Rating in Not Cooperating
--------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Anika
Apparels Private Limited (AAPL) to 'CRISIL D/CRISIL D' from
'CRISIL B+/Stable/CRISIL A4.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.25 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Export Packing 4.75 CRISIL D (Downgraded from
Credit & Export 'CRISIL A4')
Bills Negotiation/
Foreign Bill
discounting
Long Term Loan 0.77 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Proposed Long Term
Bank Loan Facility 1.23 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The rating action follows the recent instances of delay in
servicing term debt obligations due to AAPL's weak liquidity. The
company's working capital cycle was stretched due to delays in
receipt of payment from customers.
The ratings also factor in the company's modest scale of
operations and exposure to intense competition, large working
capital requirements and below average financial risk profile
because of a modest net worth, high total outside liabilities to
adjusted networth (TOLANW) ratio, and below average debt
protection metrics. These weaknesses are partially offset by the
extensive experience of the company's promoters in the readymade
garments industry and their funding support.
Key Rating Drivers & Detailed Description
* Delays in debt servicing: There have been instances of delays in
repayment of term debt obligations due to weak liquidity and delay
in receipts of payments from customer.
Weaknesses
* Modest scale of operations and exposure to intense competition:
AAPL has modest scale of operations as reflected in revenues of
INR28.2 crore estimated during fiscal 2018. Modest scale of
operations results in limited bargaining power of the company with
its customers and suppliers
* Large working capital requirements: The operations have remained
working capital intensive as reflected in high gross current
assets (GCA) days which has ranged between 170-230 days in the
last five years through fiscal 2017. This is mainly led by the
significant inventory and debtor levels.
* Below average financial risk profile: The networth remains
modest at INR3.1 crore while its TOLANW ratio is extremely high at
7.2 times as on March 31, 2017. Interest coverage ratio was below
average at 1.5 times for fiscal 2017.
Strength
* Promoter's extensive experience in garment industry: The
promoters - Mr. Abhishek Singi and Mrs. Rachana Singi, have over a
decade of experience in the readymade garments manufacturing
business. The promoter's experience has helped the company develop
strong relationships with its customers and suppliers.
AAPL was originally established as a proprietorship concern by
Mrs. Rachana Singi in 2000. In 2005, the firm was reconstituted as
a private limited company. AAPL manufactures women's readymade
garments, such as tops, tunics, dresses, and shirts, which are
mainly exported to the UK, USA, France, Denmark, and other
countries.
APOGEE SERVICES: CARE Assigns 'B' Rating to INR6.17cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Apogee
Services Private Limited (ASPL) as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.17 CARE B; Stable Assigned
Facilities
Long-term Bank 1.83 CARE B; Stable/CARE A4
Facilities/Short- Assigned
Term Bank
Facilities
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of ASPL is constrained
by modest scale of operations, low profitability margins,
leveraged capital structure coupled with weak coverage indicators.
The ratings are further constrained on account of ASPL's presence
in highly competitive industry. The ratings, however, continue to
draw comfort from experienced promoters, growing scale of
operations, comfortable operating cycle and reputed and
diversified clientele.
Going forward; ability of the company to scale up its operations
while improving its profitability margins and improvement
in capital structure shall be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest though growing scale of Operations: ASPL's scale of
operations remained modest marked by total operating income of
INR94.27 crore and gross cash accruals of INR0.05 crores during
FY18 (refers to the period April 1 to March 31; based on
provisional results). The modest scale limits the company's
financial flexibility in times of stress and deprives it from
scale benefits. Though, the risk is partially mitigated by the
fact that the scale of operations is growing continuously. ASPL's
total operating income grew from INR71.40 crore in FY16 to INR9.27
crore in FY18 reflecting a compounded annual growth rate of around
14.90% owing to addition of new customers year on year basis.
Weak financial risk profile: ASPL has weak financial risk profile
characterized by low profitability margins, leveraged capital
structure and weak coverage indicators. The profitability margins
of the company stood low as marked by PBILDT and PAT margins which
stood below unity for the past two financial years i.e. FY17-FY18
on account of high operational expenses in the form of employee
cost. The capital structure of the company stood leveraged as
marked by overall gearing ratio which stood above 4x as on balance
sheet dates of the past two financial years i.e. FY17- FY18 owing
to low net worth base and high dependence on external borrowings
to meet the working capital requirements. Further, the debt
coverage indicators also stood weak as marked by interest coverage
ratio and total debt to GCA which stood at 1.12x and 85.87x
respectively for FY18 on account of lower profitability margins
resulting in lower GCA levels.
Intense competition in the industry: ASPL's operates in a highly
competitive industry with presence of large number of organized
and unorganized players. There are several large players in the
industry such as Team Lease, Empyrean Partners, etc. Furthermore,
with presence of various organized and unorganized players, the
same limits bargaining power which exerts pressure on its margins.
Key Rating Strengths
Experienced promoters: ASPL is currently being managed by Mr.
Rajat Srivastav and Mrs. Meena Srivastav. Mr. Rajat Srivastav and
Mrs. Meena Srivastav both are graduates by qualification and have
an experience of more than two and half decades through their
association with ASPL and its associate concern Apex Services.
Both of them collectively look after the overall operations
of the company. The company has a workforce of professionally
qualified personnel which has enabled company to
establish better relationship with its customers. The same will
help the company to increase its scale of operations.
Comfortable operating cycle: The operating cycle of the company
stood comfortable at 10 days for FY18. The company receives
payment within a week of raising the invoice from its clients
resulting in an average collection period of 10 days in FY18. The
average working capital borrowing remains a85% utilized for the
past twelve months ending June 30, 2018.
Reputed and diversified clientele: ASPL has been able to establish
relationship with its clients. The company caters to a reputed and
diversified clientele comprising of well-known corporates such as
Accenture Solutions Private Limited, Vodafone mobile services
limited, Nestle India Limited etc. Diverse and reputed client base
reduces customer concentration risk and ensures timely realization
of receivables. Diversified customer base improves the bargaining
capacity of the company and association with reputed customers
enhances the image of the company in the market and lends supports
to the quality of its services.
Lucknow, Uttar Pradesh based Apogee Services Private Limited CIN
U74120UP2014PTC066093 (ASPL) was incorporated in September 15,
2014 and is currently being managed by Mr. Rajat Srivastav and
Mrs. Meena Srivastav. The company is engaged in providing Human
Resource Services (includes payroll management, temporary
staffing, permanent staffing, etc) to corporates on PAN India
basis.
AZAFRAN INNOVACION: Ind-Ra Affirms 'B-' LT Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Azafran
Innovacion Limited's (AIL) Long-Term Issuer Rating at 'IND B-'.
The Outlook is Stable.
The instrument-wise rating actions are:
-- INR37.78 mil. (reduced from INR42.00 million mil.) Term loan
due on June 2021 affirmed with IND B-/Stable rating; and
-- INR20.00 mil. Fund-based working capital facilities affirmed
with IND B-/Stable/IND A4 rating.
KEY RATING DRIVERS
The affirmation continues to reflect AIL's weak credit profile.
Its revenue increased to INR104 million in FY18 from INR63 million
in FY17, driven by an increase in order inflow. It booked INR35
million in revenue for 1QFY19. However, its EBITDA margin was
negative during FY14-FY18 due to high promotional and employee
costs, while its return on capital employed was also negative
during FY14-FY18. FY18 financials are provisional.
The ratings reflect AIL's tight liquidity position, indicated by
an average fund-based facility utilization of 94.2% for the 12
months ended June 2018. Its cash conversion cycle continued to be
elongated, albeit improved, at 284 days in FY18 (FY17: 840 days)
on account of high inventory days. The improvement in the cycle
was due to a substantial improvement in inventory days on account
of higher off take due to repeat orders from existing customers.
The ratings, however, continue to be supported by the promoters'
over two decades of experience in the manufacturing industry.
RATING SENSITIVITIES
Positive: Any substantial revenue growth, along with any
improvement in the profitability, resulting in any improvement in
the credit metrics, could be positive for the ratings.
COMPANY PROFILE
AIL, a closely held public limited company, is mainly engaged in
producing organic cosmetic products, under the brand Azafran
Organics, at its facility in Ahmedabad, Gujarat.
BABA ISPAT: CARE Lowers Rating on INR10.97cr LT Loan to 'B+'
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Baba Ispat Private Limited (BIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.97 CARE B+; Issuer not cooperating;
Facilities Revised from CARE BB on the basis
of best available information
Short-term Bank 0.55 CARE A4; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from BIPL to monitor the ratings
vide e-mail communications dated May 4, 2018, July 12, 2018 and
July 25, 2018, and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion is
not sufficient to arrive at a fair rating. Further, BIPL has not
paid the surveillance fees for the rating exercise as agreed to in
its Rating Agreement. The rating on BIPL's bank facilities will
now be denoted as CARE B+/CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The ratings have been revised on account of decline in scale of
operations in FY17 (refers to the period from April 1 to
March 31) and absence of feedback from the lenders. The ratings
also takes into account small scale of operation, susceptibility
of profitability to volatile raw material and finished goods
prices, lack of backward integration, intense competition due to
fragmented nature of the industry and working capital intensive
nature of operations. The above constraints are partially offset
by the experience of the promoters, strategic location of the
plant and moderate capital structure.
Detailed description of the key rating drivers
The ratings have been revised on account of decline in scale of
operations in FY17 (refers to the period from April 1 to
March 31) and absence of feedback from the lenders.
Key Rating Weaknesses
Decline in scale of operation with stable financial performace in
FY17: The total operating revenue of the company declined to
INR97.55 crore in FY17 from INR130.71 crore in FY16. PBILDT
margin, however, improved to 4.20% in FY17 from 2.85% in FY16.
Interest coverage ratio stood at 2.48x in FY17 vis-a-vis 2.25x in
FY16. The company reported GCA of INR2.11 crore vis-Ö-vis debt
repayment obligation of INR0.64 crore in FY17. BIPL's average
collection period continues to remain high at 166 days in FY17
(113 days in FY16).
Susceptibility of profitability to volatile raw material and
finished goods prices and lack of backward integration: Raw
material cost constitutes the major cost component of BIPL
constituting around 83% of the total cost of sales in FY17
(around 92% in FY16). BIPL does not have backward integration for
its major raw materials i.e. billets & ingots and purchases the
same from the open market. Hence, any adverse movement in raw
material price without any corresponding movement in finished
goods price might affect the profitability of the company. Though,
the prices of finished goods generally move in tandem with that of
raw materials; however with a time lag.
Fragmented nature of industry and presence of unorganized players
intensifies price based competition: BIPL is engaged in the
manufacturing of MS angles, channels (long products) and MS flats,
the industry of which is characterized by high fragmentation
mainly due to presence of a large number of unorganized players.
Indian steel industry is characterized as fragmented and
competitive especially in the downstream segment.
Key Rating Strengths
Experienced promoters: The promoter, Mr. R. Chaudhary, has more
than two decades of experience in iron and steel related business.
Currently he looks after the overall management of the company and
also heads the marketing division. He is ably supported by other
directors.
Strategic location of the plant in proximity to raw material
sources & customer base: BIPL's unit is located at Raniganj, West
Bengal. As Eastern India serves as a steel manufacturing and
consuming hub due to its large iron ore and coal reserves, BIPL
avails operational advantages from its strategic location.
Furthermore, the major raw materials (billets and ingots) are also
sourced from local manufacturers resulting in reduction in freight
costs and easy availability of materials. Additionally, BIPL's
clients are largely located in the state of West Bengal resulting
in low transportation cost and timely delivery of products.
Proximity to both raw materials sources and customers results in
significant freight cost reduction. Moderate capital structure:
The capital structure of the company continued to remain moderate
marked by debt equity ratio at 0.13x and overall gearing ratio at
1.07x as on March 31, 2017, as against 0.21x and 1.21x,
respectively, as on March 31, 2016.
Baba Ispat Pvt. Ltd. (BIPL) was promoted by Mr. Rajendra Chowdhury
and Mr. Deepak Sonthalia in 2002. The company started operation in
Raniganj (Burdwan) from November 2004 for manufacturing of iron
and steel related products like MS angles, channels and flats. The
installed capacity of the company as on Mar 31, 2016 was 60,000
MTPA (increased from 30,000 MTPA in October 2012).
In FY17, BIPL achieved PAT of INR0.71 crore (as against PAT of
INR0.58 crore in FY16) on total operating income of INR97.55 crore
(Rs.130.71 crore in FY16).
BALAJI FOOD: CARE Assigns B+ Rating to INR7cr LT Loan
-----------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Balaji
Food Products (BAF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.00 CARE B+; Stable Assigned
Short-term Bank
Facilities 3.00 CARE A4 Assigned
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of BAF are constrained
by operation stabilisation risk, partnership nature of
constitution, regulated nature of the industry, high working
capital intensity and exposure to vagaries of nature and its
presence in a fragmented and competitive nature of industry.
However, the aforesaid constraints are partially offset by
extensive experience of the partners, close proximity to raw
material sources & favourable industry scenario.
The ability of the firm to stabiles its operations, achieve the
envisaged scale of operations, profitability margins and
efficient management of working capital will be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Operations stabilization risk: BFP has already setup its rice
milling and processing plant with an aggregate cost of INR5.62
crore funded at debt equity of 1.63x and it has started its
commercial operations since January 29, 2018. Since the firm is
into nascent stage of operations, the operations stabilization
risk exists. Going forward, the ability of the firm to stabilize
its operations, achieve envisaged revenue and profits will be the
key rating sensitivities.
Regulated nature of the industry: The Government of India (GoI)
decides a minimum support price (MSP - to be paid to paddy
growers) for paddy every year limiting the bargaining power of
rice millers over the farmers. The MSP of paddy was increased
during the crop year 2017-18 to INR1550/quintal from
INR1470/quintal in crop year 2016-17. Given the market determined
prices for finished product vis-a-vis fixed acquisition cost for
paddy, the profitability margins are highly volatile. Such a
situation does not augur well for the firm, especially in times of
high paddy cultivation.
High working capital intensity and exposure to vagaries of nature:
Rice milling is a working capital intensive business as the rice
millers have to stock rice by the end of each season till the next
season as the price and quality of paddy is better during the
harvesting season. Also, paddy cultivation is highly dependent on
monsoons, thus exposing the fate of the firm's operation to
vagaries of nature. Accordingly, the working capital intensity
remains high leading to higher stress on the financial risk
profile of the rice milling units.
Partnership nature of constitution: BFP, 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. 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.
Fragmented and competitive nature of the industry: BFP's plant is
located in Subarnapur, Odisha which is in close proximity to hubs
for paddy/rice cultivating region of Odisha. Owing to the
advantage of close proximity to raw material sources, a large
number of small units are engaged in milling and processing of
rice in the region. This has resulted in intense competition which
is also fuelled by low entry barriers. Given that the processing
activity does not involve much of technical expertise or high
investment, the entry barriers are low.
Key Rating Strengths
Experienced partners: The firm is being managed by Mr. Pradeep
Agrawal, aged about 40 years, having around decade long experience
in the rice milling industry through his associate concern 'Maa
Tara Rice Industries Private Limited'. He is being duly supported
by other partners who all are actively involved in the strategic
planning and running the day-to-day operations of the firm along
with a team of experienced personnel.
Close proximity to raw material sources and favourable industry
scenario: BFP's plant is located at Subarnapur district, Odisha
which is in the midst of paddy growing areas of the state. The
entire raw material requirement is met locally from the farmers
(or local agents), which helps the firm to save on substantial
amount of transportation cost and also procure raw materials at
effective prices. Further, rice being a staple food grain with
India's position as one of the largest producer and consumer,
demand prospects for the industry is expected to remain good in
near to medium term.
Established in February 2017, Balaji Food Products (BFP) was
promoted by the Agarwal family of Sambalpur, Odisha to set up rice
milling and processing plant in the state of Odisha. The firm has
setup its rice milling and processing plant with an aggregate cost
of INR5.62 crore funded at debt equity of 1.63x. The firm has
started commercial operations at its plant from January 29, 2018.
The rice milling and processing plant of the firm is located at
Subarnapur, Odisha with an aggregate paddy processing capacity of
19,200 metric tonnes per annum.
BHAGWAN MAHAVEER: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has rated Bhagwan Mahaveer
Memorial Jain Trust's (BMMJT) bank facilities as follows:
-- INR106.72 mil. Bank loans assigned IND BB/Stable rating;
-- INR138.28 mil. Fund-based working capital facilities assigned
with IND BB/Stable rating; and
-- INR5.00 mil. Non-fund-based working capital facilities
assigned with IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect BMMJT's high debt burden and weak debt
servicing capability. The trust's debt/CBBID improved to 11.90x in
FY18 (FY17: 27.29x) owing to an increase in CBBID to INR81.89
million in FY18 (INR35.19 million); although it remained high.
Debt/income was 78.32% in FY18 (FY17: 92.78%). Debt service
coverage ratio was weak at 0.37x in FY18 (FY17: 0.22x) and
interest service coverage ratio was 0.68x (0.33x). BMMJT serviced
its debt during FY17-FY18 through unsecured loans and donations
provided by the trustees. FY18 financials are provisional in
nature.
The ratings are also constrained by BMMJT's tight liquidity
position during FY14-FY18 due to continuous capex incurred towards
expansion of its existing hospital and construction of a new
hospital during FY13-FY16. In FY18, the available fund (cash and
unrestricted investment) cover to meet the trust's total debt was
1.23% (FY17: 0.93%) and operating expenditure was 1.03% (0.90%).
The available funds marginally increased to INR11.95 million in
FY18 (FY17: INR8.97 million).
BMMJT's operating margins rebounded to 4.24% in FY18 (FY17: 1.39%,
FY16: 5.15%) on the back of a 19.74% yoy increase in core
operating income to INR1,214.20 million, partially offset by a
16.28% yoy rise in staff cost and other operating expenditure to
INR1,162.76 million. During FY17, the operating margins declined
due to an increase in staff cost and other operating expenditure,
resulting from the ongoing capex. The trust increased its total
bed capacity to 600 beds in FY17 (FY16: 500 beds, FY15: 210 beds)
leading to a 20.4% yoy rise in staff costs to INR515.98 million
(FY16: up 29.83% yoy).
Despite the weak financial metrics, operating profitability is
likely to improve as trust does not foresee any significant
increase in staff cost in the near term. Moreover, Ind-Ra expects
revenue to grow on account of a likely increase in occupancy ratio
in both the hospitals.
The ratings are, however, supported by BMMJT's increasing revenue,
which grew at a CAGR of 17.33% to INR1,244.65 million over FY14-
FY18 (FY17: INR1,035.13 million). Hospital income and sale of
medicine were the major source of income, which contributed 75.89%
and 20.00%, respectively, to the total income during FY14-FY18.
The hospital income increased at a CAGR of 18.65% to INR960.91
million and sale of medicine grew at 16.98% to INR242.60 million
during the same period.
The ratings are further supported by BMMJT's strong operational
track record of three decades and strong financial support from
trustees in the form of unsecured loans (FY18: INR244.91 million,
FY17: INR233.08 million) and donations of INR488.28 million
received during FY14-FY18. Ind-Ra expects the support from the
trustees to continue, if required.
RATING SENSITIVITIES
Positive: A significant and sustained improvement in the operating
performance, coverage ratios and liquidity profile could trigger a
positive rating action.
Negative: A substantial fall in the revenue leading to weakening
of the operating profitability, tight liquidity and high debt
burden, all on a sustained basis, would trigger a negative rating
action.
COMPANY PROFILE
Established in 1975 as a public charitable trust in Bengaluru,
Karnataka, BMMJT operates a super specialty hospital in Vasanth
Nagar, Bengaluru. The hospital offers a wide range of specialty
services which include pulmonology, nephrology, gastroenterology,
cardiology, neurology, oncology, vascular surgery and pediatrics,
among others. In 2016, the trust constructed a second hospital
with 100-bed capacity in Giri Nagar, Bengaluru.
BHUSHAN STEEL: Ex-Managing Director Arrested Over Alleged Fraud
---------------------------------------------------------------
Reuters reports that Indian authorities arrested a former managing
director of Bhushan Steel Ltd on Aug. 9 over an alleged fraud,
after a probe found billions of rupees had been siphoned off by
the firm's founders from funds borrowed from state-run banks.
According to Reuters, the Ministry of Corporate Affairs said in a
statement that Neeraj Singhal, a member of the founding family,
was presented before a court and will be held in judicial custody
until Aug. 14.
It is fairly rare for influential industrialists or corporate
leaders to be arrested over fraud allegations in India, but
efforts to clean up state banks' bad loans has put more scrutiny
on their financial transactions, Reuters states.
Reuters relates that Singhal was indicted for "indulging in
serious corporate fraud punishable" under law, the Ministry of
Corporate Affairs, said.
The government alleged that the founders of Bhushan Steel had used
a "multitude of complex, fraudulent maneuvers to divert/
siphon-off funds" amounting to billions of rupees that had been
borrowed from state-run banks, causing losses to both banks and
investors, Reuters says.
"Another blow to Crony capitalism. No mercy for siphoning off
public money," Rajeev Kumar, the government's top bureaucrat
overseeing the country's banking sector, said in a Twitter post.
Bhushan Steel was among a dozen companies pushed to bankruptcy
court last year amid a government drive to whittle down a $150
billion mountain of bad loans choking credit at Indian banks.
The company, which owed more than $8 billion to creditors, was
taken over in May by Tata Steel in a more than $5 billion deal.
About Bhushan Steel
India-based Bhushan Steel -- http://www.bhushan-group.org/--
manufactures auto-grade steel.
Bhushan Steel is one of the 12 non-performing assets referred by
the Reserve Bank of India for National Company Law Tribunal
(NCLT) proceedings. NCLT admitted the bankruptcy plea against
the steel company filed by State Bank of India on July 26, 2017.
Bhushan Steel's total debt stood at around INR42,355 crore as of
March 31, 2017.
Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary of Tata
Steel, last week completed the acquisition of controlling stake
of 72.65 per cent in Bhushan Steel Ltd (BSL).
BONCON TRADE: CARE Lowers Rating on INR15cr LT Loan to B-
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Boncon Trade Private Limited (BTPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 15.00 CARE B-; Issuer not
Facilities co-operating; Revised from
CARE B+;Issuer not cooperating
on the basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from BTPL to monitor the rating
vide e-mail communications/letters dated July 2, 2018, July 4,
2018 July 5, 2018, June 29, 2018 May 29, 2018,and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite 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 BTPL's bank facilities will now be denoted
as CARE B-; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating have been revised on account of significant decline in
total operating income with losses registered by the company over
the last two years ended FY17 (refers to the period April 1 to
March 31) leading to complete erosion of net worth. The rating
continue to remain constrained on account of relatively small
scale of operations, working capital intensive nature of
operations with high inventory holding and receivables, its
presence in fragmented nature of industry and technology
obsolescence risk. The above weaknesses are partially offset by
the experience of the partners and established distribution
network.
Detailed description of the key rating drivers
At the time of last rating on April 18, 2017 the following were
the rating strengths and weaknesses (updated with the
information available ):
Detailed description of the Key Rating Drivers
Key Rating Weaknesses
Small Scale of operations along with losses registered: The scale
of operations of the company remained small with significant
deterioration in total operating income to INR0.43 crore in FY17,
restricting its financial flexibility. The company continues to
register cash loss over the last two years ended FY17 leading to
complete erosion of net worth.
Working capital intensive nature of operations: The liquidity
position of the company remained stretched with funds being mainly
blocked in receivables and inventory as reflected by high gross
current asset days.
Fragmented nature of industry: The mobile phone segment is highly
fragmented with a large number of organized and unorganized
players operating in the market. The company faces competition
other players operating in the same segment and also from low-
priced products from China in the mobile handset and accessories
segment.
Technology obsolescence risk: The mobile handsets and accessories
segment is characterized by rapid changes in technology keeping in
line with the changing customer preferences and requirements and
continuous innovation. Thus, the company faces the risk of its
products getting obsolete with the introduction of new
technologies.
Key Rating Strengths
Experienced Partners: BTPL is promoted by Mr. Sunil Somani and Mr.
Gaurav Somani having an experience of more than two decades in the
cellular phone trading business.
Established distribution network: The company has an established
the dealership network during the year in Tier I and Tier II
cities for ZTE Mobiles. Till December 2014, the company had 29
dealers for ZTE mobiles, which are continued for the current
distributorship of Samsung, Lenovo and Gionee. Furthermore, the
company has increased the number of distributors to 60. These
distributors further distribute the products to retailers across
India.
Incorporated in the year 2013, BTPL) is a part of Calyx Group
based out of Pune, Maharashtra. Till December 2014, BTPL
was engaged in distribution of smart phones of ZTE Telecom India
Private Limited (ZTE) through a contract with ZTE. However, in
FY15, the company discontinued the contract and is currently
engaged in wholesale trading of mobile handsets for Lenovo, Gionee
and Samsung (no contract). The company is registered with Amazon
India, Flipkart and Snapdeal for online selling.
CMC TEXTILES: Ind-Ra Assigns BB+ LT Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned CMC Textiles
Private Limited (CTPL) a Long-Term Issuer Rating of 'IND BB+'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR68.90 mil. Term loan due on April 2023 assigned with IND
BB+/Stable rating;
-- INR210.00 mil. Fund-based limits assigned with IND
BB+/Stable/IND A4+ rating; and
-- INR18.90 mil. Non-fund-based limits assigned with IND A4+
rating.
KEY RATING DRIVERS
Ind-Ra has taken a consolidated view of CMC group entities i.e.
CTPL, Mani More Synthetics Private Limited ('IND BB+'/Stable) and
Global Packaging ('IND BB'/Stable), to arrive at the ratings. All
the companies manufacture texturized yarn and fabrics.
The ratings are constrained by the modest consolidated margins due
to volatility in raw material prices in the textile industry.
According the FY18 provisional financials, ROCE was 5% and EBITDA
margin was modest at 4.10% (FY17: 4.67%) on account of higher
consumable expenses. Also, the consolidated credit metrics are
weak on account of high debt levels. The interest coverage
(operating EBITDA/gross interest expense) improved to 2.58x in
FY18 (FY17: 2.08x) due to the benefit of interest subsidy and net
leverage (adjusted net debt/operating EBITDAR) increased to 5.69x
(5.50x) because of the high net debt level of the group.
The ratings factor in the group's moderate liquidity, with average
maximum utilization of the fund-based limits being 98% for the 12
months ended June 2018.
The ratings, however, are supported by the group's medium scale of
operations, marked by revenue of INR2,474.46 million in FY18
(FY17: INR2,187.74 million). The revenue improvement was on
account of an increase in production capacity. Also, the working
capital cycle is short at 73 days in FY18 (FY17: 75 days) on
account of low receivable and inventory days.
The ratings are also supported by CMC group's promoters'
experience of more than three decades in the yarn and fabric
manufacturing industry.
RATING SENSITIVITIES
Positive: An improvement in the EBITDA margin leading to net
leverage reducing below 4.5x on a sustained basis would be
positive for the ratings.
Negative: Any deterioration in the revenue and EBITDA margin
and/or working capital cycle leading to net leverage being
sustained above 5.5x would be negative for the ratings.
COMPANY PROFILE
Incorporated in 2002 by Mr. Ajeet Yadav, Mr. Pawan Yadav, and Mr.
Dheerendra Yadav, the company manufactures texturized yarn and
fabrics with total installed capacity of 10,030 metric tons per
annum.
COSMIC FERRO: CARE Maintains D Rating in Not Cooperating Category
-----------------------------------------------------------------
CARE has been seeking information from Cosmic Ferro Alloys limited
(CFAL) to monitor the ratings vide e-mail communications
/letters dated May 29, 2018, July 10, 2018 July 17, 2018 and
numerous phone calls. However, despite CARE's repeated requests,
the company has not provided the requisite information for
monitoring the ratings. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the publicly
available information, which however, in CARE's opinion is not
sufficient to arrive at a fair rating. Further, CFAL has not paid
the surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating on CFAL's bank facilities will
continue to be denoted as CARE D; ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 84.65 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Short term Bank 122.05 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on July 17, 2017, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Delays in debt servicing: There are on-going delays in debt
servicing due to stretched liquidity position of the company.
Cosmic Ferro Alloys Limited (CFAL), incorporated in 2003, is
engaged in manufacturing of ferro manganese and silica manganese
with an installed capacity of 45 MVA (5 furnaces of 9 MVA each) at
Barjora, Durgapur, West Bengal. In April 2014, CFAL forayed into a
new product line, namely, Cold Rolled Form Sections (CRFS) by
setting up a new manufacturing facility of 18,000 MTPA in Singur,
West Bengal.
In FY17, CFAL reported loss of INR76.55 crore (loss of INR12.07
crore in FY16) on total operating income of INR169.00 crore
(INR226.42 crore in FY16).
DIVINE CONSTRUCTIONS: CRISIL Keeps B Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of Divine Constructions
(DCS) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 6 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with DCS for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of DCS, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on DCS is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of DCS continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
DCS, established as a partnership firm in 1993, is a civil
construction contractor and undertakes construction works for
buildings. The firm is a registered contractor with the central
government and state government and primarily undertakes
construction work for the various government departments and
entities in Odisha. It caters to some private parties as well. DCS
has a Super Class Contractor's License under the State Government
of Orissa and Super Class-1 civil Category under Central Public
Works Department, Government of India. The operations of the firm
are primarily managed by Mr. Susant Misra.
ELECTROSTEEL STEEL: NCLAT Upholds Sale to Vedanta
-------------------------------------------------
BloombergQuint reports that the National Company Law Appellate
Tribunal ruled that Vedanta Ltd. is eligible to bid for
Electrosteel Steels Ltd., upholding the sale of the debt-ridden
company to the Anil Agarwal-group firm.
BloombergQuint relates that a two-judge bench of NCLAT, headed by
SJ Mukhopadhaya, rejected appeals against Electrosteel Steels sale
to Vedanta. However, the lawyer for Renaissance Steel India Pvt.
Ltd., which had challenged the sale to Vedanta, said they would
move the Supreme Court against the NCLAT decision, the report
says.
The National Company Law Tribunal had approved a resolution plan
submitted by Vedanta for Electrosteel Steels in April, making it
the first among the 12 large stressed accounts identified by
Reserve Bank of India last year to get resolved under the
Insolvency and Bankruptcy Code, BloombergQuint notes.
BloombergQuint says the resolution plan involved close to INR5,300
crore cash payout and a haircut of 60 percent for lenders.
Electrosteel Steels owes banks more than INR13,000 crore, of which
about INR5,000 crore is to State Bank of India alone.
The resolution process began when SBI filed an insolvency plea in
the Kolkata NCLT against the company. The petition was admitted in
July 2017, BloombergQuint relates.
On April 17, the NCLT-Kolkata bench of Justice Jinan KR and
Justice Madan Balachandra Gosavi approved Vedanta's bid to acquire
Electrosteel Steels. According to BloombergQuint, the tribunal
rejected the objection by Renaissance Steel India Pvt. Ltd. It had
argued that Vedanta was ineligible to bid as one of its affiliates
was found guilty in Zambia of environmental regulations violation.
BloombergQuint adds that the company approached the NCLAT against
the order of the NCLT. The appellate tribunal, however, didn't
stop the process, allowing Vedanta to deposit INR5,320 crore to
acquire Electrosteel Steels. The tribunal also refused to stay the
delisting of Electrosteel Steels initiated by Vedanta.
About Electrosteel
Electrosteel Steels Limited operates in the steel manufacturing
industry in India. Its products include pig iron, billets, TMT
bars, wire rods, and ductile iron pipes. The company was
incorporated in 2006 and is headquartered in Kolkata, India.
GALLUS CV: Ind-Ra Affirms 'BB+' LT Rating on INR20.8MM Loan
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Gallus CV IFMR
Capital 2017 (an ABS transaction) as follows:
-- INR167.9 mil. Series A1 pass-through certificates (PTCs)
issued on August 10, 2017 has a 9.70% coupon rate due on
February 2022 affirmed with IND A- (SO) / Stable rating; and
-- INR20.8 mil. Series A2 PTCs issued on August 10, 2017 has a
15% coupon rate due on February 2022 affirmed with IND BB+
(SO) / Stable rating.
The new and used car (18.5%), commercial vehicle (28.7%), multi
utility vehicle (24.6%), and equipment (28.2%) loans assigned to
the trust at par have been originated by Ess Kay Fincorp Private
Limited (EKFPL).
KEY RATING DRIVERS
Originator's Servicing, Underwriting & Collection Capabilities:
The affirmation reflects adequate levels of credit enhancement
(CE), overall performance of the loans in the pool, and the
servicing, collection and recovery capabilities of EKFPL. The
agency is of the opinion that the issuer's origination and
servicing capabilities are of an acceptable standard. The
origination of loans is entirely an in-house mechanism and the
company sources loans directly. The company follows a
relationship-based origination model. It has separate sales and
collection team; therefore, the person sourcing the business is
not responsible for the collection process. EKFPL repossesses
vehicles only as the last resort. The borrower's capacity and
intention to pay is analyzed before repossessing the vehicle.
Lower Delinquencies in Pool: The rating affirmation is primarily
driven by a continuous satisfactory performance of the loan pool,
as depicted by significantly low peak 90 days past due (90+dpd) of
2.22% of original pool principal outstanding (POS;
INR415.03million) observed in the last 10 months since transaction
closing compared with an initial base case 90+dpd estimate of 10%-
11% for the assigned pool. As of May 2018 collection month, 90+dpd
delinquency was 1.51% of the original POS and 2.52% of the total
current POS, including over dues (INR248.7 million). The average
current collection efficiency observed in the pool for the last 10
months' loan performance since issuance was about 95.2%, while the
cumulative collection efficiency reached the aforesaid level of
95.2% as of end-May 2018. Additionally, the pool amortization of
40.14% till end-May 2018 provides significant cushion for the
unamortized PTCs to absorb considerably higher default stresses at
the affirmed rating level.
Availability of External Credit Support: According to the payout
report dated June 15, 2018, the available CE was INR14.53 million.
The transaction also benefits from the internal CE on account of
excess interest spread and overcollateralization. As of end-May
2018, the overcollateralization available to Series A1 PTCs was
INR72.67 million and Series A2 PTCs was INR51.87 million. There
has been no use of the CE until date, as the excess spread and
overcollateralization in the transaction have been sufficient to
absorb the shortfalls.
The current CE for PTCs increased to 5.85% of the total current
pool POS including over dues at end-May 2018 from 3.5% at the time
of closing of the transaction. The available CE is in the form of
fixed deposit with AU Small Finance Bank.
Key Pool Characteristics: At end-May 2018, the 1,845-loan pool had
a weighted average seasoning of 17.1 months and a weighted average
amortization of 42.8%, indicating a significant repayment track
record of underlying borrowers. The agency has also seen a
cumulative prepayment of 6.3% in the transaction in the last 10
months.
Key Assumptions: At the time of the initial rating, Ind-Ra derived
a base case gross default rate (90+dpd) in the range of 10%-11%.
The agency had analyzed the characteristics of the pool and
established its base case assumptions through the four key
performance variables, namely default rate, recovery rate,
recovery timeline and prepayment rate, which collectively affect
the credit risk in a transaction. In the last 10 months since the
transaction closing, the peak 90+dpd observed as a % of original
POS was 2.22%, which is well within the initial assumption. The
default rates (90+dpd) well within the initial assumption, the
significant repayment record of the underlying pool and the stable
performance of the loans in the pool have led to the rating
affirmation of the PTCs.
As per the agency's assessment, the current available CE provides
significant cushion to the Series A1 PTCs commensurate with the
stress level of 'IND A- (SO)' rating, and therefore has led to the
affirmation of Series A1 PTCs. Additionally, the peak default rate
(90+dpd) observed in the pool for the 10 months till the payout
date of June 15, 2018 is significantly lower than the base case
default estimate at the initial closing; hence, the current CE is
likely to withstand any further default-related stresses on the
future POS at the 'IND BB+ (SO)' rating level as well. This has
resulted in the affirmative rating action of Series A2 PTCs as
well.
RATING SENSITIVITIES
Ind-Ra conducted rating sensitivity tests for purchaser payouts.
If the assumptions of both base case default rate and base
recovery rate were simultaneously worsened by 20%, the model-
implied rating sensitivity suggests that the PTCs' ratings will
not be impacted.
COMPANY PROFILE
Incorporated in 1994, EKFPL is a systemically important asset
financing non-deposit-taking non-banking finance company
registered with the Reserve Bank of India. The company is engaged
in the financing of both new and used vehicles, the refinancing of
pre-owned vehicles and the provision of loans to small and medium-
sized enterprises. As of 30 September 2017, EKFOL had a network of
221 branches across Rajasthan, Gujarat, Punjab, Haryana, Madhya
Pradesh and Maharashtra. Its corporate and registered office is
located in Jaipur, Rajasthan. Mr. Rajendra K Setia is the founder
and managing director of the company.
At 1HFYE18, EKFPL had assets under management totaling INR10,168.1
million, with gross non-performing assets standing at 4.91%. The
company had a capital adequacy ratio of 15.50% at 1HFYE18 and
profit after tax of INR123.0 million in FY17.
GRAMCO INFRATECH: CARE Reaffirms 'B' Rating on INR9.32cr Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Gramco Infratech Private Limited (GIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 9.32 CARE B; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of GIPL is primarily
constrained on account of continuous decline in Total Operating
Income (TOI) with continuous net loss and cash loss in last three
financial years ended FY18 (FY refers to the period from April 1
to March31), weak solvency position and stressed liquidity
position. The rating is, further, constrained on account of its
presence in the highly fragmented as well as government regulated
industry and vulnerability of margins to fluctuation in
agriculture commodities prices. The rating, however, derives
strength from the experienced management with long track record of
operations in the agro commodity industry.
The ability of the company to increase its scale of operations
with improvement in profitability and better management of working
capital would be the key rating sensitivity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Continuous decline in Total Operating Income with net loss and
cash loss: TOI of the company has witnessed continuous decline in
the last three financial years ended FY18 owing to erratic
monsoon and low trading activity. As per FY18 provisional result,
the company has registered operating profit of INR0.45 crore as
against operating loss of INR0.56 crore in FY17 on account of
lower trading activity. Despite registering of operating profit in
FY18, it has registered continuous net loss and cash loss owing to
high depreciation and interest cost in last three financial years
ended FY18.
Weak solvency position and stressed liquidity position: The
capital structure of the company stood moderate with an overall
gearing of 1.17 times as on March 31, 2017, however deteriorated
marginally from 1.00 times as on March 31, 2016 mainly on account
of decrease in net-worth owing to net loss and increase in debt.
Further, the debt service coverage indicators of the company
remained weak marked by negative total debt to gross cash accruals
and below unity interest coverage.
The business of the company remained working capital intensive in
nature with elongated operating cycle at 114 days owing to high
inventory holding and collection period though offset by higher
creditors' period. Further the liquidity ratio stood weak marked
by current ratio and quick ratio stood at 0.31 times and 0.18
times respectively as on March 31, 2018. It has fully utilized its
working capital borrowings in last twelve months ended June 2017.
Key Rating Strengths
Experienced management: Mr. Ramnik Singh Saluja, director, is an
MBA by qualification and has more than three decades of experience
in the trading of agricultural commodities industry and metal
industry. He looks after overall affairs of the company.
Indore (Madhya Pradesh) based GIPL was incorporated in 2009 by Mr.
Ramnik Singh Saluja along with his family members. However, in
FY14, SIDBI Venture Capital Fund Limited took 10% shareholding in
the company by infusing of funds of INR0.10 crore and infused
INR7.40 crore in the form of Cumulative Convertible Preference
Share Capital for funding of its projects and working capital
funding. GIPL is mainly engaged in the business of warehousing,
grading and trading of agro commodities, soil testing, seeds
multiplication program and financing activities against warehouse
receipts. The company has seven warehouse located at Pivday,
Tinonia, Attotkhs, Binjal, Nanded, Titwas and Piplyanath. Further,
it has tied up with Bank of India for financing services to
farmers against warehouse receipts. It has grading process at all
locations for agro commodities like wheat, chana, soyabeans etc.
with 2,500 Metric Tonns Per Month (MTPM) at each location.
HANWANT FASTENERS: CARE Lowers Rating on INR5.41cr Loan to B
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Hanwant Fasteners Private Limited (HFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.41 CARE B; Issuer not Cooperating;
Facilities Revised from CARE B+; Issuer
not Cooperating on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from HFPL to monitor the
rating(s) vide e-mail communications/letters dated June 4, 2018,
May 29, 2018 and May 11, 2018 and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE is
unable to express opinion on the rating. In line with the extant
SEBI guidelines CARE's rating on Hanwant Fasteners Private
Limited's bank facilities will now be denoted as CARE B; ISSUER
NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised by taking into account no due-
diligence conducted due to non-cooperation by Hanwant Fasteners
Private Limited with CARE'S efforts to undertake a review of the
rating outstanding. CARE views information availability risk as a
key factor in its assessment of credit risk.
Further, revision in rating has also taken into cognizance of
decline in profitability margins. The rating is further remained
constrained by small scale of operations, leveraged capital
structure, working capital intensive nature of operations and
highly fragmented market resulting in intense competition from
unorganised and organised players. The rating, however, draws
comfort from experienced promoters.
Detailed description of the key rating drivers
At the time of last rating on March 30, 2017, the following were
the rating weaknesses and strengths (Updated for the information
available from the Registrar of companies):
Key rating weaknesses
Small scale of operations: The scale of operations marked by total
operating income and gross cash accruals of the company continues
to remain small at INR17.58 crore and INR0.69 crore in FY17 (FY
refers to the period April 1 to March 31). Furthermore, the
company's net worth base was remained relatively small at INR2.64
crore as on March 31, 2017. The small scale limits the company's
financial flexibility in times of stress and deprives it from
scale benefits.
Decline in profitability margins, leveraged capital structure and
weak coverage indicators: The profitability margins continued to
remain on the lower side due to its presence in highly competitive
and fragmented nature of the industry coupled with low value
addition in the product. The capital structure of the company
continues to remain leveraged marked by overall gearing ratio
which stood at 2.89x as on March 31, 2017. Furthermore, the debt
coverage indicators also stood weak due to low profitability and
high debt levels.
Working capital intensive nature of operations: Operations of the
company are highly working capital intensive marked by an average
operating cycle of 137 days in FY17.
Highly fragmented market resulting in intense competition from
unorganised and organised players: The industry is highly
fragmented with a large number of small and unorganised players
catering to the demand of the customers. HFPL faces stiff
competition from the other players present in the region as well
as from other large pan-India players.
Key Rating Strengths
Experienced promoters: Mr. Mahavir Singh is the director of the
company and looks after the general management and finance
department of the company. Mr. Hari Singh looks after the
operations department of the company. Both of them have more than
two decade of experience in manufacturing of fasteners through
their association with HFPL.
HFPL was incorporated in September 1994 and started its commercial
operations in March 1995. The company is currently being managed
by Mr Mahavir Singh and Mr Hari Singh. The company is engaged in
the manufacturing of fasteners mainly bolts.
ICON CABLES: CRISIL Maintains 'B' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Icon Cables Limited
(ICL) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.9 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 0.4 CRISIL A4 (ISSUER NOT
COOPERATING)
Proposed Fund-
Based Bank Limits 1.21 CRISIL B/Stable (ISSUER NOT
COOPERATING)
SME Credit 0.25 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Term Loan 0.24 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with ICL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of ICL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ICL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of ICL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Established in 1986, ICL manufactures various types of control and
instrumentation cables. It was taken over by Mr. N K Rathi in 2004
and since then has been managed by him and is based out of Delhi.
Its plant based in Neemrana, Rajasthan.
ILASAKAA STEELS: CRISIL Maintains 'B' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Ilasakaa Steels
Limited (ISL) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer
not cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 29 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 2 CRISIL A4/Stable (ISSUER NOT
COOPERATING)
Long Term Loan 0.25 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with ISL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of ISL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ISL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of ISL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
Ilasakaa was established in January 2009 by Mr. Ashwani Kumar
Sharma, Mr. Ashok Kumar Jain, Mr. Anand Kumar Bindal, and Mr. Ajay
Kumar Bindal (brother of Mr. Anand Kumar Bindal). The company has
been manufacturing steel CR strips and sheets since August 2010
and has its plant located in Bahadurgarh (Haryana) having an
installed capacity of 42000 tonnes per annum.
JAYESH INDUSTRIES: CRISIL Maintains B- Rating in Non-Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Jayesh Industries
Limited (JIL) continues to be 'CRISIL B-/Stable/CRISIL A4 Issuer
not cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .2 CRISIL A4 (ISSUER NOT
COOPERATING)
Buyer`s Credit 5.0 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Cash Credit 10.25 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 3.49 CRISIL B-/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Standby Line of 1.00 CRISIL B-/Stable (ISSUER NOT
Credit COOPERATING)
CRISIL has been consistently following up with JIL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of JIL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JIL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of JIL continues to be 'CRISIL B-/Stable/CRISIL A4
Issuer not cooperating'
JIL was earlier known as Amson Polymer Pvt Ltd, a company which
was taken over by the Shah family in 1995; following the takeover,
the name was changed to the current one. Mr. Jayesh Shah, the
director, manages the operations. The company manufactures
ferroalloy powders and lumps for the electrodes industry and steel
plants, respectively, and is based in Navi Mumbai (Maharashtra).
K D INFRA: CRISIL Maintains 'B' Rating in Non-Cooperating
---------------------------------------------------------
CRISIL said the ratings on bank facilities of K D Infra (KDI)
continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term
Bank Loan Facility 6 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Term Loan 10 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with KDI for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KDI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on KDI is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of KDI continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
KDI, a partnership firm, was set up in 2012 for setting up a
project to manufacture autoclaved aerated concrete blocks,
commonly known as fly-ash bricks at Changsari in Guwahati (Assam).
The plant is estimated to have an installed capacity of 180,000
cubic metres of fly ash bricks a year. The project is expected to
cost INR430.5 million, which will be funded through debt of INR250
million and equity of INR180.4 million.
K.B. GEMS: Ind-Ra Affirms 'BB+' LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed K.B.Gems' (KBG)
Long-Term Issuer Rating at 'IND BB+'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR240 mil. Fund-based cash credit affirmed with IND
BB+/Stable/IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects KBG's continued modest scale of
operations. The ratings also reflect the company's modest credit
metrics and modest operating EBITDA margin due to the commodity
nature of business.
KBG's revenue declined to INR1,084.5 million in FY18 (FY17:
INR1,162.1 million), EBITDA margin fell to 4.7% (5.3%), interest
coverage (gross interest expense/operating EBITDAR) reduced to
2.4x (2.8x) and net leverage (total net adjusted debt/operating
EBITDAR) increased to 3.3x (2.9x). Its return on capital employed
was 10.0% in FY18 (FY17: 13.0%). FY18 financials are provisional.
The revenue and EBITDA margin fell because of a fall in global
demand for diamonds. The metrics deteriorated primarily due to a
decrease in absolute EBITDA and an increase in total debt. FY18
financials are provisional.
The ratings reflect KBG's modest liquidity, indicated by an
average fund-based limit utilization of about 91% for the 12
months ended June 2018. Its net cash conversion cycle stayed
modest at 145 days in FY18 (FY17: 139 days) owing to a high
inventory holding period.
The ratings factor in the partnership nature of the firm.
However, the ratings remain supported by the partners' experience
of more than two decades in the diamond business.
RATING SENSITIVITIES
Negative: A substantial decline in the EBITDA margin, leading to
deterioration in the credit metrics, on a sustained basis, will
lead to a negative rating action.
Positive: Significant revenue growth, along with an improvement in
the credit metrics, on a sustained basis, will be positive for the
ratings.
COMPANY PROFILE
Mumbai-based KBG is engaged in the processing and export of cut
and polished diamonds. It is a family-owned business.
KANMANI POULTRY: CARE Assigns 'B' Rating to INR10.15cr Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Kanmani
Poultry Farm (KPF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.15 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of KPF are tempered by
small scale of operations with thin PAT margin, leveraged capital
structure and weak debt coverage indicators, working capital
intensive nature of operations, high customer concentration risk,
Cyclical nature of poultry industry and risk associated to any
outbreaks of bird flu and other diseases, highly fragmented with
intense competition from large number of players and Constitution
of the entity as partnership firm with inherent risk of withdrawal
of capital. The rating, however, derives its strengths from
experience of the partners, growth in total operating income,
satisfactory PBILDT margin with stable outlook demand of poultry
products.
Going forward, ability of the firm to increase its scale of
operations and profitability margins, improve the capital
structure and debt coverage indicators and manage working capital
requirements efficiently would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations
Despite long track record, the scale of operations of the firm is
small and marked by total operating income of INR35.91 crore in
FY17 coupled with moderate net worth base of INR2.39 crore as on
March 31, 2017 as compared to other peers in the industry.
Leveraged capital structure and weak debt coverage indicators
The capital structure of the firm was leveraged during review
period. The debt to equity and overall gearing ratio of the
company though improved from 2.38x and 5.11x respectively as on
March 31, 2016 to 1.43x and 4.55x respectively as on
March 31, 2017 due to increase in net worth at the back of
accretion of profits to capital and decrease in debt levels
mainly due to repayment of term loans remained leveraged.
The debt coverage indictors of the firm have been weak during
review period. TD/GCA deteriorated from 11.40x in FY16
to 12.63x in FY17 mainly due to increase in utilization of working
capital bank borrowings. However the Interest coverage
ratio has improved from 1.69x in FY16 to 1.77x in FY 17 due to
decrease in interest cost.
Working capital intensive nature of operations: The firm operating
in working capital intensive nature of operations. However the
operating cycle of the firm remained moderate and stood at 68 days
in FY17. The firm receives the payment from its customers within
10-20 days. Further, the firm makes the payment to its suppliers
within 20-30 days from the date of receipt of invoice. The average
inventory period was between 3-4 months during review period due
to its nature of business where in the firm is required to keep
high inventory level of parent bird and raw material stock to feed
the birds in different growing stages and to mitigate fluctuation
in raw material prices. The average utilization of working capital
facility of the entity was 80% for the last 12 months ended May
31, 2018. Furthermore, 80% of the revenue comes from single
customer SKM resulting in high customer concentration risk.
Highly fragmented industry with intense competition from large
number of players and vulnerability of profits to raw material
price movements: KPF faces stiff competition in the poultry
business from large number of established and unorganized players
in the market. Competition gets strong with the presence of
unorganized players leading to pricing pressures. Going further,
low entry barriers in these highly competitive segments would lead
to oversupply situation which in turn may affect the profitability
of the entity. However, improved demand scenario of poultry
products in the country enables well for the entity. Maize is
relatively a small scale crop in India and being a rain-fed crop,
any monsoon failure will affect its harvest.
The Poultry industry consumes more than 50% of the domestic maize
production and its demand is expected to exceed the overall supply
in the future. As the poultry industry is virtually a buyers'
market, any sharp increase in raw material prices may not be fully
passed on to the consumers thereby affecting the profit margin of
the firm.
Cyclical nature of poultry industry and risk associated to any
outbreaks of bird flu and other diseases: KPF operates in a
cyclical industry on account of outbreaks of bird flu and other
diseases which can affect demand and cause prolonged impact on
margins and turnover. The firm margins are also susceptible to
volatility in feed prices in the poultry business.
Constitution of the entity as partnership firm with inherent risk
of withdrawal of capital: FAL, 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 the promoters for more than two decades in poultry
business KPF was established in the year 1990 and was promoted by
Mr. A. Balusamy (Managing Partner) has more than two decades of
experience in poultry business. Due to long term experience in the
poultry business, the promoters have good relations with supplier
and customers.
Growth in total operating income during review period: The total
operating income of the firm increased steadily y-o-y at a CAGR of
27.26% i.e., from INR22.17 crore in FY15 to INR35.91 crore in
FY17, at the back of increase in sales volume supported by
enhanced working capital limits as the operations of the firm are
working capital intensive.
Satisfactory PBILDT margin albeit fluctuating and thin PAT margin:
The PBILDT margin of the firm was comfortable during the
review period albeit fluctuating during review period and
decreased from 9.20% in FY16 to 5.49% in FY17 due to increase in
material cost and employee cost. The PAT margin has also been
fluctuating during the review period and decreased from 1.86% in
FY16 to 1.27% in FY17 on account of fluctuation in PBILDT margins.
Stable outlook demand of poultry products: Poultry products like
eggs and cull birds have large consumption across the country in
the form of bakery products, cakes, biscuits and different types
of food dishes in home and restaurants. The demand has been driven
by the rapidly changing food habits of the average Indian
consumer, dictated by the lifestyle changes in the urban and semi-
urban regions of the country. The demands for poultry products are
sustainable and accordingly, the kind of industry is relatively
insulated from the economic cycle.
Tamil Nadu based, Kanmani Poultry Farm (KPF) was established in
the year 1990 as a proprietorship firm and was promoted by Mr. A.
Balusamy. Further the firm has changed its constitution to
partnership firm in the year 2004. Presently the firm is managed
by Mr. P. Arumuga Gounder, Mr. A. Balusamy, and Mrs. B. Suseela,
all the promoters belongs to same family. Mr. A. Balusamy
(Managing Partner) has experience of more than two decades in the
poultry business. The firm is engaged in farming of egg laying
poultry birds (chickens) along with trading of eggs. The firm has
its plant located at Senjudaiyampalayam, Irrukkur (Post), Namakkal
district covering the area of 4.5 acres. The firm sells its
product eggs mainly to the customer SKM EGG Products Exports
(India) Limited (80%), which has an established position in the
egg distribution segment and remaining 20% from retailers located
in Tamil Nadu region. The firm mainly buys chicks (small chickens)
from Venkateshwara Hatcheries Private Limited and purchases the
raw materials for feeding of birds like maize, rice bran from
local markets within the Tamil Nadu.
L N CONSTRUCTIONS: CRISIL Maintains B- Rating in Non-Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of L N Constructions
(LN) continues to be 'CRISIL B-/Stable/CRISIL A4 Issuer not
cooperating.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 7 CRISIL A4 (ISSUER
NOTCOOPERATING)
Cash Credit 4 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with LN for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of LN, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on LN is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of LN continues to be 'CRISIL B-/Stable/CRISIL A4
Issuer not cooperating'
LN was established as a partnership concern by Mr. Sudarshan Reddy
and his family in 2004. The firm undertakes construction of
irrigation projects, roads, and bridges for the Government of
Andhra Pradesh and the Indian Railways. It is based in Hyderabad.
MAHALAXMI PADDY: CRISIL Maintains 'B' Rating in Non-Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Mahalaxmi Paddy
Products Private Limited (MPPL) continues to be 'CRISIL
B/Stable/CRISIL A4 Issuer not cooperating.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.76 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 1.60 CRISIL A4 (ISSUER NOT
COOPERATING)
Proposed Long Term
Bank Loan Facility 4.56 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Term Loan 2.08 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MPPL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MPPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of MPPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
Set up in 1990, MPPL is promoted by Mr. Arun Kumar Maheshwari and
family. The company mills and processes basmati and non-basmati
rice at its production facility in Mainpuri (Uttar Pradesh).
MAIMOON IMPEX: CRISIL Maintains 'B' Rating in Nn-Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Maimoon Impex L.L.P
(Maimoon) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 1 CRISIL A4 (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with Maimoon for
obtaining information through letters and emails dated
February 28, 2018 and July 31, 2018 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Maimoon, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on Maimoon
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of Maimoon continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
Established in 2009, Maimoon trades and processes industrial
paper, primarily kraft paper. The firm has a processing unit in
Bhiwandi (Maharashtra) and is promoted by Mr. Saifee Jani's sons,
Mr. Abiali Jani and Mr. Abifazal Jani.
MARUTHI CONSTRUCTIONS: CRISIL Keeps B Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Maruthi
Constructions - Visakhapatnam (MC) continues to be 'CRISIL
B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.5 CRISIL A (ISSUER NOT
COOPERATING)
Secured Overdraft
Facility 5.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MC for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MC is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of MC continues to be 'CRISIL B/Stable/CRISIL A4 Issuer
not cooperating'
Established in 2008, MC, is engaged in civil construction
pertaining to roads, culverts and other allied activities. The
firm is based out of Vishakhapatnam in Andhra Pradesh, MC is
promoted by Mr. UV Ramaraju and his family.
MARUTI EDUCATIONAL: CRISIL Maintains B Rating in Non-Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Maruti Educational
Trust (MET) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 3.75 CRISIL A4 (ISSUER NOT
COOPERATING)
Term Loan 8.25 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MET for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MET, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MET is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of MET continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
MET was established in 2009 in Noida (Uttar Pradesh) to operate
educational institutions offering graduate and post-graduate
courses. MET manages Noida International University (NIU) in Noida
(Uttar Pradesh), which includes 11 colleges that offer graduate
and post graduate courses in engineering, management, and
sciences. MET is planning to start new courses in medical school
for the students from FY 2016-17 onwards. The building and
infrastructure for all the five years of medical college is
complete the furnishing of classrooms with other medicine related
infrastructure already installed. The medical colleges is due for
Medical Council of India (MCI) inspection in January 2016 after
which the college will be able to start its operations with first
batch coming in month of September.
MUTHULAXMI SPINNING: CRISIL Maintains B Rating in Non-Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Muthulaxmi Spinning
Mills Private Limited (MSMPL) continues to be 'CRISIL B/Stable/
CRISIL A4 Issuer not cooperating.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 2 CRISIL A4 (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MSMPL for obtaining
information through letters and emails dated
February 28, 2018 and July 31, 2018 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MSMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MSMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of MSMPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'
Incorporated in 1996 by Mr. Shanmugavel, MSMPL manufactures cotton
yarn of 20s to 40s counts.
NAKSHTRA: Ind-Ra Maintains B- LT Issuer Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Nakshtra's
Long-Term Issuer Rating in 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 continue to appear as 'IND
B- (ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR70 mil. Fund-based working capital limits maintained in
Non-Cooperating Category with IND B- (ISSUER NOT
COOPERATING)/ IND A4 (ISSUER NOT COOPERATING) rating; and
-- INR20 mil. Proposed fund-based working capital limits
maintained in Non-Cooperating Category with Provisional
IND B- (ISSUER NOT COOPERATING)/ Provisional IND A4 (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
June 1, 2016. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Nakshtra manufactures and trades cotton and viscose fabrics along
with dress materials.
NEELAM DYEING: CARE Assigns 'B' Rating to INR7.39cr LT Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Neelam
Dyeing and Printing House Private Limited (NDPHL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 7.39 CARE B; Stable Assigned
Proposed Long-
term Bank
Facilities 0.61 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of NDPHL is constrained
by project stabilization risk, Nascent & small scale of
operations, low capitalization & weak debt coverage indicators.
The rating is further constrained by highly fragmented nature of
industry, customer concentration risk and susceptibility of
margins to volatile raw material prices. The ratings however,
derive strength from experienced promoters and their financial
support to the company and strategic location with easy access to
semi-finished material and labour. Ability of the company to
achieve the envisaged turnover, profitability and efficient
management of working capital cycle.
Detailed Description of Key Rating Drivers
Key rating Weakness
Project stabilization risk: NDPHL has completed partial project
and remaining project will complete by April 2018 at a cost of
INR17.00 crore, funded through debt of INR7.50 crore and remaining
through promoter's infusion. NDPHL leverage ratios are envisaged
to remain on the higher side as on March 31, 2017, because of
loans for the capex undertaken as well as the proposed bank
borrowings to meet the working capital requirements. In FY17, the
company has generated the revenue from trading of fabric; hence,
FY19 will be the first full year of operations. PBILDT margin is
expected to remain thin on account of the low value addition to
the product. As per the provisional results in 11MFY18, the
company has achieved total revenue of INR2.00 crore. The overall
project has been significantly debt funded, thus its ability to
operate its existing and expanded facilities at envisaged capacity
utilizations and generate sufficient accruals will be critical for
its credit profile.
Nascent & Small Scale of Operations: As discussed, the company
commenced partial commercial production in Jan 2014 and the entire
production will start from June 2018. Thus the overall operations
are at a nascent stage. In FY17, the company earned PAT of INR0.01
crore on a total of revenue of INR2.69 crore. Moreover, in
11MFY18, as well the company has earned revenue of only
INR2.00crore. With repayment commencing from Q4FY18, its ability
to use the capacity at envisaged utilization levels and
generate sufficient accruals, shall be critical from credit
perspective.
Low Capitalization & weak debt coverage indicators: NDPHL has a
small net worth (amounting to INR0.50 crore as on March 31, 2017),
which limits its financial flexibility to meet any exigency.
Moreover, due to low profitability and thereby lower accruals, the
overall debt coverage indicators are also remains weak in FY17.
Presence in highly fragmented industry leading to stiff
competition: NDPHL is engaged in the business of cotton, non-
cotton spinning, combing, cleaning, preparing, packing, weaving
and manufacturing which is highly fragmented with a high level of
competition from both the organized and largely unorganized
sector, along with the susceptibility of margins to volatile raw
material prices.
Key Rating Strengths
Experienced promoters and their financial support to the company:
NDPHL was promoted by Mr. Sandeep Singh and Ms. Neha having an
experience of 10 and 4 years respectively in the textile industry.
They look after the overall management of the company with the
support of Mr. Gaurav Arora who is the promoter of the company.
Furthermore, the promoters in past (FY17), have been providing
financial support in the form of equity (amounting to INR0.50
crore) and unsecured loans (amounting to INR1.79 crore) to meet
its operational requirement.
Strategic location with easy access to semi-finished material and
labour: NDPHL processing facility is located at Ludhiana which is
one of the textile hubs of India. The semi-finished raw material
i.e. raw fabric (both cotton and polyester) is easily available in
Ludhiana market; thereby the company enjoys proximity to
raw material resulting in lower transportation cost and relatively
easy availability. Moreover, skilled labour is also easily
available.
Neelam Dyeing and printing house private limited (NDPHL) was
incorporated in the year 2014 by Mr. Sandeep Singh and
Ms. Neha and it is engaged in processing of fabric on job work
basis and its full operation is expected to start from June
2018.
NILACHAL CARBO: CARE Assigns B Rating to INR6cr LT Loan
-------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Nilachal Carbo Metalicks Private Limited (NCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.00 CARE B; Stable Assigned
Short-term Bank
Facilities 9.00 CARE A4; Assigned
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of NCPL is constrained
by small scale of operation, weak financial risk profile,
profitability susceptible to volatility in raw material prices and
forex fluctuations, working capital intensive nature of operation
and cyclicality associated with the steel industry.
The ratings are however; derive strength from long experience of
the promoter in coal and coke industry, diversified application of
its product with close linkages with steel sector, favorable
location of the plant with close proximity to Paradip port. Going
forward, the ability of the company to increase its scale of
operation while maintaining profitability margin and ability to
maintain capital structure will continues to remain the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Weak financial risk profile: The total operating income of the
company has remained erratic over the last 4 years. In FY16
(refers to the period April 1 to March 31) the total operating
income declined by 31.37% from FY15 levels on account of cessation
of one of the large contracts due to which the company also
incurred losses. Thereafter the turnover witnessed continued
improvement since FY17 due to volume growth. The company reported
a loss at PBILDT level and extraordinary loss of INR33 crore
mainly on account of cessation of one of the contract which
resulted in write off of slow/non-moving inventory. Due to
high losses, the company's networth was eroded and it was unable
to service the debt obligation on time and the account was
classified NPA by SBI in March 2016. In March 2018, the company
has done an OTS with SBI by virtue of which its debt of INR65
crore has been settled for INR26.5 crore and the same has to be
paid off by March 2019 resulting in weak debt protection metrics.
Small scale of operation: With an installed capacity of 72,000
MTPA, NCMPL is relatively small player. With its small size, the
company does not get benefit from economies of scale and during
financial stress it may impact the business as compared to large
players in same industry.
Volatility in the prices of raw material and finished goods: The
coking coal prices are highly volatile in nature due to commodity
nature of product, whose prices are determined based on global
demand supply. Given that any sharp decline in raw-material prices
needs to be immediately passed on to consumers whereas any sharp
increase in finished goods prices are passed to the consumers with
a certain time lag, the profitability of the company is
susceptible to fluctuation in raw-material prices.
Customer concentration risk: Majority of the revenue for the
company is derived from few players in FY18, NCMPL derived around
98% of its revenue from top 5 customers and around 68% in FY17,
which shows indicates customer concentration risk.
Cyclical nature of steel industry: NCMPL is in the business of
manufacturing and trading of LAM coke which is required in the
manufacturing of steel products like pig iron, ferro alloys metals
etc. so there is a high degree of dependence on the fortunes of
the steel industry, which is cyclical in nature.
Key Rating Strength
Considerable experience of the promoters in coke industry:
Nilachal Carbo Metalicks Private Limited (NCMPL) commenced its
operation in 2003 under Dr. B D Chatterjee along with Mr.
Bibhudatta Panda. Subsequently, the entire stake was bought by Mr.
Panda. Mr. BD Panda started his career as a trader of imported
minerals and coal before venturing into LAM coke manufacturing and
having 27 years of overall experience.
Strategic location of the plant: Company imports its cooking coal
from Australia and its manufacturing unit is located at
Chadeidhara (Kalinganagar) Odisha near to Paradip port which
reduces the transportation cost.
Diversified application of NCMPL's product with close linkages
with steel sector: LAM coke is used in the production of steel and
ferro alloy. It is also used as a fuel for various iron/steel
foundries for lead smelting, non-ferrous metal casting etc.
Further it is also used by secondary steel producers, chemical
plants and pig iron producers.
Nilachal Carbo Metalicks Private Limited (NCMPL) was incorporated
in 2003 by Dr. B D Chatterjee along with Mr. Bibhudatta Panda.
NCMPL produces and sells sized coke-nut coke and coke fines with
the present installed capacity of 72,000 MTPA at Chadeidhara
(Kalinganagar) Odisha. The day to day operation of the company led
by Mr. Panda with the help of Mr. S.C Naik, Ex Executive Director
SAIL and Ex- Director Operations, Jindal Stainless Limited. The
management team includes another eight professionals from diverse
field of operations and management.
NORTECH POWER: CARE Migrates 'C' Rating to Non-Cooperating
----------------------------------------------------------
CARE Ratings has migrated the rating on bank facility of Nortech
Power Projects Pvt. Ltd. (NPPL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2.00 CARE C; Issuer not cooperating;
Facilities Based on best available
information
Short-term Bank 10.00 CARE A4; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from NPPL to monitor the ratings
vide e-mail communications/letters dated July 5, 2018 and July 12,
2018 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion is
not sufficient to arrive at a fair rating. Further, NNPL has not
paid the surveillance fees for the rating exercise as agreed to in
its Rating Agreement. The rating on NPPL's bank facilities will
now be denoted as CARE C/CARE A4; ISSUER NOT COOPERATING.
Users of this ratings (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The ratings take into account the instances of overdrawals in cash
credit account in the past, relatively small size of the company,
high average collection period leading to working capital
intensiveness of the business, vulnerability of margins to
volatile input prices, significant exposure in group companies and
moderate financial risk profile. However, the above constraints
are partially offset by satisfactory experience of promoters in
execution of hydroelectric power projects, stable financial
performance in FY17 (refers to the period from April 1 to March
31) and major clients being government departments/enterprises
leading to relatively low counterparty credit risk.
Detailed description of the key rating drivers
At the time of last rating in March 16, 2017, the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
Overdrawals in cash credit account: NPPL has been facing liquidity
problems on account of delays in receipt of dues from
its debtors resulting in frequent overdrawals in CC account in the
past.
High average collection period leading to working capital
intensiveness of the business: NPPL has a high average collection
period. Average collection period deteriorated from 322 days in
FY16 to 389 days in FY17, leading to working capital intensiveness
of the business. However, the major clients of the company are
central and state government organisations and hence, the default
risk is insignificant. Vulnerability of margins to volatile input
prices: The prices of all hydroelectric power equipments are
subject to price fluctuation. NPPL does not have price escalation
clause in its contracts and thus, is vulnerable to the increase in
costs.
Significant exposure in group companies: NPPL has significant
exposure to its group and associated companies. As on Mar.31,
2017, the company has an aggregate exposure of INR29.03 crore in
the form of investments and loans and advances to related parties.
This apart, NPPL has also extended corporate guarantee of
INR246.93 crore to the bank facilities of its group company.
Moderate financial risk profile: The overall gearing ratio of the
company (excl. interest bearing mobilization advances) stood at
0.70x as on Mar 31, 2017. Total debt/GCA stood at 14.47x in FY17
(22.10x in FY16).
Key Rating Strengths
Experienced promoters: The promoters of the company, Shri Praveen
Agarwal and Shri Vineet Agarwal have over a decade of experience
in the construction industry (mainly in execution of hydroelectric
power projects).
Major clients being Govt. departments and/or enterprises: NPPL has
mostly government enterprises, and/or departments as its clients
with Dept. of Hydro Power (DHPD), Govt. of Arunachal Pradesh,
Power & Electricity Dept., Govt. of Mizoram, awarding the maximum
contracts to the company. The major clients being government
enterprises, creditworthiness of them is a matter of comfort.
Stable financial performance in FY17: The total operating income
of the company was stable at INR33.37 crore in FY17 vis-Ö-vis
INR33.64 crore in FY16. PBILDT margin also remained steady at
9.75% in FY17 (9.35% in FY16). Interest coverage ratio was
comfortable at 1.85x in FY17. The company reported GCA of INR0.97
crore in FY17.
NPPL was incorporated in January, 1999, by Shri Praveen Agarwal
and Shri Vineet Agarwal. NPPL is engaged in setting up
hydroelectric power plants and infrastructure projects in the
North-Eastern States of India on a turnkey basis. It has
experience in setting up various mini, micro & small hydroelectric
turbo alternator sets along with other allied equipments and
control systems in remote rural areas. This apart, NPPL has also
been awarded contracts under Rajiv Gandhi Grameen Vidyutikaran
Yojana (RGGVY) for rural electrification.
In FY17, NPPL reported a PAT of INR0.77 crore (INR0.45 crore in
FY16) on a total operating income of INR33.37 crore (INR33.64
crore in FY16).
OPPO MOBILES: Ind-Ra Affirms BB LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Oppo Mobiles
India Private Limited's (OPPO) Long-Term Issuer Rating at 'IND
BB'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR7 bil. Non-convertible debentures (NCDs) issued on
September 30, 2016 ISIN INE793V08013 has a 3% coupon rate due
on September 30, 2019 affirmed with IND BB/Stable rating.
KEY RATING DRIVERS
Weak Financial Risk Profile: Ind-Ra expects OPPO to continue to
incur EBITDA losses till FY20 on account of thin gross margins and
high advertisement expenses, thus remaining vulnerable to the
refinancing risk arising from INR7 billion NCDs falling due in
September 2019. However, the company would be able to make
interest payments (INR210 million) using cash and equivalents
(unaudited FY18: INR5.4 billion).
OPPO had accumulated losses of INR6.86 billion on March 31, 2018.
The company's working capital cycle is completely funded through
trade creditors. EBITDA losses due to continued heavy
advertisement and sales promotion expenditure would lead to a weak
debt service coverage ratio, posing a refinance risk during the
redemption year.
Capex and Cash Flow: OPPO increased its assembling capacity to 15
million units per annum in FY18 (FY17: 9 million units). It is
setting up a greenfield facility in Greater Noida to meet the
increased demand requirements, which is likely to be operational
in FY20. OPPO incurred a capex amounting to INR6.1 billion during
FY17-FY18, which includes the land purchased and machinery for the
new facility. Capacity at the new facility would gradually
increase to 50 million units per annum by FY22. OPPO has received
the financial closure and approval under the Modified Special
Incentive Package Scheme of the Ministry of Electronics and
Information Technology for the plans.
Cash flow from operations increased to INR9.7 billion (FY17:
INR5.2 billion), majorly on account of an improvement in working
capital cycle to negative 84 days (negative 72 days) led by higher
payable days.
Sales Promotion to Weigh on EBITDA: The ratings are constrained by
the uncertainty over EBITDA turning positive in the near term.
EBITDA losses increased to INR5 billion in FY18 (FY17: INR2.2
billion), majorly on account of higher advertisement expenses of
INR14 billion (FY17: INR6 billion). The company expects to improve
its operating margins by rationalizing channel margins and
increasing sales through launching products across various price-
points, developing innovative products and strengthening offline
presence. The management however has indicated that it would
continue to spend sizeable amounts (7%-10% of revenue) on sales
promotions.
Shift in Strategy; Reduced Market Share: OPPO's shipment market
share significantly declined year-on-year in 1Q18, due to the
combined effect of competitive pressure from Xiaomi Technology
India Private Limited's aggressive marketing strategy along with a
shift in OPPO's own strategy. As against its earlier strategy of
spending aggressively on advertisements at all retails outlets and
providing high margins to retailers to promote sales, the company
has reduced the margins offered to retailers and has rationalized
its distribution to be available at fewer counters which have
strong visibility and sales. This strategy would improve its
margins and enable it to make focused investments to increase
market share.
Management expects to achieve 10%-15% yoy revenue growth during
FY19-FY22, on account of new product launches and improved focus
on online and offline sales. However, gaining market share on a
sustained basis would be challenging, given changing customer
preferences and low brand loyalty.
Forex Risk; Intense Competition: The company imports over 95% of
its material requirements, which exposes it to foreign exchange
fluctuation risk. Also, intense competition leaves less
flexibility to pass on price increases to customers. However, the
company is increasing local manufacturing of printed circuit
boards, which make up around 50% of the smartphone's making cost,
which would reduce the impact of rupee depreciation.
Industry Risks: The ratings factor in industry risks such as rapid
technological changes, changing consumer preferences and
competitive pricing pressures. Other risks include forex
volatility resulting from imports; this is partially mitigated by
increasing the mix of indigenous sourcing/manufacturing.
RATING SENSITIVITIES
Positive: A sustained improvement in the overall financial risk
profile could be positive for the ratings.
Negative: Sustained deterioration in the overall financial risk
profile could be negative for the ratings.
COMPANY PROFILE
Incorporated in November 2013, OPPO is engaged in manufacturing
and selling of smartphones and wholesale trading of mobile spare
parts and accessories.
PADMESH BEVERAGES: CRISIL Maintains 'B' Rating in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Padmesh Beverages
(Padmesh) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 5 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 9.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Corporate Loan 0.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term
Bank Loan Facility 1.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Term Loan 1.82 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with Padmesh for
obtaining information through letters and emails dated
February 28, 2018 and July 31, 2018 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Padmesh, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on Padmesh
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of Padmesh continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Padmesh, established in 2002, manufactures and distributes Parle
products, such as Frooti, Appy Fizz, Love Litchi, Cafaa Cuba, LMN
lemon-, aqua- and orange-flavoured fruit drinks, and Bailey Soda.
The firm has exclusive distribution rights for Parle's products in
North-East India. Located at Satgaon in Guwahati (Assam), Padmesh
is managed by Mr. Manoj Kumar Agarwala.
PANKAJ STEEL: CARE Assigns B+ Rating to INR8cr LT/ST Loans
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Pankaj
Steel Corporation (PSC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.00 CARE B+; Stable/
Facilities/Short- CARE A4 (Assigned)
term Bank Facilities
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of PSC continue to be
constrained by small and fluctuating scale of operations, thin
profit margins and debt coverage indicators, highly working
capital intensive nature of operations, susceptibility of profit
margins to volatility of the raw material prices with foreign
exchange fluctuation risk and project execution and stabilization
risk associated with plant expansion project. The rating further
continues to be constrained by its presence in the existence in
highly competitive and fragmented nature of operations and
proprietorship nature of its constitution. The rating, continue to
derive strength from long track record of operations with
experience management, established relationship with moderately
diversified clientele & reputed suppliers and comfortable capital
structure.
Ability of PSC to increase its overall scale of operations along
with an improvement in profitability and efficient management of
the working capital are the key rating sensitivities.
Detailed description of the key rating drivers
Key rating Weakness
Small and fluctuating scale of operations: Despite about four
decades of existence in the business, the scale of operations of
the entity remained small and fluctuating with total operating
income (TOI) ranging from INR6.12 crore to INR9.49 crore during
the period of FY15 to FY17 owing to fluctuating demand from the
customers. Furthermore, tangible networth of the entity stood
small due to low capitalization led by thin profit margins. The
small scale of operations and tangible networth limits the
financial flexibility of the entity. Hence, ability of the entity
to increase the scale of operations and thereby capitalization
remained critical.
Thin profit margins and debt coverage indicators: The PBILDT
margin of PSC stood moderate and fluctuating in the range
of 7.93% to 14.16% during FY15-FY17. Furthermore, the profit
margins also depend upon the fluctuations in the raw material
prices. Moreover, owing to higher finance cost and fluctuating
PBILDT margin; the PAT margin remained thin and fluctuating in the
range of 0.13% to 1.38% during FY15-FY17. Nevertheless, the
margins continue to remain low and volatile. Furthermore, led by
thin profitability and comparatively higher reliance on debt, the
debt coverage indicators also stood weak.
Susceptibility of profit margins to volatility of the raw material
prices with foreign exchange fluctuation risk: The profit margins
are susceptible to the volatile prices of raw material viz. steel
as metal prices keep on fluctuating. Further, the entity imports
from China and Europe which contribute ~40% of total purchases.
Hence, the foreign exchange risk continues to persist, since any
adverse currency movements would have a bearing on the purchase of
the entity and eventually its profitability.
Highly working capital intensive nature of operations: The
operations continue to remain highly working capital intensive in
nature with funds blocked in receivables and inventory as the
entity offers its customers an extended credit period owing to an
established relationship as well as intense competition prevalent
in the industry and has to maintain high level of raw material
inventory to avoid fluctuations in the raw material prices and
also products are slow moving in processing industry. On account
of this, the utilization of the working capital limit remained
high.
Project execution and stabilization risk associated with plant
expansion project: PSC is undertaking an expansion project
at Khalapur plant location in order to carry out processing and
warehousing activity. The total cost of the project is
estimated at INR2.00 crore, which is to be funded by way of
internal accruals and unsecured loans.
Existence in highly competitive and fragmented nature of
operations: PSC operates in the highly competitive and fragmented
steel industry where it faces intense competition from other
established players from organized and unorganized sectors in the
steel trading industry across domestic and international markets
owing to low entry barriers. This is evidently reflected in the
fluctuating profit margins, since the entity is compelled to offer
its products at competitive rates to its customers.
Proprietorship nature of its constitution: Due to PSC being a
proprietorship entity, it has limited ability to raise capital as
it has restricted access to external borrowings where personal
networth and credit worthiness of proprietor affects
decision of prospective lenders. Further, it is susceptible to
risks of withdrawal of proprietor capital at time of personal
peril and poor succession decisions may raise the risk of
dissolution of the entity.
Key Rating Strengths
Long track record of operations with experience management: PSC
has an established track record of over 40 years of operations in
the trading of iron and steel in which it has established its
presence in the market and connects with various clients. The
operations of PSC are looked after by Mrs. Usha Agarwal who has
rich experience of 45 years in the industry. She is also
supported by the family members who have significant experience in
the steel trading business.
Established relationship with moderately diversified clientele and
reputed suppliers: Over the years of operations, PSC has
established long-term relationships with its customers based in
heavy engineering industry. The customer profile remained
moderately diversified and supplier profile of the entity is
reputed and diversified.
Comfortable capital structure: The capital structure of PSC stood
comfortable with an overall gearing of 0.89 times as on March 31,
2017 vis-Ö-vis 1.79 times as on March 31, 2016. The same has
improved on account of lower utilization of the working capital
borrowing as on balance sheet date along with repayment of term
unsecured loans and car loan.
Pankaj Steel Corporation (PSC) was established in the year 1978 as
proprietorship entity by Mrs. Usha Agarwal. The entity is into
trading of iron and steel, mainly of alloy steel having
application in heavy engineering. It also does processing jobs
like heat treatment, bending, etc. or gets it done on job work
basis as per customer requirements. The entity is also involved in
demolition activities of PSU discarded assets, prior it was into
ship breaking. PSC is also involved in exports of handmade paper
to United States and Germany (contributes ~5% to TOI in FY17)
which it procures locally. PSC procures steel from China, Europe
(imports contribute ~40% of purchases) and domestic market and
sells domestically across Karnataka, Tamil Nadu, Delhi, Haryana,
Gujarat and Maharashtra. PSC has three group companies M/s
Balbirchand Agarwal which is into commissioning business in steel,
Poonam Steel Industries which is into trading of Steel & Iron and
Ferromet Forge Pvt Ltd is into manufacturing of forged products.
PSC has its plant and godown situated at Khalapur and Navi Mumbai
and registered office in Mumbai.
PRATUL ENTERPRISES: CRISIL Maintains B Rating in Non-Cooperating
----------------------------------------------------------------
CRISIL said the rating on bank facility of Pratul Enterprises
Private Limited (PEPL) continues to be 'CRISIL B/Stable Issuer not
cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with PEPL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PEPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB Rating
category or lower'.
Based on the last available information, the rating on bank
facility of PEPL continues to be 'CRISIL B/Stable Issuer not
cooperating'
PEPL, incorporated in 2012, is promoted by Mr. Pradeep Garg and
Mr. Subodh Kumar. VIU, established in 2005, is a partnership set
up by the same promoters. MIU, established in 2009, is a
proprietorship promoted by Mr. Pradeep Garg. All these entities
trade in thermo-mechanically treated bars and structural steel
products and are authorised distributors for KIL's steel products
in Punjab.
R.S. ENTERPRISES: CRISIL Maintains D Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of R. S. Enterprises
(Ludhiana) (RSE) continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL D (ISSUER NOT
COOPERATING)
Foreign Exchange 3 CRISIL D (ISSUER NOT
Forward COOPERATING)
Proposed Long Term 2.95 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 6.05 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with RSE for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of RSE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RSE is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB Rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of RSE continue to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
RSE was established in 2001 as a proprietorship concern in
Ludhiana (Punjab) by Mr. Rachit Tuli. The firm manufactures
textiles and trades in fabric and has a knitting capacity of 8
tonnes per day. The proprietor's family has over six decades of
experience in the textiles industry.
REGENT BEERS: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Regent Beers &
Wines 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 the rating. The rating will now
appear as 'IND BB (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR110 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB (ISSUER NOT COOPERATING)
rating;
-- INR34 mil. Long-term loans due on June 2019 migrated to non-
cooperating category with IND BB (ISSUER NOT COOPERATING)
rating; and
-- INR6 mil. Non-fund-based working capital limit migrated to
non-cooperating category with IND A4+ (ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
August 7, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Regent Beers & Wines manufactures beer in its 300,000 hectoliters
brewery located in Maksi, Madhya Pradesh.
RIO CERAMIC: CRISIL Maintains 'B' Rating in Non-Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Rio Ceramic Private
Limited (RCPL) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.3 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 2.75 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 2.95 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 5.50 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with RCPL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of RCPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of RCPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
RCPL, incorporated in 2014 and promoted by Morbi (Gujarat)-based
Mr. Ashokbhai Rupala and Mr. Shamjibhai Patel, manufactures wall
tiles at its facilities in Morbi.
ROSA POWER: Ind-Ra Lowers Long Term Issuer Rating to 'BB'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Rosa Power
Supply Company Limited's (RPSCL) debt facilities as follows:
-- INR32,760 mil. Rupee term loan due on September 30, 2024
downgraded with IND BB/Negative rating; and
-- USD192.19 mil. External commercial borrowing due on December
31, 2023 downgraded with IND BB/Negative rating.
The downgrade and Negative Outlook reflect RPSCL's strained
liquidity due to continued movements of funds to the sponsor
entity and delays in obtaining approval for the additional capex
leading to lower revenue realizations. The approval of capex by
the regulatory authority before September (given chunky repayments
in the month), timely release of payments by Uttar Pradesh Power
Corporation Ltd (UPPCL) to the project, flow of funds to other
entities or reverse flow of funds back to the project and further
reduction in cash liquidity in the project are key rating
sensitivities.
KEY RATING DRIVERS
Liquidity Concerns Stemming from Intercompany Fund Transfers: The
downgrade and Negative Outlook stem from RPSCL's weakened
liquidity due to continued transfer of cash to the weak sponsor
(Reliance Power Ltd; 100% stake) in the form of inter-corporate
deposits (ICDs). This coupled with the absence of a debt service
reserve (after waivers from the lead lender) has curtailed the
liquidity at the project level. RPSCL provided around INR35.6
billion as inter-corporate deposits to Reliance Power at end-FY18
(FY17: INR32.7 billion; FY16: INR27.7 billion; FY15: INR26.1
billion).
RPSCL transfers funds to the sponsor on a monthly basis without
adequately buffering cash for the next month's servicing of the
senior debt. This leads to RPSCL's higher dependence on Reliance
Power than the project for cash. Had the funds remained within
RPSCL, there would have been sufficient liquidity of over INR2.0
billion, to take care of repayments in FY19. The escrow
arrangement, according to a power purchase agreement (PPA) with
UPPCL, ensures the credit of uninterrupted and regular funds to
RPSCL as against monthly payments from UPPCL. According to
management, the movement of excess cash to the sponsor is being
carried out after debt servicing by RPSCL and the lenders have
waived off the requirement of a debt service reserve considering
the satisfactory track record of the project. However, Ind-Ra
considers diminished liquidity due to these inter-corporate
deposits and absence of debt service reserve account a point of
concern.
Imminent Cash Flow Stress due to Pending Tariff Order on
Additional Capex: In the last surveillance exercise, the
management indicated that RPSCL has raised bills and would receive
monthly payments for the full INR5.17 billion of additional capex
in the short term. However, the continued non-payment of tariff by
UPPCL for the full additional capex further stresses the
liquidity. The management expects an expert committee set up by
Uttar Pradesh electricity Regulatory Commission to complete the
final tariff approval process and release payment latest by
September 2018. Given the chunky repayments in September 30, 2018,
any minor slippage could create a severe cash flow mismatch. Also,
a reduction of tariff because of some undischarged liability,
sharing of gains from operational efficiencies (to be deducted at
the time of true-up of tariff), reduced interest on working
capital, lesser secondary oil consumption for tariff computation
and other operating norms according to the commission's tariff
order dated Aug. 22, 2017 have added to the cash flow stress to an
extent. Trade receivables increased to INR18.01 billion at end-
FY18 from INR16.02 billion at end-FY17. Total cash balance as of 6
August 2018 was around INR600 million, according to the
information received by RPSCL management.
Stable Plant Operations: The project displayed a plant
availability factor of 92.58% and plant load factor of 76.02%
during FY18. The ratios during April-July 2018 were 83.98% and
57.90%, respectively, demonstrating stable plant availability to
claim the full fixed tariff in line with the PPA terms and
conditions. RPSL is eligible to receive the full fixed tariff,
subject to plant availability above the normative 85%. The plant
has been operating for over five years now, mitigating any
operational risk.
Mitigated Revenue Risk: RPSCL's rating is supported by a take-or-
pay clause in its PPA with UPPCL. All the major costs including
landed fuel costs are pass-through in nature, mitigating any
revenue risk. Also, full capacity charges can be recovered showing
an annual plant availability of above 85%. According to the PPA,
in case of a payment default by UPPCL under the escrow account
mechanism, RPSCL will have recourse to the government of Uttar
Pradesh's guarantee after 30 days of the default from the due date
of payment (just for Phase 1 of 600MW), which provides surety to
payments from the off taker.
Moderate Counterparty Risk: RPSCL is exposed to the single
counterparty credit risk, associated with the sale of electricity
only to UPPCL. Payments from UPPCL are secured through a default
escrow mechanism, apart from one month letter of credit which has
never been invoked by RPSCL till date. According to the mechanism,
UPPCL's end-consumers will directly deposit the billed amount in
an escrow account created for UPPCL. UPPCL has identified various
revenue circles with average monthly revenue of about INR3,570
million. The escrow cover is sufficient to cover monthly billing
for the entire 1,200MW project capacity.
Manageable Fuel Supply Risk: RPSCL has signed a firm fuel supply
agreement with Central Coalfields Ltd for 4.69MTPA of E-Grade
coal. The majority of coal consumed is from this linkage and the
balance minor requirement is met through domestic e-auctions,
showing nearly 100% availability of low-cost domestic coal.
Although the average distance between the plant and the coal
source of around 900km for the linkage coal translates into high
transportation costs and high tariffs, PPA is cost pass-through in
nature.
Investments in other Group Companies: RPSCL invested about
INR4,020.2 million and INR399.6 million in its group companies
Vidarbha Industries Power Limited and Kalai Power Private Limited,
respectively, at end-FY18 through equity and preference shares.
RATING SENSITIVITIES
Negative: Inability to achieve availability above the normative
figure for any financial year (due to coal availability or other
issues), deterioration of the operational or financial
performance, delays in obtaining the final tariff approval for the
additional capex beyond 30 September 2018 or further tightening of
operating norms for tariff computation, a further increase in
receivables, continued intercompany fund movements to the sponsor
or any other group company and a further reduction in cash
liquidity available with the project can result in a negative
rating action.
COMPANY PROFILE
RPSCL is a coal-fired thermal power plant located in Rosa,
Shahjahanpur District, and Uttar Pradesh.
RPSCL has set up a 1,200MW (4 X 300MW) power plant in two phases
of 600MW (2 X 300MW each) capacity. The project site is located
4km from the Rosa railway station, about 160km from Luck now. The
phase I commenced commercial operations in July 2010, while the
phase II came online in April 2012.
Reliance Power's generation capacity is about 6,000MW, majorly in
thermal power and some renewable capacity. Its operational
projects apart from RPSCL include Butibori project in Nagpur,
Maharashtra (600MW), ultra-mega power project in Sasan, Madhya
Pradesh (3,960MW), and a solar PV project in Dhursar, Rajasthan
(40MW), and a concentrated solar power project in Pokhran,
Rajasthan (100MW) and a wind project in Vashpet, Maharashtra
(45MW).
SAI CONSTRUCTION: CRISIL Maintains B Rating in Non-Cooperating
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the
bank facilities of Sai Construction and Builders (SCAB).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 1 CRISIL B/Stable (Assigned)
Bank Guarantee 14 CRISIL A4 (Assigned)
Cash Credit 5 CRISIL B/Stable (Assigned)
The ratings reflect the long experience of its promoters in the
civil constructions industry and weak financial risk profile,
marked by moderate gearing and debt protection metrics. These
strengths are partially offset by small scale of operations in the
competitive civil construction industry and working capital
intensive operations.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations in a competitive civil constructions
industry: Scale of operations is modest as reflected in revenue of
INR 17.83 crore in fiscal 2018. Revenue is expected to remain
around 35-50 crores over the medium term. Small scale limits
bargaining power with customers, resulting in moderate operating
margin. Moreover, SCAB is exposed to intense competition in the
civil construction industry which is highly fragmented, with the
presence of large organised players and several unorganised
players.
* Working capital intensive nature of operations: The company had
gross current assets (GCA) days of 805 days as on March 31, 2018,
indicating working capital intensive nature of operations.
Strengths
* Long experience of promoter in the constructions industry: The
business risk profile benefits from its promoters' extensive
experience in the civil construction industry. Over the past 28
years, Mr. Rajeev Tyagi, the key promoter, has developed a keen
understanding of the civil construction industry dynamics,
enabling the company to execute projects efficiently. Their
experience helped establish healthy relationships with key
stakeholders, thereby ensuring a steady order flow.
* Weak financial risk profile: The financial risk profile is weak,
on account of moderate gearing of 2.07 times and high TOLTNW ratio
stood at 2.95 times, net worth of INR11.42 crore as on March 31,
2018 and debt protection metrics as reflected in interest coverage
and net cash accrual to total debt ratios of 1.49 times and 0.05
times, respectively, in fiscal 2018.
Outlook: Stable
CRISIL believes SCAB will continue to benefit from the long
experience of promoter in the constructions industry. The outlook
may be revised to 'Positive' if sustained growth in scale of
operations and profitability, resulting in improvement in its
financial risk profile. Conversely, the outlook may be revised to
'Negative' in case of a sharp decline in revenues or profitability
or stretch in its working capital cycle, or if any larger-than
expected, debt-funded capital expenditure weakenthe financial risk
profile.
SCAB was established in 2012 as a partnership firm by Mr. Rajeev
Tyagi. It undertakes Civil Construction of buildings, roads, and
electricity works among others.
SAR SENAPATI: CARE Reaffirms B- Rating on INR265.79cr Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Sar Senapati Santaji Ghorpade Sugar Factory Limited (SSGSFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 265.79 CARE B-; Issuer not cooperating;
Facilities Based on best available
information
CARE has reaffirmed the ratings CARE B-; Issuer Not Cooperating
based on best available information. However, despite CARE's
repeated requests via email dated April 25, 2018, July 2, 2018 and
numerous phone calls, the company has not provided the requisite
information for monitoring the ratings and the management has
remained non cooperative. The current rating action taken by CARE
is based on best available information. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant SEBI
guidelines CARE's rating on SSGSFL, bank facilities will now be
denoted as CARE B-; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
SGSFL was incorporated on February 19, 2011 to undertake sugar &
sugar related production at Kolhapur. SGSFL is promoted by Mr.
Hasanrao Mushrif, chief promoter, along with Mr. Sajid Hasan
Mushirf, Managing Director (MD). SGSFL has a fully integrated cane
processing plant comprising sugar plant with crushing capacity of
4,800 tonnes of cane crushed per day (TCD), 30 Kilo Liters Per Day
(KLPD) distillery and bagasse fired co-generation unit of 22 mega-
watt (MW). The company has signed power purchase agreement (PPA)
with Maharashtra Electricity Distribution Company Limited (MSEDCL;
rated 'CARE A+ (SO)') for the off-take of the surplus power from
the co-generation unit of the plant post captive consumption.
During FY16, company expanded its sugar crushing capacity by
1,300 TCD taking its crushing capacity to 4,800 TCD for sugar
season 2015-16. The company has crushed 6.91 Lakh MT of
the sugar in the Sugar Season 2017-18 at the recovery rate of the
12.11%.
SBA EDUCATION: CRISIL Maintains 'D' Rating in Non-Cooperating
-------------------------------------------------------------
CRISIL said the rating on bank facility of SBA Education Society
(SBAES) continues to be 'CRISIL D Issuer not cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 10.1 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SBAES for obtaining
information through letters and emails dated
February 28, 2018 and July 31, 2018 among others, apart from
telephonic communication. However, the issuer has remained
non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SBAES, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SBAES is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB Rating
category or lower'.
Based on the last available information, the rating on bank
facility of SBAES continues to be 'CRISIL D Issuer not
cooperating'
Set up in May 2007, SBAES offers educational courses in
engineering and management. The trust owns two colleges ' Kruti
Institute of Technology and Engineering (KITE) and Kruti School of
Business and Management (KSBM) - in Raipur (Chhattisgarh). KITE,
started in 2008, offers graduate and post-graduate courses in
engineering. The institute is approved by the All India Council
for Technical Education and is affiliated to the Chhattisgarh
Swami Vivekananda Technical University, Bhilai (Chhattisgarh).
KSBM, started in 2012, offers graduate and post-graduate courses
in management and is affiliated to the Pandit Ravishankar Shukla
University, Raipur.
SBS TRANSPOLE: CARE Reaffirms D Rating on INR116cr ST Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of SBS
Transpole Logistics Pvt Ltd, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 100.00 CARE D; Issuer not cooperating;
Facilities Based on best available
Information (Reaffirmed)
Short-term Bank 116.00 CARE D; Issuer not cooperating;
Facilities Based on best available
Information (Reaffirmed)
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SBS Transpole to monitor
the rating(s) vide e-mail communications dated June 11, 2018;
June 30, 2018 and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In the absence of minimum
information required for the purpose of rating, CARE is unable to
express opinion on the rating. In line with the extant
SEBI guidelines CARE's rating on SBS Transpole Logistics Pvt Ltd
bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Detailed description of the key rating drivers
At the time of last review on July 13, 2017, the following were
the rating strengths and weaknesses:
Delays in debt servicing: There have been on-going delays by SBS
Transpole Logistics Pvt Ltd in servicing of its debt obligations.
The company was incorporated in August, 2004 by the name of
Transpole Logistics Private Limited and is engaged in integrated
logistics services. Subsequently, in Oct, 2014; the name was
changed to the current one, SBS Transpole Logistics Private
Limited (STLPL). STLPL is promoted by Mr Anant Chaudhary and Mr
Vivek Shukla and the company business segment offers general
logistics, including 3PL, international logistics, warehouse
logistics and various other multi-modal logistics solutions.
As per provisional results, the total operating income of the
company has declined to INR615.41 crore in FY16 (Prov.) as against
INR796.37 crore in FY15 (A).
SHIVPRASAD FOODS: Ind-Ra Lowers Long Term Issuer Rating to 'D'
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shivprasad
Foods and Milk Products' (SFMP) Long-Term Issuer Rating to 'IND D
(ISSUER NOT COOPERATING)' from 'IND BB- (ISSUER NOT COOPERATING)'.
The issuer did not participate in the rating exercise, despite
continuous requests and follow-ups by the agency. Thus, the rating
is based on the best available information. 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:
-- INR70 mil. Fund-based working capital limits (long-
term/(short-term) downgraded with IND D (ISSUER NOT
COOPERATING) rating;
-- INR48.4 mil. Term loan (long-term) due on September 2021
downgraded with IND D (ISSUER NOT COOPERATING) rating; and
-- INR80 mil. Proposed fund-based working capital limits (long-
term/(short-term) downgraded with Provisional IND D (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information
KEY RATING DRIVERS
The downgrade reflects SFMP's intermittent delays in debt
repayments over the 12 months ended July 2018, due to a stretched
liquidity position.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could result in a rating upgrade.
COMPANY PROFILE
Established in 2009 in Malshiras taluka of Solapur district, SFMP
is engaged in the processing of milk and manufacturing of milk
products.
SHREE RAJ: CARE Reaffirms B+ Rating on INR4.96cr LT Loan
--------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shree Raj Metalloys Pvt. Ltd. (SRMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 4.96 CARE B+; Stable Reaffirmed
Short term Bank
Facilities 2.00 CARE A4 Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SRMPL continue to
be constrained by its relatively small scale of operation,
volatility in prices of trading materials and forex rates, stiff
competition due to fragmented nature of the industry with presence
of many unorganized players, working capital intensive nature of
business and leveraged capital structure. The ratings, however,
derive strength from its experienced promoter with long track
record of operations, strategic location of the unit and
association with Exide Industries Ltd.
Going forward, ability of the company to increase the scale of
operations and profitability margins and ability to manage working
capital effectively will be the key rating sensitivities.
Detailed Description of the Key Rating Drivers
Key Rating Weaknesses
Relatively small scale of operation: SMPL is a relatively small
player in the iron & steel industry with total operating income of
INR13.62 crore and net profit of INR0.05 crore, respectively, in
FY18 (Prov.). Furthermore, total capital employed of the company
was at INR9.36 crore as on March 31, 2018 (Prov). As per
management, the company has booked the revenue of INR3.20 crore
during 1QFY19.
Volatility in prices of trading materials and forex rates: SMPL is
engaged in trading of iron and steel related products the prices
of which is subject to market fluctuations. Since, cost of traded
material is the primary cost driver of SMPL accounting for about
80% of the total cost of sales during FY18 (Prov.) any volatility
witnessed in the prices of traded products can narrow the
profitability margins. Further, the company does not have any long
term agreements with the suppliers and procures goods at market
price which is subject to price fluctuation risk. Further around
80% of the total purchase of SMPL are met through import from
Singapore, Thailand, Korea, Japan, U.K., Malaysia, thus, exposing
SMPL to foreign exchange rate fluctuation risk. SMPL has availed
forward contract to cover around 33% of the forex risk and does
not have any delineated policy to hedge the residual forex risk
and management enters into forward contracts based on market
conditions for the same. Further, being net importer of goods, the
impact of rupee depreciation can have an impact on SMPL's
operational performance.
Stiff competition due to fragmented nature of the industry with
presence of many unorganized players: The spectrum of the steel
industry in which the company operates is highly fragmented and
competitive marked by the presence of numerous players in northern
and eastern India. Hence the players in the industry do not have
pricing power and are exposed to competition induced pressures on
profitability. This apart, SMPL's products being steel related, it
is subjected to the risks associated with the industry like
cyclicality and price volatility.
Working capital intensive nature of business: SMPL's business,
being trading of iron and steel related products is working
capital intensive marked by high average inventory period and high
collection period. Though the operating cycle has improved
marginally to 232 days during FY18 on the back of improvement in
inventory period, the same remains high. The aforesaid reason led
to high utilization of its bank limit at around 95% during the
last 12 months ended on June, 2018.
Leveraged capital structure: The overall gearing ratio still
remains high at 1.94x as on march 31, 2018. However, the same
has improved on the back of repayment of term loan and accretion
of profit to reserve.
Key Rating Strengths
Experienced promoter with long track record of operations: Mr.
Navin Bansal, Mrs. Navita Bansal and Ms. Preksha Bansal are the
directors of SMPL and looks after the overall management of the
company. Mr. Navin Bansal having more than two decades of
experience in the iron & steel industry and are ably supported by
other directors, Mrs. Navita Bansal and Ms. Preksha Bansal along
with the team of experienced professional who have rich experience
in the same line of business. Further, SMPL commenced commercial
operation since July, 1991 and accordingly has a long track record
of commercial operations.
Strategic location of the unit: SMPL's unit is located at Kolkata
which is in the vicinity of industrial belt of Durgapur and
Jamshedpur where the trading materials are available in abundance.
The proximity to the trading material sources reduces the
transportation cost to the company. Besides, the region has large
number of steel manufacturers as well as end users. Hence, the
company has a large ready market to sell its products.
Association with Exide Industries Limited: During May 2018, the
company has entered into an agreement with a reputed brand namely
Exide Industries Limited for leasing out a property of 24,750
sq.ft. in Howrah for warehousing purpose. The lease is for seven
years with a lease rental of INR0.42 crore per annum.
Shree Raj Metalloys Private Limited (SMPL), incorporated in the
year 1991, is a Kolkata (West Bengal) based company, promoted by
Mr Navin Bansal, Mrs Navita Bansal and Ms Preksha Bansal. SMPL is
engaged in the trading of iron and steel related products like
iron and steel scrap, iron and steel waste and H.R. coils at its
facility in Kolkata (West Bengal). Mr. Navin Bansal, having more
than two decades of experience in the iron & steel industry, looks
after the overall management of the company along with the other
directors Mrs Navita Bansal and Ms Preksha Bansal and supported by
the team of experienced professionals.
SIDDHARTH INDUSTRIES: CRISIL Keeps B Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of Siddharth Industries
(SI) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3.5 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 4.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 1.5 CRISIL A4 (ISSUER NOT
COOPERATING)
Proposed Long Term 0.5 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with SI for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non-cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SI is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of SI continues to be 'CRISIL B/Stable/CRISIL A4 Issuer
not cooperating'
SI, a proprietorship firm, was set up by Vadodra (Gujarat)-based
Mr. Jagdeep Shukla in 2003. SIPPL, set up in 2012-13, undertakes
projects of supply and installation of substations and laying of
cables for various government agencies (registered as a 'class A'
supplier) and private organisations.
SKS BUILDTECH: CARE Lowers Rating on INR26cr LT Loan to 'B'
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
SKS Buildtech Private Limited (SKS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term bank 26.00 CARE B: Issuer not cooperating;
Facilities Revised from CARE BB-; based on
best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SKS to monitor the
rating(s) vide e-mail communications/letters dated June 14, 2018
and June 1, 2018, May 29, 2018 and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with the
extant SEBI guidelines CARE has reviewed the rating on the basis
of the publicly available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating. CARE's
rating on SKS Buildtech Private Limited bank facilities will now
be denoted as CARE B; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised by taking into account decline in
scale of operations, moderation in financial risk profile net
profitability, coverage indicators, capital structure, and
elonagation in operating cycle. The ratings are further
constrained on account of SKS's small scale of operations, its
working capital intensive nature of operations, risk arising from
SKS's presence in a highly competitive and fragmented industry.
The rating however, draws comfort from the experienced promoters,
moderate profitability margins and capital structure.
Detailed description of the key rating drivers
At the time of last ratings on April 18, 2017, the following were
the rating strengths and weakenesses:
Key Rating Weaknesses
Small scale of operations: The scale of operations of the company
continues to be small for the past three financial years FY15-FY17
(refers to the period April 1 to March 31). The small scale limits
the company's financial flexibility in times of stress and
deprives it from scale benefits.
Working capital intensive nature of operations: The operations of
the company continue to be working capital intensive owing to
higher inventory period. For the smooth execution of projects
inventory is required to be maintained at project site. Further,
the billing is normally done after the inspections which normally
take time which resulted into high inventory in semi-finished
form.
Highly fragmented and competitive industry: SKS faces direct
competition from various organized and unorganized players in the
market. There are number of small and regional players and
catering to the same market which has limited the bargaining power
of the company and has exerted pressure on its margins. Further,
the award of contracts are tender driven and lowest bidder gets
the work. Hence, going forward, due to increasing level of
competition and aggressive bidding, the profits margins are likely
to be under pressure in the medium term.
Key Rating Strengths
Experienced promoters: SKS was incorporated in 2004 by Mr Shiv
Kumar Sharma and other family members. Mr Shiv Kumar Sharma has
around three decades of experience in the construction of roads &
other civil works and looks after the overall affairs of the
company.
Moderate PBILDT margin and capital structure: The company majorly
undertakes projects which are awarded through the tender-based
system. Therefore, the margins largely depend on nature of
contract executed. The PBILDT margin and capital structure stood
moderate for the past two financial years i.e. FY16 and FY17.
Ghaziabad-based, (Uttar Pradesh) SKS Buildtech Private Limited
(SKS) was incorporated in 2005 as a private limited company and is
promoted by Mr Shiv Kumar Sharma and his family members Ms Sunit
Sharma, Mr Abhishek Sharma and Mr Sidharth Sharma. The company is
engaged in construction which involves construction of roads,
canals and EPC services which involves erecting and construction
of a power house. The company executes the projects mainly for
Public Work Departments (PWD) Lucknow, Noida Development Authority
(NDA) and Uttar Pradesh Power Transmission Corporation Limited
(UPPTCL) in Uttar Pradesh region.
SREE KARPAGAMOORTHY: CARE Assigns B+ Rating to INR7cr LT Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Sree
Karpagamoorthy, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.00 CARE B+; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Sree Karpagamoorthy
automobiles are primarily tempered by decline in total operating
income driven by fortunes of TATA Motors Limited and small scale
of operations along with leveraged capital structure, weak debt
coverage indicators, constitution of the entity as partnership
firm, working capital intensive nature of operations and intense
competition from large number of players.
However, the rating derives comfort from experience of partner in
automobile dealership business along with increasing profitability
margin, and positive outlook for auto and ancillary industry.
Going forward, the firm's ability to increase its scale of
operations, improve its profitability, capital structure and debt
coverage indicators and efficiently utilize its working capital
requirements are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Decline in total operating income and small scale of operations:
The Total Operating Income of the firm was found declining year-
on-year during the review period. The operating income dropped
from INR19.81 crore in FY15 to INR10.92 crore in FY17. It was
mainly due to decrease in demand as a result of stiff competition
from other major players in the market.
Leveraged Capital Structure and weak debt coverage indicators: The
capital structure of the firm stood leveraged during review
period. However the debt equity ratio below unity on account of
minimal borrowing from unsecured creditors. The overall gearing
ratio though improving year-on-year i.e., from 2.87x as on March
2015 to 2.79x as on March 2017, still remained leveraged.
The firm has weak debt coverage indicators, although improving
marked by PBILDT Interest coverage ratio improved from 1.14x in
FY15 to 1.21x in FY17 due to increase in PBILDT level and total
debt/GCA improved from 79.12x in FY15 to 43.98x in FY17 on account
of increase in cash accruals, still the debt coverage indicators
remained weak.
Working capital intensive nature of operations: The firm is
engaged into working capital intensive nature of operations, due
to average inventory period which stood at 380 days during FY17.
It was noted that the value of average inventory stood at INR10.3
crores during FY17. This is mainly due to accumulated car stock in
yard, excessive stock of slow moving spare parts to meet the
customer service requirement. The spares are procured on advance
payment by placing order based on sale and service level during
that of previous year. Due to elongated inventory days, the
operating cycle also elongated to 386 days. The operations of the
firm are dependent on working capital; and the average utilisation
of cash credit is 100% for the last 12 month ended June 30, 2018.
Performance of Sree Karapagamoorthy Automobiles linked to fortunes
of TATA Motors Limited: The firm is an authorised dealer of TATA
Motors Limited (TML) and the business risk profile is directly
linked to that TML in terms of delivery of vehicles, new product
launches and marketing effort undertaken to promote the sale of
its vehicles. The market share of TATA Motors Limited stood over
42.79% in FY17 and 43.95% in FY18. The company is riding on its
turnaround strategy which aims in regaining lost ground to rivals
in FY18.
Partnership nature of constitution: Constitution as a partnership
has the inherent risk of possibility of withdrawal of the 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.
Highly fragmented industry with intense competition from large
number of players: SKA faces stiff competition in the automobile
business from large number of established and unorganized players
in the market. Competition gets strong with the presence of
unorganized players leading to pricing pressures. However,
improved demand scenario of automobile products in the country
enables well for the firm.
Key Rating Strengths
Established track record and experience of the partner in
automobile dealership industry: Mr. K.R.C.T. Ganesan, the Managing
partner of the firm has about 15 years of experience in automobile
dealership business. The firm's major decisions and operations are
vested in him. The partners are supported by qualified and
experienced second level management team consisting of a technical
team includes technicians and administrative staff.
The vast experience of the key partner in the automobile segment
is to benefit the firm at large.
Five Operational showrooms and workshop: SKA has five operational
showrooms in Tamil Nadu located at various places i.e.,
Sivagangai, Ramnad, Paramakudi, Singampunari and Thondi, two
workshops and one stock yard in Sivangangai. Each showroom has a
display capacity of about 15 cars. The workshops have installed
facilities like lifts, ramps, wheel alignment machines and paint
booths for servicing the cars and stock yard has capacity to stock
up to 300 cars at a time.
Increasing Profitability margins albeit thin PAT margin: The
profitability margins are guided by TML as it fixes the ex-
showroom price as well the ex-factory price. The automobiles are
sold at a profit margin of 5% of ex-showroom price. The firm
reported increasing PBILDT margin during the review period. In
FY15 and FY16, PBILDT margin increased from 4.27% to 4.72%.
However in FY17 PBILDT margin almost doubled to 9.20% despite
declining operating income. This was mainly due to higher margin
associated with services and sale of spares as compared to margins
associated with sale of vehicles. Since the margin on sale of
automobile is quiet thin and also dependent on discounts and
promotions provided by the manufacturers, the firm has maximized
the margin level on account of sale of spares parts and services.
The firm has used product and service mix in order to avail
benefits of greater margin. PAT margin also improved year-on-year
as a result of improving PBILDT margin despite increase in
interest charges.
Sree Karapagamoorthy Automobiles was established by Mr. K.R.C.T.
Ganesan in the year 2003 and he is the Managing Partner of the
firm. The other partners include Mrs. Pandari Boi, Mr. G. Karpaga
Manikandan, Ms. G. Karpaga Priyanka. All partners are members of a
family and Mr. Ganesan takes care of the affairs of the business.
The registered office of the firm is located in Karaikudi,
Sivagangai district Tamil Nadu. It has four other branches and one
stock yard in Sivagangai and Ramanathapuram districts of Tamil
Nadu. The firm is the authorised dealer of TATA motors Limited
(TML rated ICRA AA; positive/ICRA A1+) for Heavy and Light
commercial vehicles. The firm's revenue is predominantly attracted
from sale of TATA ACE range of models, popularly known as "Chota
Hathi". It is also involved in purchase and sale of spare parts,
accessories and auxiliary items and services of TATA motor
automobiles. The firm purchases vehicles and spare parts directly
from TML manufacturing units in Gurgoan, Bangalore, Pantnagar, and
Kolkata.
SREENATH ENG'G: CRISIL Maintains 'B' Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of Sreenath Engg. Sales
and Service Private Limited (SESSPL) continues to be 'CRISIL
B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.5 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 3.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Letter of Credit .5 CRISIL A4 (ISSUER NOT
COOPERATING)
Proposed Long Term .5 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with SESSPL for
obtaining information through letters and emails dated February
28, 2018 and July 31, 2018 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SESSPL, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on SESSPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB Rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of SESSPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
SESSPL, incorporated in 2010, installs, maintains, and provides
after-sales support for high-value medical equipment. Its
registered office is in Kolkata and has branches in Dhanbad and
Ranchi (both in Jharkhand). Operations are managed by Mr. Kumar
Mitra and his son, Mr. Kaustav Mitra.
STRAIGHT EDGE: CARE Moves B Rating to Not Cooperating Category
--------------------------------------------------------------
CARE Ratings has migrated the rating on bank facility of Straight
Edge Contracts Private Limited (SKS) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term bank 10.00 CARE B: Issuer not cooperating;
Facilities CARE B: based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SKS to monitor the
rating(s) vide e-mail communications/letters dated June 14, 2018
and June 1, 2018, May 29, 2018 and numerous phone calls. However,
despite CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In line with the
extant SEBI guidelines CARE has reviewed the rating on the basis
of the publicly available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating. CARE's
rating on Straight Edge Contracts Private Limited bank facilities
will now be denoted as CARE B; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been reaffirmed by taking into account leveraged
capital structure, weak debt coverage indicators and elongated
operating cycle. The rating however draws comfort from moderate
profitability margins and experienced promoters.
Detailed description of the key rating drivers
At the time of last ratings on April 17, 2017, the following were
the rating strengths and weaknesses.
Key Rating Weaknesses
Leveraged capital structure: The capital structure of the company
improved but continues to remain leveraged on account of high
amount of unsecured loans. The overall gearing stood at more than
4x on the balance sheet dates of the past two financial years i.e.
FY16 and FY17.
Weak debt coverage indicators: The debt service coverage continues
to remain weak on account of account of high interest cost and
higher debt levels in the form of unsecured loans.
Elongated operating cycle: The operating cycle of the company
continues to be elongated owing to high inventory. The operating
cycle stood at 450 days for FY17.
Key Rating Strengths
Experienced promoters: Mr. Rajesh Nagpal has an experience of more
than a decade in the construction of residential flats. Before
this company, he was working with Gulshan Homz Pvt. Ltd. He looks
after he overall operations of the company with the support of Mr.
Sahil Nagpal and Mr Divam Kapoor.
Moderate profitability margins: The profitability margins of the
company the company continues to remain moderate as marked by
PBILDT margin and PAT margin of more than 22% and 2% respectively
for the past two financial years i.e. FY16 and FY17.
SEPL was incorporated in 2009, by Mr Rajesh Nagpal, Mr Sahil
Nagpal and Mr Divam Kapoor in 2009. The company is engaged in the
civil construction mainly of multi-storied residential buildings.
The company operates in the Delhi-NCR region. The company procures
orders through bidding process.
SWACHHA BEVERAGES: CRISIL Maintains D Rating in Non-Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Swachha Beverages
Private Limited (SBPL) continues to be 'CRISIL D/CRISIL D Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.2 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 2 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term
Bank Loan Facility 0 7 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 3.5 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SBPL for obtaining
information through letters and emails dated February 28, 2018 and
July 31, 2018 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SBPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SBPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB Rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of SBPL continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
SBPL was incorporated in Kolkata in January 2011. The company
processes and sells packaged drinking water, marketed in
collaboration with Eureka Forbes Limited under the Aqua Sure
brand.
SWADESHI ALUMINIUM: CARE Lowers Rating on INR18cr Loan to B
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Swadeshi Aluminium Company Private Limited (SAC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 18.00 CARE B; Issuer not Cooperating;
Facilities Revised from CARE B+; Issuer
Not Cooperating;
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SAC to monitor the
rating(s) vide email communications/letters dated June 1, 2018,
May 29, 2018, May 22, 2018 and numerous phone calls. However,
despite CARE's repeated requests, the firm has not provided the
requisite information for monitoring the ratings. In the absence
of minimum information required for the purpose of rating, CARE is
unable to express opinion on the rating. In line with the extant
SEBI guidelines CARE's rating on Swadeshi Aluminium Company
Private Limited's bank facilities will now be denoted as CARE B;
ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised by taking into account non-
availability of information and no due-diligence conducted due to
non-cooperation by Swadeshi Aluminium Company Private Limited with
CARE'S efforts to undertake a review of the rating outstanding.
CARE views information availability risk as a key factor in its
assessment of credit risk.
Detailed description of the key rating drivers
At the time of last rating on April 21, 2017, the following were
the rating weaknesses and strengths:
Key Rating Weakness
Small scale of operations: The total operating income of the
company continues to remain small and stood at INR43.46crore in
FY16 (FY refers to the period April 1 to March 31.) which
inherently limits the company's financial flexibility in times of
stress and deprives it of scale benefits.
Weak financial risk profile: The profitability margins continued
to remain on lower side due to its presence in highly competitive
and fragmented nature of the industry as marked by PBILDT and PAT
margin which stood at 5.02% and 0.59% respectively for FY16. The
capital structure of the company continues to remain leveraged on
account of high debt levels and low net worth base as marked by
overall gearing which stood at 4.17x on 31st March, 2016.
Furthermore, the debt coverage indicators also stood weak due to
high debt levels and low profitability as marked by interest
coverage and total debt to GCA which stood at 1.21x and 56.19x
respectively for FY16.
Raw material price fluctuation risk: The main raw material of the
company is aluminum scrap. The company is exposed to the raw
material price volatility risk due to volatility experienced in
the prices of aluminium. The company sources its raw material
requirements on the spot basis, and is thereby exposed to the
risks associated with raw material price fluctuations.
Highly fragmented market resulting in intense competition from
unorganised and organised players: The industry is highly
fragmented with a large number of small and unorganised players
catering to the demand of the customers. SAC faces stiff
competition from the other players present in the region as well
as from other large pan-India players.
Key Rating Strengths
Experienced promoters and long track record of operations: The
Company is mainly being managed by Mr. Satpal Nagpal. Prior to
SAC, he was engaged in trading of aluminum sections and ingots.
The company has a considerable track record in this sector, which
has resulted in long-term relationship with suppliers and
customers.
SAC was incorporated in 2002 and promoted by Mr Satpal Nagpal, Mr
Sanjay Nagpal, Mr Shyam Sundar Nagpal, Mr Som Nath Bhutani and Mrs
Kanta Bhutani. The company is mainly being managed by Mr Satpal
Nagpal. SAC is primarily engaged in the manufacturing of aluminium
alloy ingots and sections which find application in automobile
industry.
YSG CABS: CARE Lowers Rating on INR40cr LT Loan to B-
-----------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
YSG Cabs and Logistics Private Limited (YSG), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 40.00 CARE B-; ISSUER NOT COOPERATING;
Facilities Revised from CARE B; Stable;
Based on best available
information
CARE has been seeking information from YSG to monitor the rating
vide e-mail communications/letters dated May 2, 2018, May 14,
2018, May 30, 2018 and numerous phone calls. However, despite
our repeated requests, the company has not provided the requisite
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 YSG's
bank facilities will now be denoted as CARE B-; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating.
Detailed description of the key rating drivers
At the time of last rating done on December 27, 2017, the
following were the rating strengths and weaknesses:
Key Rating Weaknesses:
Small size of operations: YSG is a small player in the car rental
industry marked by its total operating income of INR13.74 crore
with GCA of INR0.44 crore in FY17. Further, the net worth base was
also low at INR12.90 crore as on March 31, 2017. Moreover, YSG has
reported PBILDT of INR2.06 crore, net loss of INR8.51 crore and
GCA of INR0.44 crore in FY17.
Capital intensive nature of operations with high repayment
obligations: The company is into car rental business and
accordingly it needs to procure vehicles for which it required lot
of capital investment at a time. Currently YSG has around 619 cars
running across 11 states of India. Furthermore the company has
plans to increase the cars numbers to 12000 within next five
years. Thus the company is dependent on external barrowings for
funding its capital investment. Further the company has high
repayment obligations for next three years and thus going forward,
the ability of the company to generate cash accruals as envisaged
from business is crucial for the company.
Leveraged capital structure and weak debt coverage indicators: The
capital structure of the company remained leveraged marked by debt
equity ratio and overall gearing ratios at 1.84x each as on March
31, 2017. Furthermore the interest coverage ratio also
deteriorated to 1.02x in FY17. The total debt to GCA deteriorated
as on March 31, 2017 and remained weak at 228.79x as on March 31,
2017.
Presence in highly competitive and fragment industry: Car rental
industry is a very competitive space due to low entry barriers
resulting into presence of numerous players in the industry which
further results in an intensely competitive environment especially
for small players like YSG. Further the organized players like Ola
cabs, Uber cabs, Meru cabs etc. also offering aggressive pricing
and better services making the industry as intensely competitive.
Due to high competition and offering better services, the car
rental service providers are facing pressure on their profit
margins. Going forward the highly fragmented and unorganized
nature of the industry may further result in intense price
competition and may lead to pressure on the company's
profitability in case of adverse situations.
Key Rating Strengths:
Extensive experience of the promoters: Mr. Kumar Vihaan has more
than two decades of experience in transportation and logistics
industry, looks after the day to day operations of the company. He
is supported by other promoter Mr. Raj Kumar Bamalwa who has also
more than two decades of experience in this line of business. The
promoters are well assisted by a team of experienced
professionals.
YSG was originally incorporated in the name of JAS Cabs Private
Limited in August 2009 and subsequently the name of the company
changed to Yo Cabs Private Limited in November 2010. However, the
company was taken over by the present promoters namely Mr. Kumar
Vihaan and Mr. Raj Kumar Bamalwa in December 2015 and the name of
the company changed to the current one (YSG) with effect from
February 02, 2016 (YSG). The company has been engaged in car
rental services. The company provide car to individual drivers on
daily subscription basis and the company attached each driver with
Ola and Uber cabs. The company bears repairs & maintenance,
insurance and road tax costs itself whereas the fuel cost is born
by the driver. The company take one time joining fee i.e.
INR25,000 and charge daily subscription of on an average of
INR1000 per day. The company currently has around 619 cars which
are operating across 11 states of India.
===============
M A L A Y S I A
===============
UTUSAN MELAYU: Defaults on MYR1.18 Million Loan Payments
--------------------------------------------------------
The Sun Daily reports that Utusan Melayu (Malaysia), which has
defaulted on another two loan payments totalling MYR1.18 million
due to financial constraints, proposes to undertake a private
placement to raise up to MYR2.1 million for the repayment of bank
borrowings.
It told Bursa Malaysia that the loan payments owed to Bank
Muamalat Malaysia Bhd and Maybank Islamic Bhd stand at MYR530,121
and MYR654,750, respectively.
According to Sun Daily, the report, the group said it intends to
submit a proposal to restructure the loan facilities with the
banks.
"In the meantime, the company is working towards restructuring all
its loan facilities in line with its business transformation
plan."
Early this month, Utusan Melayu also announced a loan default of
MYR2.96 million to Affin Bank, bringing the total amount of
default to MYR4.14 million, Sun Daily recalls.
The Sun Daily reports that Utusan Melayu said in a separate filing
its proposed private placement will involve an issuance of up to
11.07 million new shares representing about 10% of its issued
shares to third party investors.
Based on an indicative issue price of 19 sen per share, the
proposed private placement is expected to raise gross proceeds of
up to about MYR2.1 million, Sun Daily relays.
Utusan Melayu said it intends to use up to MYR2 million to repay
bank borrowings, while the remaining will be used for the private
placement expenses, relates Sun Daily.
The exercise is expected to be completed by the third quarter of
this year, Sun Daily adds.
Utusan Melayu (Malaysia) Berhad engages in the publication,
printing, and distribution of newspapers in Malaysia. The company
operates through Publishing, Distribution and Advertisements; and
Others segments. It publishes and distributes Utusan Malaysia,
Mingguan Malaysia, Kosmo!, Kosmo! Ahad, and Utusan Melayu Mingguan
newspapers; and Wanita, URTV, Harmoni, Mastika, Saji, Al-Islam,
Infiniti, iSihat, and Hijab Fesyen magazines, as well as
newspapers and magazines in digital form. The company also
publishes and distributes educational books for various levels of
education from pre-school to university; and children's books and
other general titles covering subjects.
===============
X X X X X X X X
===============
FIJI: S&P Affirms 'B+/B' Sovereign Credit Ratings, Outlook Stable
-----------------------------------------------------------------
On Aug. 8, 2018, S&P Global Ratings affirmed its 'B+' long-term
and 'B' short-term sovereign credit ratings on Fiji. The long-term
rating outlook is stable. S&P's transfer and convertibility
assessment on Fiji is 'B+'.
OUTLOOK
S&P said, "The stable outlook reflects our expectation that Fiji's
economy will continue to grow over the next 12 months despite the
impact from Cyclone Winston while the government's budget remains
in deficit. We expect the country's external position and foreign-
exchange reserves to remain steady.
"We may lower the ratings within the next 12 months if the
government's fiscal position weakens substantially beyond our
forecasts, leading net debt to rise toward 60% of GDP. A downgrade
could also occur if the political and policy environment becomes
unpredictable, causing a decline in domestic and foreign investor
confidence, and the withdrawal of donor and multilateral support.
"We may raise the ratings if Fiji's institutional setting
continues to improve after the coming election; an improving
institutional setting will support policy stability and economic
growth. At the same time, if the government loosens its foreign
exchange restrictions while maintaining a healthy level of
reserves, that may also result in upward rating pressure."
RATIONALE
S&P affirmed its rating on Fiji to reflect its view of the
country's weak institutional settings, limited monetary policy
flexibility, income levels, and fiscal deficits as rating
constraints. Mitigating these weaknesses are the government's
falling interest costs, stabilizing debt levels, and its sound
external position.
Institutional and Economic Profile: Economy continues to grow, but
institutional setting remains weak
-- The economy is recovering post-Cyclone Winston, entering the
ninth consecutive year of growth.
-- Institutional settings may improve after the next elections.
S&P said, "We expect Fiji's economic expansion--in its ninth year-
-to continue at about 3.5% per year between 2018 and 2021, driven
by tourism spending and investment, higher levels of consumption,
and public investments. Per capita GDP is growing about 3% per
year, and we estimate GDP per capita in 2018 at US$6,200--up by
25% since 2015.
Nevertheless, the country remains vulnerable to shifts in tourism
preferences and natural disasters. In 2017, the economy rebounded,
growing more than 4% after Cyclone Winston caused major damages
and disruptions in February 2016; growth was slower than we had
expected in 2016 at just 0.4%. Private property and equipment,
including housing, made up a significant proportion of the
damages, rather than government-owned infrastructure. Roads,
crops, and the sugar industry were also affected. The central
business district in Suva and key tourism areas around Nadi were
spared the brunt of the cyclone and incurred limited damage to key
infrastructure.
Rating support may improve after the elections if policy stability
boosts growth prospects. In the past few years, Fiji has been
politically stable and relations with the international community,
including donor agencies such as the Asian Development Bank and
the World Bank, have strengthened. During this period, GDP growth
remained steady, with the exception of 2016, due to the cyclone.
Fiji's political and social settings have historically been marked
by ethnic tension between its indigenous Fijian and the minority
Indo-Fijian communities, resulting in several military coups
during the past 20 years, with the most recent one ended in 2014.
There are no domestic conflicts and coups have had limited impact
on the economy or the tourism sector.
The effectiveness of policymaking remains mixed with limited
checks and balances. While the quality and timeliness of data is
improving, the government still has some deficiencies in this
area. Fiji is ranked 101st on the World Banks' "Doing Business
2018" survey, down from 81st in 2015.
Flexibility and Performance Profile: Deficits continue with debt
peaking in 2019
-- Deficits remain relatively high after cyclone reconstruction,
but S&P forecasts debt levels to fall after 2019.
-- A strong tourism sector supports the economy and Fiji's
external position.
-- Monetary flexibility is limited due to its pegged exchange
rate and foreign exchange restrictions.
S&P said, "We forecast Fiji's fiscal deficits to remain high at
more than 4% of GDP this fiscal year because the government's
spending, including forecasts for infrastructure, continues to be
higher than in the past. Deficits are unlikely to widen
significantly even if the government delays the sale of 44% of
Energy Fiji Ltd.; we believe the government's ambitious
infrastructure program will not be fully implemented in 2019.
Deficits widened to about 4.4% of GDP in fiscal 2018. Government
spending rose with higher public sector wages, tertiary education
spending, and infrastructure spending. In the years leading up to
this, Fiji's fiscal position was stronger than we expected, due to
robust growth in tax revenues after the government increased its
focus on compliance, and executed less than its planned
infrastructure program.
"We forecast the annual growth in general government debt will
slow to less than 3% of GDP after the reconstruction efforts in
2016 and 2017 resulted in borrowing that was higher than we
expected. Government spending related to Cyclone Winston was
roughly 5% of GDP in the two years and reconstruction continues.
This will boost the ratio of net debt to GDP to about 47% in 2019
before declining again. The government announced in its 2018-2019
Budget that it aims to reduce debt to less than 35% of GDP in the
coming years."
Interest costs could fall further in the future with the
government currently considering donor offers to refinance its
US$200 million bond due in 2020 at lower interest rates and longer
tenor. Interest expenditure continued to be below 9% of revenues.
This reflects improved market pricing on the refinancing of the
government's international bonds in 2015, a higher proportion of
concessional borrowings from the Asian Development Bank and World
Bank than in the past, and strong growth in government revenues.
In S&P's view, shortcomings in infrastructure and basic services
continue to constrain the government's budgetary flexibility.
However, the government receives financial and technical support
from the Asian Development Bank and World Bank for essential
infrastructure such as water sanitation and treatment, among other
projects.
Fiji's external metrics remain supportive of the ratings. External
liquidity (measured by gross external financing needs as a
percentage of current account receipts [CAR] and usable reserves)
is likely to average about 93% over 2018-2021. Meanwhile, external
borrowings (measured by narrow net external debt) are likely to
rise to more than 10% of CAR in 2018.
Risks to Fiji's fiscal and external metrics may deteriorate if
social and infrastructure spending are above S&P's current
expectations. If strong spending coincide with serious damage
dealt by another episode of adverse weather conditions, it could
exacerbate the weakening of credit support for the government.
However, this uncertainty could ease when fiscal priorities become
clearer after the next elections.
Weighing on its external metrics is Fiji's high reliance on
foreign financing, as indicated by its much greater level of net
external liabilities relative to narrow net external debt. This
potentially makes Fiji more susceptible to shifts in foreign
investor sentiment.
S&P said, "We expect tourism to support Fiji's services receipts
and external position as current account deficits persist at 9%-
10% of current account receipts. Strong tourism flows, inward
remittances for local residents, and foreign aid support the
current account. Official reserves remain comfortable at more than
US$900 million (about five months of import coverage). The
country's reliance on imports, especially oil, makes its current
account position vulnerable to rising global oil prices. In 2016,
Cyclone Winston resulted in higher imports for reconstruction and
lower goods exports (such as sugar and timber)."
In S&P's view, the Reserve Bank of Fiji has a constrained ability
to support sustainable economic growth while attenuating economic
or financial shocks. The pegged currency arrangements restrict the
country's monetary flexibility. The authorities have to focus on
exchange rate stability at the expense of stability in domestic
prices and economic growth. Further limiting monetary flexibility
is the lack of effective monetary policy transmission to the
economy, which is a result of Fiji's underdeveloped financial
system and strong liquidity within the system.
Extensive restrictions on foreign exchange can be a further
hindrance to supporting growth, although these have gradually
eased in recent years as Fiji rebuilt its official reserves, and
appear to be less of a concern to foreign investors.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee by
the primary analyst had been distributed in a timely manner and
was sufficient for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision.
The views and the decision of the rating committee are summarized
in the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
RATINGS LIST
Ratings Affirmed
Fiji
Sovereign Credit Rating B+/Stable/B
Transfer & Convertibility Assessment
Local Currency B+
Fiji
Senior Unsecured B+
*********
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
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objective is to share information, not make markets in publicly
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or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
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about which we report.
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Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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