/raid1/www/Hosts/bankrupt/TCRAP_Public/200423.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
Thursday, April 23, 2020, Vol. 23, No. 82
Headlines
A U S T R A L I A
ARMNET LIMITED: Second Creditors' Meeting Set for April 29
CS (WAREHOUSING) PTY: First Creditors' Meeting Set for April 30
FREEDOM ICE: Second Creditors' Meeting Set for April 29
HOMESTEAD HIGHFIELDS: First Creditors' Meeting Set for April 30
LEGEND INTERNATIONAL: Loses High Court Appeal over AUD1 Mine Deal
MOUNT ELIZA HOME: Second Creditors' Meeting Set for April 29
OZTOPIA HOLDINGS: Second Creditors' Meeting Set for April 30
RIVERCITY MOTORWAY: Bank Debt Due 2014 Trades at 55% Discount
RIVERCITY MOTORWAY: Bank Debt Due 2016 Trades at 55% Discount
T & B MINE: First Creditors' Meeting Scheduled for May 1
VIRGIN AUSTRALIA: Bondholders Prepares for Fight in Restructuring
VIRGIN AUSTRALIA: First Creditors' Meeting Set for April 30
XTENDED PLUMBING: First Creditors' Meeting Set for April 29
C H I N A
BANK OF GANSU: Moves a Step Closer to State Bailout
REMARK HOLDINGS: Amends Stock Purchase Agreement with Aspire
I N D I A
ADISHAKTI ICE: CRISIL Moves 'B+' Debt Ratings to Not Cooperating
AKSH OPTIFIBRE: CARE Reaffirms 'D' Rating on INR114cr Loan
AKULA BOARDS: CRISIL Migrates 'B+' Rating to Not Cooperating
ALL KIND HEALTHCARE: CARE Cuts Rating on INR40.83cr LT Loan to B+
ARUMUGA MUDALIAR: CARE Reaffirms 'B+' Rating on INR5.11cr LT Loan
ATARSON OVERSEAS: CRISIL Moves 'D' Debt Ratings to Not Cooperating
BEE GEE AUTOMOBILES: CARE Lowers Rating on INR10cr LT Loan to B+
BUDS TEA: CARE Lowers Rating on INR20cr LT Loan to 'D'
C.I. FINLEASE: CRISIL Moves 'B+' on INR35cr Loans to NonCooperating
CHANDNA INFRAPROJECTS: CARE Keeps 'D' Rating in Not Cooperating
GREATWELD ENGINEERING: CRISIL Moves 'D' Ratings to Not Cooperating
GVK POWER: CARE Reaffirms 'D' Rating on INR39.46cr Loan
HAMON SHRIRAM: CARE Keeps 'C' Issuer Rating in Not Cooperating
HLM EDUCATIONAL: CRISIL Moves D Debt Ratings to Not Cooperating
K E AGRO: CRISIL Moves B+ Debt Ratings to Not Cooperating
K. S. COT FIBER: CARE Lowers Rating on INR7cr LT/ST Loan to 'C'
KLG JEWELLERS: CRISIL Moves B+ on INR18cr Debt to Not Cooperating
KUMAR JEWELLERS: CRISIL Moves B+ Debt Ratings to Not Cooperating
PATWARI FORGINGS: CRISIL Moves B+ on INR5cr Debt to Not Cooperating
RHEOMAX GUMS: CRISIL Moves B+ on INR13cr Loans to Not Cooperating
ROHTAK-PANIPAT TOLLWAY: CARE Cuts Rating on INR937.92cr Loan to D
S.K. INDUSTRIES: CARE Lowers Rating on INR7.28cr LT Loan to B
SAI POULTRY: CARE Reaffirms 'B' Rating on INR7.0cr LT Loan
SANGAMESHWAR DALL: CRISIL Moves B on INR7cr Loan to NonCooperating
SANGHAVI JEWEL: CARE Maintains 'D' Debt Ratings in Not Cooperating
SEAM INDUSTRIES: CARE Reaffirms 'D' Rating on INR38.37cr Loan
SHANTAI EXIM: CARE Withdraws 'C/A4' Ratings on Bank Facilities
SHASHWAT POWER: CRISIL Migrates B+ Debt Ratings to Not Cooperating
SHIVANI CONSTRUCTION: CRISIL Moves B Debt Rating to Not Cooperating
SUPER DISCO: CRISIL Migrates 'B+' Debt Ratings to Not Cooperating
UMA EXPORTS: CRISIL Migrates 'B' Debt Ratings to Not Cooperating
VENKATA SAI: CRISIL Assigns B+ Rating to INR6cr Loans
VTP CORP: CARE Lowers Rating on INR41.96cr LT Loan to D
[*] INDIA: Cash-Tight Shadow Lenders Face New Turmoil
S I N G A P O R E
SINGAPORE: Oil Traders Face Credit Crunch After Hin Leong Fiasco
X X X X X X X X
[*] ASIA: Banks Spurn Commodity Traders in Credit Squeeze
- - - - -
=================
A U S T R A L I A
=================
ARMNET LIMITED: Second Creditors' Meeting Set for April 29
----------------------------------------------------------
A second meeting of creditors in the proceedings of ARMnet Limited
has been set for April 29, 2020, at 11:30 a.m. via Skype for
Business.
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 April 28, 2020, at 4:00 p.m.
Geoffrey Trent Hancock of PKF was appointed as administrator of
ARMnet Limited on March 16, 2020.
CS (WAREHOUSING) PTY: First Creditors' Meeting Set for April 30
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of CS
(Warehousing) Pty Ltd will be held on April 30, 2020, at 10:00 a.m.
via telephone or Zoom video conferencing.
Brent Leigh Morgan and Geoffrey Niels Handberg of Rodgers Reidy
were appointed as administrators of CS (Warehousing) on April 20,
2020.
FREEDOM ICE: Second Creditors' Meeting Set for April 29
-------------------------------------------------------
A second meeting of creditors in the proceedings of Freedom Ice
Creamery Pty Limited has been set for April 29, 2020, at 11:00 a.m.
via teleconference.
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 April 28, 2020, at 5:00 p.m.
Adam Shepard of Setter Shepard was appointed as administrator of
Freedom Ice on March 17, 2020.
HOMESTEAD HIGHFIELDS: First Creditors' Meeting Set for April 30
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Homestead
Highfields Limited will be held on April 30, 2020, at 9:00 a.m. via
telephone conference facilities.
Jason Walter Bettles of Worrells Solvency & Forensic Accountants
was appointed as administrator of Homestead Highfields on April 21,
2020.
LEGEND INTERNATIONAL: Loses High Court Appeal over AUD1 Mine Deal
-----------------------------------------------------------------
Sarah Danckert at The Sydney Morning Herald reports that the
Gutnick family has lost its final court bid to secure the ownership
of a massive mining project once valued at AUD174 million for just
AUD1 in a controversial deal to allegedly avoid creditors.
According to the report, the High Court on April 22 threw out an
appeal by Queensland Phosphate, a company controlled by Pnina
Feldman - the sister of former mining magnate Joseph Gutnick - to
enforce the AUD1 deal.
Earlier court hearings had found the transaction was not commercial
and designed to help Legend International avoid its creditors,
namely Indian conglomerate IFFCO, by transferring the mine held by
Legend's subsidiary Paradise Phosphate to Queensland Phosphate, SMH
says.
SMH relates that the dispute and Mr Gutnick's financial issues all
hark back to 2008 when Legend signed a AUD103 million deal with
IFFCO to supply phosphate from its Queensland mine to the Indian
company so it could make it into fertiliser.
But shortly after the deal was brokered it turned sour and IFFCO
launched, and won, legal action in Singapore and later in Victoria
to get its money back from Legend and from Mr Gutnick personally.
SMH says Mr Gutnick placed himself in bankruptcy shortly after the
Victorian Supreme Court found in favour of the Indian group in late
2015 and ordered him to pay the money owed to them and interest, an
amount that was close to AUD200 million. He spent less than a year
as a bankrupt and was discharged after doing a deal with his
creditors which included his wife and old friends.
The former bankrupt has also recently had another entity associated
with his family, Merlin Diamonds, wound up amid allegations of
undisclosed dealings that harmed shareholders in the group, the
report notes.
According to SMH, the High Court decision puts to an end a
long-running legal dispute over the mine between Queensland
Phosphate, which is owned by Pnina Feldman family, and the
liquidators to
Mr. Gutnick's failed business Legend International KordaMentha.
Ahead of its collapse, Legend International transferred its rights
to a massive phosphate mine once worth AUD174 million to Queensland
Phosphate for AUD1 and a AUD400,000 bond, SMH recalls.
SMH relates that liquidators for Legend at KordaMentha had
successfully argued in the Victorian Supreme Court the AUD1
transaction was uncommercial and designed to reduce the amount of
assets available to other creditors. That ruling was upheld in the
Victorian Court of Appeal and now the High Court, the report
states.
The liquidators, Mark Korda and Craig Shepard of KordaMentha, said
in a statement that they believed the High Court refusal to hear
the appeal vindicates their decision to take steps to protect
Paradise's mining assets for the benefit of all creditors, SMH
adds.
MOUNT ELIZA HOME: Second Creditors' Meeting Set for April 29
------------------------------------------------------------
A second meeting of creditors in the proceedings of Mount Eliza
Home Services Pty Ltd has been set for April 29, 2020, at 10:00 via
telephone or video conferencing.
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 April 28, 2020, at 5:00 p.m.
Brent Leigh Morgan of Rodgers Reidy was appointed as administrator
of Mount Eliza Home Services on March 16, 2020.
OZTOPIA HOLDINGS: Second Creditors' Meeting Set for April 30
------------------------------------------------------------
A second meeting of creditors in the proceedings of Oztopia
Holdings Pty Ltd, trading as Oztopia Electrical and Oztopia, has
been set for April 30, 2020, at 11:00 a.m. via teleconference.
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 April 29, 2020, at 4:00 p.m.
Jimmy Trpcevski and David Ashley Norman Hurt of WA Insolvency
Solutions, a division of Jirsch Sutherland were appointed as
administrators of Oztopia Holdings on March 16, 2020.
RIVERCITY MOTORWAY: Bank Debt Due 2014 Trades at 55% Discount
-------------------------------------------------------------
Participations in a syndicated loan under which Rivercity Motorway
Finance Pty Ltd is a borrower were trading in the secondary market
around 45 cents-on-the-dollar during the week ended Fri., April 17,
2020, according to Bloomberg's Evaluated Pricing service data.
The AUD668 million term loan matured on August 4, 2014. As of
April 17, 2020, the full amount is drawn and outstanding.
The Company's country of domicile is Australia.
RIVERCITY MOTORWAY: Bank Debt Due 2016 Trades at 55% Discount
-------------------------------------------------------------
Participations in a syndicated loan under which Rivercity Motorway
Finance Pty Ltd is a borrower were trading in the secondary market
around 45 cents-on-the-dollar during the week ended Fri., April 17,
2020, according to Bloomberg's Evaluated Pricing service data.
The AUD668 million term loan matured on August 4, 2016. As of
April 17, 2020, the full amount is drawn and outstanding.
The Company's country of domicile is Australia.
T & B MINE: First Creditors' Meeting Scheduled for May 1
--------------------------------------------------------
A first meeting of the creditors in the proceedings of T & B Mine
Service Pty Ltd, trading as 'T&B Engineering' will be held on May
1, 2020, at 11:30 a.m. via the Skype for business teleconference
facility.
Brent Leigh Morgan and Geoffrey Niels Handberg of Rodgers Reidy
were appointed as administrators of Xtended Plumbing on April 20,
2020.
VIRGIN AUSTRALIA: Bondholders Prepares for Fight in Restructuring
-----------------------------------------------------------------
Sarah Danckert and Patrick Hatch at The Sydney Morning Herald
reports that the holders of Virgin Australia's AUD1.8 billion of
bonds are preparing for a major fight with the company amid
concerns that they will not be treated fairly in a restructure to
resuscitate the failed airline.
Virgin called in Deloitte as administrators on April 21 after
collapsing under the weight of AUD4.8 billion in debt amid the
government-mandated shutdown of the airline sector. A third of that
debt pile is held by the bondholders.
According to SMH, the ailing airline called in administrators after
weeks of trying to broker a new ownership arrangement with its
debt-holders and other parties, including the federal government
and some state governments.
SMH relates that the three representatives working with noteholders
said on April 21 that the holders were growing concerned about the
process Virgin and its board undertook in managing the company
ahead of its decision to call in administrators. They are also
concerned they will be forced to take much larger haircuts in any
restructure and have lashed out at UBS for managing a AUD900
million issuance of Virgin bonds in November.
The bonds were sold to both mum and dad investors and institutional
investors through a range of brokerages, the report notes.
Virgin had been trying to restructure the company so that it didn't
have to go into administration, but several bondholder sources,
advising or working for institutional investors, said bond-holders
had been left out of these negotiations, SMH relays.
A source at an institutional investor holding the bonds, who
declined to be named so that they kept their powder dry for any
negotiations with the administrators, said the pool of holders was
not as large as many people had thought.
"We are up for a fight," the bondholder, as cited by SMH, said.
"How the bond-holders are treated will be the thorn in the side of
any restructure."
SMH says the bonds include a make whole provision, which sources
say includes a requirement for it to come into force if there is a
change of ownership.
Under those rules, bond-holders may have been paid out the full
AUD1.8 billion if Virgin had opted for a debt for equity
restructure, which would trigger a change of ownership event rather
than putting itself into administration. Instead, Virgin's
administration means the bond-holders now rank below the holders of
Virgin's AUD3 billion in secured debt, which includes banks and
airline leasing businesses like Macquarie.
According to SMH, the bond-holders now expect a return of just 50c
in the dollar. One investment banking source said they were
surprised the company did not conduct a debt for equity swap even
with the noteholders in play, pointing to the success of other
pre-insolvency restructures in Australia.
One group of bond-holders has appointed major law firm Corrs
Chambers Westgarth as their legal advisers, while another group was
reaching out to insolvency groups for advice on how to navigate the
company's administration, SMH discloses.
Virgin chief executive Paul Scurrah would not be drawn on the
group's discussions with its debt-holders, including bond-holders
at a press conference on April 21 with Deloitte partner and Virgin
administrator Vaughan Strawbridge.
Asked if Virgin's administrators planned to ‘stiff' these
bond-holders, Mr. Strawbridge responded: "That's an interesting
observation," SMH relays.
"Obviously the secured creditors have got their positions with
security over assets and employees have got their priority ahead of
unsecured creditors, but fundamentally my role is to get the best
outcome."
SMH adds that one institutional bond-holder, who also declined to
comment owing to the sensitivity of negotiations, pointed to the
appointment of former Macquarie banker Nicholas Moore as a key
adviser to the Morrison government as a bad sign for bond-holders.
"Nick Moore is a tough customer and he will ensure that he will get
the best deal for government so I don't expect there to be much in
this for bond-holders," he said.
Bond-holders have famously tried to scupper a number of rescue
deals when they believe they have been treated unfairly in
administrations, most notably the bond-holders of Arrium launched
legal action to enforce their rights in 2017, SMH notes.
About Virgin Australia
Brisbane, Queensland-based Virgin Australia is Australia's
second-largest airline. It commenced services in 2000 as Virgin
Blue, wholly owned by the Virgin Group.
As reported in the Troubled Company Reporter-Asia Pacific on April
22, 2020, Bloomberg News related that Virgin Australia Holdings
Ltd. became Asia's first airline to fall to the coronavirus after
the outbreak deprived the debt-burdened company of almost all
income. Administrators at Deloitte, who have taken control of the
Brisbane-based carrier, aim to restructure the business and find
new owners within months. More than 10 parties have expressed an
interest, Deloitte related on April 21.
According to Bloomberg, Virgin Australia, which has furloughed 80%
of its 10,000 workers, will continue to operate some flights for
essential workers, freight and the repatriation of Australians. The
airline's frequent flyer program is a separate company and is not
in administration.
VIRGIN AUSTRALIA: First Creditors' Meeting Set for April 30
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of:
-- Virgin Australia Holdings Ltd
-- Virgin Australia International Operations Pty Ltd
-- Virgin Australia International Holdings Pty Ltd
-- Virgin Australia International Airlines Pty Ltd
-- Virgin Australia Airlines (SE Asia) Pty Ltd
-- Virgin Australia Airlines Holdings Pty Ltd
-- VAH Newco No.1 Pty Ltd
-- Tiger Airways Australia Pty Limited
-- Virgin Australia Airlines Pty Ltd
-- VA Borrower 2019 No. 1 Pty Ltd
-- VA Borrower 2019 No. 2 Pty Ltd
-- Virgin Tech Pty Ltd
-- Short Haul 2018 No. 1 Pty Ltd
-- Short Haul 2017 No. 1 Pty Ltd
-- Short Haul 2017 No. 2 Pty Ltd
-- Short Haul 2017 No. 3 Pty Ltd
-- VBNC5 Pty Ltd
-- A.C.N. 098 904 262 Pty Ltd
-- Virgin Australia Regional Airlines Pty Ltd
-- Virgin Australia Holidays Pty Ltd
-- VB Ventures Pty Ltd
-- Virgin Australia Cargo Pty Ltd
-- VB Leaseco Pty Ltd
-- VA Hold Co Pty Ltd
-- VA Lease Co Pty Ltd
-- Virgin Australia 2013-1 Issuer Co Pty Ltd
-- 737 2012 No.1 Pty. Ltd
-- 737 2012 No. 2 Pty Ltd
-- Short Haul 2016 No. 1 Pty Ltd
-- Short Haul 2016 No. 2 Pty Ltd
-- Short Haul 2014 No. 1 Pty Ltd
-- Short Haul 2014 No. 2 Pty Ltd
-- VA Regional Leaseco Pty Ltd
-- VB 800 2009 Pty Ltd
-- VB Leaseco No 2 Pty Ltd
-- VB LH 2008 No. 1 Pty Ltd
-- VB LH 2008 No. 2 Pty Ltd
-- VB PDP 2010-11 Pty Ltd
will be held on April 30, 2020, at 11:00 a.m. via virtual meeting.
Richard John Hughes, John Greig, Vaughan Strawbridge and Sal Algeri
of Deloitte were appointed as administrators of Virgin Australia et
al. on April 20, 2020.
XTENDED PLUMBING: First Creditors' Meeting Set for April 29
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Xtended
Plumbing Services Pty Ltd will be held on April 29, 2020, at 10:30
a.m. via virtual meeting.
Liam William Paul Bellamy of Chan & Naylor was appointed as
administrator of Xtended Plumbing on April 20, 2020.
=========
C H I N A
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BANK OF GANSU: Moves a Step Closer to State Bailout
---------------------------------------------------
Liang Hong and Timmy Shen at Caixin Global reports that embattled
regional lender Bank of Gansu Co. Ltd. has published more details
of a state-led bailout that will see entities owned by the Gansu
provincial government provide most of the funds to recapitalize the
bank.
Caixin relates that the Hong Kong-listed bank, whose net profit was
almost wiped out last year by losses on soured assets, announced in
March that it planned to issue up to 3.75 billion new
yuan-denominated shares, or "domestic shares," and up to 1.25
billion Hong Kong dollar-denominated H-shares to shore up its
weakened balance sheet. The pricing of the new shares, which will
be sold in a private placement to selected investors, has yet to be
disclosed, but based on April 21's closing price, the bank could
raise as much as HK$4.3 billion ($555 million), Caixin relays.
Gansu Highway Aviation Tourism, a wholly owned subsidiary of Gansu
province's transport department, is currently the bank's biggest
shareholder with a direct stake of 11.49% and an indirect stake of
1% through Gansu Financial Capital Management Co., Ltd., its
controlling shareholder, Caixin discloses. It intends to subscribe
for 40% of the new yuan-denominated domestic shares, which will
take its stake up to 18.3%, Bank of Gansu said in a stock exchange
filing on April 17, adds Caixin.
REMARK HOLDINGS: Amends Stock Purchase Agreement with Aspire
------------------------------------------------------------
Remark Holdings, Inc., entered into a First Amendment to Common
Stock Purchase Agreement, dated as of April 9, 2020, with Aspire
Capital Fund, LLC, amending the Common Stock Purchase Agreement,
dated as of March 3, 2020, by and between the Company and Aspire
Capital, providing for Aspire Capital's commitment to purchase up
to an aggregate of $30.0 million of shares of the Company's common
stock upon the terms and subject to certain conditions and
limitations. The Amendment amends the Purchase Agreement to
provide that (i) the Company may issue up to an additional
13,220,164 shares (the "Exchange Cap"), or 19.99% of the Company's
shares of common stock outstanding as of the date of the Amendment,
pursuant to the Purchase Agreement following the effective date of
the Amendment, unless stockholder approval is obtained in
accordance with the rules of the Nasdaq Stock Market, (ii) if
stockholder approval is not obtained, such limitation will not
apply after the Exchange Cap is reached if at all times thereafter
the average purchase price paid for all shares issued under the
Purchase Agreement following the effective date of the Amendment is
equal to or greater than $0.3950 per share, (iii) the Company has
the right, in its sole discretion, to present Aspire Capital with a
purchase notice directing Aspire Capital to purchase up to 500,000
shares of its common stock per trading day, (iv) the aggregate
purchase price payable by Aspire Capital on any one purchase date
may not exceed $1,000,000, unless otherwise mutually agreed, (v) on
any trading day on which the Company submits a purchase notice to
Aspire to purchase at least 500,000 shares of Common Stock, the
Company also has the right, in its sole discretion, to present
Aspire Capital with a volume-weighted average price purchase notice
directing Aspire Capital to purchase an amount of the Company's
common stock equal to up to 30% of the aggregate shares of the
Company's common stock traded on the next trading day, (vi) the
purchase price per share pursuant to such VWAP Purchase Notice will
be equal to the lesser of (A) the closing sale price of the
Company's common stock on the VWAP Purchase Date, or (B) 95% of the
volume-weighted average price for the Company's common stock traded
on its principal market on the VWAP Purchase Date, and (vii) Aspire
Capital will not be required to buy any shares of the Company's
common stock pursuant to a Purchase Notice on any trading day on
which the closing trade price of the Company's common stock is
below $0.15.
About Remark Holdings
Remark Holdings -- http://www.remarkholdings.com/-- delivers an
integrated suite of AI solutions that enable businesses and
organizations to solve problems, reduce risk and deliver positive
outcomes. The company's easy-to-install AI products are being
rolled out in a wide range of applications within the retail,
financial, public safety and workplace arenas. The Company also
owns and operates digital media properties that deliver relevant,
dynamic content and e-commerce solutions. The company is
headquartered in Las Vegas, Nevada, with additional operations in
Los Angeles, California and in Beijing, Shanghai, Chengdu and
Hangzhou, China.
Remark reported a net loss of $21.56 million for the year ended
Dec. 31, 2018, following a net loss of $106.73 million for the year
ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $21.48
million in total assets, $41.71 million in total liabilities, and a
total stockholders' deficit of $20.22 million.
Cherry Bekaert LLP, in Atlanta, Georgia, the Company's auditor
since 2011, issued a "going concern" qualification in its report
dated April 1, 2019, citing that the Company has suffered recurring
losses from operations and negative cash flows from operating
activities and has a negative working capital and a stockholders'
deficit that raise substantial doubt about its ability to continue
as a going concern.
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I N D I A
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ADISHAKTI ICE: CRISIL Moves 'B+' Debt Ratings to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Adishakti Ice
And Cold Storage Private Limited (AICSPL) to 'CRISIL
B+/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 4.36 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 0.12 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Term Loan 2.38 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with AICSPL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 AICSPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AICSPL 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 AICSPL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Incorporated in 2008, AICSPL provides cold storage facility for
potatoes. The cold storage is in Aligarh, Uttar Pradesh, and the
company's promoted by Mr. Satish Kumar Singh and family. The cold
storage currently has a capacity of 178639 quintals.
AKSH OPTIFIBRE: CARE Reaffirms 'D' Rating on INR114cr Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Aksh
Optifibre Limited (AOL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities
(Term Loan) 66.00 CARE D Reaffirmed
Long Term Bank
Facilities
(Fund Based) 70.00 CARE D Reaffirmed
Short Term Bank
Facilities
(Non-Fund Based) 114.00 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating reaffirmation for the bank facilities of AOL continues
to factor in the past instances of LC devolvement and delayed
payments on its debt obligations. The company had been facing
stressed liquidity position resulting from delayed realizations
from its customers leading to cash flow mismatches. CARE has taken
into account that the account of AOL is still not standard with all
the lenders though the delayed interest & debt obligations have
been serviced as confirmed by its lenders.
Key Rating Sensitivities: Going forward, the ability of the company
to service its debt & interest obligations in a timely manner would
remain the key rating sensitivities.
Positives:
* Regularization of the debt obligations of the company with no
delays & classification of its account as Standard for a minimum
period of 3 months with all its lenders.
Analytical approach: Standalone. However, the support extended by
AOL to the subsidiaries has been factored in.
Detailed description of the key rating drivers
Key rating Weakness
* Stretched Liquidity: The company had delays in servicing its
debt obligations on account of stressed liquidity position
resulting from delayed realizations from customers leading to cash
flow mismatches. Later, as the company received the payment from
its customers, it has cleared the delays and is now regular is
servicing its debt obligations. The account however is not yet
classified Standard by all its lenders. The current ratio of the
company has decreased from 1.17x on March 31, 2018 to 0.94x as on
March 31, 2019. Operating cycle of the company increased to 104
days as on March 31, 2019 (PY: 84 days). Average collection period
of the company increased to 138 days in FY19 from 124 days in
FY18.
Key rating Strengths
* Experienced promoters with established track record in the OFC
industry: Incorporated in 1986, the company has over three-decades
of long track record of operations in OFC industry. AOL
manufactures OFC and is also backward integrated to manufacture OF
and FRP rods, which leads to operational efficiencies. The company
started with the manufacturing of OF and OFC in 1994. In 1996-97
AOL acquired FRP business which is a key raw material for OFC. AOL
went public in 2000 and is listed on NSE and BSE. The company also
delivers to e-governance services through its programme 1 Stop Aksh
with the government of Rajasthan. The present Chairman and Managing
Director, Dr. Kailash S. Choudhari, is a key founding member of
AOL. He is MBBS by qualification, gold medallist AIIMS. His father,
Mr. Shantilal Choudhari, was the promoter of Choudhari Metal
Industry (later on renamed CMI Limited) which specializes mainly in
manufacturing of copper cables.
Aksh Optifibre Limited (AOL) was incorporated in March 1986 as a
manufacturer of Poly Vinyl Chloride (PVC) and Polyethylene (PE)
insulated specialty cables. In 1994, the company ventured into
manufacturing of Optical Fibre Cables (OFCs) and did backward
integration in 1995 by setting up a plant for Optical Fibre (OF) in
Bhiwadi, Rajasthan. In 2000, AOL acquired Fibre Reinforced Plastic
Rods (FRP rods) business which is a key raw material for OFC
(mainly used at the strength membrane in OFC). The company is also
undertaking e-governance services, which includes 10,000 plus
e-Governance kiosks in the state of Rajasthan and is also providing
smart city/ turnkey solutions, which includes installation and
managing of OFC turnkey of 350 kms in Jaipur smart city project.
AKULA BOARDS: CRISIL Migrates 'B+' Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Akula Boards
Private Limited (ABPL) to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 11 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Letter of Credit 3 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 17 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with ABPL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 ABPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ABPL 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 ABPL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
ABPL, promoted by Mr A G V V N Satyanarayana and family, commenced
operations in 2008; it manufactures writing and printing paper
along with newsprint paper.
ALL KIND HEALTHCARE: CARE Cuts Rating on INR40.83cr LT Loan to B+
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of All
Kind Healthcare Unit-III, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 40.83 CARE B+; Stable; Issuer not
Facilities cooperating; Revised from
CARE BB-; Stable on the basis
of best available information
Detailed Rational & Key Rating Drivers
CARE has been seeking information from All Kind Healthcare Units-
III to monitor the rating vide letter dated March 20, 2020 and e
mail communications dated February 28,2020, February 7,2020,
January 28, 2020 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 All Kind
Healthcare Units-III 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 ratings.
Detailed description of the key rating drivers
The rating has been revised on account of exposure to regulatory
risk and susceptibility of margins to volatility in raw material
prices, competitive nature of industry and its partnership nature
of constitution. The rating, however, drives strength from
experienced promoters.
Key Rating Weaknesses
* Exposure to regulatory risk and raw material price volatility:
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. Furthermore,
the key raw materials required for the manufacturing primarily
include API (Active Pharmaceuticals Ingredients) that constitute
major cost of sales, hence the firm remains susceptible to
commodity price variation risks.
* Presence in competitive industry: 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.
* Partnership nature of its constitution: AKH'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.
Key rating Strengths
* Experienced promoters in pharmaceutical industry: AKH is a
partnership firm and is engaged in manufacturing of pharmaceutical
formulations. The firm is currently being managed by Mr. Vivek
Singh and Mr. Amit Kumar. The partners have industry experience of
more than one decade in pharmaceutical industry and have
accumulated this experience through their association with the
group concerns – All Kind Healthcare Unit – 1 and Leeford
Healthcare Limited. Additionally, the promoters are supported by a
team of experienced and qualified professionals having varied
experience in the technical, finance and marketing fields.
All Kind Healthcare Unit-III was established as a partnership firm
in December 2014 with Mr. Vivek Singh and Mr. Amit Kumar as its
partners sharing profit and loss equally. The entity was earlier
engaged in manufacturing of packaging material, however, commenced
manufacturing of pharmaceutical formulations (cosmetics) such as
creams, face wash, hair gel, etc. w.e.f. March 2016 at its
manufacturing facility located in Baddi, Himachal Pradesh, having
an installed capacity of manufacturing 20 crore tubes of cosmetics
per annum as on December 31, 2018. In May, 2018 the firm commenced
third party manufacturing of pharmaceutical products like tablets
and capsules at its manufacturing facility located in Baddi,
Himachal Pradesh having an installed capacity of 48 crore tablets
and 24 crore capsules per annum as on December 31, 2018. The firm
is present across various therapy areas including anti-bacterial,
anti-diabetic, anti-infective, anti-allergic, anti-fungal,
antacids, painkillers, etc. The firm procures its main raw material
i.e. Active Pharmaceutical Ingredients (API) from wholesalers
located across India. The finished products are mainly supplied to
Leeford group of companies. Besides AKH, the partners are also
engaged in another group concerns namely All Kind Healthcare (AH)
and Leeford Healthcare Limited (LHL). AH was established in 2010
and is engaged in manufacturing of pharmaceutical formulations
(medicines). LHL got incorporated in 2006 and is engaged in trading
of pharmaceutical formulations.
ARUMUGA MUDALIAR: CARE Reaffirms 'B+' Rating on INR5.11cr LT Loan
-----------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Arumuga Mudaliar Sornam Educational Trust (AMSET), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.11 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of AMSET continues to be
tempered by weak debt-coverage indicator though improved in FY19,
high level of regulations with strict norms in the industry and
high level of competition from other established institutes in the
region and further tempered by stretched liquidity. The rating also
factors in increase in gross receipts and overall increase in
student enrolments in FY19 (refers to the period April 1 - March
31). The rating, however, derives its strengths from experienced
trustees, long track record of operations along with diversified
revenue stream on account of various courses offered, comfortable
capital structure and increase in profitability margins.
Key Rating Sensitivities
Positive Factors
* Consistent increase in the trust's scale of operations marked by
gross receipts beyond INR12 crore
* Improved debt coverage marked by the TD/GCA below 6.00x on a
sustained basis
Negative Factors
* Any sizeable decline in scale of operation on a sustained basis
followed by significant decline in enrolments
* Deterioration in capital structure marked by overall gearing
ratio beyond 2.00x on a sustained basis
Detailed description of the key rating drivers
Key Rating Weaknesses
* Weak debt-coverage indicator though improved in FY19: The debt
coverage marked by TD/GCA stood weak albeit improved at 9.23x in
FY19 (11.70x in FY18) mainly due to decline in total debt owing to
scheduled term loan repayments and improved cash accruals, The
interest coverage stood at 2.01x in FY19 as against 1.82x in FY18
on account of increase in absolute SBID due to increase in income
by way of admission and tuition fees during FY19.
* High level of regulations with strict norms in the industry and
high level of competition from other established institutes in the
Region: Indian professional education is regulated by two
agencies, namely the University Grants Commission (UGC) through the
UGC Act and The All India Council for Technical Education (AICTE)
through the AICTE Act. UGC controls the establishment of private
universities and AICTE has the sole authority to plan and maintain
technical education in the country. The operational as well as
financial flexibility of higher education are limited as
regulations governs almost all aspects of operations including fee
structure, number of seats, and change in curriculum and
infrastructure requirements. Despite the increasing trend of
privatization of educational sector in India, regulatory challenges
continue to pose a significant threat to the educational
institutes. Due to increasing focus on education sector in Tamil
Nadu and addition of new colleges/schools every year results in
high competition level in the state and adjoining areas of AMT.
* Stretched liquidity: The liquidity position of the trust remains
stretched as on March 31, 2019 mainly on the back of tightly
matched accruals to debt-repayment and moderate cash balance of
INR0.33 crore as on March 31, 2019. The current and quick ratios
was seen above unity at 1.29x as on March 31, 2019 (4.28 x as on
March 31, 2018). The unutilized portion of WC limits stood at
around 10% for the 12 months ended February 2020.
Key Rating Strengths
* Experienced trustees long track record of operations along with
diversified revenue stream on account of various courses offered:
Mr. A. Krishnaswamy is the founder of the trust with over five
decades of experience in the educational sector. He has been one of
the three development committee members' instrumental in setting up
the Regional Engineering College, Trichy (now referred as National
Institute of Technology) in 1964. He was also instrumental in
setting up government school in Tittagudi which has student
strength of 800 students at present. The founder trustee has also
served as a member in Tamil Nadu Government Higher Educational
Department for 10 years. Mr. A. Krishnaswamy is being referred as
'KalviKavalar' for his service in education. Mr. K. Rajapiradhaban,
S/o Mr. A. Krishnaswamy is one of the key management trustees who
is looking after the trust along with his father. He has over three
decade of experience in the field of education. The board of
trustees consist of 5 members including the founder, who belong to
the same family. The members of the trust are supported by
qualified professionals heading the respective college/institution
having rich experience in the respective field. The policy
decisions such as starting new course and investment in
infrastructure are taken by a committee comprising trustees in
consultation with respective administrative/academic staff.
* Increase in gross receipts in FY19: The gross receipts improved
from INR9.57 crore in FY18 to INR9.99 crore in FY19. The
improvement in gross receipt is attributed by increase in income by
way of admission and tuition fees. AMT had total student strength
of 2238 students for the FY19 as against 2254 students in FY18.
* Overall increase in student enrolments: The AMT has registered
increase in the overall actual intake, marked by 39.50% for the
AY19-20 as against 31.29% for the AY18-19. Especially, the
enrolment ratio is decreasing year-on-year with regard to
Engineering and Polytechnic College on account of limited takers
for the seat due to preference of the students over other courses
on account of limited demand as compared to the supply for
engineering graduates.
* Comfortable capital structure: The capital structure of the
trust marked by overall gearing continue to remained stable and
comfortable at 0.12x as of March 31, 2019 as against 0.12x as of
March 31, 2018 due to robust corpus fund. Furthermore, the debt
equity also stood comfortable at 0.10x as of March 31, 2019 due to
adequate corpus fund, coupled with scheduled repayments of Long
term loans borrowed.
* Increase in operating margins: The SBID margin of the trust
improved to 16.57% in FY19 as against 14.48% in FY18, due to
increase in absolute SBID on account of increase in admission,
tuition and other fees collected from students. The surplus margin
stood at 8.34% in FY19 as against 6.54% in FY18 due to healthy
growth in operating profit.
Arumugha Mudhaliar Sornam Educational Trust (AMT) was established
in March 1992 by Mr. A. Krishnaswamy and registered under Indian
Trust Act. The main objective of the trust is to provide education
services and engage in social welfare activities like eye camp and
blood donation camp to the rural population. Presently, the trust
runs 6 institutions consisting of an engineering college (both UG
and PG courses), Arts and Science College, Polytechnic College, one
teacher training college (B.Ed. course), Matriculation higher
secondary school and a nursery school. The institutions are located
in Cuddalore district, Tamil Nadu. The above institutions are
managed by experienced professionals in their respective fields.
ATARSON OVERSEAS: CRISIL Moves 'D' Debt Ratings to Not Cooperating
------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Atarson
Overseas Private Limited (SBRM) to 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 60 CRISIL D (ISSUER NOT COOPERATING;
Rating Migrated)
Term Loan 9 CRISIL D (ISSUER NOT COOPERATING;
Rating Migrated)
CRISIL has been consistently following up with SBRM for obtaining
information through letters and emails dated February 29, 2020 and
March 19, 2020 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 SBRM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SBRM 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 SBRM to 'CRISIL D Issuer not cooperating'.
SBRM was incorporated by Gupta family of Bareilly in 2011. It is
engaged in milling and processing of paddy into rice, rice bran,
broken rice and husk. Mr Rachin Gupta and Ms Seema Gupta are the
promoters of the company. Mr. Rachin Gupta is also engaged managing
day to day activity of the business.
BEE GEE AUTOMOBILES: CARE Lowers Rating on INR10cr LT Loan to B+
----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Bee
Gee Automobiles, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B+; Issuer not cooperating;
Facilities Revised from CARE BB-; Stable on
the basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from Bee Gee Automobiles to
monitor the rating vide letter dated March 20, 2020 and e mail
communications dated March 16, 2020, February 10, 2020,
February 7, 2020 and numerous phone calls. However, despite CARE's
repeated requests, the firm has not provided the requisite
information for monitoring the rating. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion is
not sufficient to arrive at a fair rating. The rating on Bee Gee
Automobiles 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 ratings.
Detailed description of the key rating drivers
The long term rating of the firm has been revised on account of
proprietorship nature of constitution and intense competition
amongst dealers with pressure to pass on cash discounts to
customers.
Key Rating Weaknesses
* Intense competition amongst dealers with pressure to pass on cash
discounts to customers: Presently BGA operates through its
showrooms located at Himachal Pradesh Region. The number of dealers
dipped over the past few years. However, in order to capture the
market share, the auto dealers offer better buying terms like
allowing discounts on purchases. Such discounts offered to
customers create margin pressure and negatively impact the profits
of BGA.
* Proprietorship nature of its constitution: Due to BGA being a
proprietorship entity, it has limited ability to raise capital as
it has restricted access to external borrowings where personal net
worth and credit worthiness of proprietor affects decision of
prospective lenders. Further, it is susceptible to risks of
withdrawal of proprietor capital at time of personal peril and poor
succession decisions may raise the risk of dissolution of the
entity.
Bee Gee Automobiles (Solan) (BGA) was established in 01st July 2014
as a proprietorship entity by Mr. Munish Gupta. The entity was in
existence since 2002 as a partnership firm with Mr. Rakesh Bindlish
and later on converted into proprietorship entity in 2014 BGA is
authorized dealer of Tata Motors Limited (TML) for sale of all
commercial vehicles and its spare parts for Solan & Sirmaur Shimla
and Kinnaur region. The company operates through its 3S (Sales,
spare, & services) facility at Solan Region with various range of
busses, truck and loading vehicle. BGA got dealership of Tata
Motors in July 2018 before that SGA was dealing with SML ISUZU.
BUDS TEA: CARE Lowers Rating on INR20cr LT Loan to 'D'
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Buds
Tea Industries Limited (BTIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 20.00 CARE D; Issuer not cooperating;
Facilities Revised from CARE B; Stable
on the basis of best available
information
Long term/Short 2.00 CARE D/CARE D; Issuer not
Term Bank cooperating; revised from
Facilities CARE B; Stable/CARE A4 on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information BTIL to monitor the rating(s)
vide email communications/letters dated December 2, 2019, December
13, 2019, December 24, 2019, January 8, 2020, March 5, 2020 and
March 21, 2020 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
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. Further, BTIL has not paid
the surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating on BTIL's bank facilities will now be
denoted as CARE D/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 revision in the rating of Buds Tea Industries Limited has been
on account of on-going delays in debt servicing.
Detailed description of the key rating drivers
At the time of last rating on April 4, 2019, the following were the
rating strengths and weaknesses (updated for information available
from Registrar of Companies):
Key Rating Weaknesses
* On-going delays in debt servicing: There are on-going delays in
debt-servicing owing to non-servicing of interest on Cash Credit
limits, primarily due to liquidity mismatch.
* Moderate financial performance in FY18 & 9MFY19: The operating
income of the company remained stable at INR109.41 crore in FY18
vis-à-vis INR112.87 crore in FY17. However the company reported
decline in PBILDT margin from 5.39% in FY17 to 4.54% in FY18.
Interest coverage ratio was stable at 1.60x in FY18 vis-à-vis
1.64x in FY17. The company reported gross cash accruals of INR1.91
crore vis-à-vis debt repayment obligation of INR2.35 crore in
FY18. The deficit was financed by infusion of unsecured loan from
promoters. In 9MFY19, the company reported PBT of INR1.04 crore on
total operating income of INR74.68. BTIL witnessed ~15% y-o-y
decline in operating income from INR109.41 crore in FY18 to
INR93.26 crore in FY19. Further, PBILDT margin moderated from 4.97%
in FY18 to 4.39% in FY19. Interest coverage ratio was however
stable at 1.58x in FY19 vis-à-vis 1.60x in FY18.
* Small scale of operations: The operations of the company are
relatively small with total operating income of INR109.41 crore
during FY18 and total capital employed of INR47.42 crore as on
Mar.31, 2018 (vis-à-vis INR44.68 crore as on Mar.31, 2017). The
small size restricts the financial flexibility of BTIL and hinders
the benefits of economies of scale. The operations of the company
are relatively small with total operating income of INR93.26 crore
during FY19 and total net-worth of INR11.81 crore as on March 31,
2019(Rs. 11.70 crore as on March 31, 2018).
* Weak capital structure & debt protection metrics: The company
reported leveraged capital structure as exhibited by increase in
overall gearing from 2.83x as on March 31, 2017 to 3.04x as on
March 31, 2018. Accordingly Total Debt/ GCA also deteriorated from
13.18x as on March 31, 2017 to 18.56x as on March 31, 2018. The
capital structure of the company remained leveraged and in line
with FY18 which stood at 3.01x as on March 2019(3.04x as on March
31, 2018). However, Total Debt/GCA moderated from 18.56x as on
March 31, 2018 to 21.60x as on March 31, 2019 due to decline in the
Gross Cash Accruals of the company.
* Working capital intensive nature of business: BTIL's operations
are working capital intensive as exhibited by average inventory
period and collection period of about 2 months each. The company
reported moderation in working capital turnover ratio from 4.08x in
FY17 to 3.69x in FY18. BTIL's operations are working capital
intensive as exhibited by average inventory period and collection
period above 2 months in FY19.
* Agro-climatic risk and resultant price risk: The company has a
bought leaf factory and procures tea leaves from local sources. The
production of tea leaves in turn is susceptible to the vagaries of
nature and the resultant demand supply gap also leads to variation
in prices. This also exposes the company's profits to fluctuation
due to price risk.
Key Rating Strengths
* Experience of the promoters in the tea industry: BTIL is a part
of the Limtex Group and its operations are managed by
promoters-directors Mr Gopal Poddar, Mr Shankar Poddar and Mr
Subhash Poddar. The directors have experience of more than three
decades in the tea business through various companies in the group.
The Limtex group has a strong presence in the tea industry through
its various tea factories and tea gardens.
* Liquidity position- Poor
The company reported gross cash accruals of INR1.64 crore
vis-à-vis debt repayment obligation of INR2.34 crore in FY19. The
deficit was financed by infusion of unsecured loan of INR1.64 crore
by the promoters. During current fiscal (FY20) the company has
however fully repaid the term debt obligation of INR2.33crore
outstanding as on March 31, 2019. Nonetheless, the liquidity
position of the company is termed to be poor taking into account
the on-going delays in debt servicing.
Buds Tea Industries Limited (BTIL), incorporated in 2013, is
engaged in processing (4,500 tpa) and sale of tea. For this it has
a bought leaf factory in Jalpaiguri, West Bengal. The operations of
BTIL are managed by directors and brothers Mr.Gopal Poddar, Mr.
Shankar Poddar and Mr Subhash Poddar. BTIL is a part of the Limtex
Group of Industries which is promoted by Kolkata based Poddar
family which is mainly into tea industry.
C.I. FINLEASE: CRISIL Moves 'B+' on INR35cr Loans to NonCooperating
-------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of C.I. Finlease
Limited (CIFL) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 20 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Inventory Funding 15 CRISIL B+/Stable (ISSUER NOT
Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with CIFL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 CIFL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on CIFL 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 CIFL to 'CRISIL B+/Stable Issuer not cooperating'.
Incorporated in 1996 and promoted and managed by Mr Rakesh Malik,
CIFL was engaged in auto financing for TVS Motors Limited in
Bhopal. In the year 2005, the company became authorised dealer for
HMIL. It has 3 showrooms and 3 service centres in Bhopal.
C.I. Group of companies has two other companies; C.I. Automotors
Private Limited having dealership of Mahindra and Mahindra and C.I.
Builders Private Limited involved in real estate development.
CHANDNA INFRAPROJECTS: CARE Keeps 'D' Rating in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Chandna
Infraprojects (India) Private Limited (CIPL) continues to remain in
the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.50 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Short-term Bank 0.50 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from CIPL to monitor the
rating(s) vide email dated November 1, 2019, November 25, 2019,
January 2, 2020, March 11, 2020 and March 23, 2020 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 best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. Further, CIPL has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. The rating on
CIPL's 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 ratings of Chandna Infraprojects (India) Private Limited
(CIIPL) continue to take into account ongoing delays in debt
servicing of interest and installment of its term loan owing to
stretched liquidity position.
Detailed description of the key rating drivers
At the time of last rating on March 8, 2019, the following were the
rating strengths and weaknesses (Updated for the information
available from the client)
Key Rating Weakness
* Irregularity in debt servicing due to stressed liquidity: The
company is engaged in the business of processing of granites which
is mainly used in the cyclical real estate sector. It maintains
inventory of 245-270 days and also collection period got stressed.
Due to it, the liquidity position of the company has deteriorated
and that led to delay in debt servicing. There are instances of
delay in debt servicing of interest and installment of term loan.
The banker of the company has also verbally confirmed the same.
Jaipur (Rajasthan) based CIIPL, incorporated in 2010, is a part of
Chandna Group which is engaged primarily in the mining of marbles
and granites as well as cutting and processing of marbles since
2000.
GREATWELD ENGINEERING: CRISIL Moves 'D' Ratings to Not Cooperating
------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Greatweld
Engineering Private Limited (GEPL) to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 5 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 16 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Foreign Letter 13 CRISIL D (ISSUER NOT
of Credit COOPERATING; Rating Migrated)
Rupee Term Loan 8 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with GEPL for obtaining
information through letters and emails dated February 29, 2020 and
March 19, 2020 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 GEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on GEPL 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 GEPL to 'CRISIL D/CRISIL D Issuer not cooperating'.
GEPL, incorporated in 2005, manufactures electro-forged mild steel
gratings and hand rails. It has two plants, at Indapur and Markal,
near Pune. Mr Rakesh Ranjan, Mr Suhas Baddi, Mr Ravindra Mule, and
Mr Sateesh Rane are the promoters. Mr Rakesh Ranjan and a manage
the business.
GVK POWER: CARE Reaffirms 'D' Rating on INR39.46cr Loan
-------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of GVK
Power and Infrastructure Limited (GVKPIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 39.46 CARE D Reaffirmed
Long/Short-term
Bank Facilities 0.01 CARE D/CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers:
The ratings assigned to the bank facilities of GVKPIL is
constrained on account of delays in debt servicing owing to
stretched liquidity position of the company. The Key rating
sensitivities are as follows:
Positive Factors
* Improvement in the liquidity profile & regularization of debt
servicing.
Detailed description of the key rating drivers
Key Rating Weakness
* Stretched liquidity position: During FY19, GVKPIL's total
operating income grew by about 11% which is mainly driven by
revenue from consultancy services and increase in interest income
on financial guarantees extended. The company witnessed net profit
of INR113.94 crore in FY19 (net loss of INR36.08 crore in FY18)
mainly on account of reversal of tax transaction which is non-cash
in nature & amounts to INR80.47 crore in FY19. However, the company
reported cash flow from operations to the tune of INR18.33 crore
which was insufficient to service the debt obligation resulting in
continued delays in servicing of debt obligations.
Key Rating Strengths
* Experienced promoters and management team: GVK Power &
Infrastructure Limited (GVKPIL) is the flagship company of the GVK
Group (GVK). GVK was established nearly four decades ago by Dr.
G.V. Krishna Reddy, the Chairman & Managing Director of the
company. GVK is a diversified conglomerate with interests in a wide
range of businesses including power, roads, urban infrastructure,
bioscience, hotels and mining.
GVKPIL is the flagship company of Hyderabad-based GVK group. GVKPIL
acts as an investment vehicle of the GVK group for all its
investments in the infrastructure sector and is the ultimate
holding company of diversified infrastructure assets of the group.
HAMON SHRIRAM: CARE Keeps 'C' Issuer Rating in Not Cooperating
--------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Hamon
Shriram Cottrell Private Limited (HSPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Issuer rating - CARE C(Is); Issuer not
cooperating; Based on best
available information
Long term Bank 27.65 CARE C; Stable; Issuer not
Facilities cooperating; Based on best
available information
Long term/Short 100.50 CARE C; Stable/CARE A4;
term Bank Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from HSPL to monitor the rating
vide e-mail communications dated March 9, 2020, March 11, 2020,
March 13, 2020, March 16, 2020, March 19, 2020 , March 21, 2020
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 best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. The rating on Hamon Shriram
Cottrell Private Ltd.'s bank facilities will now be denoted as CARE
C; Stable/CARE A4; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Weak operational performance resulting in weakened debt coverage
indicators: The total operating income of the company increased by
56.59% from INR45.80 crore during FY18 to INR71.72 crore during
FY19. However, the company registered net loss of INR85.08 crore
during FY19 on account of write off of exceptional items amounting
INR77.09 crore. The exceptional items includes written-off trade
receivables, unbilled revenue and doubtful debt provisions. The
networth of the company completely eroded during FY19 on account of
significant loss registered by the company resulting in weakened
debt coverage indicators.
* Inherent risk associated with execution of orders in power
industry and prevalent competition in cooling tower industry: HSPL
continues to derive major revenue from cooling tower business.
These orders are from various user industries mainly power sector.
Any delay/deferral of operational expenditure by these companies
might adversely impact the operational performance and consequently
prospects of the company. Further, in the cooling tower industry
with the presence of organised/unorganised players the business
environment is competitive. However, the company's established
position in cooling tower business mitigates it to an extent.
Key Rating Strengths
* Established promoters having proven track in cooling tower
industry: Hamon Shriram Cottrell Private Limited is promoted by
Hamon and Shriram Group. Hamon group is an international
Engineering and Contracting company which designs and implements
cooling systems, heat exchangers, air pollution control systems and
chimneys across the world, through its subsidiary companies and
JVs. Shriram Venture Limited (SVL) is part of the Chennai-based
Shriram group, which has been operating in the financial services
sector since 1974. The group has diverse business interests across
engineering construction, pharmaceuticals, machined & auto
components, press dyes & sheet metal stamping, packaging, IT
services and property development along with vehicle finance,
insurance, chit funds and advisory services. The day-to-day
operations of the company are managed by a qualified and
experienced team headed by Mr. N.K. Suryanarayanan (Director and
Chief Executive Officer).
HSPL is engaged in the design, manufacture, construction, and
commissioning of different types of cooling towers. HSPL originally
incorporated in 1971 and later in 2007 formed as an equal sharing
joint venture between Hamon Group, Belgium and Shriram EPC Limited
(SEPC). In June 2013, on account of internal restructuring of the
Shriram Group; the shareholding of SEPC in HSCPL was transferred to
SVL Limited (erstwhile Shriram Industrial Holding Limited). SVL is
a holding company for various non-financial services entities of
the Shriram Group.
HLM EDUCATIONAL: CRISIL Moves D Debt Ratings to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of HLM
Educational Society (HLM) to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3.5 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Overdraft 4.03 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Term Loan 3.47 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 9 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with HLM for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 HLM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HLM 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 HLM to 'CRISIL D/CRISIL D Issuer not cooperating'.
HLM was set up in 2005 by Mr Sunil Miglani (Chairman of the Migsun
group) in the memory of his late father, Mr Harbans Lal Miglani.
The Ghaziabad based society provides education courses such as law,
business management and Medical.
K E AGRO: CRISIL Moves B+ Debt Ratings to Not Cooperating
---------------------------------------------------------
CRISIL has migrated the rating on bank facilities of K E Agro
Products Private Limited (KEAPPL) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 1.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 0.5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Working Capital 2 CRISIL B+/Stable (ISSUER NOT
Demand Loan COOPERATING; Rating Migrated)
CRISIL has been consistently following up with KEAPPL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 KEAPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on KEAPPL 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 KEAPPL to 'CRISIL B+/Stable Issuer not cooperating'.
Based in Kottayam, Kerala, KEAPPL was incorporated in 2002 by Mr
Thomas Mathew and his family. The company processes rice and has
capacity of 120 tonne per shift.
K. S. COT FIBER: CARE Lowers Rating on INR7cr LT/ST Loan to 'C'
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of K.
S. Cot Fiber Private Limited (KSCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 7.00 CARE C; Stable/CARE A4;
term Bank ISSUER NOT COOPERATING;
Facilities Revised from CARE B;
Stable/CARE A4 “on the
basis of best available
information
Detailed Rationale & Key rating Drivers
CARE has been seeking information from KSCPL to monitor the ratings
vide e-mail communications dated December 19, 2019, January 8,
2020, January 21, 2020, February 27, 2020, March 14, 2020 and March
17, 2020 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 best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. Further, KSCPL has not paid
the surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating of KSCPL bank facilities will now be
denoted as CARE C; Stable/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 revision in the ratings of KSCPL takes into account its
stretched liquidity position and decline in its total operating
income in FY19 over FY18. The ratings further continue to remain
constrained on account of thin profit margins, leveraged capital
structure, weak debt coverage indicators. The ratings, further,
continue to remain constrained on account of susceptibility of
KSCPL's profit margins to the raw material price fluctuations and
its presence in the highly fragmented cotton industry. The ratings
continue to draw strength from the wide experience of the promoters
in the cotton industry.
Detailed description of the key rating drivers
At the time of last rating on March 29, 2019, the following were
the rating strengths and weaknesses (Updated for the information
available of FY19 from MCA site)
Key Rating Weakness
* Decline in Total Operating Income (TOI) with thin profitability
margins: During FY19, the TOI of the company declined by 39.58%
over FY18 and stood at INR24.15 Crore as against 39.97 Crore in
FY18. Due to low value addition and its presence in highly
competitive industry, the profitability margins of the company
remained thin with PBILDT and PAT margin of 4.41% and 0.45%
respectively in FY19 as against PBILDT and PAT margin of 2.27% and
0.53% respectively in FY18. Further, the GCA level stood low at Rs
0.14 Crore in FY19 as against INR0.25 crore in FY18.
* Leverage capital structure and weak debt coverage indicators:
The capital structure of the company stood leveraged with an
overall gearing of 5.17 times as on March 31, 2019, deteriorated
from 4.46 times as on March 31, 2018 mainly on account of infusion
of unsecured loans and higher utilization of working bank
borrowings which get partially off-set by accretion of profits to
reserves. The debt service coverage indicators stood weak,
deteriorated from total debt to GCA of 54.48 times as on March 31,
2018 to 116.26 times as on March 31, 2019 mainly due to higher debt
level and decrease in GCA level. Further, interest coverage ratio
also stood moderate at 1.22 times in FY19.
* Stretched liquidity position: The liquidity position of the
company stood stretched owing to instance of overutilization of its
working capital bank borrowings. The operating cycle of the company
stood moderate at 79 days due to higher collection period. The
current and quick ratio stood at 1.94 times and 1.88 times
respectively as on March 31, 2019.
* Operating margins susceptible to cotton price fluctuation and
seasonality associated with the cotton industry: Operations of
cotton business are seasonal in nature, as sowing season is done
during March to July and harvesting cycle (peak season) is spread
from November to February every year. Prices of raw material i.e.
raw cotton are highly volatile in nature and depend upon factors
like monsoon condition, area under production, yield for the year,
international demand supply scenario, export policy decided by
government and inventory carried forward of the last year. Ginners
usually have to procure raw materials at significantly higher
volume to bargain bulk discount from suppliers. Furthermore, cotton
being a seasonal crop, the inventory levels of the entity generally
remains high at the end of the financial year. Thus, aggregate
effect of both the above factors results in exposure of ginners to
price volatility risk.
* Presence in the lowest segment of the textile value chain and in
a highly fragmented cotton ginning industry: High proportion of
small scale units operating in cotton ginning and pressing industry
has resulted in fragmented nature of industry leading to intense
competition amongst the players. As MGPL operates in this highly
fragmented industry wherein large numbers of un-organised players
are also present, it has very low bargaining power against both its
customers as well as its suppliers. This coupled with limited value
addition in cotton ginning process results in the firm operating at
very thin profitability (PAT) margins.
Key Rating Strengths
* Wide experience of the promoters in the cotton industry: KSCPL
was incorporated by Mr. Kailashchandra Agrawal and Mr. Hemant Kumar
Agrawal in 2008. Mr. Kailashchandra Agrawal (Director) holds more
than three decades of experience in cotton trade, agro based
processing and trading industry. He looks after overall
administration as well as accounts and finance related functions at
KSCPL. He is accompanied by Mr. Hemant Kumar Agrawal (Director) who
holds two decades of experience in cotton trade, agro based
processing and trading industry. Prior to incorporation of the
company, promoters were engaged into trading of cotton. Promoters
of KSCPL are also directors in KCIPL.
K. S. Cot Fiber Private Limited (KSCPL) was incorporated in June
2008 by Mr. Kailashchandra Agrawal and Mr. Hemant Kumar Agrawal as
a private limited company. KSCPL is engaged into the business of
cotton ginning and pressing. KSCPL deals in 'Shankar 6' type of
cotton which is being sourced through local farmers from Madhya
Pradesh and Maharashtra. KSCPL operates from its sole manufacturing
plant located at Sendhwa (Madhya Pradesh) which has an installed
capacity of 18,900 Metric Tonnes Per Annum (MTPA) as on March 31,
2018.
KLG JEWELLERS: CRISIL Moves B+ on INR18cr Debt to Not Cooperating
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of KLG Jewellers
(KLG) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Electronic Dealer 18 CRISIL B+/Stable (ISSUER NOT
Financing Scheme COOPERATING; Rating Migrated)
(e-DFS)
Proposed Long Term 9.1 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with KLG for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 KLG, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on KLG 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 KLG to 'CRISIL B+/Stable Issuer not cooperating'.
Set up as a partnership firm in September 2013 by Patiala-based Mr.
Pawan Goyal and his son, Mr Kashish Goyal, KLG has dealership of
Tanishq jewellery in Patiala.
KUMAR JEWELLERS: CRISIL Moves B+ Debt Ratings to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Kumar
Jewellers (KJ) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with KJ for obtaining
information through letters and emails dated February 29, 2020 and
March 19, 2020 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 KJ, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on KJ 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 KJ to 'CRISIL B+/Stable Issuer not cooperating'.
Based in Nellore, Tamil Nadu, KJ retails gold jewellery. The firm
was established by Mr Sukumar D Vas a proprietary concern in 1992
and reconstituted as a partnership firm in February 2016 when his
brothers also joined the business.
PATWARI FORGINGS: CRISIL Moves B+ on INR5cr Debt to Not Cooperating
-------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Patwari
Forgings Private Limited (PFPL) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with PFPL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 PFPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PFPL 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 PFPL to 'CRISIL B+/Stable Issuer not cooperating'.
PFPL incorporated in 1999 is engaged in manufacturing steel
structures and angles used in manufacturing of sheds and windows
through its manufacturing capacity in Patna.
RHEOMAX GUMS: CRISIL Moves B+ on INR13cr Loans to Not Cooperating
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Rheomax Gums
LLP (RGL) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 10 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Proposed Working 3 CRISIL B+/Stable (ISSUER NOT
Capital Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with RGL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 RGL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RGL 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 RGL to 'CRISIL B+/Stable Issuer not cooperating'.
Set up in February 2012 and promoted Mr Dinesh Ranchhodlal Chudgar
and Mr Kadam Dineshbhai Chudgar, RGL is a setting up a synthetic
organic chemical plant in Ahmedabad.
ROHTAK-PANIPAT TOLLWAY: CARE Cuts Rating on INR937.92cr Loan to D
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Rohtak-Panipat Tollway Private Limited (RPTPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 937.92 CARE D Revised from CARE B;
Facilities Negative
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of RPTPL
is on account of overdues in debt servicing (as per lender's
feedback) owing to poor liquidity and debt coverage indicators
arising due to subdued toll collection on sustained basis as
against large debt obligations.
Rating sensitivities
Positive factors
* Establishing a track record of timely servicing of debt
obligations for a period of at least 90 days
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in debt servicing: There are overdues of over 30 days in
the account of RPTPL in servicing its debt obligations due to poor
liquidity on account of subdued toll collection as against large
debt obligations. Toll collection of the company during FY19 stood
at INR106 crore while the debt obligations (interest + principal)
stood at around INR141 crore for the same period. Further, company
has not created liquidity backup mechanism in the form of debt
service reserve account (DSRA) as stipulated in terms of sanction.
* De-growth in toll collection leading to delays in debt servicing:
Since it began operations, the traffic on the project stretch of
RPTPL has been significantly lower than originally envisaged as per
the traffic study primarily on account of toll leakages in the
bypass near the toll plazas, presence of alternate route on State
Highways and higher than envisaged local category vehicles
(exempted from toll) in total traffic. Toll collection has
witnessed de-growth by around 20% from Q4FY19 onwards as compared
to corresponding quarter on y-o-y basis on account of diversion of
traffic to the alternate route of Kundli - Manesar section that
commenced its operations in November 2018.
* Interest rate and O&M risk: RPTPL is exposed to inherent
interest rate risk due to presence of annual reset clause in its
term loan and volatility associated with interest rates. RPTPL is
also exposed to inherent O&M risk and scheduled major maintenance
activity in the medium term along with pending creation of major
maintenance reserve account (MMRA).
Liquidity: Poor
Liquidity of RPTPL is stretched as marked by lower accruals
vis-à-vis repayment obligations of the company. Toll collection of
the company during FY19 stood at INR106 crore while the debt
obligations (interest + principal) stood at around INR141 crore for
the same period. Furthermore, the liquidity back-up in the form of
DSRA is yet to be created for the project post its
exhaustion during FY17, as required by the terms of sanction of
project term loan. Decline in toll collection and non-creation of
DSRA have resulted in overdues in debt servicing.
RPTPL is a special purpose vehicle (SPV) incorporated and wholly
owned by Sadbhav Infrastructure Project Limited (rated CARE A-;
Stable/CARE A2+) which is the holding company of BOT projects of
Sadbhav Engineering Limited (rated CARE A-; Stable/CARE A2+). The
company had entered into a 25 year concession agreement (CA) with
NHAI for the construction of 80.86 - km road project on BOT basis.
The concession period of 25 years included construction period of
910 days. The project was for four laning of the existing two lanes
of Rohtak – Panipat section of Km. 63.30 of NH – 10 to Km.
83.50 of NH – 1 (total 80.86 kms) in the state of Haryana. RPTPL
was required to pay an annual concession fee of INR45 crore to NHAI
immediately on COD on a monthly basis which was to be increased by
5% every year throughout the concession period. However, as per the
letter dated May 23, 2014, NHAI has allowed deferment of premium
for the project and has entered into supplementary concession
agreement with RPTPL.
S.K. INDUSTRIES: CARE Lowers Rating on INR7.28cr LT Loan to B
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of S.
K. Industries, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.28 CARE B; Stable; Issuer not
Facilities cooperating; Revised from
CARE B+; Stable on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from S.K. Industries to monitor
the rating vide letter dated March 23, 2020 and e mail
communications dated March 16, 2020, February 10, 2020 and February
7, 2020 and numerous phone calls. 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 S.K.
Industries 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 ratings.
Detailed description of the key rating drivers
The long term rating of the firm has been revised on account of
partnership nature of constitution, susceptibility of fluctuation
in raw material prices and monsoon dependent operations and
fragmented nature of industry coupled with high level of government
regulation.
Key Rating Weaknesses
* Susceptibility to fluctuation in raw material prices and monsoon
dependent operations: Agro-based industry is characterized by its
seasonality, due to its dependence on raw materials whose
availability is affected directly by the vagaries of nature.
Adverse climatic conditions can affect their availability and leads
to volatility in raw material prices. Any sudden spurt in raw
material prices may not be passed on to customers completely owing
to company's presence in highly competitive industry.
* Partnership nature of constitution: SKI'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
partner(s). Moreover, partnership firms have restricted access to
external borrowing. However, the partners infused funds in the form
of unsecured loans amounting to INR1.94 crore in FY18 period.
* Fragmented nature of industry coupled with high level of
government regulation: The commodity nature of the product makes
the industry highly fragmented with numerous players operating in
the unorganized sector with very less product differentiation. The
raw material (paddy) prices are regulated by government to
safeguard the interest of farmers, which in turn limits the
bargaining power of the rice millers.
S. K. Industries was established as a partnership firm in 1996 and
it is currently being managed by Mr. Rakesh Kumar, Mr. Naresh
Kumar, Mr. Sanjiv Kumar and Mr. Rajiv Kumar sharing profits and
losses equally. The firm is engaged in processing of paddy at its
manufacturing facility located in Faridkot, Punjab with an
installed capacity of 2,00,000 quintal of paddy per annum.
SAI POULTRY: CARE Reaffirms 'B' Rating on INR7.0cr LT Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Sri
Sai Poultry (SSP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.00 CARE B; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SSP are continues to
be tempered by business and project implementation risk, highly
fragmented and competitive business segment and constitution of the
entity as partnership firm with inherent risk of withdrawal of
capital. The rating, however, derives its strengths from the
experience of the partners for decade in poultry business, part
financial closure achieved for the project with more than 85% of
the project completed and stable outlook of poultry industry.
Rating Sensitivities
Positive Factors
* Successful completion of project without any cost and time
overrun.
Negative Factors
* Delay in project may lead to additional cost
Detailed description of the key rating drivers
Key Rating Weaknesses
* Business and project implementation risk: The firm is exposed to
business implementation risk with respect to being exposed to
delays in project completion due to cost and/or time overruns,
delay in acquiring approvals, inability to find suitable clientele,
inability to penetrate market as foreseen due to several reasons
such as economic uncertainty etc.
* Highly fragmented industry with intense competition from large
number of players: SSP faces stiff competition in the poultry
business from large number of established and unorganized players
in the market. Competition gets strong with the presence of
unorganized players leading to pricing pressures. However, improved
demand scenario of poultry products in the country enables well for
the firm.
* Constitution of the entity as a partnership firm: SSP being a
partnership firm is exposed to inherent risk of the partner's
capital being withdrawn at time of personal contingency and firm
being dissolved upon the death/retirement/insolvency of the
partners. Moreover, partnership firm business has restricted
avenues to raise capital which could prove a hindrance to its
growth.
Key Rating Strengths
* Experience of the partner for more than one decade in Poultry
business: SSP was established as partnership firm in the year 2018
by Mr. Sudhakar Rao and his family members. Mr. Sudhakar Rao
(Managing Partner) has more than one decade of experience in the
poultry business. Due to long term experience of promoter in same
field may expected to help the firm in developing business in near
future.
* Financial closure yet to be achieved and more than 85% of the
project completed: The partners of the firm are setting up a unit
for farming of egg laying poultry birds with total estimate cost of
the project is INR6.50 crore which is likely to be funded through
bank term loan of INR4.00 crore and remaining INR2.50 crore from
promoter's funds. Till date the firm has incurred INR5.75 crore
(88.46%) towards land and building and construction from the
partners' capital of INR3.25 crore and term loan of INR2.50 crore.
The firm is planning to start commercial operations from May 2020.
* Stable demand outlook of poultry products: Poultry products like
eggs have large consumption across the country in the form of
bakery products, cakes, biscuits and different types of food dishes
in home and restaurants. The demand has been driven by the rapidly
changing food habits of the average Indian consumer, dictated by
the lifestyle changes in the urban and semi-urban regions of the
country. The demands for poultry products are sustainable and
accordingly, the kind of industry is relatively insulated from the
economic cycle.
Sri Sai Poultry (SSP) was established on December13, 2018 by Mr.
B.Sudhakar Rao (Managing Partner), Mr.B.Ram Prasad (Parnter) and
Mr.B.Lakshman Prasad (Parnter). The firm plans to take up farming
of egg, laying poultry birds (chickens) and trading of eggs, cull
birds and their manure. The firm plans to sells its products such
as eggs and cull birds to retailers through own sales personnel as
well as through dealers.
SANGAMESHWAR DALL: CRISIL Moves B on INR7cr Loan to NonCooperating
------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Sangameshwar
Dall Mill (SDM) to 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SDM for obtaining
information through letters and emails dated February 29, 2020 and
March 19, 2020 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 SDM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SDM 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 SDM to 'CRISIL B/Stable Issuer not cooperating'.
Established in 1991 as a partnership between Mr Jagdishprasad Shah
and his family, SDM processes pigeon pea at its facility in Vasad,
Gujarat, with installed capacity of 300 tonne per day.
SANGHAVI JEWEL: CARE Maintains 'D' Debt Ratings in Not Cooperating
------------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sanghavi
Jewel Pvt Ltd. (SJPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 78.71 CARE D; Issuer Not Cooperating;
Facilities– Based on best available
Fund Based information
Short term Bank 1.00 CARE D; Issuer Not Cooperating;
Facilities– Based on best available
Non Fund Based information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SJPL to monitor the ratings
vide e-mail communications dated January 20, 2020, February 28,
2020, March 17, 2020 and March 18, 2020 and numerous phone calls.
However, despite our 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 best available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating. The rating on
Sanghavi Jewel Private Limited 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).
Detailed description of the key rating drivers
At the time of the last rating on August 6, 2019, the following
were the rating strengths and weaknesses.
Key Rating Weakness
* Delays in servicing of debt obligations: There have been
instances of delays as reported by the company and confirmed by the
lender.
Sanghavi Jewel Pvt Ltd. (SJPL) is a part of the Sanghavi Group,
headed by Mr. Jayesh Sanghavi who is the Managing Director.
Sanghavi Exports International Pvt Ltd (SEIPL) (rated CARE D; Non
co-operation), the flagship company of the group, holds 91.02%
shares in SJPL. SEIPL is engaged in the processing of rough
diamonds and export of cut and polished diamonds. SJPL is engaged
in the manufacturing and export of studded gold, silver and
platinum jewellery using polished diamonds, precious and other
semi-precious stones. In FY18 top two destinations (United States
of America and Hong Kong) contributed to approx. 84% of the net
sales. Gold is purchased mainly from Bank of India under the gold
loan scheme. SJPL has its factory at SEEPZ, Mumbai.
SEAM INDUSTRIES: CARE Reaffirms 'D' Rating on INR38.37cr Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Seam
Industries Limited (SEAM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term bank 38.37 CARE D; Issuer not cooperating,
facilities Rating reaffirmed; Based on
best available information
Short term bank 30.00 CARE D/CARE D; Issuer not
facilities cooperating, Rating reaffirmed;
Based on best available
information
Detailed Rationale & Key Rating Drivers
SEAM has not paid the surveillance fees as well as not submitted
the information for the rating exercise agreed to in its Rating
Agreement. In line with the extant SEBI guidelines, CARE's rating
on SEAM's 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).
Detailed description of the key rating drivers
Based on the due diligence carried out, the company is under
liquidation.
At the time of last rating on March 18, 2019, the following were
the rating weaknesses:
Key Rating Weaknesses
* Ongoing delays in debt servicing (including LC devolvements and
overdrawals in cash credit account): Based on the due diligence
carried out, there have been continous LC devolvements as well as
overdrawals in the cash credit account. This is mainly on account
of the continued stress in the liquidity position.
Seam Industries Ltd (SEAM) was incorporated as a backward
integration unit to help its parent Sunil Hi-Tech Engineers Limited
(SHEL) to consolidate its fabrication and installation know-how in
the power sector. SIL is a subsidiary of SHEL, which holds 88.61%
(as on March 31, 2018), while the rest is held by promoters of
Sunil HiTech in their individual capacity. SEAM is engaged in the
manufacturing of pressure parts used by power plants, petrochemical
plants, sugar industry and heavy engineering industry. SEAM
primarily undertakes fabrication related to pressure parts, IBR
(Indian Boiler Regulations) certified piping systems. Besides, that
it also undertakes fabrication of tanks, cooling coils, trays and
jackets, distillation columns and volumetric condensers. SEAM
operates out of two units located in Nagpur with a combined area of
1,50,000 sq. meters and covered sheds of 11,800 sq. metres. The two
units have a consolidated installed capacity of fabrication of
24,000 metric tonnes per annum (MTPA) of structures, 4,000 MTPA of
piping and 5,000 MTPA of carbon piping and allied works. The major
power clients of SEAM are BHEL, Reliance Infrastructure, Dossan
Chennai Works Pvt Ltd, etc.
SHANTAI EXIM: CARE Withdraws 'C/A4' Ratings on Bank Facilities
--------------------------------------------------------------
CARE has reviewed the ratings assigned to the bank facilities of
Shantai Exim Limited (SEL) to CARE C; Stable/CARE A4 and has
simultaneously withdrawn it, with immediate effect. The ratings
assigned to the bank facilities of SEL factor in its declining and
modest scale of operations along with net losses booked, leveraged
capital structure and weak debt coverage indicators during FY19
(FY; refers to the period April 1 to March 31). The ratings,
further, continue to remain constrained on account of its presence
in highly fragmented textile industry as well as susceptibility of
profit margins to fluctuations in raw material prices.
The ratings, however, continue to derive strength from experienced
promoters and location advantage.
The ratings withdrawal is at the request of SEL and 'No Objection
Certificate' received from the bank that has extended the
facilities rated by CARE.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Declining and modest scale of operations with net losses booked
during FY19: During FY19, scale of operation of SEL remained
modest and decreased by 66.51% y-o-y and remained at INR17.56 crore
as compared to INR52.43 crore during FY18. Profitability of SEL as
marked by PBILDT remained moderate at INR5.84 crore in FY19 as
against INR8.40 crore in FY18. Consequent to a decrease in scale of
operations coupled with an increase in interest expenses during
FY19, SEL continued to book booked net losses to the tune of
INR3.75 crore as against net losses of INR0.34 crore during FY18.
* Leveraged capital structure and weak debt coverage indicators:
The capital structure of SEL continued to remain leveraged marked
by an overall gearing of 4.93 times as on March 31, 2019 as
compared to 3.41 times as on March 31, 2018. As on March 31, 2019,
the debt coverage indicators of SEL marked by total debt to gross
cash accruals (TDGCA) continued to remain weak owing to cash losses
booked in FY19 as compared to 145.33 years as on March 31, 2018.
Also, interest coverage remained weak at 0.64 times during FY19 as
against 1.06 times during FY18.
* Presence in highly fragmented textile industry as well as
susceptibility of profit margins to fluctuations in the raw
material prices: The Indian textile industry is highly fragmented
in nature with presence of large number of organized as well as
unorganized players into the processing of fabric. SEL being into
fabric processing segment faces high degree of competition from
numerous other players in textile market. Further, SEL has limited
presence in the textile value chain as it is engaged in the
business of processing of fabric only. The price of key raw
material, i.e. yarn, has been volatile in nature and therefore cost
base remains exposed to any adverse price fluctuations in the
prices of raw materials.
Key Rating Strengths
* Experienced promoters along with location advantage: Key
promoters of SEL have more than three decades of experience in the
same industry and hence are well versed with the textile business.
Further, the manufacturing facility of the company is situated in
Surat (Gujarat) which is considered to be one of the textile hubs
of the country resulting in advantages derived from easy
availability of raw material, power, labour and lower logistics
expenditure.
Shantai Exim Limited (SEL) was incorporated on December 15, 2004 as
a private limited company by Mr. Harish F. Sawlani, Mr. Vasudev F.
Sawlani and Mr. Kiran N. Doshi. SEL is jointly managed by Mr.
Harish F. Sawlani, Mr. Vasudev F. Sawlani and Mr. Kiran N. Doshi.
SEL procures greige fabric from local market and gets the fabric
processed on job work basis. The activities outsourced on job work
basis include dyeing, printing, embroidery, pleating, crushing,
stamping, foiling, coding etc. However, stitching, garmenting and
final packaging of the products are done at SEL's facility. The
company has a capacity of 20 Lakh Meters per Month as on March 31,
2018 for processing of fabric at its sole processing unit located
in Surat (Gujarat).
SHASHWAT POWER: CRISIL Migrates B+ Debt Ratings to Not Cooperating
------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shashwat Power
(I) LLP (Shashwat) to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 6 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Bank
Guarantee 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 4 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with Shashwat for
obtaining information through letters and emails dated January 31,
2020 and February 19, 2020 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 Shashwat, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on Shashwat
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 Shashwat to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Set up in July 2016, Shashwat executes electrical projects on 100%
turnkey basis for orders received from electricity distribution and
transmission companies across India. The firm is promoted by Mr
Solipuram Venkat Reddy, Mr Hanumanmal Nakhat, and Mr Yogesh
Nakhat.
SHIVANI CONSTRUCTION: CRISIL Moves B Debt Rating to Not Cooperating
-------------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shivani
Construction - Sarguja (SCS) to 'CRISIL B/Stable/CRISIL A4 Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 5 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 1.5 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SCS for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 SCS, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SCS 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 SCS to 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
SC, based in Sarguja, Chhattisgarh, undertakes civil construction
projects.
SUPER DISCO: CRISIL Migrates 'B+' Debt Ratings to Not Cooperating
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Super Disco
Ispat Private Limited (SDIPL) to 'CRISIL B+/Stable/CRISIL A4 Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 4 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Letter of Credit 2 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Bank 2 CRISIL B+/Stable (ISSUER NOT
Guarantee COOPERATING; Rating Migrated)
Proposed Cash 8 CRISIL B+/Stable (ISSUER NOT
Credit Limit COOPERATING; Rating Migrated)
Proposed Letter 4 CRISIL A4 (ISSUER NOT
of Credit COOPERATING; Rating Migrated)
Proposed Term 2 CRISIL B+/Stable (ISSUER NOT
Loan COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SDIPL for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 SDIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SDIPL 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 SDIPL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Incorporated in 1997, SDIPL, promoted by Mr Vijay Mittal and Mrs
Anita Mittal, manufactures roofing sheets and trades in different
type of roofing sheets of steel and iron such as poly carbonate,
FRP profile sheets and pencil profile sheets.
UMA EXPORTS: CRISIL Migrates 'B' Debt Ratings to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Uma Exports
(UE) to 'CRISIL B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Foreign Bill 2 CRISIL B/Stable (ISSUER NOT
Discounting COOPERATING; Rating Migrated)
Packing Credit 6 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with UE for obtaining
information through letters and emails dated January 31, 2020 and
February 19, 2020 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 UE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on UE 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 UE to 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
Set up in 1975, UE is a partnership firm of Mr Rakesh Agarwal and
Ms Mamta Agarwal. The firm trades in hardware and bathroom fittings
and exports to Russia, Dubai, Malaysia, the UK, Qatar, and
Germany.
VENKATA SAI: CRISIL Assigns B+ Rating to INR6cr Loans
-----------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Venkata Sai Industries (VSI).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4 CRISIL B+/Stable (Assigned)
Long Term Loan 2 CRISIL B+/Stable (Assigned)
The rating reflects VSI's susceptibility to climatic conditions and
volatility in raw material prices, and modest scale of operations.
These weaknesses are partially offset by the extensive experience
of the partners in paddy milling industry and comfortable debt
protection metrics.
Key Rating Drivers & Detailed Description
Weaknesses:
* Susceptibility to climatic conditions and volatility in raw
material prices: The crop yield of agricultural commodities is
dependent on adequate and timely monsoon. Thus, VSI is exposed to
the risk of limited availability of its key raw material during a
weak monsoon. Also, production may be impacted by pests or crop
infection leading to higher unpredictability in production and
pricing of agri-commodities and derived products.
* Modest scale of operations: VSI's business profile is
constrained by its modest scale of operations in the intensely
competitive agriculture industry. Revenue, estimated at a modest
INR17.00 crore for fiscal 2020, will continue to limit its
operating flexibility.
Strengths:
* Extensive experience of the partners: The partners' experience
of over 40 years in trading and milling of paddy, their
understanding of the dynamics of the market, and healthy
relationships with suppliers and customers will continue to support
the business.
* Comfortable debt protection: Debt protection measures have been
comfortable despite leverage due to moderate profitability. The
interest coverage and net cash accrual to total debt ratios are
estimated at 1.92 times and 0.10 time, respectively, for fiscal
2020. The debt metrics are expected to remain at similar level over
the medium term.
Liquidity Stretched
Cash accrual, expected at INR0.60 crore over the medium term should
comfortably cover term debt obligation of INR0.27 crore and support
liquidity. However, bank limit utilisation is high at around 98.45%
for the 12 months through February 2020. Current ratio is estimated
at a moderate 1.28 times as on March 31, 2020.
Outlook: Stable
CRISIL believes VSI will continue to benefit from the extensive
experience of its partners, and healthy relationships with
clients.
Rating Sensitivity factors
Upward factors
* Improvement in scale of operations by 40% and stable operating
margin, leading to higher cash accruals
* Expansion in financial risk profile
Downward factors
* Decline in net cash accrual to below INR0.40 crore on account of
fall in revenue or operating profits.
* Stretch in working capital cycle weakening the financial risk
profile and liquidity.
Established in 2016, VSI is a Hyderabad based partnership firm
engaged in milling of paddy. Mr Hari Krishna, and family are the
partners Its facility is located in Nalgonda.
VTP CORP: CARE Lowers Rating on INR41.96cr LT Loan to D
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of VTP
Corporation LLP (VTPLLP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 41.96 CARE D Revised from CARE BB;
Facilities Stable
Detailed Rationale & Key Rating Drivers
The rating revision to the long term bank facilities of VTPLLP
takes into account instances of delays in servicing interest
obligations on the term loan rated by CARE.
Rating Sensitivities
Positive Factors
* Regularization of debt servicing with a default free track record
of minimum 90 days.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Mismatch in cash flow resulting in delays in servicing term loan
obligations: The firm's liquidity has been stretched on account of
slower than expected customer advances from the booked units along
with few cancellations of unregistered units. This led to erratic
cash flows leading to delay in servicing interest obligations of
the term loan as reflected in the term loan account statements of
the company.
Liquidity: Poor
Liquidity is marked by tightly matched accruals to debt
obligations.
VTP Corporation LLP (VTPLLP) was established in March 2011 as a
special purpose vehicle (SPV) constituted by the promoters of the
VTP Group to execute two real estate projects. VTP LLP is formed by
promoters Vilas Kumar Palresha (24% stake as on March 31, 2017),
Bhushan Vilas Palresha (20%), Nilesh Vilas Palresha (20%), Dheeraj
Maleneni (18%), Manoj Maleneni. The firm is currently executing two
projects in Pune, namely 'VTP Purvanchal' at Wagholi location
admeasuring 7.21 lsf and 'KP Sqauare' at Chinchwad, Pune
admeasuring 0.73 lsf. The day-to-day affairs of the firm are looked
after by Mr. Vilas Palresha, aged 61 years and his two sons Mr.
Bhushan Palresha and Mr. Nilesh Palresha with Mr. Dheeraj Maleneni
and his brother Mr. Manoj Maleneni being partners in the form of
investors.
[*] INDIA: Cash-Tight Shadow Lenders Face New Turmoil
-----------------------------------------------------
Reuters reports that India's banks are freezing credit lines to
shadow lenders as the coronavirus crisis shuts down commerce in
Asia's third-largest economy, but leaving this sector in the lurch
risks wider financial contagion.
All major state-owned and private banks have stopped lending to
non-banking financial companies (NBFCs) due to concerns about their
financial health as businesses they lend to reel from the impact of
the pandemic, four industry executives, who asked not to be named
due to the sensitivity of the situation, told Reuters.
This has led to a working capital squeeze for many NBFCs who
account for nearly a fifth of overall lending as they struggle to
meet operating costs, Reuters states. Their debt collections have
dried up amid a 40-day nationwide lockdown to rein in the
respiratory illness that has claimed over 500 lives.
"For now, we've taken salary cuts of up to 75% across the board so
that we can stretch the capital for a couple more months, but if
things continue like this we are considering winding up our
operations," Reuters quotes the founder of a small NBFC that lends
to small and medium enterprises as saying.
A report by India Ratings this month said NBFCs are more exposed to
bad debt as they tend to lend to riskier clients, often those
likely the hardest hit by the virus lockdown, Reuters says.
According to Reuters, non-bank lenders have faced much tougher
market conditions since the collapse in late 2018 of Infrastructure
Leasing & Financial Services (IL&FS), a major shadow bank. Securing
credit has become more expensive for all but the top-rated
players.
There are nearly 10,000 non-bank lenders in India out of which the
top 100 manage at least 80% of the total assets under management,
said Krishnan Sitaraman, senior director of rating agency Crisil,
Reuters relays.
Adding to the squeeze on NBFCs, the Reserve Bank of India (RBI)
last month allowed banks and finance companies to offer their
borrowers a moratorium on loans for three months to tide over the
current crisis, according to Reuters.
Most NBFCs have not been able to benefit from this as the final
decision on which borrowers can delay loan repayments rests with
banks, but they have extended debt moratoriums to their borrowers
who mainly fall in the self-employed category and have seen their
businesses affected by the lockdown, Reuters says.
=================
S I N G A P O R E
=================
SINGAPORE: Oil Traders Face Credit Crunch After Hin Leong Fiasco
----------------------------------------------------------------
The Financial Times reports that the collapse of one of Singapore's
biggest oil traders has raised the prospect of a severe liquidity
crunch in the city-state's under-pressure commodities sector,
threatening a wave of defaults and bankruptcies.
According to the FT, investors and analysts warn that banks are
likely to cut their exposure to the industry after heavily indebted
oil trader Hin Leong Trading filed for bankruptcy protection. The
company has admitted to $800 million in undisclosed losses and is
the subject of a police investigation.
It is the second Singapore commodities trader to run into financial
difficulties in recent weeks as the coronavirus pandemic pummels
crude oil demand and prices, the report FT says.
"The key question is whether the big trading companies that rely on
massive balance sheets can survive at these commodity prices," said
the founder of one macro hedge fund in Hong Kong, the FT relays.
"We will probably see a big consolidation where only the top three
or four trading firms survive."
Banks both in Singapore and overseas have significant exposure to
the city-state's commodities sector.
The FT says Hin Leong owes about $3.85 billion to more than 20
lenders, including $600 million to HSBC. Of Singapore's three
largest banks - DBS, UOB and OCBC - 5 per cent of their loan books
is exposed to the energy sector, which includes commodities trading
as well as support services such as oil rig maintenance. The trio
are owed a total of more than $600 million.
The FT relates that OCBC said its exposure to the oil and gas
sector had been "relatively stable" the past few quarters and that
it continued to "proactively monitor" its credit portfolio for
signs of weakness. It added it had "set aside allowances for this
sector".
DBS said it continued to support its long-term clients, the report
relays.
According to the FT, Jean-Francois Lambert, an industry consultant
and former trade finance banker at HSBC, said the fallout from the
Hin Leong scandal would result in lenders curtailing their exposure
to all but the biggest traders. "Their reaction will be a flight to
quality and quite restrictive on everything else," he said.
Singapore's de facto central bank on April 21 urged lenders not to
"indiscriminately" exit its oil industry. But banks are
"definitely" considering cutting exposure to the oil and gas
industry, said Jonathan Cornish, head of Asia Pacific bank ratings
at Fitch Ratings.
Those lenders that do not pull back from the industry entirely may
require more collateral, have loans refinanced elsewhere or adjust
their risk pricing in an attempt to manage their exposure, the FT
relates. "All those options are on the table right now,"
Mr. Cornish said.
The FT notes that the withdrawal of commercial bank credit would
threaten the business model of oil traders in the city-state, which
rely on high doses of leverage to boost razor-thin margins.
"Trading companies need leverage and for that they need cheap
financing," the FT quotes Soo Cheon Lee, chief investment officer
at Hong Kong-based investment firm SC Lowy, as saying. "If
[interest payments] go up to double digits, it doesn't make sense
to be involved in this business." Those that did not have
sufficient cash balances could be forced to liquidate, he said.
Hin Leong's disclosures have rocked Singapore's business community
at a time when south-east Asia's main commodities trading hub has
also been hit by a soaring rate of coronavirus infections, the
report states. Prior to the outbreak of Covid-19, the economy had
been buffeted by the impact of the US-China trade war.
DBS in a recent note predicted that Singapore faced its "worst
recession ever on record," according to the FT. Peter Lee, senior
oil and gas analyst at Fitch Solutions, added: "More lay-offs and
announcements of bankruptcies certainly look possible."
Other analysts said the commodities industry around the globe was
likely to face a similar reckoning due to the coronavirus crisis,
adds the FT.
"The lockdowns across the world are disastrous for the oil sector,"
the report quotes Richard Gorry, managing director at consultancy
JBC Energy Asia, as saying. "We are in unknown water here."
===============
X X X X X X X X
===============
[*] ASIA: Banks Spurn Commodity Traders in Credit Squeeze
---------------------------------------------------------
Alfred Cang, Serene Cheong, and Andy Hoffman at Bloomberg News
report that bankers are increasingly reluctant to give commodity
traders in Asia the credit they need to survive as the lenders grow
ever more fearful about the risk of a catastrophic default.
Their anxiety has reached new heights in recent days as fabled
Singapore oil trader Hin Leong Trading (Pte.) Ltd. struggles to
repay debts said to amount to almost $4 billion, Bloomberg says.
And that's just weeks after another commodities firm in the
city-state, Agritrade International Pte, collapsed after a unit
defaulted on its loans.
It could be a bumper time for commodity traders as the huge swings
in prices prompted by the coronavirus crisis create the sort of
volatility on which they thrive, says Bloomberg.
But unless they've got the deep pockets and credit history of a
trading powerhouse like Trafigura Group or Vitol Group, they face
being frozen out of the market by risk-averse bankers demanding
crippling terms or refusing to lend to them altogether, Bloomberg
notes.
"Only large trading houses are able to play with such a market and
cope with the underlying risks," Bloomberg quotes Jean-Francois
Lambert, an industry consultant and former trade finance banker at
HSBC Holdings Plc, as saying. "Banks are tightening their exposures
on every front. With regard to commodity trading, their reaction is
to fly for quality and be quite restrictive on everything else."
According to Bloomberg, trade financing and access to capital are
the lifeblood of the traditionally high-volume, low-margin business
of trading commodities. Letters of credit are a critical part of
that infrastructure.
A bank issues the so-called L/C on behalf of the buyer as a
guarantee of payment to the seller. Once the goods have exchanged
hands, the buyer repays the lender.
But traders of everything from zinc to oil interviewed by Bloomberg
said their bankers were pulling back from short-term financing.
Lenders are asking for more collateral, financing costs have jumped
and in some cases the banks are simply refusing to issue letters of
credit altogether to some smaller companies, according to the
traders, who asked not to be identified because they're not
authorized to speak publicly, Bloomberg relays.
That's echoed by lenders themselves, with at least four telling
Bloomberg that they were reducing their exposure to commodities by
cutting short-term loans to some clients and only lending to the
biggest traders.
And while this remains an Asian problem for now, there's growing
consternation that it could spread to the U.S. or Europe.
According to Bloomberg, Saad Rahim, the chief economist of trading
giant Trafigura, said a global tightening of credit across all
sectors is a looming threat.
"We have been talking about this as a series of cascading waves.
First the virus, then the economic and then potentially the credit
side of it," Rahim said in an interview from Geneva, Bloomberg
relays.
According to Bloomberg, the tightening of credit is another example
of the extraordinary impact that the coronavirus is having on
global commodity markets, from crude oil to copper. Measures to
contain the pandemic are hammering demand for raw materials,
throwing supply chains into chaos and forcing producers to shut
down mines, refineries and processing plants.
Bloomberg says the disruptions are putting unprecedented strain on
the companies that extract, produce and process commodities,
triggering defaults and even bankruptcies as prices plunge. And
traders may find themselves with products they can't sell or
stockpiled material that's plunged in value.
The risks in such circumstances are manifold. Tighter liquidity can
constrain traders' ability to meet margin calls and pay their loans
while they also face the prospect of a counterparty failing, Mr.
Lambert, as cited by Bloomberg, said.
For many banks, the danger that clients may be caught out is
proving too great. Some have more than doubled the rate at which
they'll lend, according to the traders and lenders interviewed by
Bloomberg.
In the case of Hin Leong, where it emerged on April 19 the fuel-oil
trader hid about $800 million in losses from futures trading, it
appears the company sold oil inventories used as collateral,
potentially leaving lenders without their security, Bloomberg
notes.
According to Bloomberg, banks were already pulling back from
commodities in Asia before the chaos triggered by coronavirus. Over
the past few years the industry has been rocked by a number of
high-profile collapses and scandals, including multi-million dollar
losses by some major Chinese and Japanese traders, and the
spectacular downfall of Noble Group, one of the biggest names in
the industry.
"Lenders are bound to be cautious as commodity traders face a
triple whammy of increased price volatility, supply chain
disruptions and counterparty risks," Bloomberg quotes Soo Cheon
Lee, chief investment officer at SC Lowy, a global banking and
asset management group in Hong Kong, as saying. "We're expecting
the near-term disruption on their earnings as a result."
*********
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-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
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