/raid1/www/Hosts/bankrupt/TCRAP_Public/180903.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, September 3, 2018, Vol. 21, No. 174
Headlines
A U S T R A L I A
ASTUTE PROJECTS: Second Creditors' Meeting Set for Sept. 6
CALIBRE BUILDING: Second Creditors' Meeting Set for Sept. 10
CREATIVE COMMERCIAL: Second Creditors' Meeting Set for Sept. 10
ENVIRO ENERGY: First Creditors' Meeting Set for Sept. 10
IMPERIAL EAGLE: First Creditors' Meeting Set for Sept. 7
PREMIUM TRAVEL: First Creditors' Meeting Set for Sept. 7
SAAFIN CONSTRUCTIONS: Second Creditors' Meeting Set for Sept. 7
SPEEDCAST INTL: Moody's Affirms 'Ba3' CFR & Sr. Sec. Loan Rating
C H I N A
CHINA AOYUAN: Moody's Rates New Sr. Unsecured Notes 'B2'
CHINA AOYUAN: S&P Rates New USD-Denominated Unsec. Notes 'B'
GEMDALE CORP: S&P Rates New Guaranteed Sr. Unsecured Notes 'BB-'
LEECO: Unit Expects to Post 1H Net Loss of CNY1.1 Billion
MAOYE INT'L: S&P Alters Outlook to Stable & Affirms B- ICR
RONSHINE CHINA: S&P Alters Outlook to Stable & Affirms 'B' ICR
SINO CLEAN: 9th Circuit Affirms Case Dismissal
I N D I A
AISHWARYA TECHNOLOGIES: CARE Lowers Rating on INR7.11cr Loan to D
B.V.S. DISTILLERIES: CRISIL Lowers Rating on INR29cr Loan to D
BIDAR SOLAR: CARE Reaffirms 'D' Rating on INR76cr LT Loan
BINANI CEMENT: NCLAT Reserves Judgment on Insolvency Matter
BOSS PHARMA: CARE Assigns B Rating to INR4cr Long-Term Loan
CKOMPAX METATECH: CRISIL Cuts Rating on INR20cr Loan to D
CHAWLA INTERNATIONAL: CARE Moves B+ Rating From Not Cooperating
ELITE MOTORS: CARE Lowers Rating on INR7.39cr Loan to B
EMPEROR TEXTILES: CARE Reaffirms B+ Rating on INR2.53cr Loan
GARG ISPAT: CARE Lowers Rating on INR9cr LT Loan to D
GRACE MICRON: CRISIL Lowers Rating on INR6.75cr Loan to D
GREENERIES AGRO: CARE Assigns B+ Rating to INR10cr LT Loan
INDO GERMAN: Ind-Ra Lowers Long Term Issuer Rating to 'BB-'
INDUSTRIAL GLASS: CRISIL Migrates B Rating to Not Cooperating
JAMNADAS AND COMPANY: CRISIL Migrates D Rating to Not Cooperating
JOSEPH LESLIE: Ind-Ra Raises Long Term Issuer Rating to 'B-'
MANASA QUALITY: CRISIL Migrates B+ Rating to Not Cooperating
MNG OVERSEAS: CRISIL Migrates B+ Rating From Not Cooperating
MODERN MACHINERY: CARE Lowers Rating on INR9.30cr Loan to D
NOVELTY GOLD: CARE Moves B+ Rating to Not Cooperating Category
PRABHU CONSTRUCTION: Ind-Ra Lowers Long Term Issuer Rating to BB-
SAI BABUJI: CARE Assigns B+ Rating to INR8.40cr Long-Term Loan
SAMEERA HOTELS: CRISIL Migrates B- Rating to Not Cooperating
SDS INFRATECH: CRISIL Withdraws D Rating on INR50cr Term Loan
SH. RANSINGH: CRISIL Moves B+ Rating to Not Cooperating Category
SHIVANGOUDA PATIL: CRISIL Migrates B+ Rating to Not Cooperating
SHAKTHI SEEDS: CARE Assigns B Rating to INR8cr LT Loan
SHREE BABA: CRISIL Migrates B Rating to Not Cooperating
SHREE HANUMAN: Ind-Ra Lowers Long Term Issuer Rating to B+
SOUTHCO UTILITY: Ind-Ra Assigns 'BB-' LT Rating on INR720MM Loan
SREE DHANNVIJAY: CRISIL Migrates B+ Rating From Not Cooperating
SUPER SUPER SEAL: CRISIL Reaffirms B+ Rating on INR9cr Cash Loan
M A L A Y S I A
CHINA AUTOMOBILE: Fails to Issue Outstanding Annual Report
N E W Z E A L A N D
CCMR PONSONBY: Augustus Bistro Placed in Liquidation
S I N G A P O R E
KITCHEN CULTURE: Posts $3.8MM Net Loss Full Year Loss
WILTON RESOURCES: Loss Widens to IDR78.8MM in 6 Mos. Ended June 30
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A U S T R A L I A
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ASTUTE PROJECTS: Second Creditors' Meeting Set for Sept. 6
----------------------------------------------------------
A second meeting of creditors in the proceedings of Astute
Projects Pty Ltd has been set for Sept. 6, 2018, at 10:00 a.m. at
Level 10, 12 Creek 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 Sept. 5, 2018, at 5:00 p.m.
Andrew Peter Fielding and Helen Newman of BDO were appointed as
administrators of Astute Projects on Aug. 1, 2018.
CALIBRE BUILDING: Second Creditors' Meeting Set for Sept. 10
-------------------------------------------------------------
A second meeting of creditors in the proceedings of Calibre
Building and Construction Pty Ltd has been set for Sept. 10, 2018,
at 11:30 a.m. at the offices of Cor Cordis, One Wharf Lane
Level 20, 171 Sussex Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Sept. 9, 2018, at 4:00 p.m.
Jason Tang and Andre Lakomy of Calibre Building were appointed as
administrators of Calibre Building on Aug. 3, 2018.
CREATIVE COMMERCIAL: Second Creditors' Meeting Set for Sept. 10
---------------------------------------------------------------
A second meeting of creditors in the proceedings of Creative
Commercial Interiors Pty Ltd has been set for Sept. 10, 2018, at
11:00 a.m. at the offices of BCR Advisory, Level 2, 139 Frome
Street, in Adelaide, SA.
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 Sept. 6, 2018, at 4:00 p.m.
Stephen Glen James of BCR Advisory was appointed as administrator
of Creative Commercial on Aug. 6, 2018.
ENVIRO ENERGY: First Creditors' Meeting Set for Sept. 10
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Enviro
Energy Savers Pty. Ltd., formerly Trading as Enviro Temp, will be
held at the offices of Clifton Hall, Level 3, 431 King William
Street, in Adelaide, South Australia, on Sept. 10, 2018, at
12:30 p.m.
Timothy James Clifton of Clifton Hall was appointed as
administrator of Enviro Energy on Aug. 29, 2018.
IMPERIAL EAGLE: First Creditors' Meeting Set for Sept. 7
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Imperial
Eagle and Dragon Pty Limited will be held at the offices of
Accounting Brice Consultants, 2 Malop Street, in Geelong,
Victoria, on Sept. 7, 2018, at 11:00 a.m.
Nathan Lee Deppeler of Worrells Solvency & Forensic Accountants
was appointed as administrator of Imperial Eagle on Aug. 28, 2018.
PREMIUM TRAVEL: First Creditors' Meeting Set for Sept. 7
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Premium
Travel Solutions Pty Ltd will be held at the offices of Veritas
Advisory, Level 5, 123 Pitt Street, in Sydney, NSW, on Sept. 7,
2018, at 11:00 a.m.
David Iannuzzi and Vincent Pirina of Veritas Advisory were
appointed as administrators of Premium Travel on Aug. 28, 2018.
SAAFIN CONSTRUCTIONS: Second Creditors' Meeting Set for Sept. 7
---------------------------------------------------------------
A second meeting of creditors in the proceedings of Saafin
Constructions Pty Ltd has been set for Sept. 7, 2018, at 11:00
a.m. at the offices of Worrells Solvency & Forensic Accountants
Level 15, 114 William Street, in Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Sept. 6, 2018, at 5:00 p.m.
Ivan Glavas and Matthew Kucianski of Worrells Solvency were
appointed as administrators of Saafin Constructions on Aug. 3,
2018.
SPEEDCAST INTL: Moody's Affirms 'Ba3' CFR & Sr. Sec. Loan Rating
----------------------------------------------------------------
Moody's Investors Service has revised Speedcast International
Limited's rating outlook to negative from stable.
At the same time, Moody's has affirmed the Ba3 corporate family
rating and the Ba3 senior secured rating on its senior secured
term loan due 2025.
RATINGS RATIONALE
"The change in outlook reflects our expectation that Speedcast's
debt levels will increase significantly once it completes its
announced acquisition of Globecomm Systems Inc.," says Sean Hwang,
a Moody's Analyst.
"The announced transaction and its weaker-than-expected 1H 2018
results suggest that its financial leverage will increase
significantly in 2018 and likely remain elevated over the next 12-
18 months," adds Hwang.
On August 28, Speedcast announced that it will acquire Globecomm,
a US-based satellite communications services company, for an
estimated net consideration of $135 million, subject to regulatory
approvals and the arrangement of new debt financing.
While the acquisition will benefit Speedcast's business profile in
terms of scale and diversification, Moody's expects that
Speedcast's adjusted net debt/EBITDA will increase to and remain
at 3.3x or above -- pro-forma for the acquisition -- over the next
12-18 months, as the additional acquisition debt will more than
offset the additional EBITDA and cost synergies from the
acquisition.
This projected level of net leverage is weaker than the 2.8x
recorded in 2017 (pro-forma for the UltiSat Inc. acquisition),
positioning Speedcast weakly for its Ba3 rating category.
In addition, according to the company's announcement on the same
day, its reported EBITDA fell 13% in 1H 2018 compared to 2H 2017,
despite the full-period contribution from its government business
unit acquired on November 1, 2017. The weaker earnings were mainly
because of (1) a double-digit fall in energy-customer segment
revenue, (2) some seasonality in its customer contracts, and (3)
one-off operating expenses incurred to facilitate contract
renewals for a key customer.
The weaker-than-expected results highlight the persistent
challenges and cyclicality associated with Speedcast's energy-
customer segment, although Moody's expects the industry
fundamentals underpinning this segment to be largely favorable
over the next 12-18 months.
Given these developments, Moody's expects that the pace of
improvement in its earnings and financial leverage to be slower
than previously anticipated. If the company fails to achieve
meaningful improvements in its earnings over the next 6-9 months,
Moody's would consider downgrading the rating.
The company's liquidity profile has also weakened -- although it
still remains adequate -- with availability in its $100 million
revolving credit facility reduced to $45 million at the end of
June 2018.
Speedcast's Ba3 ratings continue to reflect the company's leading
market position, recurrent revenue from a diversified customer
base, and adequate liquidity. The ratings also factor in Moody's
expectation that Speedcast will grow its earnings again and
gradually reduce its financial leverage.
The rating outlook could return to stable if Speedcast improves
its financial profile by enhancing its earnings and/or
implementing substantial deleveraging initiatives, such that
adjusted net debt/EBITDA returns to below 3.0x on a sustained
basis.
On the other hand, Moody's could downgrade Speedcast's ratings if
the company fails to improve its earnings and financial leverage,
such that adjusted net debt/EBITDA stays above 3.0x. A further
weakening in its liquidity would also result in a rating
downgrade.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Speedcast International Limited is a leading provider of satellite
communications and network services in remote locations globally,
mainly serving customers in the maritime, energy, enterprise and
government segments. Speedcast is a widely held company listed on
the Australia Stock Exchange since 2014.
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C H I N A
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CHINA AOYUAN: Moody's Rates New Sr. Unsecured Notes 'B2'
--------------------------------------------------------
Moody's Investors Service has assigned a B2 senior unsecured
rating to the proposed notes to be issued by China Aoyuan Property
Group Limited (B1 stable).
The ratings outlook is stable.
China Aoyuan plans to use the net proceeds from the proposed notes
to refinance existing offshore indebtedness and for general
working capital purposes.
RATINGS RATIONALE
"The proposed note issuance will not have a material impact on
China Aoyuan's credit metrics, because the proceeds will be mainly
used for debt repayment," says Celine Yang, a Moody's Assistant
Vice President and Analyst.
In addition, the proposed issuance will lengthen the company's
debt maturity profile.
Moody's expects Aoyuan will maintain financial discipline and
control its debt growth, while pursuing an expansion strategy in
the coming 12-18 months.
Moody's projects that its debt leverage -- as measured by
revenue/adjusted debt -- will trend towards 65% by the end of 2019
from around 50.6% for the 12 months ended June 2018. Similarly,
its EBIT/interest coverage will approach 3x in the next 12-18
months from 2.45x for the 12 months ended June 2018.
Aoyuan achieved a robust 143% year-on-year growth in contracted
sales of RMB46.3 billion in the first seven months of 2018,
exceeding the RMB 45.6 billion achieved in the full year of 2017,
highlighting its strong execution capability.
Moody's believes Aoyuan is likely to register contracted sales of
RMB80 billion in 2018 and RMB90 billion -- RMB100 billion in 2019
in view of its growing portfolio, solid housing demand in Aoyuan's
core Guangdong market, especially the Greater Bay area, and the
company's demonstrated abilities in sales execution.
The strong contracted sales will also provide part of the funding
for its business expansion and support its revenue growth over the
next 12-18 months.
In addition, China Aoyuan's B1 corporate family rating (CFR)
reflects (1) its good land bank in the Greater Bay area, (2) its
track record in economically strong Guangdong Province, (3) its
strong management in previous down-cycles, and (4) its good access
to onshore and offshore funding.
On the other hand, the rating is constrained by the moderate
credit metrics and execution risks associated with Aoyuan's rapid
expansion plans and hence continued high capital requirements.
The B2 senior unsecured debt rating is one notch lower than the
corporate family rating due to structural subordination risk.
This risk reflects the fact that the majority of claims are at the
operating subsidiaries. These claims have priority over China
Aoyuan's senior unsecured claims in a bankruptcy scenario. In
addition, the holding company lacks significant mitigating factors
for structural subordination. As a result, the likely recovery
rate for claims at the holding company will be lower.
The stable outlook reflects Moody's expectation that over the next
12 months China Aoyuan will continue to achieve positive growth in
contracted sales, remain prudent in its land acquisitions, and
maintain an adequate liquidity position, while posting improved
credit metrics.
Upward ratings pressure could emerge if it (1) demonstrates
sustained growth in contracted sales and revenue recognition
through cycles without sacrificing profitability; (2) maintains
prudent practices in its land acquisitions and financial
management; (3) further improves its credit metrics, such that
EBIT/interest registers 3.0x or above and revenue/adjusted debt
stays within 75%-80% or above on a sustained basis; and (4)
maintains good liquidity, such that cash consistently covers
short-term debt and there is sufficient room in its maintenance
covenants for bank loans.
However, the ratings could be downgraded if (1) the company shows
more volatility or slower growth in contracted sales; or (2) the
company's credit metrics weaken, or both. In particular, Moody's
would consider downgrading the rating if China Aoyuan's
EBIT/interest falls below 2.0x or revenue/adjusted debt registers
less than 65%. A weakening in the company's liquidity, as
reflected by cash/short-term debt below 1.0x, could also lead to a
downgrade.
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
China Aoyuan Property Group Limited was founded in 1996 by Guo Zi
Wen. In 2005-06, the company restructured the shareholdings of its
operating subsidiaries, such that the owners transferred their
indirect interests in the Chinese subsidiaries to offshore
subsidiaries.
China Aoyuan listed on the Hong Kong Stock Exchange in October
2007.
At June 2018, the company had 164 projects across 60 cities in
China, Australia, Canada and Macau, with a total land bank of
about 30 million square meters in gross floor area (GFA), which
can cover three to four years of property development.
CHINA AOYUAN: S&P Rates New USD-Denominated Unsec. Notes 'B'
------------------------------------------------------------
S&P Global Ratings said it has assigned its 'B' long-term issue
rating to a proposed issue of U.S. dollar-denominated senior
unsecured notes by China Aoyuan Property Group Ltd.
(B+/Stable/--). The issue rating is subject to S&P's review of the
final issuance documentation.
S&P said, "We rate the senior unsecured notes one notch below the
issuer credit rating because of subordination risk. The proposed
notes will rank behind a significant amount of secured debt and
subsidiary level debt, which together remain materially higher
than our notching threshold of 50% of total debt."
The company will use the notes proceeds to refinance existing
offshore bank loans due in the third quarter of 2018. Aoyuan's
proportion of short-term debt in total debt has risen above 50%
over the past 12 months owing to increasing project loan rollovers
under an accelerated development cycle and challenges in issuing
long-tenor debt in the current credit conditions. S&P expects this
new issuance to marginally improve the company's debt maturity
profile.
S&P said, "We believe Aoyuan will continue to grow its debt at a
moderate pace and project its debt-to-EBITDA ratio at about 6x
with fast revenue growth in the next 12 months, in line with our
expectation. Due to strong earnings and good cash collection in
the first half of 2018, Aoyuan's debt-to-EBITDA ratio fell below
8x at the end of June from nearly 9x at the end of 2017. In the
first seven months of 2018, Aoyuan's contracted sales increased
143% year on year to Chinese renminbi (RMB) 46.3 billion. Based on
the company's strong performance, we expect it to exceed its full-
year sales target of RMB73 billion."
GEMDALE CORP: S&P Rates New Guaranteed Sr. Unsecured Notes 'BB-'
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term issue rating to
the proposed U.S. dollar-denominated senior unsecured notes by
Gemdale Ever Prosperity Investment Ltd. Famous Commercial Ltd.
(BB-/Stable/--) unconditionally and irrevocably guarantee the
notes. The issue rating is subject to S&P's review of the final
issuance documentation.
Gemdale Corp. (BB/Stable/--) owns 100% of Famous, its Hong Kong-
based offshore holding company and financing platform.
S&P said, "We equalize the ratings on the guaranteed notes with
the issuer credit rating on Famous. This is because the proportion
of secured debt plus subsidiaries' unsecured debt to the issuer's
total debt is below our notching threshold of 50%.
"We expect Gemdale's 2018 full-year contracted sales to increase
about 10% from 2017's Chinese renminbi (RMB) 140 billion, with its
attributable ratio remaining about 50%. The company's total
contracted sales were RMB76.8 billion in the first seven months of
2018, almost flat compared with the same period in 2017. Gemdale's
total debt rose above RMB70 billion by June from RMB55 billion at
the start of the year. The debt increase was mainly to support
land acquisitions and scale expansion, as well as to maintain an
enlarged cash balance for financial flexibility under the current
adverse credit conditions.
"The issuer credit rating and stable outlook on Gemdale reflects
our expectation that the company's contracted sales will continue
to expand at a moderate pace with stable margins over the next 12
months. Meanwhile, we expect the company's "see-through" debt-to-
EBITDA ratio to be 4.5x-5x in the period, up from 4.2x in 2017.
The see-through ratio includes the proportional consolidated
financials of joint ventures and associates."
LEECO: Unit Expects to Post 1H Net Loss of CNY1.1 Billion
---------------------------------------------------------
Caixin reports that Leshi Internet Information and Technology
Corp., the Shenzhen-listed unit of embattled LeEco, said it
expects to report a net loss for the first half of more than
CNY1.1 billion (US$162 million), 73.4% wider than the loss from a
year earlier.
Estimated first-half revenue was CNY984 million, down 82.25% from
a year ago, Leshi said on Aug. 29, Caixin relays.
Caixin relates that Leshi, which has been shaken by the debt woes
of its parent, said it may continue operating in the red in the
second half of the year. If the company registers net negative
assets for the full year, it will risk being delisted, Leshi said.
China-based LeEco makes smartphones, entertainment platforms,
set-top boxes, and smart TVs.
MAOYE INT'L: S&P Alters Outlook to Stable & Affirms B- ICR
----------------------------------------------------------
S&P Global Ratings revised its rating outlook on Maoye
International Holdings Ltd. to stable from negative. At the same
time, S&P affirmed its 'B-' long-term issuer credit rating on the
company. Maoye is a China-based department store retailer.
S&P said, "We revised the outlook to stable because new financing
sources and stronger cash flows from property sales will reduce
Maoye's refinancing risk. However, liquidity could remain tight
because we expect the company's short-term debt balance to remain
high. Therefore we have affirmed our ratings on Maoye.
"We expect Maoye to be able to refinance its upcoming US$300
million senior unsecured notes due October 2018, given several
immediately accessible financing sources. These sources include
new bank lines of about Chinese renminbi (RMB) 1.4 billion, and an
approved secured bank line of around RMB2.1 billion. In addition,
Maoye is in the process of raising up to US$500 million senior
unsecured notes to refinance its existing U.S. dollar-denominated
notes. The company has also received Shanghai Exchange approval to
issue an exchangeable bond of RMB1.1 billion and asset-backed
securities of RMB1.4 billion at the parent level as a back-up
plan.
"Maoye's heavy reliance on short-term debt has underpinned its
refinancing risk. Yet, we believe the company is expanding its
debt maturities to moderately improve its capital structure.
Maoye's short-term debt ratio has declined to about 45% as of June
2018 from 60% at the end of fiscal 2015 (ended Dec. 31, 2015).
"We forecast that Maoye's cash flow from property sales will
improve moderately in 2018 to around RMB2.2 billion, and to RMB3.0
billion in 2019. Cash outflows are likely to be limited since the
company has no plans for further property development or
acquisitions over the next two to three years. Also, Maoye's
longer-term strategy to move away from department stores to
shopping mall formats should result in more stable and predictable
cash flows from rents, in our view.
"The outlook for the Chinese department store sector remains
subdued over the next 12 months due to intense competition. We
expect Maoye's same-store sales growth to remain flat during this
time. Given its aggressive appetite for debt-funded expansion in
the past, we maintain our negative view of Maoye's financial
policy.
"Our stable outlook for the next 12 months reflects reduced
refinancing risk, given new financing sources and rising cash
flows. We expect Maoye to be able to refinance near-term
maturities, and the company's property sales over the next 12
months should support cash inflow. Nonetheless, Maoye's liquidity
is very tight and it faces ongoing refinancing risk.
"We could lower the rating if Maoye's liquidity deteriorates and
refinancing risk rises again. This could happen if the company's
free cash flow deteriorates significantly and it is likely to fail
to refinance short-term debt; or the company's cash flow from
property is worse than we expect."
An upgrade is unlikely over the next 12 months, given the
company's debt capital structure is heavily weighted toward short-
term debt, causing ongoing refinancing risks. Even so, S&P could
raise the rating if Maoye's liquidity position improves materially
on a sustainable basis, if the company generates stronger cash
flows that would meet its ongoing debt repayment needs, or it
significantly improves its reliance on short-term debt.
RONSHINE CHINA: S&P Alters Outlook to Stable & Affirms 'B' ICR
--------------------------------------------------------------
S&P Global Ratings said it has revised its rating outlook on
Ronshine China Holdings Ltd. to stable from negative. At the same
time, S&P affirmed its 'B' long-term issuer credit rating on the
company and its 'B-' long-term issue rating on its senior
unsecured notes.
S&P said, "We revised the rating outlook because we expect
Ronshine's leverage to significantly improve over the next 12
months, through solid revenue growth, margin recovery, and a more-
conservative expansion strategy. We estimate the company's debt-
to-EBITDA ratio will improve to 8x-8.5x in 2018 and gradually
decline in 2019, from 11.6x in 2017.
"Ronshine is toning down its growth ambitions, in our view, as the
funding environment and industry dynamics are less supportive of
aggressive expansion. Since the second half of 2017, restrictions
on funding to support developers' growth have included slower
mortgage approvals, a clampdown on "shadow banking" activity, and
limited bond approvals. Investment risks have also increased,
given rising funding costs and price restrictions in major cities.
"In our view, Ronshine has quickly adjusted to changing market
conditions and significantly scaled back its land acquisitions
since mid-2017. We estimate the company's full-year land cost
payments to reach about Chinese renminbi (RMB) 25 billion, or
around 30% of its cash from sales. Ronshine's current land bank of
25 million square meters should support its growth over the next
three years. We expect Ronshine's strong cash generation and
managed land acquisitions to keep its overall debt levels under
control over the next 12 months. We estimate the company's cash
from sales will reach RMB60 billion-RMB65 billion in 2018,
supported by the RMB29 billion achieved in the first half and
another RMB110 billion of saleable resources to be launched in the
second half of the year. Adjusted debt should grow moderately to
RMB75 billion-RMB80 billion by the end of 2018, from RMB70 billion
in 2017.
"The rebound in Ronshine's gross margin to 29.3% in the first half
from 16.6% in 2017 has exceeded our previous expectation. This is
likely because the company recognized the majority of its low-
margin projects in 2017. We estimate that Ronshine's gross margin
will slightly decline as the contributions increase from Ningbo
Hailiang Property Investment Co. Ltd. and Anhui Hailiang Property
Co. Ltd. (collectively Hailiang), which it acquired in 2017. The
margin is likely to stabilize at 25%-26% over the next two years.
The company's high average selling price of over RMB21,000 since
2017 should cover higher land costs and the impact from the
acquisitions. We also expect margin volatility to gradually
improve as the number of projects increases.
"In our view, Ronshine will slow down its scale growth in the next
12 months and refocus on margin, liquidity, and organizational
efficiency. We believe these areas have been placed in lower
priorities for Ronshine under its previous fast scale growth and
geographical expansion, as highlighted by the large Hailiang
acquisition last year. At the same time, we expect the company to
gradually improve its capital structure and lengthen its maturity
profile. As of June 2018, Ronshine's cash to short-term debt
coverage is 96%, and it has continuously replaced its loans from
nonbank financial institutions with bank borrowings. Given
Ronshine's good sales performance, we believe the company can
repay or refinance from traditional borrowings.
"However, we also consider Ronshine to have a limited track record
of maintaining a less-aggressive expansion strategy. In our view,
the company could reaccelerate if opportunities arise and the
funding environment becomes supportive.
"The stable outlook reflects our view that Ronshine will maintain
strong sales execution, satisfactory margin, and adopt a less-
aggressive approach to debt-funded expansion over the next 12
months, such that the company's leverage will continue to improve
from the current high level.
"We could lower the rating if Ronshine resumes aggressive debt-
funded expansion, such that its debt-to-EBITDA ratio deteriorates.
We could also lower the rating if the company's liquidity
materially weakens, as indicated by an increase in short-term debt
compared with cash levels and a decrease in the weighted debt
maturity profile to less than two years.
"We could raise the rating if Ronshine continues to expand its
scale and geographical coverage, maintains stable profitability,
and improves its leverage and liquidity position. A debt-to-EBITDA
ratio approaching 5x may indicate such improvement."
SINO CLEAN: 9th Circuit Affirms Case Dismissal
----------------------------------------------
A three-judge panel in the U.S. Court of Appeals for the Ninth
Circuit affirmed rulings by the district and bankruptcy courts
dismissing a Chapter 11 bankruptcy petition filed by former board
members of a corporation.
With an opinion authored by Judge Lemelle, the 9th Circuit ruled
in favor of Robert W. Seiden, in his capacity as receiver over
Sino Clean Energy Inc. (SCEI), in a dispute with former board
members of SCEI.
In October 2013, a group of 43 shareholders had filed a Nevada
state-court petition in an attempt to acquire financial
information from SCEI, including books and records regarding the
money invested with SCEI. The shareholders also sought certain
declaratory relief under Nevada Revised Statute section 78.345.
After more than a year of SCEI's disregard for the Nevada state-
court action, the plaintiffs filed for entry of default, which the
state court granted. On March 17, 2014, the shareholder
plaintiffs filed a motion for the appointment of a receiver. The
Nevada state court granted the motion on May 12, 2014.
In July 2015, former chairman and CEO Baowen Ren purported to
"reconstitute" the former SCEI board of directors, and thereafter
attempted to file a voluntary petition for Chapter 11 bankruptcy
on behalf of SCEI. The bankruptcy court dismissed the action on
August 26, 2015, holding that, at the time the petition was filed
by Ren and the former board members, the petition "was filed
without corporate authority" because SCEI's board of directors
"had been replaced by the receiver." The district court affirmed.
With an opinion authored by Judge Lemelle, the 9th Circuit
concluded that the former board members lacked corporate authority
under Nevada law when they filed the bankruptcy petition because a
receiver appointed by the Nevada state court already had removed
them from the corporation's board of directors. Accordingly, the
former board members were not authorized to file the bankruptcy
petition on behalf of the corporation.
Katherine R. Catanese, a bankruptcy and restructuring attorney
with Foley & Lardner LLP, argued before the 9th Circuit on behalf
of Mr. Seiden. The appeal team also included partner Douglas E.
Spelfogel, senior counsel Tamar N. Dolcourt, and associate Carly
Krupnick. Ryan J. Works of McDonald Carano LLP also represented
Mr. Seiden.
Matthew C. Zirzow of Larson & Zirzow LLC, argued on behalf of
SCEI, et al.
A full-text copy of the decision is available at
https://bit.ly/2wAwffD
About Sino Clean Energy
Sino Clean Energy Inc. -- http://www.sinocei.net/-- is a holding
company. The Company is a producer of clean coal heating and
energy solutions for residential, commercial and industrial uses
in the People's Republic of China. The Company produces and
distribute coals water slurry fuel (CWSF), which is a liquid fuel
that consists of fine coal particles suspended in water, mixed
with chemical additives, and is used to fuel boilers and furnaces
to generate steam and heat for both residential/commercial heating
and industrial applications. As of Dec. 31, 2011, the Company had
total annual production capacity 1,150,000 metric tons of CWSF.
The Company uses washed coal to produce CWSF, which the Company
procures from local coal mines. The Company sells its CWSF
exclusively in the People's Republic of China to residential
complex development management companies, commercial businesses,
industrial users, and government organizations.
Sino Clean Energy, Inc., filed a Chapter 11 petition (Bankr. D.
Nev., Case No. 15-50934) on July 8, 2015, and is represented by
Matthew C. Zirzow, Esq., at Larson & Zirzow, LLC, in Las Vegas,
Nevada.
At the time of filing, the Debtor's estimated assets ranged from
$1 million to $10 million and estimated liabilities ranged from $1
million to $10 million.
=========
I N D I A
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AISHWARYA TECHNOLOGIES: CARE Lowers Rating on INR7.11cr Loan to D
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Aishwarya Technologies & Telecom Limited (ATTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 7.11 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE C on the basis
of best Available information
Short term Bank 4.50 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE A4 on the basis
of best Available information
Long-term/Short- 6.00 CARE D/CARE D; Issuer not
Term Bank cooperating; Revised from
Facilities CARE C/CARE A4 on the basis
of best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from ATTL to monitor the ratings
vide email communications dated April 18, 2018, June 15, 2018 &
July 3, 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. The rating on ATTL's
bank facilities will now be denoted as CARE D/CARE D; ISSUER NOT
COOPERATING (revised from CARE C/CARE A4; ISSUER NOT COOPERATING).
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised due to the liquidity stress in the
business on account of subdued financial performance during FY18
(period refers to Apr 1 to Mar 31) with taking the cognizance of
initiation of Corporate Insolvency Resolution Process (CIRP) as
intimated to the Bombay Stock Exchange (BSE) based on the order
passed by the National Company Law Tribunal (NCLT), Hyderabad
Bench. The order has been passed against the petition filed by an
operating creditor of the company for non-payment of the dues
outstanding.
Detailed description of the key rating drivers
Key Rating Weaknesses
Initiation of Corporate Insolvency Resolution Process (CIRP): The
Interim Resolution Professional (IRP) of ATTL has intimated the
BSE that the CIRP has been initiated based on the order
dt.01.08.2018 passed by the NCLT, Hyderabad Bench against a
petition filed by an operating creditor of the company with a
request to initiate the CIRP at the back of non-payment of approx.
INR1.73 crore outstanding as on Sept. 12, 2017 along with interest
amount of INR0.09 crore for the delay in payment. The amount so
due was against the invoices raised by the creditor for the
purchases made by ATTL in different occasions.
Subdued financial performance in FY18 and stretched liquidity: The
total operating income of the company declined significantly by
around 53% in FY18 (INR26.24 crore), y-o-y over FY17 (INR55.86
crore). Low operating income led to under-recovery of expenses and
ATTL reported operating loss (INR9.82 crore) in FY18 as against
PBILDT of INR3.03 crore in FY17. The company also reported net
loss and cash loss during the year.
Small scale of operation: The scale of operation of the company
has remained moderate with a net worth base of INR25.70 crore as
on March 31, 2018 (INR33.96 crore as on March 31, 2017). Due to
huge loss incurred, the net worth base eroded significantly as on
March 31, 2018.
Stretched working capital cycle: The operating cycle stretched
further to 393 days in FY18 compared to 167 days in FY17 due to
high collection period (308 days in FY18).
Key Rating Strengths
Experienced promoters: The promoters of ATTL, Mr. G Rama Krishna
Reddy, Rama Manohar Reddy and Mrs. G Amulya Reddy have more than
two decades of experience in the telcom sector.
Exclusive distributorship from reputed clients: ATTL has exclusive
distributorship from Sumitomo Electric Industries, Japan for
India, Bangladesh & Sri Lanka for entire range of splicing
machines. The company has further appointed re-sellers in various
parts of India, Sri Lanka & Bangladesh, for promoting these
splicing machines.
Aishwarya Technologies & Telecom Limited (ATTL) was promoted by Mr
G Rama Manohar Reddy and Mrs G Amulya Reddy as a partnership firm
named Advanced Electronics & Communications System. ATTL was
formed by taking over the business of the said partnership firm.
ATTL is a ISO 9001:2008 certified company, which manufactures
testing & measuring equipments like data and cable fault locators
for telephone service providers, defence sector, cable TV
operators and railways. The company has its manufacturing
facilities situated at Hyderabad and it supplies a wide range
of telecom & fibre optic products to Bharat Sanchar Nigam Limited,
Tata Tele Services, Bharati Airtel, Mahanagar Telephone Nigam
Limited, railways & defence sectors in India.
B.V.S. DISTILLERIES: CRISIL Lowers Rating on INR29cr Loan to D
--------------------------------------------------------------
CRISIL has downgraded its rating on the long term bank facility of
B.V.S. Distilleries Private Limited (BDPL) to 'CRISIL D' from
'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 29 CRISIL D (Downgraded from
'CRISIL B/Stable')
Downgrade reflects delay in debt servicing.
The rating reflects the company's below-average financial risk
profile because of high gearing and weak debt protection metrics,
modest scale of operations, and exposure to stringent government
regulations in the Indian-made foreign liquor (IMFL) segment.
These weaknesses are partially offset by the extensive experience
of its promoter and benefits expected from tie-up with Pernod
Ricard India (P) Ltd (Pernod).
Key Rating Drivers & Detailed Description
Weakness
* Delay in repayment of term loans: BDPL has been repaying its
term loan with delays and the same is on account of temporarily
stretch in liquidity.
* Modest scale of operations and exposure to intense competition
BDPL has set up its bottling plant during 2012-13, which commenced
commercial operations during Feb 2017. The company is still in
stabilization phase, as reflected in estimated modest revenues of
around INR6.2 crore in Fiscal 2018, and hence its capacity
utilisation has been low.
* Below-average financial risk profile: Gearing was high at 3.52
times as on March 31, 2017. The gearing ratio of the company is
estimated to have remained high in Fiscal 2018. The company is
expected to have had weak debt protection metrics in Fiscal 2018,
the same is on account of small scale of operations and hence low
accruals.
* Exposure to government regulations: The liquor manufacturing
industry is regulated by both central and state governments. In
the case of BDPL, Government of Andhra Pradesh regulates
production, wholesale and retail prices, distribution, and raw
material availability. Any change in government regulations can
affect competitiveness and profitability.
Strengths
* Extensive experience of promoter and benefits expected from tie-
up with Pernod: The company's promoter has been providing
transportation service to Pernod through group entities since the
past one decade. Hence, BDPL set up an IMFL bottling unit for
Pernod that commenced production from February 2017. The company
will continue to benefit from its tie-up with Pernod, which has
established premium IMFL brands in India.
Incorporated in 2011 and promoted by Mr. Bommadevara Venkata Subba
Rao, BDPL manufactures IMFL at its unit in Kankipadu, Andhra
Pradesh.
BIDAR SOLAR: CARE Reaffirms 'D' Rating on INR76cr LT Loan
---------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Bidar Solar Power Private Limited (BSPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 76.00 CARE D; ISSUER NOT COOPERATING
Facilities Reaffirmed
CARE has been seeking information from BSPPL to monitor the
rating(s) vide e-mail communications and numerous phone calls.
However, despite CARE's repeated requests, the company has not
provided the requisite information for monitoring the ratings. In
line with the extant SEBI guidelines, CARE has reviewed the rating
on the basis of the publicly available information which however,
in CARE's opinion is not sufficient to arrive at a fair rating.
The rating on BSPPL bank facilities will now be denoted as CARE D;
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 reaffirmation of rating assigned to the bank facilities of
BSPPL is on account of ongoing delays in debt servicing by the
company, as reported by the banker.
Detailed Description of the Key Rating Drivers
At the time of last rating in March 20, 2017, the following were
the rating strengths and weaknesses:
Key rating weakness:
Ongoing Delays: BSPPL has entered into PPA with Gulbarga
Electricity Supply Company during July 2012, for sale of power
upto 10 MW for the period of 25 years from COD. However, delay in
receipt of payments from Gulbarga Electricity Supply Company
Limited has resulted in stressed liquidity position for the
company. The same has resulted in delays in servicing of debt
obligation.
Bidar Solar Power Private Limited (BSPPL), is a special purpose
vehicle (SPV) sponsored by GKC Projects Ltd (GKCPL) for setting up
Solar PV (Photovoltaics) power plant in the Bidar district of
Karnataka on Design, Build, Finance, operate and Transfer (DBFOT)
basis. The company is headed by Mr K V Raja Sekhar who is founder
Chairman of the company and has rich experience of over a decade
in the infrastructure industry. He is responsible for the overall
administration and management of the company. The installed
capacity of the plant is 10 MW. The project has achieved
commercial operational date (COD) on August 28, 2014.
BINANI CEMENT: NCLAT Reserves Judgment on Insolvency Matter
-----------------------------------------------------------
Livemint.com reports that the National Company Law Appellate
Tribunal (NCLAT) on Aug. 30 reserved its judgment on the Binani
insolvency matter, as it concluded hearing various appeals related
to the matter.
Livemint relates that the two-judge NCLAT bench headed by Justice
S.J. Mukhopadhyay also directed all parties concerned, including
Rajputana Properties Pvt. Ltd. and UltraTech Cement Pvt. Ltd., to
submit their additional written responses, if any, by
September 4.
Appearing for UltraTech, lawyer Mukul Rohatgi argued before NCLAT
that UltraTech's plan was INR 1,000 crore more than Rajputana's,
Livemint says. "I am paying all operational creditors in full as
opposed to their (Rajputana's) plan," claimed Rohtagi.
In its last hearing, the appellate tribunal had sought the payment
terms for stakeholders, including financial and operational
creditors of the debt-ridden firm, in the resolution plan
submitted by Rajputana and UltraTech, respectively, Livemint says.
Livemint recalls that the Supreme Court in July 2018 had directed
NCLAT to adjudicate upon all issues in the Binani Cement
insolvency case, including the question of UltraTech Cement's
eligibility under Section 29A as well the legality of its bid, at
the earliest. In doing so, the apex court transferred the matter
from the NCLT's Kolkata Bench to the insolvency appellate
authority in New Delhi, the report states.
Dalmia Bharat-controlled Rajputana Properties had moved NCLAT in
May against the May 2 order of NCLT, which allowed the resolution
professional and Committee of Creditors (CoC) for Binani Cement to
consider the revised resolution plan submitted by UltraTech, while
offering Rajputana Properties an opportunity to revise its
resolution plan of INR6,930 crore, according to Livemint.
UltraTech Cement's revised offer was INR7,900 crore, against its
earlier bid of INR7,200 crore, Livemint notes.
According to Livemint, the NCLAT on May 15 refused to stall the
insolvency process and asked the resolution professional to submit
the revised resolution plans for the corporate debtor in a sealed
cover before the CoC, along with his opinion on questions
pertaining to conformity with the Insolvency and Bankruptcy Code
(IBC).
About Binani Cement
Binani Cement is a subsidiary of Binani Industries, a
conglomerate with manufacturing and R&D operations. It has a
manufacturing capacity of 11.25 million tonnes (mt) per annum
with integrated plants in India and China, and grinding units in
Dubai.
On July 25, 2017, the Kolkota bench of the National Company Law
Tribunal (NCLT) admitted an insolvency petition against Binani
Cement.
Bank of Baroda (BoB) had referred Binani to the bankruptcy court
after it failed to repay a sum of INR97 crore. BoB has appointed
Vijaykumar V Iyer of Deloitte India as the interim resolution
professional (IRP) to oversee the insolvency process.
The company owes around INR6,500 crore to a consortium lenders.
BOSS PHARMA: CARE Assigns B Rating to INR4cr Long-Term Loan
-----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Boss
Pharma (BSP) as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 4.00 CARE B; Stable Assigned
Short-term Bank
Facilities 4.00 CARE A4 Assigned
Detailed Rationale and Key Rating Drivers
The ratings assigned to the bank facilities of BSP are constrained
by its small scale of operations along with losses at PBILDT
level, weak debt coverage indicators and working capital intensive
nature of operations. The ratings are also constrained by
partnership nature of constitution, foreign currency fluctuation
risk, exposure to regulatory risk and presence in competitive and
low value acute therapeutics segment. The ratings, however, derive
support from the experienced partners, comfortable capital
structure and positive demand outlook for pharmaceutical industry.
Going forward, the ability of the firm to scale up its operations
while achieving profitability and efficient management of working
capital borrowings would remain the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced partners: BSP is currently being managed by Mr. Pankaj
Nandwana and Mr. Rajat Nandwana as its partners. Both the partners
have a work experience of more than one decade through their
association with BSP and PTP since 2006. Mr. Pankaj Nandwana was
also previously associated as a director with Nandwana Chemicals
Private Limited which was engaged in manufacturing of
pharmaceutical formulations.
Comfortable capital structure: The capital structure of the firm
stood comfortable reflected by overall gearing ratio of 0.71x as
on March 31, 2017. The same deteriorated from 0.38x as on March
31, 2016 due to decline in the net worth base owing to net losses
incurred by the firm in FY17 coupled with withdrawal of funds by
the partners amounting to INR 0.39 crore during FY16-17 period.
Healthy growth prospects: The Indian Pharma industry (IPI) would
continue to experience strong growth, the generic opportunities in
USA and yet to be saturated emerging markets will drive the
growth. With domestic formulation, market is expected to grow on
the back of huge generic opportunities in regulated market,
expansion of healthcare spending (government and private
investment), rising incidence of chronic diseases and healthcare
penetration to the extended urban and rural regions. Besides, yet
to be saturated emerging economies or semi/non-regulated markets
like Africa (Franco Africa), West Asia, Latin America etc. provide
an alternative to the formulation companies with growth
opportunities.
Key Rating Weaknesses
Small and declining scale of operations along with losses at
PBILDT level: Despite of being in operations for around one
decade, the firm's scale of operations has remained small marked
by Total Operating Income (TOI) of INR 14.53 crore in FY17 9refers
to the period April 1 to March 31). Additionally, the scale of
operations of the firm witnessed a declining trend during FY15-17
period. The small scale of operations limits the firm's financial
flexibility in times of stress and deprives it from scale
benefits. Furthermore, the firm incurred losses at PBILDT level
amounting to INR 0.98 crore in FY17 due to decline in capacity
utilisation which resulted in increased cost owing to deprivation
of scale benefits. Consequently and due to high interest and
depreciation expenses, the firm incurred net losses amounting to
INR 1.91 crore in FY17.
Weak debt coverage indicators: The debt coverage indicators of the
firm stood weak as characterized by interest coverage ratio of -
2.44x in FY17 and total
debt to GCA of -3.00x for FY17.
Working capital intensive nature of operations: The operating
cycle of the firm stood elongated at 155 days for FY17 (PY: 71
days). BSP is required to maintain adequate inventory of raw
materials for smooth production process and finished goods to meet
the demand of the customers. The average utilization of working
capital limit stood at 70% for the past 12 month period ended June
2018.
Partnership nature of constitution: BSP's constitution as a
partnership firm has the inherent risk of possibility of
withdrawal of the partners' capital at the time of personal
contingency and firm being dissolved upon the death/retirement
/insolvency of partners. Moreover, partnership firms have
restricted access to external borrowing as credit worthiness of
partners would be the key factor affecting credit decision of the
lenders.
Foreign currency fluctuation risk: BSP imports the raw material
(API) from China (imports constituted 98% of the total purchases
in FY17) while it derives its income from domestic sales, thereby
exposing the firm to risks associated with adverse fluctuations in
the foreign currency. With cash outlay for sales in foreign
currency & sales realization in domestic currency and in the
absence of any hedging mechanism, the firm is exposed to the
fluctuation in exchange rates.
Exposure to regulatory risk: The pharmaceutical industry is a
closely monitored and regulated industry and as such there are
inherent risks and liabilities associated with the products and
their manufacturing. Regular compliance with product and
manufacturing quality standards of regulatory authorities is
critical for selling products across various geographies.
Furthermore, issues like price control of essential medicines by
the Government of India through the Drug (Prices Control) Order,
2013, pose regulatory risk for the Pharmaceutical industry.
Presence in competitive and low value acute therapeutics which
limits the growth: The competitive pressure in the domestic
formulation market has been rising steadily. While on one hand,
this has been prompted by significant increase in investments by
domestic players in marketing efforts through expansion in field
force, on the other hand, Multi-National Companies have also
renewed their focus on India. Hence, increasing competition and
government price control is expected to restrict margins.
Furthermore, the firm is present in low value therapeutics
segment which limits the growth prospects.
Boss Pharma (BSP), based in Baddi, Himachal Pradesh was
established in March 2006 as a partnership firm. The firm is
currently being managed by Mr. Pankaj Nandwana and Mr. Rajat
Nandwana as its partners sharing profit and losses equally. BSP is
engaged in manufacturing of pharmaceutical formulations in the
form of powder namely paracetamol, diclofenac sodium and vitamin C
at its manufacturing facility located in Baddi, Himachal Pradesh
with an installed capacity of producing 360 tonnes per annum of
diclofenac sodium & vitamin C and 1200 tonnes per annum of
paracetamol as on March 31, 2018. The firm sells its products
under the brand name 'BOSS PHARMA'. The firm imports the raw
material i.e. Active Pharmaceutical Ingredients (API) from China
(Imports constituted 98% of the total purchases for FY17) while
other requirements like PP woven bags are procured from local
market. BSP sells the final product directly to formulators and
trading houses located in Himachal Pradesh, Rajasthan, Haryana,
Maharashtra and Uttarakhand. BSP hasthe required approval from
State Drugs Controlling Authority, Baddi. The firm has a group
concern namely Paramount Pharma (PTP) which is engaged in same
business since 2006.
CKOMPAX METATECH: CRISIL Cuts Rating on INR20cr Loan to D
---------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Ckompax Metatech Private Limited (CMPL) to 'CRISIL D' from
'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 20 CRISIL D (Downgraded from
'CRISIL B/Stable')
Proposed Working
Capital Facility 30 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects instances of overdues in the working
capital limit for more than 30 days continuously on account of
stretched liquidity.
The rating also considers modest scale of CMPL's operations and a
below-average financial risk profile. However, the company
benefits from the experience of the promoters in the sugar
industry.
Key Rating Drivers & Detailed Description
* Continuous Overdue for above 30 days: There are instances of
overdues for more than 30 days in the overdraft limit owing to
stretched liquidity.
Weakness
* Modest scale of operations: Although revenue increased to INR144
crore in fiscal 2018 from INR53.4 crore in fiscal 2017, intense
competition may continue to constrain scalability, pricing power,
and profitability.
* Below-average financial risk profile: Total outside liabilities
to adjusted networth ratio was high at 5 times as on March 31,
2018. Interest coverage ratio was subdued at 1 times in fiscal
2018.
Strength
* Experience of promoters: Benefits from the promoters' experience
of over a decade, their strong understanding of the local market
dynamics, and healthy relations with customers and suppliers
should continue to support the business.
CMPL, incorporated in October 2011 promoted by Zaveri family, CMPL
was acquired in July 2016 by its current promoters, Mr. Atul
Kshirsagar and Mr. Sachin Singare. Since then, the company changed
its operations from lock assembly to sugar and ethanol trading.
CHAWLA INTERNATIONAL: CARE Moves B+ Rating From Not Cooperating
---------------------------------------------------------------
CARE Ratings has migrated the rating on bank facility of Chawla
International (CIL) to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2.25 CARE B+; Stable Revised from
Facilities CARE B+; Stable; Issuer Not
Co-Operating
Short-term Bank 5.50 CARE A4 Revised from CARE A4;
Facilities Issuer Not Co-Operating
In the absence of minimum information required for the purpose of
rating, CARE was unable to express an opinion on the ratings of
CIL and in line with the extant SEBI guidelines, CARE revised the
ratings of bank facilities of the company to 'CARE B+; Stable;
ISSUER NOT COOPERATING'. However, the firm has now submitted the
requisite information to CARE. CARE has carried out a full review
of the rating and the rating stand at 'CARE B+; Stable/CARE A4'.
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of Chawla
International (CIL) continue to be remain constrained by its small
scale of operation with low profitability, volatile commodity
prices (like coal, rice. wheat, maize etc.) with linkages to
vagaries of the monsoon and regulated nature of industry,
partnership nature of business and intensely competitive nature of
the industry with presence of many unorganized players. The
aforesaid constraints are partially offset by experienced
partners.
Going forward, the ability of the firm to grow its scale of
operation and improve its profitability margins and the ability to
manage working capital effectively will be the key rating
sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations with low profitability: CLI is a
relatively small player in trading and export business with
revenue and PAT of INR42.95 crore and INR0.11 crore respectively
in FY18 provisional. The profit margins of the firm remained low
marked by PBILDT margin of 0.92% and PAT margin of 0.27% in FY18
provisional.
Volatile commodity prices with linkages to vagaries of the monsoon
and regulated nature of the industry: CLI is primarily engaged in
trading and export of products like coal, rice, wheat, maize etc.
Wheat and rice being an agricultural produce and staple food, its
price is subject to intervention by the government. In the past,
the prices of the same have remained volatile mainly on account of
the government policies in respect of Minimum Support Price (MSP)
& controls on its exports. Further to be noted, the prices of both
the commodities are also sensitive to seasonality, which is highly
dependent on monsoon. Any volatility in the prices will have an
adverse impact on the performance of the same.
Partnership nature of business: CLI, being a partnership firm, is
exposed to inherent risk of partners' capital being withdrawn at
time of personal contingency. Furthermore, limited ability to
raise capital and poor succession planning may result in
dissolution of the firm.
Intensely competitive nature of the industry with the presence of
many unorganised players: Commodity products trading is highly
fragmented and competitive due to presence of many players
operating in this sector owing to its low entry barriers, due to
low capital and technological requirements. West Bengal, Assam and
nearby states are a major paddy and wheat and other agro
commodities growing area with many processing unit operating in
the area. Besides, coal mines also are located in and around the
area. High competition restricts the pricing flexibility of the
industry participants and has a negative bearing on the
profitability.
Key Rating Strengths
Experienced partners: The firm is managed by Mr J S Chawla,
partner, with the help of other three partners. The partners
have over two decades of experience in trading and export
operation.
CLI was established in 1994 as a partnership firm by Mr. J. S
Chawla along with his family members. The firm is in the business
of trading and exports of coal and agro based commodities like
maize, wheat, rice etc. The firm generated around 60% of total
turnover from coal trading and remaining from agro based
commodities trading. The firm derived around 91% of total sales
during FY18, provisional from exports to Bangladesh and Bhutan and
balance from domestic market.
ELITE MOTORS: CARE Lowers Rating on INR7.39cr Loan to B
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Elite Motors Private Limited (EMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 7.39 CARE B; Stable; ISSUER NOT
Facilities COOPERATING Revised from
CARE B+; Issuer Not
Cooperating; Based on best
available Information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from EMPL to monitor the rating
vide e-mail communications/letters dated April 26, 2018; May 3,
2018; August 3, 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. The rating
on Elite Motors Private Limited's bank facilities will now be
denoted as CARE B; Stable; 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).
In the absence of information on company's financial performance
and other critical data including operational performance, capex
undertaken etc. post the last review on March 29, 2017, CARE is
unable to assess the company's ability to service the debt
obligations and hence the revision in rating.
Detailed description of the key rating drivers
At the time of last rating on March 29, 2017, the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies).
Key Rating Weaknesses
Weak financial risk profile: EMPL's income has been growing on
Y-o-Y basis from FY15 to FY17 but the operating margins have been
declining. The same has also led to decline in cash accruals of
the company from INR 2.77 crore in FY15 to INR 2.11 crore in FY17.
Total Debt/PBDIT and TDGCA were high at 32.76x and 8.04x
respectively as on March 2018. Intense competition from other auto
dealers exerts pressure on margin: The nature of business being
trading of automobiles is characterized by high competition, low
profitability margins, high amount of working capital
requirements, etc. EMPL has limited negotiating power as the
margins on products are set by VW thereby restricting the company
to earn incremental income.
Key Rating Strengths
Experienced promoters with reasonable track record in automobile
dealership: The key promoter of EMPL, Mr Gurjith Singh (CMD) has
around three decades of experience in retail, distribution and
real estate business. The day-to-day operations of EMPL are looked
after by Mr Gurjith Singh (CMD), who is adequately supported by
his two sons Mr Jas Singh and Mr Pavan Singh and a group of
professionals having rich business experience.
Lineage of brand image and adequate support from Volkswagen:
Volkswagen extends adequate support to EMPL in the form of cash
discounts, free accessories to customers, sharing of promotional
and marketing expenses.
Elite Motors Private Limited (EMPL) was promoted by Mr. Gurjit
Singh and Mrs. Sonia Singh in September 2007. EMPL is an
authorized dealer for passenger vehicles (PV) of Volkswagen India
Private Limited (VIPL). It operates through one show room and one
yard having a capacity of parking 500 cars in Bangalore. The
showroom is occupied on leased premises and is equipped with 3-S
facilities (Sales, Service and Spare-parts). Elite group was
established in Bangalore in the year 1975, with the business in
trading of crockery and consumer durables. In the year 2005, the
group diversified into automobiles and since then established
three dealerships for Honda, Ford and Volkswagen.
EMPEROR TEXTILES: CARE Reaffirms B+ Rating on INR2.53cr Loan
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Emperor Textiles Private Limited (ETPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 2.53 CARE B+; Stable Re-affirmed
Short-term Bank
Facilities 14.00 CARE A4 Re-affirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of ETPL continues to
be tempered by decline total operating income, leveraged capital
structure, working capital intensive nature of operations, foreign
exchange fluctuation risk and exposure to volatile prices of yarn
The ratings also factor in improvement in PBILDT margin and
reduced net loss in FY18 (Provisional, refers to period April 01
to March 31) resulting in improved debt coverage indicators. The
ratings continue to derive strength from long experience of
promoter in textile industry, integrated production facilities
resulting in better operational performance, established
relationship with customers and suppliers and diversified product
offerings resulting high revenues. Going forward, the ability of
the company to improve its scale of operations, capital structure,
profitability and to efficiently manage its working capital
requirements will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Decline in total operating income: The total operating income of
company declined from INR53.37 crore in FY17 to 34.01 crore in
FY18 (Prov.) due to decrease in execution of orders on account
change in key managerial persons and part of the business were
taken over by one of the director of the company and change in key
managerial persons.
Working capital intensive nature of operations: The company
procures raw materials based on the orders received. The purchased
yarn is weaved, dyed and stitched before storing as finished
goods. Since the fabric needs to go through different phases, the
raw materials are stored for about 132 days, which resulted in
elongated operating cycle. The customers are given credit upto 59
days. The firm procures raw materials predominantly on cash basis
and at times avails credit upto 43 days depending on the quantum
of goods. Due to elongated inventory period, the operating cycle
also stood elongated at 132 days in FY18 (Prov.) as against 100
days in FY17.
The working capital facility utilization fluctuated during the
review period according to the order execution. The average
working capital utilization stood at 90% for the last 12 months
ended July 2018.
Foreign exchange fluctuation risk: Since the company is engaged in
international business transaction such as exporting, fluctuations
in the currency value has a significant impact on the bottom line.
When exchange rates take an unfavourable turn, it results in lower
receipt of payments from its customers. However, the company has
natural hedge to certain extent and it also utilizes packaging
credit facility in foreign currency to mitigate the risk of
foreign currency fluctuation to an extent.
Exposure to volatile prices of yarn: The spinning units are
exposed to the price risk of raw material. Yarn units are required
to keep stock of sufficient cotton inventory to meet the demand.
These units also tend to purchase cotton when the prices are
relatively favorable and build up the stock. This results in the
need to fund the pile up inventory. Also the price fluctuation
linked to monsoon, increasing manufacturing cost and the demand &
supply dynamics causes cotton prices tend to move sharply.
Leveraged capital structure albeit improvement: The capital
structure of company stood at leveraged marked with overall
gearing of 8.21x as of March 31, 2018 (Prov.) which is improved
from 9.93x as of March 31, 2017 due to decrease in total debt.
Key Rating Strengths
Improvement in profitability margins: The company achieved
operating profit (PBILDT) of INR2.00 crore in FY18 (Prov.) as
compared to operating loss of INR1.83 crore in FY17 due to
decreases in cost of sales on back of decrease in raw material
cost and employee costs. Furthermore, the net loss of the company
reduced to INR1.33 crore in FY18 (Prov.) as compared to net loss
of INR6.19 crore in FY17 due to achievement of operating profit
resulting in absorption of financial expenses and depreciation to
an extent. Improvement in debt coverage indicators The debt/GCA
and interest coverage ratio are improves from -12.72 and -1.31 in
FY17 to 16.89 and 1.74 in FY18 (Prov.) due to improvement in gross
cash accruals on back of increase in PBILDT margin.
Long experience of promoter in textile industry: Mr. P.
Karthikeyan (Managing director) has nearly three decades of
experience in the textile industry since 1986. He started the
business as a proprietorship firm and has established ETPL in
2005. The day to day activities of the company is managed by
Mr.P.Karthikeyan along with other directors who are ably supported
by well qualified and experienced staff members.
Integrated production facilities resulting in better operational
performance: ETPL purchases yarn directly from local suppliers and
has integrated operational facilities for fabrics, weaving and
stitching of fabrics in its own units. ETPL outsources certain
process like embroidery and printing on job work basis. Overall
capacity utilization is moderate at 70% as informed by the company
due to its nature of operations.
Established relationship with customers and suppliers: ETPL has
established good relations with its suppliers and customers,
leveraging on the vast experience of the promoter. Earlier, ETPL
used to import yarn from China, Singapore and Italy. Now, the
company purchases yarn only from local suppliers due to
competitive price.
Diversified product offerings resulting in increased revenues:
ETPL generates revenue from sale of fabrics, home textiles,
garments (shirts and pants) and job work income. The major
component of revenue for the company is from sale of home
textiles. The job work income is derived from fabrics, sizing,
weaving and stitching of fabrics.
Emperor Textiles Private Limited (ETPL) is a Tirupur (Tamilnadu)
based textile company incorporated in 2005 by Mr.A.Palanisamy.
Mr.A.Palanisamy initially started the business of manufacturing
and sale of home textiles as a proprietorship firm in 1966. Later
on, the proprietorship firm converted into a partnership firm with
his relatives as partners. The firm gradually started
manufacturing of other products like fabrics, shirts, garments,
home textiles and other textile products from 2004 onwards. In
2005, the partnership firm was converted into private limited
company. The directors of the company at the time of incorporation
were Mr. A. Palanisamy, Mr. P. Karthikeyan, Mr. P. Krishnaraj and
Ms. P. Vimala. The shares held by Mr. P. Krishnaraj were
transferred as gift in favour of Mr. P. Karthikeyan and Ms.
SujiniKamatchi in equal proportion with effect from June 26, 2017.
Mr. P. Krsihnaraj has resigned from his position. Mr. P.
Krishnaraj has established a proprietorship concern in the name of
Emperor Textile Processors (ETP), which deals with dyeing of
fabric. ETPL gets the fabric dyed from ETP through job work order.
The shares held by Mr. A Palanisamy and Ms. P Vimala was
transferred in favour of MR. P. Karthikeyan.
GARG ISPAT: CARE Lowers Rating on INR9cr LT Loan to D
-----------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Garg Ispat Udyog Limited (GIUL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 9.00 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE B-; Stable on
the basis of best available
information
Short term Bank 6.00 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE A4; Stable on
the basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from GIUL to monitor the ratings
vide emails dated August 8, 2018, July 30, 2018, July 20, 2018,
July 6, 2018 and numerous phone calls. E-mail communications
seeking information are attached as Annexure C. However, despite
CARE's repeated requests, the company has not provided the
requisite information for monitoring the ratings. In-line with the
SEBI guidelines, CARE has reviewed the rating on the basis of
publicly available information which however, in care's opinion is
not sufficient to arrive at fair rating. CARE's rating on Garg
Ispat Udyog Limited's bank facilities will now be denoted as CARE
D; ISSUER NOT COOPERATING. The ratings have been revised on
account of account of ongoing delays in meeting the debt
obligations.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
The rating has been revised on account of ongoing delays in debt
servicing due to stretched liquidity position.
Delhi based, Garg Ispat Udyog Ltd. (GIUL) was incorporated in 1987
and is currently being managed by Mr. Manish Gupta, Ms. Nidhi
Gupta, Ms. Alka Gupta and Ms. Kamini Goyal. GIUL is engaged is
manufacturing of MS black pipes, scaffolding, PPG fabricated
sheets for Buildings, MS fabrications etc. GUIL procures key raw-
material viz. HR-coil, aluminium extrusion, aluminium form work
from traders. The company sells its products domestically to real
estate developers and construction contractors.
GRACE MICRON: CRISIL Lowers Rating on INR6.75cr Loan to D
---------------------------------------------------------
CRISIL is downgraded the ratings on bank facilities of Grace
Micron LLP (GML) from 'CRISIL B/Stable/CRISIL A4+ Issuer Not
Cooperating' to 'CRISIL D/CRISIL D' owing to delay in term debt
installment repayment.
Amount
Facilities (INR Crore) Ratings
---------- ----------- ------
Bank Guarantee .75 CRISIL D (Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
Cash Credit 2.00 CRISIL D (Downgraded from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Long Term Loan 6.75 CRISIL D (Downgraded from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Due to inadequate information, CRISIL, in line with Securities and
Exchange Board of India guidelines, had migrated the ratings on
the bank facilities of GML to 'CRISIL B/Stable/CRISIL A4+ Issuer
Not Cooperating'. However, GML has subsequently started sharing
requisite information, necessary for carrying out comprehensive
review of the rating. Consequently, CRISIL is downgraded the
ratings from 'CRISIL B/Stable/CRISIL A4+ Issuer Not Cooperating'
to 'CRISIL D/CRISIL D' owing to delay in term debt installment
repayment.
Key Rating Drivers & Detailed Description
Weakness
* Delay in servicing term debt obligation: GML has delayed
servicing its July 2018 instalment, which still remains overdue.
The initial phase of operations has resulted in cash flow mismatch
and weak liquidity.
Strength
* Experience of partners: Benefits from the partners' experience
of around three decades, their strong understanding of the local
market dynamics, and healthy relations with customers and
suppliers should continue to support the business.
GML, established in 2016 at Morbi, is a Greenfield project for
manufacturing and purifying of soda and potash feldspar mainly
used in the ceramic industry. The firm commenced operations in
October 2017.
GREENERIES AGRO: CARE Assigns B+ Rating to INR10cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Greeneries Agro Private Limited (GAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 10.00 CARE B+; Stable Assigned
Short term bank
facilities 2.50 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of GAPL are
constrained on account of modest scale of operations with low
capitalization, leverage capital structure and weak debt coverage
indicator. The ratings are also constrained on account of working
capital intensity and its presence in highly competitive and
fragmented industry. The rating however, derives strength from
experienced promoters in agro based industry, reputed clientele
and Moderate profitability.
The ability of GAPL to increase its scale of operations with
efficient management of working capital requirements are the key
rating sensitivities.
Detailed description of Key rating drivers
Key rating Weakness
Moderate profitability margins: PBILDT margin improved & stood at
6.06% in FY18 (vis-a-vis 5.09% in FY17) on account of reduction in
cost of traded goods which is 78% of total revenue in FY18 (vis-a-
vis 86% of total revenue in FY17). Further net profit margin has
declined slightly and remained moderate at 2.77% in FY18 (vis-Ö-
vis 2.84 % in FY17) on account of increased in interest and
depreciation cost.
Leverage capital structure and weak debt coverage indicator: The
capital structure of the company stood leveraged with total debt
of INR14.17 crore against of low total net worth of INR4.69 crore
and marked by overall gearing ratio of 3.02x as on March 31,2018
vis-Ö-vis 2.25x as on March 31,2017 owing to availment of cash
credit of INR10 crore in FY18 to fund its growing business
operation. Debt coverage indicator of the company remained weak in
FY18 marked by total debt to GCA of 5.84 times & interest coverage
of 3.28x (vis-Ö-vis 3.09x and 7.34x respectively in FY17) owing to
low cash accruals and high debt level.
Working capital cycle and comfortable liquidity position:
Operations of GAPL's are working capital intensive in nature as it
procures the farm produce directly from the farmers on cash basis
to get cash discount and some-times it procures through agents who
provides 20-30 days credit period to make payment. Similarly
GAPL's offers 30 days credit period to its customers due to
intense competition in prevailing market conditions. Hence it has
average utilization of 90% of cash credit limit and 50% of letter
of credit limit for last six month ended as on June 30, 2018.
Moreover, liquidity position of GAPL stood comfortable with
current and quick ratios stood above unity with 1.48x and 1.14x in
FY18 (vis-a-vis 2.05x and 1.66x in FY17).
Highly competitive and fragmented industry: Agro trading industry
is a highly fragmented industry and there are large numbers of
organized and unorganized players which have led to high
competition in the industry, restricting the profitability
margins.
Key Rating Strengths
Experienced and Resourceful promoters: Mr. Sachin Shivaji Chavan,
Director and Founder of the company is from agriculture family and
having about 18 years of experienced into agriculture industry.
Similarly, Executive Director Mr. Sreekumar C Sreedhar is a Post
Graduate from Indian Institute of Material Management having two
decades of experience into agriculture retail business. In
addition to the top management is supported by qualified
professionals heading various verticals with adequate and relevant
experience in their respective fields. Further, promoters are more
resourceful with equity infusion of INR0.75 crore by promoters
owing to which equity capital of the company stood at INR1.50
crore as on August 2018 as against of INR 0.50 crore as on March
31, 2018 which allows company to have financial flexibility to the
great extent.
Reputed clientele: Directors have more than a decade experienced
into similar line of business which has helped to build cordial
relationship with reputed clients from retail industries which in
turn brings the consistence business for GAPL. Growing scale of
operation with low capitalization: GAPL's scale of operations is
growing yet stood modest during the period FY15-18. GAPL posted
total operating income of INR83.62 crore in FY18 (vis-Ö-vis
INR57.63 crore in FY17). In last three years company had undergone
capex plan with opening of new five more branches at different
location of India in order to meet increasing demand from customer
and with due advantage of existing network of took over firms have
helped GAPL to bring on more and more revenue for company.
Incorporated in April 2015, Greeneries Agro Private Limited
(GAPL); started its operations in agriculture retailing business
under the leadership of Mr. Sachin Chavan and its engaged into
bulk purchasing of farm produce of fruits and vegetables (namely
Onion, Potato, Garlic) directly from farmers and does the value
addition to its like quality control checks, packing, grading,
labelling etc. and selling it to retail business and thereby
acting as channel between farmers and retailers. It procures 52%
of goods directly from domestic farmers and 48% imports from USA,
Itali, Chilly, Iran, South Africa etc. GAPL has its registered
office located at Vashi, Navi Mumbai and seven more branches at
New Delhi, Pune, Hubali, Bengaluru, Kochi, Hyderabad and Chennai
out of which at four places has its own cold storage and rest
three are on rental basis. Being a perishable nature of products
and to avoid risk of damaging of goods, GAPL have specifically
designed warehouses, own logistics, in-house sourcing and sorting.
INDO GERMAN: Ind-Ra Lowers Long Term Issuer Rating to 'BB-'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Indo German
International Private Limited's (IGIPL) Long-Term Issuer Rating to
'IND BB-' from 'IND BB'. The Outlook is Negative.
The instrument-wise rating actions are:
-- INR150 mil. Fund-based working capital limit Long-term rating
downgraded; Short-term rating affirmed with IND BB-/
Negative/IND A4+ rating; and
-- INR200 mil. Non-fund-based working capital limit affirmed
with IND A4+ rating.
KEY RATING DRIVERS
The downgrade and the Negative Outlook reflect IGIPL's sharply
declined revenue, along with its operating losses, owing to
adverse market conditions and a shipment delay from a counterparty
that led to deterioration in its credit metrics in FY18.
IGIPL's revenue declined 75.50% yoy to INR418.89 million in FY18
from INR1,709.49 million in FY17, leading to a decline in the
scale of operations to small from modest. Furthermore, it
incurred INR2.28 million in operating losses in FY18 compared with
EBITDA of INR8.32 million in FY17 (0.49% EBITDA margin) on account
of stuck inventory and a rise in fixed cost. FY18 financials are
provisional.
The ratings, however, continue to be supported by IGIPL's
comfortable liquidity, indicated by an approximate 36.0%
utilization of its non-fund-based limits during the 12 months
ended July 2018.
The ratings, however, are supported by more than four decades of
extensive experience of its promoters in the steel trading
business, which has resulted in the company's long-standing
relationships with its clientele and suppliers, and an interest
income generated from fixed deposits that provided cushion for
interest obligations.
RATING SENSITIVITIES
Negative: Any further operating losses, leading to further
deterioration in the credit metrics, could be negative for the
ratings.
Positive: The company registering operating profitability, leading
to any improvement in the credit metrics, could be positive for
the ratings.
COMPANY PROFILE
Incorporated in 1995, IGIPL is engaged in the trading of iron and
steel, their alloys and other allied products. Its head office is
in New Delhi.
INDUSTRIAL GLASS: CRISIL Migrates B Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Industrial
Glass Company - Navi Mumbai (IGC) to 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Letter of Credit 1.25 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Bank
Facility 3.10 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term
Bank Loan Facility 5.65 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with IGC for obtaining
information through letters and emails dated June 28, 2018,
July 31, 2018, August 7, 2018 and August 13, 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 Industrial Glass Company - Navi
Mumbai. Which restricts CRISIL's ability to take a forward looking
view on the entity's credit quality. CRISIL believes information
available on Industrial Glass Company - Navi Mumbai is consistent
with 'Scenario 2' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BBB' rating category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Industrial Glass Company - Navi Mumbai to 'CRISIL
B/Stable/CRISIL A4 Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting
rating surveillance as agreed to in the rating agreement.
Established in 1984 as a proprietorship firm, IGC is promoted by
Mr. Joseph Varghese and is based out of Navi Mumbai. IGC
undertakes manufacturing of abrasives and fiber glass.
JAMNADAS AND COMPANY: CRISIL Migrates D Rating to Not Cooperating
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Jamnadas and
Company (JNC) to 'CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with JNC for obtaining
information through letters and emails dated May 31, 2018,
June 30, 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 Jamnadas and Company. Which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Jamnadas and Company is consistent with 'Scenario 1' outlined in
the 'Framework for Assessing Consistency of Information with
CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Jamnadas and Company to 'CRISIL D Issuer not
cooperating'.
Set up in 1969 in Nagpur as a partnership firm by Mr Jamnadas
Udeshi and his family, JNC trades in structural steel products
such as mild steel angles, beams, channels, flat, and round and
square bars.
JOSEPH LESLIE: Ind-Ra Raises Long Term Issuer Rating to 'B-'
------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Joseph Leslie
Dynamiks Manufacturing Private Limited's (JLDPL) Long-Term Issuer
Rating to 'IND B-' from 'IND D'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR50 mil. Fund-based limits upgraded with IND B-/Stable
rating; and
-- INR50 mil. Non-fund-based limits upgraded with IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects timely debt servicing by JLDMPL and an
improvement in its liquidity position with no instances of
overutilization since April 2018.
However, the ratings remain constrained by the company's small
scale operations and modest credit metrics. As per FY18
provisional financials, revenue declined to INR208 million in FY18
(FY17: INR281 million) owing to the implementation of the Goods
and Services Tax regime.
The company reported EBITDA losses of INR7.93 million in FY18P, as
against a profit of INR10.66 million in FY17, due to an increase
in the cost of raw materials consumed. Interest coverage
(operating EBITDAR/gross interest expense) was 1.0x in FY17 and
net leverage (total adjusted net debt/operating EBITDAR) was 6.7x
in FY17.
However, the ratings continue to be supported by JLDMPL's
founder's experience of more than two decades in the safety rescue
and fire safety products manufacturing business.
RATING SENSITIVITIES
Positive: An improvement in the scale of operations leading to an
improvement in the credit metrics and liquidity position, all on a
sustained basis, could lead to a positive rating action.
COMPANY PROFILE
JLDPL was incorporated in 1987 as Joseph Leslie Drager
Manufacturing Pvt Ltd by Mumbai-based Leslie family and
Dragerwerks, AG (Germany). The company trades and manufactures
equipment used in gas detection, fire safety and disaster
management. Its manufacturing unit is located in Vasai,
Maharashtra.
MANASA QUALITY: CRISIL Migrates B+ Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating of Manasa Quality Enterprises
Limited (MQEL) from 'CRISIL B+/Stable Issuer Not Cooperating' to
'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Export Packing 55 CRISIL B+/Stable (Migrated
Credit from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Proposed Long Term 5 CRISIL B+/Stable (Migrated
Bank Loan Facility from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Due to inadequate information, CRISIL, in line with Securities and
Exchange Board of India guidelines, had migrated the rating on
bank facilities of MQEL to 'CRISIL B+/Stable Issuer Not
Cooperating'. However, the management subsequently started sharing
the information necessary for carrying out a comprehensive review
of the rating. Consequently, CRISIL is migrating the rating from
'CRISIL B+/Stable Issuer Not Cooperating' to 'CRISIL B+/Stable'.
CRISIL's rating on long-term bank loan facilities of MQEL
continues to reflect a below-average financial risk profile
because of weak debt protection metrics, and susceptibility to any
adverse impact of regulatory changes and to intense competition in
the agricultural commodities trading industry. These rating
weaknesses are partially offset by the extensive industry
experience of the promoters and a moderate scale of operations.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: The company has modest net
worth of around INR8.68 Cr as on March 31, 2017 and estimated
networth of INR9.17 Cr as on March 2018. TOL/TNW is stood at
around 8.85 times as on March 2017 and estimated TOL/TNW of 8.33
times as on March 2018. The company has weak debt protection
metrics as indicated by its NCATD and interest coverage ratio of
0.01 and 1.28 times for fiscal 2017 and estimated NCATD and
interest coverage ratio of 0.01 and 1.21 times for fiscal 2018.
* Susceptible to adverse government regulations and exposure to
intense competition: The domestic rice industry is highly
regulated in terms of paddy prices, export/import policy for rice,
and the rice-release mechanism, which affects the credit quality
of players in the industry. The minimum support price of paddy and
prevailing rice prices are two important factors that determine a
rice mill's profitability. The commoditized nature of the industry
has led to high competitive pressures along with very low
operating margin
Strengths
* Extensive experience of promoters: The company benefits from the
extensive industry experience of the promoters. They have been
dealing in agricultural commodities for the past two decades and
have developed strong relationships with various overseas
customers and suppliers. The promoters are high net worth
individuals and have developed strong relationships with the
lending community.
* Moderate scale of operations: MQEL's moderate scale is reflected
in estimated revenue of INR301.13 crore in fiscal 2018.The
agricultural commodities trading industry in India is dominated by
a large number of unorganized players catering to local demand.
MQEL is a moderate trading company operating in Andhra Pradesh and
derives its revenue primarily from export of non-basmati rice to
mostly Middle East and European countries.
Outlook: Stable
CRISIL believes MQEL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of higher-than-expected revenue and
profitability, leading to a better financial risk profile. The
outlook may be revised to 'Negative' in case of any large debt-
funded expansions, a substantial decline in revenue and
profitability, or a stretched working capital cycle, leading to
weakening of the financial risk profile.
MQEL was incorporated in 2012, promoted by Mr D Veerabhadra Reddy
and his family. The company processes rice, maize, and broken
rice.
MNG OVERSEAS: CRISIL Migrates B+ Rating From Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating of MNG Overseas Private Limited
(MNGOPL) from 'CRISIL B+/Stable/Issuer Not Cooperating' to 'CRISIL
B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Warehouse Receipts 9.5 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Due to inadequate information, CRISIL, in line with Securities and
Exchange Board of India guidelines, had migrated the rating on the
long-term bank facilities of MNGOPL to 'CRISIL B+/Stable/Issuer
Not Cooperating'. However, management has subsequently started
sharing the requisite information for carrying out a comprehensive
review of the rating. Consequently, CRISIL is migrating the rating
from 'CRISIL B+/Stable/Issuer Not Cooperating' to 'CRISIL
B+/Stable'.
The rating reflects working capital-intensive operations, a weak
financial risk profile, and a low operating margin due to the
trading nature of operations. These weaknesses are partially
offset by the extensive experience of the promoters in the rice-
trading industry.
Analytical Approach
CRISIL has treated unsecured loans from the promoters as debt, as
these loans are not subordinated to bank debt.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive operations: Gross current assets were
high at 296 days, driven by large inventory of 286 days, as on
March 31, 2018.
* Low operating profitability margin: The margin was 5.7% for
fiscal 2018, and should remain low at 5.0-6.5% over the medium
term due to the trading nature of operations and limited value
addition to products.
* Weak financial risk profile: The networth was low at INR210
crore, and the total outside liabilities to adjusted networth
ratio high at 9.42 times, as on March 31, 2018. The debt
protection metrics were subdued: the interest coverage and net
cash accrual to total debt ratios were 1.2 times and 0.02 time,
respectively, in fiscal 2018.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of a decade in the rice-trading industry. This
has resulted in an established relationship with key customers,
thereby ensuring steady sales.
Outlook: Stable
CRISIL believes MNGOPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' if a significant increase in the scale of operations
and operating profitability strengthens the financial risk
profile. The outlook may be revised to 'Negative' if a decline in
profitability or large working capital requirement weakens the
financial risk profile.
MNGOPL, based in Delhi, was established in 2012, promoted by Mr
Mitihilesh Gupta, Ms Geeta Gupta, and their son, Mr Namit Gupta.
The company trades in rice and maize, both locally and globally.
MODERN MACHINERY: CARE Lowers Rating on INR9.30cr Loan to D
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Modern Machinery Store (MMS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.30 CARE D; ISSUER NOT COOPERATING;
Facilities Revised from "CARE B; Stable;
ISSUER NOT COOPERATING on the
Basis of best available
Information
Long-term/Short- 0.30 CARE D/CARE D; ISSUER NOT
Term Bank COOPERATING Revised from
Facilities CARE B; Stable/CARE A4;
ISSUER NOT COOPERATING on
the basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MMS to monitor the ratings
vide e-mail communications/ letters dated December 7, 2017,
December 21, 2017, February 9, 2018 and February 13, 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
MMS's bank facilities will now be denoted as CARE D/CARE D; ISSUER
NOT COOPERATING*. Users of these ratings (including investors,
lenders and the public at large) are hence requested to exercise
caution while using the above ratings. The revision in the ratings
of MMS takes into account ongoing delays in servicing of debt
obligations.
Detailed Description of Key Rating Drivers
Key rating weaknesses
Irregularity in debt servicing: The banker of MMS has verbally
confirmed that there are ongoing delays in debt servicing by the
firm due to stressed liquidity position.
Incorporated as a partnership firm in 1954 by Gupta family, Alwar-
based (Rajasthan) MMS is engaged in auto dealership business. MMS
is an authorized dealer for two wheelers (2W) of Hero Moto Corp
Limited (HMCL). Besides, it also operates dealership of John Deere
India Private Limited (JDIPL). The firm has a 3S (sales, service
and spares) facility in Alwar. Until July 2016, MMS was also the
sole authorized dealer for passenger cars of HMIL in Alwar region;
however, the business pertaining to HMIL has now been shifted by
the promoters in newly incorporated Modern Autocar Private Limited
(MAPL).
NOVELTY GOLD: CARE Moves B+ Rating to Not Cooperating Category
--------------------------------------------------------------
CARE Ratings has migrated the rating on bank facility of Novelty
Gold (NG)to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 30.00 CARE B+; Stable; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from NG to monitor the ratings
vide e-mail communications/letters dated April 30, 2018, June 5,
2018, June 19, 2018 and numerous phone calls. However, despite
CARE's repeated requests, the firm has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion is
not sufficient to arrive at a fair rating. The rating on NG'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 in August 1, 2017, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Short track record with small scale of operations: The firm has
commenced trial run for market survey from September 2016 to March
31, 2017 and during this period the firm has reported total
operating income of INR9.38 crore with a net loss of INR0.65 crore
in FY17 (Provisional). However, the firm has started commercial
operations from April 2017 and in Q1FY18, it has reported turnover
of INR6.50 crore as maintained by the management. Thus it has very
short track record of operations.
Partnership nature of constitution: NG, being a partnership firm,
is exposed to inherent risk of withdrawal of capital by the
partners, restricted access to funding and risk of dissolution on
account of poor succession planning. Furthermore, partnership
firms have restricted access to external borrowing as credit
worthiness of partners would be the key factors affecting credit
decision for the lenders.
Working capital intensive nature of operations: The operation of
the firm is working capital intensive as the firm is required to
hold adequate inventories for timely supply of traded goods to
wholesale customers/retailers. Furthermore, the firm is also
required to pay to its creditors in advance or on delivery of
traded goods. Therefore it requires large working capital funds
for smooth function of its operations. However, as the firm makes
sales in cash which mitigates its working capital requirement to
some extent.
Exposed to volatility in traded materials: The prices of gold
jewellery are highly volatile in nature. The management has stated
that to mitigate the risk of volatility in gold jewellery prices
they purchases gold jewellery on daily basis equivalent to the
quantity sold. However they are exposed to the risk of volatility
in gold jewellery prices to the extent of inventory holding.
Competitive nature of industry with the presence of many
unorganized players: The Gems and Jewellery (G&J) industry has
limited restriction in terms of entry barriers for new players
given lower government regulations and technological dependence.
The Indian G&J industry is very competitive with the unorganized
sector dominating the market and is highly fragmented in nature.
There are few key domestic private sector players in the retail
jewellery segment but they comprise a mere 4% of the total
jewellery market while the remaining are mainly family run
businesses. Therefore, being a new entrant in the market, the firm
is exposed to intense competition from other established players
operating in the same region.
Key Rating Strengths
Experienced partners: The key partner, Mr. P. Ashok Kumar has
around three decades of experience in diversified business. He
looks after the day-to-day operations of the firm. He is supported
by other six partners who are also having around two decades of
experience in trading of various products, real estate business,
etc.
Authorised distributor of Emerald Jewel Industry India Limited:
The firm is an authorised distributor of Emerald Jewel Industry
India Limited for Behrampur, Odisha. The Emerald Jewel India Ltd
has its recognised brand presence in the state of Odisha and the
firm is deriving benefits out of this.
Novelty Gold (NG) was constituted as a partnership firm via
partnership deed dated June 12, 2015, by the seven partners namely
Mrs. Anita, Mr. P. Ashok Kumar, Mr. P. Pratap Kumar, Mr. P
Someswar, Mr. M. Rajiv Kumar Patro, Mr. S. Manoj Kumar Prusty and
Mr. Siva Sankar Rao. The firm has already set up its showroom
located (spread in an area of 5888 square feet) at Gandhi Nagar,
Berhampur, with aggregate costs of INR 11.46 crore. The firm is an
authorized distributor of Emerald Jewel Industry India Limited for
Berhampur, Odisha with effect from April 2016. The firm has
commenced trial runs for market survey from September 2016 to
March 31, 2017 and during this period earned a revenue of INR9.38
crore. The full-fledged commercial operations commenced from April
2017.
PRABHU CONSTRUCTION: Ind-Ra Lowers Long Term Issuer Rating to BB-
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Prabhu
Constructions' (PC) Long-Term Issuer Rating to 'IND BB-' from 'IND
BB (ISSUER NOT COOPERATING)'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR20 mil. Fund-based limits Long-term rating downgraded;
short-term rating affirmed with IND BB-/Stable/IND A4+
rating;
-- INR125 mil. (increased from INR35 mil.) Non-fund-based limits
affirmed with IND A4+ rating; and
-- INR10 mil. Proposed fund-based limits* assigned with
Provisional IND BB-/Stable/Provisional IND A4+ rating.
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facility by
PC to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The downgrade reflects PC's stressed liquidity position as
indicated by full utilization of its working capital limits during
the 12 months ended July 2018.
The ratings remained constrained by the firm's small scale of
operations and modest credit metrics. As per FY18 provisional
financials, revenue declined to INR292.06 million (FY17: INR302.30
million) on account of lack of new orders. Interest coverage
(operating EBITDA/gross interest expense) deteriorated to 2.03x in
FY18P (FY17: 4.67x) mainly due to an increase in gross interest
expense on account of machinery loans. However, net leverage
(adjusted net debt/operating EBITDA) improved to 1.56x in FY18P
(FY17: 1.96x) due to lower utilization of working capital limits
at the end of the year.
The ratings also factor in the proprietorship structure of the
firm.
However, the ratings are supported by PC's strong EBITDA margins
of 6.93% (FY17: 5.36%) with return on capital employed of around
20%. The improvement in the EBITDA margins was mainly on account
of a decrease in labor expenses.
The ratings continue to be supported by PC's established
operational track record of more than 28 years in the civil
construction business.
RATING SENSITIVITIES
Negative: A decline in the margins leading to deterioration in the
credit metrics on a sustained basis would be negative for the
ratings.
Positive: A significant improvement in the top line along with an
improvement in the credit metrics on a sustained basis will be
positive for the ratings.
COMPANY PROFILE
Established in 1986, PC undertakes civil construction contracts
for Uttar Pradesh Public Works Departments, Luck now Development
Authority, Uttar Pradesh Rajkiya Nirman Nigam.
SAI BABUJI: CARE Assigns B+ Rating to INR8.40cr Long-Term Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Sai
Babuji Projects Private Limited (SBPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.40 CARE B+; Stable Assigned
Short-term Bank
Facilities 5.60 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SBPPL are tempered
by small scale of operations along with fluctuating total
operating income, working capital intensive nature of operations,
leveraged capital structure, weak debt coverage indicators and
presence in highly fragmented and competitive solar industry. The
ratings, however, derives its strengths from experience of the
promoters, increasing profitability margins during the review
period, medium term revenue visibility from order book position
and stable outlook of solar industry.
Going forward, the ability of the company to increase its revenue
along with improving the profitability margins and capital
structure, while managing its working capital efficiently are the
key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operations along with fluctuating total operating
income: Despite being in the industry since 2011, the scale of
operation has been small, with revenue of INR40.51 crore in FY18
(Prov.). The total operating income of the company has been
fluctuating during FY16(A)-FY18 (Prov.). The total operating
income decreased from INR 12.61 crore to INR 12.05 crore due to
less orders executed by the company. However, the revenue
increased from INR 12.05 crore in FY17 to INR 40.51 crore in FY18
(Prov.) due to more number of orders executed by the company from
the existing as well as new clientele. The company has executed
orders for Telangana, Andhra Pradesh, Tamil Nadu, Gujarat,
Chhattisgarh and Haryana state in FY18. Apart, the networth of the
company stood small at INR 2.95 crore as on March 31, 2018 (Prov.)
as compared to other peers in the industry.
Working capital intensive nature of operations: The operations are
working capital intensive on account of stretched average
collection days and creditor days. The company provides a credit
period of up to 60 days to its customers and sometimes because of
delays in payment received from the Government departments, the
average collection days stood stretched at 121 days in FY18
(Prov.) when compared to 54 days in FY16. On suppliers end, the
company receives a credit period of 60 days and sometimes
depending on the realization from debtors, the company avails
extension of credit period up to three months.
Furthermore, the company maintains 15-20 days inventory in hand in
order to meet customer requirement on time. Due to the
aforementioned reasons, the operating cycle stood at 44 days in
FY18 (Prov.) when compared to 7 days in FY16. The average
utilization of the cash credit facility was 90%-95% for the last
12 month ended July 31, 2018.
Leveraged capital structure and weak debt coverage indicators: The
capital structure of the company marked by overall gearing stood
leveraged during the review period. Overall gearing of the company
improved from 2.80x as on March 31, 2016 to 1.16x as on March 31,
2017 on account of increase in share capital from INR 0.25 crore
to INR 1.50 crore which led to increase in tangible net worth.
However, the overall gearing ratio of the company deteriorated to
3.46x as on March 31, 2018 (Prov.) due to increase in debt levels
on account of higher utilization of working capital facility along
with increase in unsecured loans.
The debt coverage indicators of the company remained weak during
review period. Total debt/GCA deteriorated from 10.99x in FY17 to
13.08x in FY18 (Prov.) due to increase in total debt levels.
However, interest coverage ratio improved and stood satisfactory
at 2.11x in FY18 (Prov.) when compared to 1.86x in FY16 owing to
improvement in PBILDT levels in absolute terms.
Presence in a highly fragmented and competitive solar industry The
company operates in the solar products industry. While Government
projects are awarded through floating of tender, orders from
private players are secured after several rounds of price
negotiations. In view of intense competition, the ability of the
company to bag more orders, while improving / sustaining its
operating margins is critical to the prospects of the Company. A
majority of solar projects are executed with the grant of subsidy
from Central Government. Hence the prospects of the sector are
closely linked to the policy decisions of the central and State
Government.
Key Rating Strengths
Experience of the promoters: The promoters of the company, Mr.
Sreekanth and Mrs. Bhuvaneshwari Mallela, both MBA graduates by
qualification, have over a decade of experience in the solar
business. The promoters are actively involved in core decision
making of the company. Their extensive business experience would
continue to support the business and help receive tenders from the
government.
Increasing profitability margins during the review period: PBILDT
margin of the company has been increasing during FY16-FY18
(Prov.). The PBILDT margins increased from 3.78% in FY16 to 4.30%
in FY18 (Prov.) due to better margin associated with orders. The
increase in TOI in FY18 (Prov.) has resulted in absorption of
direct expenses which has led to increase in PBILDT levels.
Furthermore, PAT margin increased marginally from 1.09% in FY16 to
1.93% in FY18 (Prov.) due to increase in PBILDT levels which led
to absorption of financial expenses.
Medium term revenue visibility from order book position: The
company has a healthy order book of INR 67.36 crore as on August
06, 2018 which translates to 1.66x of total operating income of
FY18 (Prov.). The said order book provides revenue visibility for
medium-term period.
Hyderabad based, Sai Babuji Projects Private Limited (SBPPL) was
incorporated in August 2011 by Mr. Sreekanth Mallela and Mrs.
Bhuvaneshwari Mallela. The company is engaged in system
integration i.e. supply, installation and commissioning of solar
water pumping systems since 2014. The company has its customer
base spread across Telangana, Tamil Nadu, Andhra Pradesh,
Chhattisgarh, and Gujarat. The clientele of the company include
Andhra Pradesh Southern Power Distribution Company Limited
(APSPDCL), Agricultural Engineering department of Tamil Nadu,
Chhattisgarh State Renewable Energy Development Agency (CREDA),
PGVCL, MGVCL & DGVCL- power distribution companies of Gujarat. The
company purchases inputs such as solar panels, structures, HDPE
pipes etc. from local suppliers in and around Hyderabad.
SAMEERA HOTELS: CRISIL Migrates B- Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Sameera
Hotels (Chennai) Private Limited (SHPL) to 'CRISIL B-/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 26 CRISIL B-/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SHPL for obtaining
information through letters and emails dated May 31, 2018 and
June 30, 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 Sameera Hotels (Chennai)
Private Limited. Which restricts CRISIL's ability to take a
forward looking view on the entity's credit quality. CRISIL
believes information available on Sameera Hotels (Chennai) Private
Limited is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Sameera Hotels (Chennai) Private Limited to 'CRISIL
B-/Stable Issuer not cooperating'.
Incorporated in 2011, Chennai-based, SHPL owns two hotels in
Chennai and Vellore. The company has a consolidated 110 rooms with
various facilities like cafe, restaurant, bar, spa etc. The
operations of the company are managed by the promoters, Mr
Murugesan and his family.
SDS INFRATECH: CRISIL Withdraws D Rating on INR50cr Term Loan
-------------------------------------------------------------
CRISIL has withdrawn its ratings on the bank facilities of SDS
Infratech Private Limited (SIPL) on the request of the company and
receipt of a no objection from its bank. The rating action is in
line with CRISIL's policy on withdrawal of its ratings on bank
loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 37.5 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating
Withdrawn)
Term Loan 50.0 CRISIL D (ISSUER NOT
COOPERATING; Rating
Withdrawn)
CRISIL has been consistently following up with SIPL for obtaining
information through letters and emails dated December 18, 2017 and
January 17, 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 they are arrived at without any management
interaction and are 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 SIPL. This restricts CRISIL's
ability to take a forward SIPL 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 facilities of SIPL
continues to be 'CRISIL D Issuer Not Cooperating'.
CRISIL has withdrawn its ratings on the bank facilities of SIPL on
the request of the company and receipt of a no objection from its
bank. The rating action is in line with CRISIL's policy on
withdrawal of its ratings on bank loans.
SIPL, formed in 2008 and based in Delhi, undertakes real estate
development. The company is promoted by Mr Deepak Bansal. It is
developing two residential projects, both under NRI residency, at
Noida and Greater Noida.
SH. RANSINGH: CRISIL Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Sh. Ransingh
Bohra Fuels (RSB) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with RSB for obtaining
information through letters and emails dated May 31, 2018 and
June 30, 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 Sh. Ransingh Bohra Fuels. Which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Sh. Ransingh Bohra Fuels is consistent with 'Scenario 1' outlined
in the 'Framework for Assessing Consistency of Information with
CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Sh. Ransingh Bohra Fuels to 'CRISIL B+/Stable Issuer
not cooperating'.
Established in 2011, RSB is a Haryana-based proprietorship firm of
Ms Kusum Bala; operations are looked after by Mr Hirdey Ram. The
firm runs a petrol pump with a tie-up with IOCL.
SHIVANGOUDA PATIL: CRISIL Migrates B+ Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shivangouda
B. Patil (Prop Patil Engineering Co) - Bijapur to 'CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4.05 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 0.50 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Overdraft 1.40 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Cash
Credit Limit 4.05 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SBP for obtaining
information through letters and emails dated May 31, 2018 and
June 30, 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 Shivangouda B. Patil (Prop
Patil Engineering Co) - Bijapur. Which restricts CRISIL's ability
to take a forward looking view on the entity's credit quality.
CRISIL believes information available on Shivangouda B. Patil
(Prop Patil Engineering Co) - Bijapur is consistent with 'Scenario
1' outlined in the 'Framework for Assessing Consistency of
Information with CRISIL BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Shivangouda B. Patil (Prop Patil Engineering Co) -
Bijapur to 'CRISIL B+/Stable/CRISIL A4 Issuer not cooperating'.
Shivangouda B. Patil, incorporated in the year 1991 by Mr.
Shivanagouda. B.Patil, located in Bijapur, Karnataka, engaged in
civil construction (95 per cent of the total revenue) and trading
of Havel and Jain pipe (5 per cent of the total revenue).
SHAKTHI SEEDS: CARE Assigns B Rating to INR8cr LT Loan
------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of Shakthi
Seeds Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 8.00 CARE B; Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SSPL are tempered by
small scale of operations with satisfactory profitability margins
and fluctuating total operating income, leveraged capital
structure and weak debt coverage indicators, elongated operating
cycle days, seasonal nature of availability of agriculture seeds
resulting in working capital intensive nature of operations highly
fragmented industry with intense competition from large number of
players. The ratings are, however, underpinned by established
track record of the entity and vast experience of the promoter in
the agro industry and healthy demand outlook of seed market.
Going forward, ability of the firm to improve its scale of
operations, increase profitability margins and improve capital
structure, debt coverage indicators and ability to utilize the
working capital requirements efficiently will be the key rating
sensitivities.
Detailed Description of the key rating drivers
Small scale of operations with satisfactory profitability margins
and fluctuating total operating income: Though the company has
been operational for more than three decades, the scale of
operations remained small marked by a total operating income (TOI)
of INR21.45 crore in 11MFY18 (Prov.). The TOI was seen fluctuating
during the review period. The TOI declined from INR22.69 crore in
FY15 to INR22.51 crore in FY16 on the back of decrease in orders
from customers. However in the subsequent years the TOI stood at
INR22.92 crore and INR 21.45 crore respectively in FY17 and
11MFY18 (Prov.) due to the prevailing climatic condition, the
company was unable to sell the stock. The profitability margins of
the company was seen increasing during the period FY16-11MFY18
(Prov.) The PBILDT margin of the company declined from 10.41% in
FY16 to 6.66% in 11MFY18 (Prov.) mainly on account of increase in
cost of raw material. The PAT margin of the company has increased
from 0.66% in FY16 to 0.82 % in 11MFY18 (Prov.) on account of
decrease in interest cost at the back of reduced the working
capital limit. However the margins remained thin during review
period due to trading nature of business operations.
Leveraged capital structure and weak debt coverage indicators: The
capital structure of the firm remained leveraged during the review
period. The debt equity ratio of the company deteriorated from
0.73x as on March 31, 2016 to 1.26x as on March 31, 2017 on
account of increase in unsecured loan from INR11.44 crore as on
March 31, 2016 to INR 15.73 crore as on March 31, 2017. It is
improved to 1.02x as on February 28, 2018 (Provisional) due to
decrease in unsecured loans to INR 7.31 crore. The overall gearing
ratio improved from 3.43x as on March 31, 2016 to 3.22x as on
February 28, 2018 (prov), due to decline in the utilization of
working capital limits as on balance sheet dates along with
increasing networth.
The debt coverage indicators of the company stood weak during
review period. Total debt/GCA of the company improved from 125.35x
in FY16 to 105.14x in 11MFY18 due to reduced working capital
limits from INR 11.80 crore to INR 8 crore. The PBILDT interest
coverage ratio of the company improved from 1.11x in FY16 to 1.22x
in 11MFY18 due to decrease in interest cost on the back of reduced
working capital limits and repayment of unsecured loans.
Elongated operating cycle days: The operating cycle of the company
remained elongated during the review period and stood at 724 days
in 11MFY18 (provisional). The company receives the payment from
its customers within 1 year. However, the credit period was
extended for a few customers depending on the quantum of sales
made. Furthermore, the company makes the payment to its single
supplier (associate concern) within 5-6 months. The company
sometimes avail extension in credit period from its suppliers due
to long standing relationship and the company maintains an average
inventory of 1-2 year for anticipation of better sales
realization. Since, the life span of seed is for three years,
hence the company maintains high inventory to meet the customers
requirement as on need basis.
Seasonal nature of availability of agriculture seeds resulting in
working capital intensive nature of operations: Paddy, maize,
jowar, bajra and among others. India is harvested mainly at the
end of two major agricultural seasons Kharif (June to September)
and Rabi (November to April). During this time, the working
capital requirements of the farms are generally on the higher
side. Majority of the funds of the company are blocked in
inventory and with customers reflecting the working capital
intensity of business. The average utilization of fund based
working capital limits of the company stood at 95% for the last 12
months ended July 31, 2018.
Highly fragmented industry with intense competition from large
number of players: Indian Agro Industry is highly fragmented in
nature with several organized and unorganized players. High
dependence on agro sector, lower productivity, unfavorable labor
laws are a few drawbacks of the industry from which it has to
overcome. The biggest challenge facing the Indian agro industry is
competition from the other low cost neighboring countries which
attract more business from the international market because of
lower production costs, ease in doing business and easier trade
routes.
Key Rating Strengths
Established track record of the entity and vast experience of the
promoters in the agro industry: Shakthi Seeds Private Limited
(SSPL) was incorporated in 1988 and promoted by Mr. Vidyanath
Reddy along with his family members and friends. The promoters
have around 30 years of experience in trading of seeds. Through
his vast experience in trading business, they have established
healthy relationship with key suppliers, customers, local farmers,
dealers and also with the brokers facilitating the ease in sale of
products.
Healthy demand outlook of seed market: Global Seeds market to grow
at a CAGR of 11.04 percent during the period 2014-2019. Seed is
the most basic unit for cultivation of crops. It is a fertilized
ripened ovule, capable of reproducing and developing into a plant.
Seeds include cereals, pulses, vegetables, and fruits. Innovations
in technology have improved the quality of seeds and provided a
wide variety with desired characteristics and suited to specific
conditions and geographies. This development is necessary for
ensuring the best-quality crop production and meeting the growing
demand for food worldwide. The Global Seeds market is highly
dependent on the demand for agricultural products. With a rise in
global population, a 60 percent increase in food production is to
be attained by 2050 to keep up with the food demand.
Telangana based, Shakthi Seeds Private Limited (SSPL) was
established as a private limited in 1988 by Mr. Vidyanath Reddy
along with family members and friends. SSPL is engaged in
packaging and marketing of certified seeds like paddy, maize,
Jowar, bajra, vegetables seeds among others. The company procures
the different varieties of seeds from its associate concerns
(Anila Seed Processing Industries). The company sells its products
to customers located in Uttar Pradesh, Chhattisgarh, Jharkhand,
Haryana, Bihar, Karnataka, etc., through dealers in the name of
Shakthi Seeds.
SHREE BABA: CRISIL Migrates B Rating to Not Cooperating
-------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shree Baba
Exports (SBE) to 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SBE for obtaining
information through letters and emails dated May 31, 2018 and
June 30, 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 Shree Baba Exports. Which
restricts CRISIL's ability to take a forward looking view on the
entity's credit quality. CRISIL believes information available on
Shree Baba Exports is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
BB' rating category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Shree Baba Exports to 'CRISIL B/Stable Issuer not
cooperating'.
SBE was established in 1980 as a partnership firm, Shree Baba
Enterprises, by Mr. Ramesh Agarwal and Ms. Batsoo Devi. Later, in
2000 the firm was converted into the proprietorship firm and got
its current name. The firm manufactures menthol crystals and
trades in essential oils, used in pharmaceuticals, perfume
compounds, and toothpastes.
SHREE HANUMAN: Ind-Ra Lowers Long Term Issuer Rating to B+
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shree Hanuman
Mosaic & Marble's (SHMM) Long-Term Issuer Rating to 'IND B+' from
'IND BB- (ISSUER NOT COOPERATING)'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR50 mil. Fund-based limits downgraded with IND B+/Stable
rating; and
-- INR3.14 mil. (reduced from INR5.84 mil.) Term loan due on
December 2019 downgraded with IND B+/Stable rating.
KEY RATING DRIVERS
The downgrade reflects the deterioration in SHMM's scale of
operations and credit metrics to small and weak levels,
respectively, in FY18 from moderate levels in FY17. According to
FY18 provisional financials, revenue was INR143.44 million (FY17:
INR157.52 million, FY16: INR168 million), gross interest coverage
(operating EBITDA/gross interest expense) was 1.41x (1.60x) and
net financial leverage (adjusted net debt/operating EBITDAR) was
7.79x (5.94x). The revenue fell because of a decrease in the
demand of traded goods. The metrics deteriorated due to an
increase in in the total debt, leading to an increase in interest
expense, and a fall in EBITDA.
The ratings also reflect SHMM's continued tight liquidity
position, indicated by its almost full use of the working capital
limits during the 12 months ended July 2018.
The ratings however are supported by MFPPL's healthy EBITDA margin
of 11.79% in FY18 (FY17: 10.96%) with return on capital employed
of 12.88% (15.92%). The ratings are further supported by the
promoters' over two decades of experience in the trading of
marble, tiles and sanitary goods.
RATING SENSITIVITIES
Negative: A decline in the EBITDA margin leading to deterioration
in the credit metrics, all on a sustained basis, could lead to a
negative rating action.
Positive: Revenue growth along with an improvement in the credit
metrics, all on a sustained basis, could lead to a positive rating
action.
COMPANY PROFILE
Incorporated in 1995, SHMM is a proprietorship firm engaged in the
trading of tiles, marbles and sanitary ware.
SOUTHCO UTILITY: Ind-Ra Assigns 'BB-' LT Rating on INR720MM Loan
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has taken the following rating
action on Southco Utility's (SOUTHCO) bank lines:
-- INR720 mil. Fund-based/non-fund-based limits Long-term rating
assigned; Short-term rating affirmed with IND BB-/Stable/IND
A4+ rating.
KEY RATING DRIVERS
The ratings remain constrained by SOUTHCO's sustained transmission
and distribution losses, which gradually reduced to 33% in FY18
(FY17: 34.6%, FY14: 41%), but remained higher than the normative
level of 25.5%. As a result, SOUTHCO continued to report EBITDA
losses of more than INR2,000 million in FY18 (FY17: INR2,111
million, FY16: INR846 million). FY18 financials are provisional in
nature.
SOUTHCO's customer profile is characterized by high number of low
tension customers accounting 75% of the customer mix. Its licensed
area has a higher number of low income customers with lower
ability and willingness to pay. As a result, the company has high
debtors, and consequently high aggregate technical and commercial
(AT&C) losses of 38% in FY18 compared to normative AT&C losses of
26.25% (FY17: 41.2%). However, SOUTHCO avails short-term loans
with almost 100% utilization of its working capital limits to
manage liquidity mismatches.
However, the ratings remain supported by continued financial
support from GRIDCO Limited (GRIDCO; 'IND BBB+'/Stable), the sole
supplier of power and government of Odisha (GoO). While payments
to GRIDCO are funded through a separate secured overdraft account,
SOUTHCO has payment flexibility for its outstanding dues to GRIDCO
which helps it to manage its working capital cycle. As of March
2017, payables to GRIDCO stood at INR3,929 million (FY16:
INR3,084.5 million).
As of FY18, the GoO had extended interest free loans of INR1,322
million (FY17: INR522 million), which would be convertible to
grant-on-pro rata basis subject to achievement of average AT&C
loss reduction of 3% over a period of three years. SOUTHCO
continued to receive the support despite delays and defaults on
loans from GRIDCO and GoO in the past because of its nature of
business. Therefore, Ind-Ra expects the financial support to
continue.
Further, SOUTHCO's business profile is characterized by a
regulated tariff regime, which provides an assured return on
equity and a pass-through of allowed costs.
RATING SENSITIVITIES
Positive: A significant reduction in distribution losses leading
to an improvement in the profitability and liquidity on a
sustained basis could result in a positive rating action.
Negative: Continued stressed liquidity and delays in timely
support by GRIDCO and the GoO could result in a negative rating
action.
COMPANY PROFILE
SOUTHCO was formed in March 2015, post the revocation of license
of Southern Electricity Supply Company of Odisha Limited. SOUTHCO
operates in 47,000 sq. km geographical area and provides
electricity to about 1.6 million consumers in its licensed area.
As per FY18 provisional financials, revenue was INR10,908 million
and total debt outstanding was INR2,882 million.
SREE DHANNVIJAY: CRISIL Migrates B+ Rating From Not Cooperating
---------------------------------------------------------------
CRISIL has migrated its rating on the long-term bank facilities of
Sree Dhannvijay Texmills Private Limited (SDTPL) to 'CRISIL
B+/Stable/Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING')
Term Loan 0.54 CRISIL B+/Stable (Migrated
from 'CRISIL B+/Stable ISSUER
NOT COOPERATING')
Due to inadequate information and in line with Securities and
Exchange Board of India guidelines, CRISIL had migrated its rating
on the long-term bank facilities of SDTPL to 'CRISIL
B+/Stable/Issuer Not Cooperating'. However, the company's
management has subsequently started sharing requisite information
necessary for carrying out a comprehensive review of the rating.
Consequently, CRISIL is migrating its rating from 'CRISIL
B+/Stable/Issuer Not Cooperating' to 'CRISIL B+/Stable'.
The rating reflects the modest scale of operations in an intensely
competitive industry, and below average financial risk profile
because of muted debt protection metrics. This weakness is
partially offset by the extensive experience of SDTPL's promoters
in the textile industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and exposure to intense competition:
With turnover of INR51 crore for fiscal 2018, scale remains small.
Furthermore, the company's unit is in Coimbatore, which is a major
textiles belt and is hence intensely competitive.
* Below average financial risk profile: Debt protection metrics
are weak as indicated by the interest cover and net cash accrual
to total debt of 1.99 times and 0.13 times respectively for fiscal
2018 and is likely to remain at similar levels over the medium
term. The networth is also small at INR12 crores and gearing at
0.95 times as on March 31, 2018.
Strength
* Extensive experience of promoters: Presence of more than two
decades in the textiles segment has enabled the promoters to
establish healthy relationship with suppliers and customers.
Outlook: Stable
CRISIL believes SDTPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' in case of a significant improvement in scale of
operations, leading to a better financial risk profile while
maintaining its capital structure. The outlook may be revised to
'Negative' if decline in scale of operations or profitability, or
large debt-funded capital expenditure further weakens financial
risk profile.
Established in 2004 by Mr Vijay Shankar and his wife, Ms
Dhanalakshmi, Coimbatore-based SDTPL manufactures polyester cotton
yarn.
SUPER SUPER SEAL: CRISIL Reaffirms B+ Rating on INR9cr Cash Loan
----------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Super Super Seal Flexible Hose Limited
(SSFHL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B+/Stable (Reaffirmed)
Inland/Import
Letter of Credit 1 CRISIL A4 (Reaffirmed)
CRISIL's ratings continue to reflect SSFHL's modest scale,
fluctuating profitability and large working capital requirement.
These weaknesses are partially offset by the extensive experience
of its promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Despite the company's presence of
over 2 decades in the industry, revenue at INR26 crore for fiscal
2018, renders the scale modest thereby restricting cost
efficiencies.
* Fluctuating profitability: Profitability has been at 2.6-9.6%
over the four years through 2018; 9.6% during fiscal 2018. The
volatility is on account of fluctuation in raw material prices
i.e. nitrile rubber and wire as they are linked to crude oil
prices and the dollar rate.
* Large working capital requirement: Operations are working
capital intensive, as reflected in gross current assets of 223
days as on March 31, 2018 driven by high debtors and inventory of
86 and 131 days, respectively.
Strength:
* Extensive experience of the promoters: Benefits from the
promoters' over two decades of experience and established
relationship with customers and suppliers should support the
business. Some of the leading customers include Action
Construction Equipment, Bharat Earthmovers, Caterpillar, Escorts
Group, Indian Tractors, Indian Railways and others.
Outlook: Stable
CRISIL believes SSFHL will continue to benefit from the extensive
experience of its promoters and its established customer
relationships. The outlook may be revised to 'Positive' if cash
accrual increases, working capital cycle is efficient and
profitability is stable. The outlook may be revised to 'Negative'
if decline in revenue or profitability, or stretch in working
capital cycle exerts pressure on liquidity.
Incorporated in 1995, Noida-based SSFHL, promoted by Mr Sanjay
Kumar Das and family, manufactures hydraulic and industrial hoses
with an inner diameter of 2 inches and also undertakes their
assembly. The company has a manufacturing capacity of 30 lakh
metres per annum.
===============
M A L A Y S I A
===============
CHINA AUTOMOBILE: Fails to Issue Outstanding Annual Report
----------------------------------------------------------
theedgemarkets.com reports that China Automobile Parts Holdings
Ltd (CAP) failed to issue its outstanding 2017 annual report on
Aug. 31.
According theedgemarkets.com, CAP said in a filing with Bursa
Malaysia it expects issue the outstanding annual report by Oct. 31
as it is still in the midst of finalising the consolidated account
for the financial year ended June 30, 2017.
The group said it expects to furnish the same to external auditors
to undertake the audit works by Sept. 7, the report relays.
"The Company may only be able to finalise and issue the
outstanding quarter results after the external auditors complete
their work," it said.
theedgemarkets.com relates that CAP said in a separate filing that
it is also unable to issue the outstanding quarterly results dated
March 31, 2017; June 30, 2017; Sept 30, 2017; Dec 31, 2017; March
31, 2018 and June 30, 2018, which were supposed to be due for
issuance on or before Aug 31, 2018.
"The board will expedite the completion of the outstanding
quarterly results and expect to issue the outstanding quarter
results on or before Oct. 31," it said.
China Automobile Parts Holdings Limited is a Malaysia-based
investment holding company. The Company, through its
subsidiaries, is principally engaged in the manufacturing of
chassis components used in automobiles for transporting goods.
Its product portfolio consists of five categories: wheel-hub
bolts, wheel axles, steel pins, u-bolts and torque-rod bushings.
The Company's products are supplied for aftermarket repair,
maintenance and modification segment, with an emphasis towards
catering for replacement components in heavy commercial vehicles.
The Company's subsidiaries include CAP-HK, an investment holding
company, and FenSun, a manufacturer, marketer and trader of
automobile chassis components.
China Automobile Parts Holdings Ltd slipped into Practice Note 17
(PN17) after its external auditor Messrs PFK expressed an audit
disclaimer of opinion in the company's latest audited financial
statements for financial year ended Dec. 31, 2015 (FY15) on
undisclosed material liabilities.
====================
N E W Z E A L A N D
====================
CCMR PONSONBY: Augustus Bistro Placed in Liquidation
----------------------------------------------------
Anuja Nadkarni at Stuff.co.nz reports that the high-end fine
dining Auckland restaurant Augustus Bistro has been put into
voluntary liquidation.
Liquidators from Staples Rodway Tony Maginness and Jared Booth
were appointed on Aug. 30 to liquidate CCMR Ponsonby Post Office,
the company that owns the restaurant, Stuff discloses.
Augustus Bistro was set up two years ago by father-daughter duo
Chris and Courtney Rupe.
CCMR Ponsonby Post Office also owned SPQR, a popular Ponsonby
restaurant that hosted celebrities including Tyra Banks and Sam
Smith.
Stuff says SPQR went into liquidation last year.
According to Stuff, Maginness said the liquidators had planned to
sell the company.
The liquidators' first report is due next week, Stuff notes.
=================
S I N G A P O R E
=================
KITCHEN CULTURE: Posts $3.8MM Net Loss Full Year Loss
-----------------------------------------------------
The Strait Times reports that Kitchen Culture on Aug. 30 posted
revenue of $14.5 million for its fiscal year ended June 30, 2018,
compared with $49.6 million for the 18-month financial period from
Jan 1, 2016 to June 30, 2017, as the group is in the midst of
changing its financial year-end from December to June.
Besides the shorter reporting period, the company also attributed
the lower turnover to lower revenue contribution from the
residential projects segment due to fewer projects on hand, as
well as from the distribution and retail segment due mainly to
slowdown in retail sales, the report says.
Earnings wise, it incurred a net loss of $3.8 million, compared to
a net loss of $6.9 million for the prior 18-month period. Loss per
share was 3.8 cents, versus 6.9 cents for the preceding period, on
the back of the lower revenue and shorter 12-month period, the
Strait Times discloses.
According to the report, the group said that the business outlook
in Singapore and in the regions which it operates in is expected
to remain challenging and competitive for the next 12 months,
given the present economic outlook and uncertainty in the global
economy.
"There are plans to broaden the group's business by entering the
mass market sector through a relaunch of the group's Pureform
brand for kitchen and wardrobe systems, and any interior fit-out
solutions, as well as to expand the group's businesses through
KROOM, which retails premium kitchen appliances and accessories,
and kitchen and wardrobe systems," Kitchen Culture, as cited by
The Strait Times, added.
Kitchen Culture Holdings Ltd. distributes high-end kitchen
systems, kitchen appliances, wardrobe systems, household furniture
and accessories from Europe and USA.
Singapore-based Kitchen Culture Holdings Ltd., an investment
holding company, sells and distributes imported kitchen systems,
kitchen appliances, wardrobe systems, and household furniture and
accessories under the Kitchen Culture brand name. It operates
through Residential Projects, and Distribution and Retail
segments.
WILTON RESOURCES: Loss Widens to IDR78.8MM in 6 Mos. Ended June 30
------------------------------------------------------------------
The Strait Times reports that higher operating and finance
expenses sent Catalist-listed gold miner Wilton Resources Corp
deeper into the red for its fourth-quarter and full year results.
Wilton Resources widened its net loss to IDR78.8 billion for the
12 months ended June 30, from a net loss of IDR46 billion in the
previous year, the report discloses.
For the three months ended June 30, net loss came in at
IDR24.7 billion (SGD2.3 million), from a loss of IDR14.9 billion a
year earlier, the Strait Times relates.
This translates to a loss per share (LPS) of IDR10.12 (0.1
Singapore cent) for the quarter, from a LPS of 6.1 Indonesian sen
(0.06 Singapore cent) last year.
No dividend has been declared, the report notes.
The Strait Times relates that Wilton Resources said revenue for
the fourth quarter and the full year came in at IDR4.3 billion as
the group reported the maiden sale of its gold dore in Q4. A total
of 7.7 kg of gold dore was sold at about US$1,274 per ounce. No
revenue was reported for the fourth quarter and the full year of
fiscal 2017, the report relays.
In particular, other operating expenses rose by 73.4 per cent, or
IDR6 billion in fiscal 2018, mainly due to higher exploration and
evaluation expenses, higher amortisation of prepaid land leases,
and higher site expenses incurred during the year, Wilton
Resources said.
Finance costs of IDR15.2 billion was also recorded for the full-
year period. This was related to interest expense incurred on the
project financing arrangement obtained by the group in October
last year to fund a facility at the company's Ciemas Gold Project
located in West Java, Indonesia. There was no such cost incurred
in FY2017, according to The Strait Times.
According to the report, Wilton Resources said the price of gold
has declined since the beginning of July last year from US$1,229
per ounce to about US1,198 per ounce due to the stronger US
dollar.
Nonetheless, the group said it remains focused on gold production
at its Ciemas Gold Project, which "boasts high grades, large and
open resources, and low projected costs which help to de-risk the
opportunity," the report relays.
Looking ahead, the volatility of the foreign exchange for the US
dollar against the group's functional currency (Indonesian rupiah)
will continue to have a significant impact on its financial
results, Wilton Resources said.
Wilton Resources Corporation Limited -- http://www.wilton.sg/--
an investment holding company, engages in the exploration, mining,
and production of gold ores in Indonesia. It holds interest in the
Ciemas gold project comprising two concession blocks covering a
total area of 3,078.5 hectares located in Sukabumi Regency, West
Java Province of Indonesia. The company is also involved in
general trading, transportation, construction, real estate,
logging, farming, plantation, forestry, electrical, mechanical,
computer, workshop, and printing and services businesses. Wilton
Resources Corporation Limited is based in Singapore.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2018. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***