/raid1/www/Hosts/bankrupt/TCRAP_Public/200525.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, May 25, 2020, Vol. 23, No. 104
Headlines
A U S T R A L I A
A.D. ENGINEERING: First Creditors' Meeting Set for May 29
KAYLAH PTY: First Creditors' Meeting Set for June 3
KIRWAN TRAINING: Second Creditors' Meeting Set for May 29
MOSMAN ENTERPRISES: First Creditors' Meeting Set for June 1
ORGANIC DAIRY: Taps Worrells Solvency as Voluntary Administrators
SETTLERS COMPANY: Second Creditors' Meeting Set for May 29
SOUTHWEST REALTY: Second Creditors' Meeting Set for June 1
TEX ASSETS: Second Creditors' Meeting Set for May 29
THINK TALENT: First Creditors' Meeting Set for June 1
WESFARMERS LIMITED: To Close or Convert Up 167 Target Stores
C H I N A
BAOFENG GROUP: Faces Delisting After Failure to File Annual Report
LUCKIN COFFEE: Credit Suisse Seeks to Wind Up Chair's Family Trust
I N D I A
ANJANI COTTON: CARE Cuts INR20.12cr Loan Rating to 'B', Not Coop.
ANNA BHAU: CARE Cuts Rating on INR11.85cr LT Loan to 'D', Not Coop.
ANNAI JEWELLERS: Ind-Ra Cuts LT Issuer Rating to 'BB+', Not Coop.
DUAL RINGS: CARE Cuts INR7.0cr LT Loan Rating to B+, Not Coop.
DUGGAR FIBER: CARE Lowers Rating on INR10.30cr LT Loan to 'D'
FLEXPACK FIBC: CARE Cuts INR9.0cr LT Loan Rating to 'B-', Not Coop.
GHAN MARINE: CARE Cuts Rating on INR10cr LT Loan to 'B', Not Coop.
GREEN VATIKA: CARE Keeps D INR6.0cr Debt Rating in Not Cooperating
GYANKUND TRUST: Ind-Ra Keeps D Bank Loan Rating in Non-Cooperating
INDUS PROJECTS: Ind-Ra Affirms 'D' Long Term Issuer Rating
INFRES METHODEX: Ind-Ra Cuts Issuer Rating to BB+, Outlook Stable
JAI GURUDEV: CARE Cuts Rating on INR8.21cr LT Loan to B-, Not Coop.
JINDAL WOOD: Ind-Ra Lowers Long Term Issuer Rating to 'D'
KSM EDUCATIONAL: Ind-Ra Keeps D Bank Loan Rating in NonCooperating
NAGABHUSHANAM & CO: Ind-Ra Moves 'B-' Rating to Non-Cooperating
NANDI VARDHANA: CARE Keeps D Debt Ratings in Not Cooperating
POPULAR AUTO: CARE Cuts Rating on INR10cr LT Loan to 'C', Not Coop.
PRAKASH PLASTIC: CARE Keeps 'D' Debt Ratings in Not Cooperating
PRAYAG POLYTECH: CARE Cuts INR219cr Loan to 'D', Not Coop.
RADHA KRISHNA: CARE Cuts INR7.30cr LT Loan Rating to B-, Not Coop.
RAJVIR INDUSTRIES: CARE Keeps D Debt Ratings in Not Cooperating
RELIANCE COMM: Ambani Ordered to Pay $700MM+ to 3 Chinese Banks
SAFFRON MET: CARE Cuts Rating on INR9.75cr LT Loan to B, Not Coop.
SARASWATI EDUCATIONAL: Ind-Ra Moves 'D' Rating to Non-Cooperating
SARNA MARBLES: CARE Keeps D INR25cr Debt Rating in Not Cooperating
SHANKAR PARVATI: CARE Cuts Rating on INR6.0cr Loan to B, Not Coop.
SHIVANGAN SPINNER: CARE Cuts INR4.65cr Loan Rating to B, Not Coop.
SHREE DULICHAND: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
SHREEYA PEANUTS: CARE Keeps B+ Debt Ratings in Not Cooperating
SHRI GURU: CARE Lowers Rating on INR20cr LT Loan to B-, Not Coop.
SREE HARI: CARE Lowers Rating on INR12cr LT Loan to 'B', Not Coop.
SREE VARASIDHI: CARE Lowers INR5.40cr Loan Rating to B, Not Coop.
SRINIVASAN CHARITABLE: Ind-Ra Keeps 'D' Rating in Non-Cooperating
SRINIVASAN HEALTH: Ind-Ra Keeps 'D' Loan Rating in Non-Cooperating
SUBHANG CAPSAS: CARE Cuts INR5.46cr Loan Rating to 'B', Not Coop.
SUN SHINE: CARE Cuts Rating on INR10cr Loan to 'B', Not Cooperating
SURYA MANUFACTURING: CARE Cuts Rating on INR24cr LT Loan to 'D'
VIDHATA INDUSTRIES: CARE Keeps B+ INR10cr Debt Rating in Not Coop.
J A P A N
MITSUBISHI HEAVY: Plans to Slash Workforce at Regional Jet Unit
NISSAN MOTOR: Mulls to Cut More Than 20,000 Jobs in Europe
N E W Z E A L A N D
SMITHS CITY: Placed Into Receivership to Hasten Sale
S I N G A P O R E
HYFLUX LTD: Clarifies Report in Middle Eastern Media on Utico
V I E T N A M
VIETNAM: S&P Affirms 'BB/B' Sov. Credit Ratings, Outlook Stable
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A U S T R A L I A
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A.D. ENGINEERING: First Creditors' Meeting Set for May 29
---------------------------------------------------------
A first meeting of the creditors in the proceedings of A.D.
Engineering International Pty Ltd will be held on May 29, 2020, at
10:30 a.m. via virtual meeting.
Shaun William Boyle of BRI Ferrier was appointed as administrator
of A.D. Engineering on May 20, 2020.
KAYLAH PTY: First Creditors' Meeting Set for June 3
---------------------------------------------------
A first meeting of the creditors in the proceedings of Kaylah Pty
Ltd, trading as Ricbuilt Heavy Industries & Wadeville Woolies &
Wadeville Woolies NSW, will be held on June 3, 2020, at 11:00 a.m.
via telephone.
Francis Jude O'Neill and David Michael Stimpson of SV Partners were
appointed as administrators of Kaylah Pty on May 22, 2020.
KIRWAN TRAINING: Second Creditors' Meeting Set for May 29
---------------------------------------------------------
A second meeting of creditors in the proceedings of Kirwan Training
Pty Ltd and Tex Onsite Pty Ltd has been set for May 29, 2020, at
12:30 p.m. at the offices of Hamilton Murphy, Level 1, at 255 Mary
Street, in Richmond, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by May 28, 2020, at 4:00 p.m.
Stephen Robert Dixon and and Richard Trygve Rohrt of Hamilton
Murphy were appointed as administrators of Kirwan Training on Dec.
16, 2019.
MOSMAN ENTERPRISES: First Creditors' Meeting Set for June 1
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Mosman
Enterprises Pty Ltd, trading as Fat Albert Cafe and Punchbowl Cafe,
will be held on June 1, 2020, at 12:00 p.m. at the offices of
Hamilton Murphy, Level 1, at 255 Mary Street, in Richmond,
Victoria.
Stephen Robert Dixon of Hamilton Murphy was appointed as
administrator of Mosman Enterprises on May 20, 2020.
ORGANIC DAIRY: Taps Worrells Solvency as Voluntary Administrators
-----------------------------------------------------------------
Scott Andersen and Ivan Glavas of Worrells Solvency and Forensic
Accountants were appointed voluntary administrators of Organic
Dairy Farmers of Australia Limited (ODFA) May 15, 2020.
Established in 2002 as a co-operative, today ODFA remains 100%
owned by more than 40 family farmers who supply fresh, organic milk
from three main dairy regions of Victoria, as well as central, and
North-West Tasmania.
ODFA is the largest producer of Certified Organic milk in
Australia, and operates from headquarters located at 62-66 Cowie
Street in North Geelong, Victoria. Worrells advises that all ODFA
operations are trading and all employees are continuing in their
respective roles.
"The appointment follows a range of external pressures. In
particular, ODFA recruited farmers and their milk supply into the
co-op, as part of their vertical integration strategy," Worrells
said in a statement.
"This growth strategy had a strong focus on exports to China
through key customer partnerships. The combination of a contracting
Chinese market, delayed sales, and now the impact of COVID-19, saw
the directors of ODFA take the prudent measure of appointing
Worrells, to facilitate a structured and transparent approach, to
work through the current business challenges.
"Worrells appreciates and understands the impact the appointment
will have on the organisation and its members (farmers and
shareholders), employees, service providers, customers, business
partners, the dairy and organic industries, as well as the broader
community.
"Worrells advises the administration is still in its infancy and
its teams are working hard to assess and determine all aspects of
ODFA's operations. All relevant and known stakeholders have been
notified of ODFA's position, provided with all relevant information
and had their questions responded to."
Mr. Andersen said, "Our goal, together with the co-operative's
directors, management and members, is to ensure that this integral
and unique business continues to deliver its exceptional produce to
Australians, and to the international market.
"We understand the enormous value and potential for the co-op. We
have a robust strategy to turnaround its predicament for long-term
viability and success."
ODFA farms are Australian Certified Organic, with many also Chinese
Certified. They comply with a strict set of standards. They do not
use synthetic or artificially produced pesticides, herbicides,
fertilisers or GMOs. Their cows are fed predominantly on pasture
that is completely GMO free. The farmers have a genuine concern
about the long-term health of the land and the welfare of their
herds. This results in ‘happy cows and remarkable tasting milk
and dairy products'.
The administrators are considering all available options for the
continuation of ODFA's operations and to minimise disruption and
impact on stakeholders. Parties interested in discussing options
for the acquisition or continuation of ODFA's operations are
invited to contact the Worrells Geelong office on
geelong@worrells.net.au or (03) 5222 7624.
Worrells assert that the objectives of the voluntary administration
regime allow businesses to address issues and if possible--with
creditor approval--return it to a healthy trading prospect.
Under the voluntary administration process, a first meeting of
creditors is held within eight business days of the appointment,
and a second meeting of creditors is usually held within 20 to 30
business days, when creditors of ODFA will determine the future for
the business.
The first meeting of creditors has been scheduled for May 27, 2020.
Notice of the meeting has been issued to all creditors. Worrells
will continue to proactively communicate with all impacted parties
at each step in the administration.
SETTLERS COMPANY: Second Creditors' Meeting Set for May 29
----------------------------------------------------------
A second meeting of creditors in the proceedings of Settlers
Company Pty Limited and Settlers Operations Pty Limited has been
set for May 29, 2020, at 11:30 a.m. via virtual meeting.
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 May 27, 2020, at 4:00 p.m.
Damien Hodgkinson of Dem Asia Group was appointed as administrator
of Settlers Company on Aug. 26, 2019.
SOUTHWEST REALTY: Second Creditors' Meeting Set for June 1
----------------------------------------------------------
A second meeting of creditors in the proceedings of Southwest
Realty Pty Ltd, trading as Raine & Horne Fairfield, has been set
for June 1, 2020, at 10:00 a.m. via Teleconference facilities
only.
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 May 29, 2020, at 5:00 p.m.
Brent Kijurina and Richard Albarran of Hall Chadwick were appointed
as administrators of Southwest Realty on April 27, 2020.
TEX ASSETS: Second Creditors' Meeting Set for May 29
----------------------------------------------------
A second meeting of creditors in the proceedings of Tex Assets Pty
Ltd, Tex High Voltage Pty Ltd, and Orion Safety Pty Ltd, has been
set for May 29, 2020, at 11:00 a.m. at the offices of Hamilton
Murphy, Level 1, at 255 Mary Street, in Richmond, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by May 28, 2020, at 4:00 p.m.
Stephen Robert Dixon and and Richard Trygve Rohrt of Hamilton
Murphy were appointed as administrators of Tex Assets et al. on
Dec. 16, 2019.
THINK TALENT: First Creditors' Meeting Set for June 1
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Think Talent
Pty Ltd ATF Think Talent Unit Trust will be held on June 1, 2020,
at 2:30 p.m. at the offices of Hamilton Murphy, Level 1, at 255
Mary Street, in Richmond, Victoria.
Stephen Dixon and Leigh Dudman of Hamilton Murphy were appointed as
administrators of Think Talent on May 20, 2020.
WESFARMERS LIMITED: To Close or Convert Up 167 Target Stores
------------------------------------------------------------
Matthew Elmas at SmartCompany reports that Wesfarmers Limited has
unveiled a mammoth restructuring of troubled department store
Target which will see up to 167 of its stores either closed or
converted to sister brand Kmart.
SmartCompany says the downsizing will leave Target a shadow of its
former self as the Perth-based conglomerate's chief executive Robb
Scott looks to find a place for the brand in Australia's
fast-changing retail landscape.
Under the plan, between 122-167 of about 285 Target stores across
Australia will either close or be converted to Kmart by the end of
2021, SmartCompany relates.
Kmart will be significantly expanded under the move, poised to gain
as many as 92 new locations.
According to SmartCompany, Target's support office will also be
scaled back significantly, raising the spectre of job losses at the
struggling business, although Wesfarmers said it will try to
redeploy staff.
In a statement circulated on May 22, Mr. Scott suggested Target was
not poised to deal with disruption in the retail sector and must be
restructured into a viable business.
"The actions announced reflect our continued focus on investing in
Kmart, a business with a compelling customer offer and strong
competitive advantages, while also improving the viability of
Target by addressing some of its structural challenges by
simplifying the business model," the report quotes Mr. Scott as
saying.
Wesfarmers will book AUD120-170 million in restructuring costs from
the closures, inventory write-offs and further cuts to Target's
support office, while taking a AUD430–480 million non-cash
impairment on Target's brand and other assets, SmartCompany says.
SmartCompany relates that the restructuring will see Target Country
closed entirely, with 52 such stores expected to be converted to
small Kmart locations and a further 50 to be shutdown.
Between 10-40 large format Target stores will become Kmart
locations, subject to landlord support, while between 10-25 other
stores will be shut down.
According to the report, Target has long been Wesfarmers weakest
retail brand and has struggled to generate consistent earnings
growth over the last decade amid structural changes in the retail
sector and the introduction of new competitors such as H&M, Zara
and Uniqlo.
These changes have hit all legacy department store businesses,
including Myer and David Jones, hard in recent years, with Target's
sister brand Kmart emerging as the only success story with its
command over cheap products, the report notes.
Wesfarmers has previously shaved parts of Target's portfolio off to
Kmart, but the announcement on May 22 is the largest such shift the
conglomerate has ever embarked on, adds SmartCompany.
Target is a discount department store retailer in Australia.
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C H I N A
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BAOFENG GROUP: Faces Delisting After Failure to File Annual Report
------------------------------------------------------------------
Wang Juanjuan and Denise Jia at Caixin Global report that another
popular Chinese online video service provider, Baofeng Group Co.
Ltd., faces the risk of being delisted in Shenzhen after failing to
file its annual report on time.
Baofeng would be following in the footsteps of rival Leshi Internet
Information & Technology Corp., which is being delisted by the
Shenzhen Stock Exchange, Caixin says. The bourse gave notice May 20
of an investigation into suspected violation of information
disclosure rules, Baofeng said.
If the company fails to file its 2019 annual report by June 30, its
stock will be suspended and could be delisted a month later if it
still hasn't filed the report by then, according to the exchange's
rules, Caixin says.
Caixin notes that Baofeng has been in trouble for the past two
years. Its President Feng Xin was taken into police custody last
summer on bribery allegations. Almost all staff have left the
company since, the report states.
According to Caixin, Baofeng, which had ambitions of competing with
rival sports media platform LeSports, has been haunted by
operational and financial challenges as it struggles to manage
fallout from its involvement in a high-profile and ill-fated
acquisition of British firm MP & Silva Holding SA.
LeSports' operator Leshi will be delisted June 5 from the Shenzhen
Stock Exchange after three consecutive years of losses and
suspension of trading for a year, the report adds.
Baofeng Group Co., Ltd. offers online audio and video entertainment
services. The Company provides a movie player, game website, video
download converter, and other network entertainment tools.
LUCKIN COFFEE: Credit Suisse Seeks to Wind Up Chair's Family Trust
------------------------------------------------------------------
Bloomberg News reports that lenders led by Credit Suisse Group AG
have targeted the family assets of Luckin Coffee Inc. Chairman Lu
Zhengyao as they try to recoup losses on more than $500 million in
soured margin loans.
Credit Suisse is seeking a court order to appoint liquidators for
Haode Investment Inc., according to a notice in the BVI Gazette on
May 21. Haode, controlled by Lu's family trust, defaulted on loans
backed by Luckin shares in April, according to a statement from
lenders last month.
Bloomberg says the liquidation request adds to a long list of
challenges facing Lu, who became a billionaire after his
fast-growing Chinese coffee chain went public in the U.S. with help
from some of the biggest names on Wall Street. Much of Lu's wealth
has been wiped out by a 92% plunge in Luckin's stock since April,
when the company disclosed that some of its employees may have
fabricated billions of yuan in sales.
According to Bloomberg, Luckin's fall from grace has made it a
poster child for concerns about Chinese corporate governance,
fueling a debate in Washington over the extent to which U.S. money
and capital markets should be made accessible to firms from a
growing geopolitical rival. Bloomberg notes that Nasdaq Inc. plans
to delist Luckin's stock, while the U.S. Senate approved
legislation on May 20 that could lead to some Chinese companies
being barred from American exchanges.
Bloomberg relates that Lu said in a statement on May 20 that he's
"deeply disappointed" Nasdaq is moving to delist Luckin before the
company releases final results of an internal probe into its
accounting. Regulators in the U.S. and China are also investigating
the coffee chain, while Luckin bondholders have secured a freeze on
$160.7 million in assets, according to a May 11 filing in Hong
Kong, the report relays.
Banks that participated in the loan facility to Lu's investment
vehicle signaled in April that they plan to sell Luckin shares that
were pledged as collateral, Bloomberg recalls. It's unclear whether
the banks have started offloading the shares or how much money
they'll be able to recoup.
Credit Suisse and Morgan Stanley each put up about $100 million as
part of the loan facility, while China's Haitong International
Securities Group lent about $140 million, Bloomberg reported last
month, citing a person familiar with the matter. Other banks
involved include Barclays Plc, Goldman Sachs Group Inc. and China
International Capital Corp.
Lu's investment vehicle has disputed that it's in default and has
requested an injunction against Credit Suisse in Hong Kong to
prevent the bank from commencing liquidation proceedings, according
to a May 6 court filing cited by Bloomberg.
Few banks have seen a bigger fallout from the Luckin saga than
Credit Suisse, which was the lead underwriter for Luckin's initial
public offering, a secondary share sale in January and a $460
million issuance of convertible bonds, Bloomberg states.
Bloomberg says the bank lost a high-profile Hong Kong IPO in the
wake of the scandal and reported a five-fold increase in loan-loss
provisions at its Asia Pacific unit, primarily due to the Luckin
margin loans. The bank is conducting a review of the case, and
scrutiny on loans to Chinese companies has increased, according to
people familiar with the matter who declined to be named discussing
private matters. China is core to Credit Suisse's strategy to win
business from rich entrepreneurs across Asia.
The Swiss bank, which is acting as an agent for the loan facility,
filed the liquidation request to the Eastern Caribbean Supreme
Court, High Court of Justice, in the British Virgin Islands on
April 23, Bloomberg discloses citing the BVI Gazette notice. A
hearing is scheduled for June 8.
About Luckin Coffee
Based in China, Luckin Coffee Inc. (NASDAQ: LK) --
https://www.luckincoffee.com/ --- has pioneered a technology-driven
retail network to provide coffee and other products of high
quality, high affordability, and high convenience to customers.
Empowered by big data analytics, AI, and proprietary technologies,
the Company pursues its mission to be part of everyone's everyday
life, starting with coffee.
As reported in the Troubled Company Reporter-Asia Pacific on April
7, 2020, China Daily said that Luckin Coffee Inc, the so-called
rival to Starbucks in China, has exposed itself to the risks of
delisting and even bankruptcy due to severe fabrication of sales
data, experts said.
China Daily related that the Nasdaq-listed Chinese coffee chain saw
its share price crash more than 75 percent to $6.40 on April 2
after the company disclosed that its earnings results were
substantially inflated. It dropped nearly 15 percent more in the
first two hours of trading on April 3.
Liu Jian, chief operating officer and a director of the company,
and several employees reporting to him, had engaged in misconduct,
including fabricating transactions, a company statement said on
April 2.
The aggregate sales associated with fabricated transactions amount
to around CNY2.2 billion (US$310 million) during the April to
December period last year, according to Luckin's preliminary
internal investigation, the statement said.
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I N D I A
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ANJANI COTTON: CARE Cuts INR20.12cr Loan Rating to 'B', Not Coop.
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Anjani Cotton Industries (ACI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 20.12 CARE B; Issuer Not Cooperating;
Facilities Revised from CARE B+; on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated May 30, 2019, placed the
rating(s) of ACI under the 'issuer non-cooperating' category as ACI
had failed to provide information for monitoring of the rating. ACI
continues to be noncooperative despite repeated requests for
submission of information through e-mails, phone calls and a
letter/email dated April 22, 2020, April 23, 2020, April 24, 2020
and April 28, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while
using the above rating(s).
The rating assigned to the bank facilities of ACI have been revised
on account of non-availability of requisite information. The
ratings factored in moderate scale of operations with thin profit
margins, moderate capital structure and moderate debt coverage
indicators during FY16 (refers to period of April 01 to March 31).
Further, the rating also continues to remain constrained on account
of its partnership nature of constitution, presence in highly
fragmented cotton ginning industry and susceptible to fluctuations
in cotton prices and seasonal procurement resulting in working
capital intensive nature of operations. However, Rating derives
strength from Extensive experience of promoters in cotton ginning
and pressing business and proximity to cotton-producing region of
Gujarat.
Detailed description of the key rating drivers
At the time of last rating on May 30, 2019 the following were the
rating strengths and weaknesses:
Key Rating Weaknesses
* Moderate scale of operations with thin profitability: Total
operating income (TOI) of ACI has shown a declining trend marked by
decline of 37.6% in TOI in FY16 over FY15. Its scale of operations
remained at INR97.93 crore in FY16. the profitability also remained
thin owing to its low value added nature of business marked by
PBILDT margin and PAT margin of 2.20% and 0.29% respectively.
* Moderate capital structure and weak debt coverage indicators:
As on March 31, 2016, capital structure of the firm remained
moderate marked by overall gearing ratio of 1.56x as against 1.35x
as on March 31, 2015. Debt coverage indicators have continued to
remain weak on back of thin profitability marked by total debt to
GCA ratio and interest coverage ratio remained at 23.02 years and
1.64x during FY16 respectively as against 18.97 years and 1.64x
during FY15.
* Partnership nature of constitution: Being a partnership firm
ACI is exposed to inherent risk of the partners' capital being
withdrawn at the time of contingency and also limits the ability to
raise the capital.
* Presence in highly fragmented cotton ginning industry and
susceptible to fluctuations in cotton prices: Cotton ginning
business involves very limited value addition and is highly
dominated by small and medium scale units resulting in highly
fragmented nature of industry. Also, cotton prices in India are
regulated through fixation of Minimum Support Price (MSP) by the
government. Further, price of raw cotton is highly volatile in
nature and depends upon factors like area under production, yield
for the year.
* Seasonal procurement resulting in working capital intensive
nature of operations: Cotton being an agro commodity is seasonal
in nature, where sowing season is normally during March to July and
harvesting season is during November to February every year. Also
the cotton ginners usually have to procure raw cotton in bulk to
bargain better discount from the suppliers. Hence, there is
significant requirement for working capital funds especially during
the peak season towards stocking of inventory.
Key Rating Strengths
* Extensive experience of promoters in cotton ginning and pressing
business: Started in 1999, ACI has established track record in
cotton industry. ACI is managed by four partners, Mr Rajeshkumar
Ghodasara, Mr. Ashvin Kasundra and other two partners i.e. Mr.
Kirti Ghodasara and Mr. Piyush Saradava. All are holding healthy
experience in the same line of business.
* Proximity to cotton-producing region of Gujarat: Raw cotton is
the key input required for ginning & pressing activities. ACI's
plant is located in the cotton growing region which is the largest
producer of raw cotton in India. Due to its proximity to the
cotton-growing region of Gujarat, raw cotton is readily available
at lower logistic expenditure.
Wankaner, Gujarat based – Anjani Cotton Industries (ACI) was
setup in 1999 as partnership firm and is currently managed by four
partners. The firm is engaged in cotton ginning and pressing
business with 60 ginning and 1 pressing machine. It has installed
capacity of 19,950 Metric Tonne (MT) of cotton bales and 34,900 MT
of cotton seeds as on March 31, 2016 at its sole manufacturing
plant located at Wankaner, Gujarat.
ANNA BHAU: CARE Cuts Rating on INR11.85cr LT Loan to 'D', Not Coop.
-------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Anna
Bhau Ajara Taluka Shetkari Sahkari Soot Girni Limited (ABGL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 11.85 CARE D; Stable; Issuer Not
Facilities Cooperating Revised from
CARE BB-; Stable; on the basis
of best available information
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated January 16, 2019, placed the
rating of ABGL under the 'issuer non-cooperating' category as ABGL
had failed to provide information for monitoring of the rating as
agreed to in its Rating Agreement. ABGL continues to be
non-cooperative despite repeated requests for submission of
information through email dated April 16, 2020, April 24, 2020,
April 28, 2020 and numerous phone calls. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating takes into account the on-going delays
in the repayment of debt obligation.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in debt servicing obligations: As per the interaction with
the banker, there are on-going delays in the repayment of the
term loan and the account has been classified as SMA2.
ABGL is a co-operative society established in October 1979,
promoted by Mr. Amogh Wagh in the strength of General Manager.
There are over 17 members in the society. The society is engaged in
the business of cotton spinning with its sole manufacturing unit
located at Ajara, Maharashtra with the products sold under the
brand name 'Ajara Spin'. The society is an open end spinning unit
and consists of twenty one ring frame machines having production
capacity of 25,000 kg of yarn per day and manufactures yarn with
the range of 24 to 32 counts of cotton yarn.
ANNAI JEWELLERS: Ind-Ra Cuts LT Issuer Rating to 'BB+', Not Coop.
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Annai Jewellers'
Long-Term Issuer Rating to 'IND BB+' from 'IND BBB-' and has
simultaneously migrated the rating to the non-cooperating category.
The Outlook was Stable. The issuer did not participate in the
surveillance exercise despite continuous requests and follow-ups by
the agency. Thus, the rating is based on the best available
information. Therefore, investors and other users are advised to
take appropriate caution while using the ratings.
The instrument-wise rating actions are:
-- INR130 mil. Fund-based working capital limits downgraded and
migrated to non-cooperating category with IND BB+ (ISSUER NOT
COOPERATING) / IND A4+ (ISSUER NOT COOPERATING) rating; and
-- INR20 mil. Proposed fund-based working capital limits
downgraded and migrated to non-cooperating category with
Provisional IND BB+ (ISSUER NOT COOPERATING) / Provisional
IND A4+ (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
the best available information
KEY RATING DRIVERS
The downgrade reflects lower financial transparency, with the
non-availability of financials in the public domain. Furthermore,
Ind-Ra expects the overall retail jewelry sector's sales to decline
by 25% in FY21 owing to the COVID-19-related lockdown and an
overall reduction in disposable income.
Annai Jewellers did not participate in the surveillance exercise
and has not provided information such as audited financials,
interim financials, the projections for the next five years,
utilization reports, and key details required for the surveillance
exercise.
COMPANY PROFILE
Annai Jewellers was set up as a partnership firm at Tuticorin
(Tamil Nadu) in 1991. The firm is engaged in the retailing of gold
jewelry, silver and silver articles, diamond, and platinum
ornaments.
DUAL RINGS: CARE Cuts INR7.0cr LT Loan Rating to B+, Not Coop.
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Dual
Rings Private Limited (DRPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.00 CARE B+; Stable; Issuer Not
Facilities Cooperating Revised from
CARE BB-; Stable; on the basis
of best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 15, 2019, placed the
rating(s) of DRPL under the 'issuer non-cooperating' category as
DRPL had failed to provide information for monitoring of the
rating. DRPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and an e-mail communications/letters dated from October 2019 to
April 23, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
The revision in the ratings assigned to the bank facilities of Dual
Rings Private Limited (DRPL) takes into account of decline in
profitability margins and deterioration of debt coverage
indicators. The rating continues to be tempered by leveraged
capital structure, working capital intensive nature of operations
and highly fragmented industry with intense competition from large
number of players. The ratings however underpinned by established
track record and long experience of promoters in the steel industry
and stable outlook of steel industry.
Key Rating Weakness
* Small scale of operations: The TOI company remained small at
Rs.43.77 crore in FY19 and net worth stood at Rs.5.47 crore as on
March 31,2019 as compared to other peers of industry.
* Leveraged capital structure and weak debt coverage indicators:
The debt coverage indicators of the company remained weak marked by
Total debt/GCA is which is marginally deteriorated from 11.63x in
FY18 to 12.40x in FY19. The interest coverage of the company
moderate and stood at 1.80. Total debt/CFO significantly improved
from 17.30x in FY18 to 4.54x in FY19.
* Working capital intensive nature of operations: The operating
cycle stood at 40 days in FY19.
* Highly fragmented industry with intense competition from large
number of players: DRPL faces stiff competition in the industry
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 steel and metal in the country enables well for the
company.
Key Rating Strengths
* Established track record and long experience of promoters in the
steel industry: DRPL was started its business in 1991 by Mr.
Ramachandra Rao and Mr. Malahala Rao. Mr. Ramachandra Rao is
qualified in M.Tech. He is the Managing Director of the company who
takes care of day to day operations and has close to two decades of
experience in the manufacturing of industrial components since
inception of the business. The other Director also well qualified
and has close to two decades of experience in the industry. The
company has established good relationship with suppliers and
customers due to established track record and presence in the
business for a longer period of time.
* Increased in total operating income FY19: The TOI of the company
increased from INR39.10 crore in FY18 to INR43.77 crore in FY19.
* Satisfactory profitability margins although declining: The
PBILDT margin of the company has marginally declined from 8.30%
inFY18 to 8.26% in FY19. Further the PAT margin of the company has
also declined from 1.37% in FY18 to 0.51% in FY19.
* Stable outlook for Steel industry: The growth in Indian steel
demand lagged much behind expectations due to subdue environment in
infrastructure and Real Estate Company. However, on back of various
initiatives taken by the government coupled by expected turnaround
in real estate and infrastructure sector, outlook of steel demand
is expected to remain stable for the medium term. For
the next two years, India's steel consumption is forecasted to grow
annually by about 5%–6%. Indian steel capacity is also expected
to grow about 125mt in 2017, registering a growth of 8.8%. Further,
the Government of India has floated a target to produce 300mt by
2025–26.
Hyderabad based, Dual Rings Private Limited (DRPL) was incorporated
in 1991 as a Private Limited Company by Mr. Ramachandra Rao and Mr.
Malahala Rao. The company is engaged in the manufacturing of Forged
Components and Rolled Components such as Forged Rings, Bearings,
Wheel Space, Hexagon Nuts, and Machined Components etc. for the use
of various industrial requirements like Automobile industry. The
company purchases raw material like steel, alloy, metal and iron
from suppliers located in Telangana and Maharashtra states. The
company manufactures and sells its final product to the customers
located in Tamilnadu and Maharashtra. The current installed
capacity for the manufacturing of industrial components is 250
metric tons per month.
DUGGAR FIBER: CARE Lowers Rating on INR10.30cr LT Loan to 'D'
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Duggar Fiber Private Limited (DFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.30 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE BB-; Stable;
Issuer not cooperating on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 19, 2019, placed
the rating(s) of DFPL under the 'issuer non-cooperating' category
as DFPL had failed to provide information for monitoring of the
rating. DFPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter dated April 21, 2020. 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.
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
The rating has been revised on account of stretched liquidity due
to elongated operating cycle and taking cognizance of reported
delays in the past as per the audit report for FY19 (refers to the
period from April 1 to March 31) in repayment of dues to the
lenders (not rated by CARE). The rating action is based on the best
available information (audited financials from Ministry of
Corporate Affairs) and our inability to assess any improvement in
the liquidity in absence of any feedback from the lender.
At the time of last rating on February 19, 2019, the following were
the rating strengths and weaknesses (updated for the
information available from Ministry of Corporate Affairs):
Key Rating Weaknesses
* Modest scale of operations: The scale of operations though
increased continues to remain modest marked by a total operating
income and gross cash accruals of INR68.70 cr (PY: Rs .97.74 crore)
and (PY: INR0.66 crore) respectively in FY19.
* Low profitability margins, leveraged capital structure and weak
coverage indicators: Profitability margins of the company have been
historically on the lower side owing to low value addition, intense
market competition and fragmented nature of industry. The company
reported PBILDT and PAT margin of 4.07% and 0.79% respectively for
FY19 as against 2.79% and 0.25%, respectively for FY18. The overall
gearing stood at 0.53x as on March 31, 2019 (0.60x as on March 31,
2018). Further, the interest coverage and total debt to gross cash
accruals stood at 1.73x and 16.05x respectively for FY19 against
1.46x and 25.47x respectively for FY18.
* Working capital intensive nature of operations: The company has
working capital intensive nature of operations as reflected by
elongated operating cycle, which further deteriorated to 96 days in
FY19 (PY: 64 days). Being a highly competitive business and low
bargaining powers with its customers, resulted into average credit
period of 123 days in FY19(PY: 76 days) in comparison to an average
creditor period of 90 days(PY: 52 days). The company had to
maintain adequate inventory levels to carry out its production
activities uninterruptedly. The same resulted into average
inventory of around 62 days for FY19 (PY: 39 days).
* Presence in a highly fragmented and competitive industry: The
spectrum of the steel industry in which the company operates is
highly fragmented and competitive marked by the presence of
numerous players in India. Hence, the players in the industry do
not have any pricing power and are exposed to competition induced
pressures on profitability. This apart, its product being
intermediary steel products is subjected to the risks associated
with the industry like cyclicality and price volatility.
Key Rating Strengths
* Experienced management with long track record of operations:
DFPL, having commenced operation in the year 1980 has a long track
record of being engaged in trading and manufacturing of steel and
iron products for around four decades. The present management
comprises of Mr. Purushottam Kr. Gupta, Mr. Ashok Chauhan and Mr.
Sachdev Sharma, they collectively looks after the overall affairs
of the company and has experience of more than three decades in the
iron & steel industry.
Delhi based Duggar Fiber Pvt. Ltd. (DFPL) was incorporated in
December 1980 by Mr Radhey Shyam Agrawal and Mr. Rajendra Kr
Agrawal. The company is currently being managed by Mr Purshottam Kr
Gupta, Mr Ashok Chauhan and Mr. Sahdev Sharma. DFPL is engaged in
manufacturing and trading of iron & steel products i.e. mild steel
(MS) ingots. The manufacturing facility of the company is located
at SMA Industrial area in Delhi.
FLEXPACK FIBC: CARE Cuts INR9.0cr LT Loan Rating to 'B-', Not Coop.
-------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Flexpack FIBC (FPF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.00 CARE B-; Issuer Not Cooperating;
Facilities Revised from CARE B; on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 12, 2019, placed the
rating(s) of FPF under the 'issuer noncooperating' category as FPF
had failed to provide information for monitoring of the rating. FPF
continues to be noncooperative despite repeated requests for
submission of information through e-mails, phone calls and a
letter/email dated April 22, 2020, April 23, 2020, April 24, 2020
and April 27, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating assigned to the bank facilities of RCC have been revised
on account of non-availability of requisite information. The
ratings factored in project implementation and stabilization risk,
presence in highly competitive and fragmented industry,
proprietorship nature of constitution, raw material price
volatility risk and high bargaining power of suppliers coupled with
foreign exchange fluctuation risk. However, Rating derives strength
from experienced proprietor.
Detailed description of the key rating drivers
At the time of last rating on March 12, 2019 the following were the
rating strengths and weaknesses:
Key Rating Weaknesses
* Proprietorship nature of constitution: The constitution as a
proprietorship firm restricts FPF's overall financial flexibility
as there is inherent risk of withdrawal of capital by proprietor in
times of personal contingency.
* Project implementation and stabilization risk: FPF has been
setting up a project to manufacture plastic packaging products and
water-proofing sheets with proposed installed capacity of 1800 MT
per annum. The total capital cost was INR12.98 crore, the firm had
incurred cost of only INR2.50 crore (19.26% of total project cost)
till July 31, 2016 while balance was proposed to be incurred till
February 2017. The financial closure was pending. With the given
funding mix, project gearing stands at 2.20 times. Further, post
project implementation risk towards quick stabilization of the
manufacturing facilities to achieve the envisaged scale of business
persists.
* Presence in highly competitive and fragmented industry: The
Indian FIBC industry is dominated by players operating in the small
and medium scale sector, resulting in high fragmentation and
intense competition. Furthermore, due to low product
differentiation and value addition, the industry is highly
competitive with price being the key differentiating factor.
Furthermore, majority of PP products find application in cement,
agro commodities and fertilizer industries; thereby its future
growth prospects are directly linked to the growth of end user
industries.
* Raw material price volatility risk and high bargaining power of
suppliers coupled with foreign exchange fluctuation risk: The
prices of inputs like PP/HDPE polypropylene granules and chips,
polyethylene resin, polyester, adhesives, chemicals are derivatives
of crude oil. Hence, any adverse fluctuation in the crude oil
prices is likely to impact the profitability margins of FPF.
Furthermore, the market is seller dominated as there are limited
producers of HDPE, PP or LDPE which restricts the bargaining power
of the buyers. Also, as the firm is going to import some of the raw
materials and export majority of its products, it is subject to
foreign exchange fluctuation risk.
Key Rating Strengths
* Experienced proprietor: The proprietor of FPF, Mr. Vinayak
Sheshrao Sanap is a Bachelor of Engineering (Instrumentation) and
has an experience of more than 15 years in the FIBC industry
through companies such as Flexituff International Limited. Overall,
the promoter of the firm has vast experience in the plastic
packaging industry, which will assist FPF in establishing customer
base.
Silvassa-based FPF is a proprietorship firm, established in 2016 by
the proprietor Mr Vinayak Sheshrao Sanap. The entity is currently
undertaking a greenfield project with proposed installed capacity
of 1,800 MT of plastic tapes per annum to manufacture Polypropylene
(PP)/ High-density polyethylene (HDPE) yarn, container liners,
tarpaulin sheets, plastic woven sacks, Flexible Intermediate Bulk
Containers (FIBC's) like bulk bags and jumbo bags which are used as
plastic packaging products for transportation and storage of goods
as well as utilized for water-proofing purposes. The products
manufactured by FPF would find application primarily in industries
like construction, agriculture and food-packaging. The total
project cost was estimated at INR12.98 crore which is to be funded
through proposed debt-equity mix of 2.20 times. While, FPF would
purchase PP/HDPE granules from local players or import them, it
will export majority of the finished goods to U.S.A and various
European and Latin American countries via dealers or direct sales
agents under the brand name of "Flexpack". Also, its group entity
Flexpack, established in October 2015 is into similar line of
business.
GHAN MARINE: CARE Cuts Rating on INR10cr LT Loan to 'B', Not Coop.
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Ghan
Marine Products (GMP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 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 had, vide its press release dated February 28, 2019, placed
the rating(s) of GMP under the 'issuer non-cooperating' category as
GMP had failed to provide information for monitoring of the rating.
GMP continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and an
e-mail communications/letters dated from October 2019 to April,
2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on February 28, 2019 the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Moderate Capital Structure and debt coverage indicators: The
debt equity and overall gearing ratio of the firm deteriorated from
0.03x and 0.97x respectively, as on March 31, 2016 to 0.12x and
1.16x respectively as on March 31, 2017 due to increase in debt
level on account of enhancement in working capital bank borrowing
coupled with decrease in tangible net worth. The PBILDT interest
coverage ratio decline from 3.52x in FY16 to 2.42x in FY17 due to
increase in interest cost. However, the total debt/GCA marginally
improved from 8.65x in FY16 to 8.20x in FY17 due to increased gross
cash accruals.
* Competitive nature of industry coupled with regulatory risk and
seasonality associated with seafood industry: Fish procurement is
seasonal, with the fishing season lasting from September to May;
hence, the company has to stock fish for export during the off
season, thus increasing its inventory levels. Apart from
seasonality, adverse climate conditions, lack of quality feed,
rampant diseases continue to pose risk in the raw material
procurement. Furthermore, due to limited value addition nature of
business and less technological input entry barriers are low. As a
result, processed sea food industry is highly competitive with the
presence of a large number of Indian players as well as players
from other international market. Furthermore, exports of sea food
is highly regulated, as exporters of sea food have to meet various
regulations imposed by importing nations as well as imposed by the
Indian government.
* Constitution of the entity as a Partnership firm with inherent
risk of withdrawal of capital and limited access to funding:
Constitution as a partnership firm has the inherent risk of
possibility of withdrawal of the partner's capital at the time of
personal contingency which can adversely affect its capital
structure. Furthermore, partnership firms have restricted access to
external borrowings as credit worthiness of the partners would be
key factors affecting credit decision for the lenders.
Key Rating Strengths
* Reasonable track record and experience of the partner for three
decades in sea food industry: Ghan Marine Products was established
in the year 2011, currently promoted by Mr. S Venkateswara Rao
(Managing Partner) and Ms. S Ganga Bhavani (spouse of Mr. S
Venkateswara Rao). The managing partner has three decades of
experience in sea food industry. He is also the proprietor of M/s
SVR Cold Storage, the firm is engaged in trading of ice, the
clientele of the firm includes companies engaged in process of sea
food business. Due to long term presence in the market, the
managing partner has good relations with suppliers and customers.
* Growth in total operating income and improved profitability
margins albeit thin PAT margin during review period: The total
operating income of the firm grew year on year from INR41.81 crore
in FY16 to INR73.94 Crore in FY17 representing growth of 76.85% due
to increase in repeat orders from existing customers coupled with
increase in demand for shrimps. Furthermore, the firm has achieved
sales of INR79 crore during 10MFY18. The PBILDT margin of the firm
increased from 3.71% in FY16 to 4.16% in FY17 due to increase in
export of shrimps as compared to fishes where profitability margins
are relatively low. Despite of increase in interest cost the PAT
margin of the firm increased from 0.96% in FY16 to 1.19% in FY17
due to increase in PBILDT absolute terms.
* Comfortable operating cycle: GMP has moderate operating cycle.
The operating cycle of the firm increased from 55 days in FY16 (A)
to 67 days in FY17 due to increase in average inventory days from
54 days in FY16 (A) to 64 days in FY 17 The average collection
period increased from 11 days to 18 days. Further, the firm is
required to maintain the average inventory level of 30-60 days due
to seasonal availability and to meet customers' requirements on
time.
* Plant located in aquaculture zone: The plant location of the
firm is located in aquaculture Zone near the coastal area of Andhra
Pradesh, which enables the firm to procure raw materials and
process them immediately after harvest. This results in better
quality product as well as lowers the transportation costs.
Ghan Marine Products (GMP) was established in the year 2011 and
reconstituted in the year 2015. The firm is currently promoted by
Mr S Venkateswara Rao and his spouse Ms. S Ganga Bhavani. The firm
is engaged in processing, packing and export of shrimp and fishes
to various places like Vietnam, China, Japan and Thailand. The
product profile of the company includes ribbon fish, Mackerel, and
Pudding fish. The firm has the certification of Marine Products
Export Development Authority (MPEDA) for its export activities.
GREEN VATIKA: CARE Keeps D INR6.0cr Debt Rating in Not Cooperating
------------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Green
Vatika Constructions Private Limited (GVCPL) continues to remain in
the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 6.00 CARE D; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from GVCPL to monitor the rating
vide e-mail communications/letters dated April 7, 2020, April 09,
2020 and April 13, 2020 and numerous phone calls. However, despite
our repeated requests, the entity 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 GVCPL'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.
Detailed description of the key rating drivers
At the time of last rating in February 05, 2019 the following were
the rating weaknesses:
Key Rating Weakness
* Delay in debt servicing: There was a delay in term debt servicing
of the company owing to weak liquidity position of the company.
Jharkhand based Green Vatika Constructions Pvt. Ltd. (GVCPL) was
incorporated in July 2012 by Mr. Rajesh Agarwal, Mr. Ajay Agarwal,
Mrs. Sumita Agarwal and Mrs. Sonam Agarwal. The company is engaged
in development of residential projects. The company has executed
only one residential project 'Daffodils' so far.
GYANKUND TRUST: Ind-Ra Keeps D Bank Loan Rating in Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Gyankund Trust
to Educate and to Serve's (GTTES) bank facilities' ratings in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using the ratings. The ratings will
continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the
agency's website.
The detailed rating actions are:
-- INR153.74 mil. Term loan (long-term) due on August 2024 –
February 2027 maintained in non-cooperating category with IND
D (ISSUER NOT COOPERATING) rating; and
-- INR32.5 mil. Working capital facility (long-term) maintained
in non-cooperating category with IND D (ISSUER NOT
COOPERATING) rating.
ISSUER NOT COOPERATING: The ratings were last reviewed on May 24,
2017. Ind-Ra is unable to provide an update, as the agency does not
have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2007 in Kurukshetra, GTTES manages and operates the
Technology Education & Research Integrated Institutions group of
institutes.
INDUS PROJECTS: Ind-Ra Affirms 'D' Long Term Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Indus Projects
Limited's (IPL) Long-Term Issuer Rating at 'IND D (ISSUER NOT
COOPERATING)'. The issuer did not participate in the rating
exercise, despite continuous requests and follow-ups by the agency.
Thus, the rating is based on the best available information.
The instrument-wise rating actions are:
-- INR250.0 mil. Fund-based working capital limit (Long-term) a
affirmed with IND D (ISSUER NOT COOPERATING) rating; and
-- INR636.2 mil. Non-fund-based working capital limit (Short-
term) affirmed with IND D (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
the best available information
KEY RATING DRIVERS
The affirmation reflects IPL's classification as a non-performing
asset by the lenders since June 2019.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could result in a positive rating action.
COMPANY PROFILE
IPL is engaged in the fabrication and erection of medium/heavy
capital equipment for petrochemical/oil and gas, mineral
processing, and nuclear power plants.
INFRES METHODEX: Ind-Ra Cuts Issuer Rating to BB+, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Infres Methodex
Private Limited's (IMPL) Long-Term Issuer Rating to 'IND BB+' from
'IND BBB'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR368 mil. (reduced from INR390 mil.) Non-fund-based working
capital limits downgraded with IND BB+/ Stable/IND A4+
rating; and
-- INR10 mil. Fund-based limits downgraded with IND BB+/ Stable /
IND A4+ rating.
KEY RATING DRIVERS
Continuous Decline in Revenue and EBITDA Margins: IMPL's revenue
fell around 3% YoY to INR755.71 million in FY19 (FY18: down 24%
YoY), driven by around 5% YoY decline in the revenue from the sale
of products (around 36% decline) and around 1% YoY decline in
revenue from the sale of services (around 6% decline). In FY19, the
revenue from the sale of products accounted for 47% of the total
revenue (FY18: 48%; FY17: 57%), and revenue from services accounted
for the remaining. The company derives a majority of revenue from
currency counting machines (FY19: 39.85%; FY18: 42.74%; FY17:
62.22%), followed by multi-functional devices (28.59%; 29.73%;
20.49%), document shredders (9.33%; 8.76%; 5.96%) and various other
equipment (22.23%; 18.69%; 11.33%). IMPL derives a majority of its
revenue from banks; the top eight customers, consisting only banks,
contributed around 41% to the total topline in FY19. The company
booked INR555.73 million of revenue during 9MFY20.
Ind Ra expects further deterioration in the revenue in FY21 due to
the pan-India lockdown disruptions and the overall economic
slowdown due to the COVID-19 outbreak.
The demand for currency handling machines has been declining
year-on-year post demonetization due to a reduction in cash
transactions in the economy and also due to the merger of banks
leading to the closure of many branches pan-India. Also, the demand
for office equipment is cyclical as the life of a machine is
five-six years.
Furthermore, the company's weak EBITDA margins have also been
falling consistently (FY19: 1.91%; FY18: 8.91%, FY17: 19.25%) due
to the lower fixed cost absorption on declining revenue. The
return on capital employed was 0.4% in FY19 (FY18: 6.9%;
FY17:17.9%).
Substantial Deterioration in Credit Metrics: At FYE19, the
company's debt comprised only an unsecured debt of INR30.45
million. The company's interest coverage (operating EBITDA/gross
interest expense) deteriorated to 1.88x in FY19 (FY18: 10.18x;
FY17: 27.77x) while net leverage remained negative (adjusted net
debt/operating EBITDAR) at 12.35x (negative 2.28x; negative 3.72x)
due to the high cash & cash equivalents. The deterioration in
metrics was majorly due to a decline in the absolute EBITDA on
account of lower revenue and low fixed cost absorption. The credit
metrics are likely to remain the same or further deteriorate
slightly due to a further decline in the absolute EBITDA.
Elongated Working Capital Cycle: IMPL's working capital cycle
elongated to 208 days in FY19 (FY18: 207 days) on high inventory
days, due to the requirement to stock up inventory in the latter
part of the year on account of bulk order placing.
Liquidity Position - Adequate: The company had around INR208
million of cash & cash equivalents at FYE19 (FYE18: INR188.56
million). It utilizes only non-fund-based working capital limits
and its average utilization was 53% over the 12 months ended March
2020. The fund-based limit of INR10 million remained unused during
the 12 months that ended March 2020. However, the cash flow from
operations turned negative in FY19 to INR30.63 million (INR6.67
million) due to a decline in operating profit. The company does not
have any long-term loans.
Pan-India Presence: The company's service network is spread over 80
locations in India. As a result, it is able to provide annual
maintenance services for brands such as Konica.
RATING SENSITIVITIES
Positive: A substantial increase in the EBITDA margins because of
improved fixed cost absorption owing to the ramping up of the
operations, and a corresponding improvement in the interest
coverage above 3x will be positive for the ratings.
Negative: The inability to ramp up the revenue leading to further
deterioration in the EBITDA margins could lead to negative rating
action.
COMPANY PROFILE
Incorporated in January 1987, IMPL manufactures and trades office
automation systems. It also provides technical services to
customers through annual maintenance services contracts and
supplies spare parts.
JAI GURUDEV: CARE Cuts Rating on INR8.21cr LT Loan to B-, Not Coop.
-------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Jai
Gurudev Ginning and Pressing Industries (JGGPI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 8.21 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 had, vide its press release dated March 4, 2019, placed the
rating(s) of JGGPI under the 'issuer non-cooperating' category as
Jai Gurudev Ginning and Pressing Industries had failed to provide
information for monitoring of the rating. Jai Gurudev Ginning and
Pressing Industries continues to be non-cooperative despite
repeated requests for submission of information through e-mails,
phone calls and a letter dated April 27, 2020. 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
it is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised on account of non-cooperation by JGGPI
and CARE's efforts to undertake a review of the ratings
outstanding. CARE views information availability risk as a key
factor in its assessment of credit risk.
Detailed description of the key rating drivers
At the time of last rating on March 4, 2019 the following were the
rating strengths and weaknesses:
Key Rating Weaknesses
* Modest scale of operations: JGGPI started its operations in
April 2013 and since then has achieved a CAGR of 81% till March 31,
2016. Its TOI grew by 265% y-o-y in FY16 on account of increased
orders from existing customers and new customers tied up.
* Low profitability due to nature of business: JGGPI is engaged
into cotton ginning and pressing which is the lowest end of the
value chain in the textile sector and hence operates in low profit
margins. Its PBILDT margin deteriorated by 317 bps y-o-y and stood
at 2.46% in FY16 on account of aggressive pricing adopted to tie up
new clients as well as rise in prices of raw cotton. Furthermore,
its PAT margin was low at 0.12% in FY16 (vis-à-vis 0.16% in
FY15).
* Moderate capital structure and debt protection metrics: JGGPI's
capital structure improved with overall gearing to 1.76x as on
March 31, 2016 vis-à-vis 2.42x as on March 31, 2015 on account of
accretion of profits to reserve. On account of low profit margins
as well as high reliance on WC bank borrowings, its debt coverage
indicators deteriorated with interest coverage of 1.65x in FY16
(vis-à-vis 1.95x during FY15) and total debt/cash accruals of
16.46x as on March 31, 2016 (vis-à-vis 12.15x as on March 31,
2015).
* Working capital intensive nature of operations: JGGPI's
liquidity position is moderate marked by moderately comfortable
current ratio (1.67x as on March 31, 2016), low quick ratio (0.32x)
and moderate level of utilization of its working capital limits
(Cash Credit was enhanced to INR5.00 crore and utilized at 70% over
the past 12 months ended October 2016). It maintains raw material
(cotton) inventory for adequate supply during off seasons leading
to Gross Current Assets days of nearly 50 days on an average basis.
The operations are moderately working capital intensive in nature
and net working capital as a % of capital employed was 56 percent
as on March 31, 2016. While cash flow from operating activities was
negative, the unencumbered cash & bank balance was around INR0.60
crore as on March 31, 2016.
Key rating strengths
* Experienced partners with demonstrated financial support: The key
promoters Mr. ChandrashekharThote have more than 10 years of
experience in cotton business. Further, another partner Mr.
SachinKawale also has five years of industry experience which have
helped JGGPI to bring sizeable business to the firm.
* Location advantage: Maharashtra is the second highest cotton
producing state in India and Yavatmal is major cotton growing
district in Maharashtra also known as "Cotton City". Hence, firm
gains the location advantage in terms of timely and easy
availability of raw material for ginning and pressing. Moreover,
there are large numbers of cotton yarn manufacturers in Yavatmal
region providing easy access to customers. Proximity to raw
material and customers also results in low transportation cost for
the firm.
Established in April 2013 by Mr. Chandrashekhar Thote, Mr.
SachinKawale and Mrs. SharadaThote, Jai Gurudev Ginning and
Pressing Industries (JGGPI) is engaged into cotton ginning &
pressing at its plant located at Kalambm, Yavatmal, Maharashtra
which has an annual capacity of 280 metric ton of cotton bales and
52 metric ton of cotton seeds. The manufacturing facility runs in
three shifts in a day during season which falls during October to
June and raw material (i.e. raw cotton) is sourced from local
market (farmers). The firm earns a major part of its revenue from
cotton bales (74% of total revenue in FY16 and 65% in FY15; refers
to April 1 to March 31) which is sold to traders and textile mills
and remaining is generated from sale of cotton seeds to oil mills.
JINDAL WOOD: Ind-Ra Lowers Long Term Issuer Rating to 'D'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Jindal Wood
Products Private Limited's Long-Term Issuer Rating to 'IND D' from
'IND BB- (ISSUER NOT COOPERATING)'.
The instrument-wise rating actions are:
-- INR40 mil. Fund-based limits (Long-term/Short-term) downgraded
with IND D rating; and
-- INR119.7 mil. (reduced from INR170 mil.) Non-fund-based limits
(Short-term) downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects Jindal Wood Products' delays in debt
servicing.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months will be positive for the ratings.
COMPANY PROFILE
Incorporated in 1990, Jindal Wood Products is engaged in the
trading and processing of timber logs, mainly teak and hardwood.
KSM EDUCATIONAL: Ind-Ra Keeps D Bank Loan Rating in NonCooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained KSM Educational
& Charitable Trust's bank loans' rating in the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will
continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the
agency's website.
The detailed rating action is:
-- INR65.20 mil. Bank loans (long-term) maintained in non-
cooperating category with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The rating was last reviewed on May
18, 2018. Ind-Ra is unable to provide an update as the agency does
not have adequate information to review the ratings.
COMPANY PROFILE
KSM Educational & Charitable Trust was established in 2007 and is
registered under the Indian Trust Act 1872. In 2008, it started a
college - Holy Trinity College of Education - in Kanyakumari
district. The trust also started a CBSE school named Holy Trinity
International School in the academic year 2015-2016.
NAGABHUSHANAM & CO: Ind-Ra Moves 'B-' Rating to Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Nagabhushanam &
Co's Long-Term Issuer Rating to the non-cooperating category. The
issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND
B-(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR70 mil. Fund-based working capital limit migrated to non-
cooperating category with IND B- (ISSUER NOT COOPERATING) /
IND A4 (ISSUER NOT COOPERATING) rating; and
-- INR225 mil. Non-fund-based working capital limit migrated to
non-cooperating category with IND A4 (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on May
7, 2019. Ind-Ra is unable to provide an update, as the agency does
not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2001, Nagabhushanam & Co executes civil works for
the government of Telangana such as the construction and
improvement of roads and bridges. The firm is a partnership concern
and is operated by two partners- Nagabhushana Rao and Visweswara
Rao.
NANDI VARDHANA: CARE Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Nandi
Vardhana Textiles Mills Limited (NVTML) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 24.56 CARE D; Issuer not cooperating;
Facilities on the basis of best available
information
Short-term Bank 3.40 CARE D; Issuer not cooperating;
Facilities on the basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 29, 2019, placed the
rating(s) of NVTML under the 'issuer non-cooperating' category as
NVTML had failed to provide information for monitoring of the
rating. GMP continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and an e-mail communications/letters dated from October 2019 to
April, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on March 29, 2019 the following were the
rating strengths and weaknesses:
Key rating Weaknesses
* Delays in meeting of debt obligations: The company was unable to
generate sufficient cash flows leading to strained liquidity
position resulting in delays in meeting its debt obligations on
time.
Key Rating Strengths
* Experienced promoters in the cotton ginning industry: The
promoters have been in cotton ginning and trading business for more
than a decade.
NVTML was incorporated in the year 2005 by Mr P Srinivasa Rao, Mr G
Anjaiah, Mrs P Padmavathi and the relatives of the promoters. NVTML
is engaged in the manufacturing of cotton yarn with an installed
capacity of 20,448 spindles per annum at Thimmapuram, Guntur
District, Andhra Pradesh. NVTML manufactures and supplies cotton
yarn for both domestic as well as global markets. Till FY12, a
predominant portion of the finished product was sold domestically,
while around 22% was exported to countries like Turkey, Brazil and
China.
POPULAR AUTO: CARE Cuts Rating on INR10cr LT Loan to 'C', Not Coop.
-------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Popular Auto Distributors (PAD), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE C; Stable; Issuer Not
Facilities Cooperating Revised from
CARE B; Stable; on the basis
of best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 22, 2019 placed the
rating(s) of PAD, under the 'issuer non-cooperating' category as
PAD had failed to provide information for monitoring of the
ratings. PAD continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and emails dated April 22, 2019 & April 23, 2020 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating takes into account the non-availability
of requisite information due to non-cooperation by PAD with CARE's
efforts to undertake a review of the outstanding ratings as CARE
views information availability risk as key factor in its assessment
of credit risk profile
Detailed description of the key rating drivers
At the time of last rating on February 22, 2019 the following were
the rating strengths and weaknesses:
Key Rating Weakness
* Small scale and short track record of operations with partnership
nature of entity: PAD was established in June, 2016. During its 9
months of operations, ending on March 31, 2017, it generated
revenue of Rs 30.67 crore with low net worth base of INR3.44 crore.
The small scale limits the firm's financial flexibility in times of
stress and deprives it from scale benefits. PAD, 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.
* Financial risk profile marked by thin profitability margins,
leveraged capital structure with weak debt coverage indicators:
The firm has thin profitability margins due to low bargaining power
with TVS Motors Limited as well as low value addition associated
with trading of spare parts and lubricants of two-wheeler vehicles.
The PBILDT margin of the firm for FY17 stood at 3.18% and the PAT
margin, in line with PBILDT margin stood at 1.01%. The capital
structure of the firm stood leveraged with debt profile consisting
of only working capital borrowings of INR8.28 crore, while the
tangible net worth of the firm stood at INR3.44 crore. The overall
gearing and total debt to gross cash accruals of the firm are 2.40x
and 16.61x as on March 31, 2017. The interest coverage ratio for
FY17 stood at 2.18x.
* Working capital intensive nature of business operations: PAD
purchases spares and lubricants from TVS motors against advance
payment, resulting in creditors' period during FY17. The sales to
customers are made mostly on credit basis resulting in an average
collection period of around 29 days. Due to low creditors period
and high collection period, the operating cycle remained moderate
at 39 days during FY17 despite having a low inventory period of 11
days. The firm's average working capital utilization remained high
at 90% during the last 12 months ending November, 2017. The current
ratio and the quick ratio remained moderate at 1.37x and 1.09x
owing to higher amount of short term debt as against the cash/bank
balances.
* Volume driven business with intense competition in the industry:
The automobile spare parts industry is highly competitive in nature
as there are large numbers of small to medium players operating in
the market. The demand for the spares is also subjected to the
market conditions prevailing for the two wheelers. Thus, the firm
functions on thin profitability margins in order to increase the
sale of units.
* Fortunes linked to TVS: As an authorized dealer, PAD's business
risk profile is directly linked to the terms and conditions guided
by TVS motors. The firm is not authorized to deal in spare parts of
any other two-wheeler manufacturer which further restricts its
growth prospects.
Key Rating Strengths
* Experienced promoters in auto dealership business: PAD is a part
of Popular Group which has been in the business of auto parts
dealership for over 17 years. The partners, Mr Deepak Singh Kohli
and Mr Rajesh Kumar, have about two decades of experience auto
dealership business. One of its associate concerns, Popular
Scooters Private Limited (Assigned CARE BB/Stable in August, 2017)
which is also an authorized spares parts stockiest of TVS Motors
Limited has been in the similar line of business for over 17 years
and has established its presence in automobile spare parts segment
in Tamil Nadu.
Madurai based Popular Auto Distributors (PAD) is a partnership firm
established in 2016 by its partners Mr Deepak Singh Kohli, Mr
Gobind Singh Kohli, Mr P Rajesh Kumar and Mr Assish Kumar Jain. It
is a part of Chennai based Popular Group which consists of Popular
Scooters Private Limited, Popular Motor Cycle Company, and Popular
Honda Parts. Currently, the firm is the authorized parts stockiest
of TVS Motors Limited in Madurai, Dindugal, Theni, Virudhunagar,
Sivagangai, and Ramanathapuram. The group company, Popular Scooters
Private Limited has been an authorized dealer for sale of two
wheeler spare parts and lubricants of TVS Motors Limited for over
17 years. From September, 2017, the firm has also been the
authorized dealer for Ceat Tyres Limited in Kanyakumari and
Tirunelveli. Mr. Rajesh Kumar manages day to day operations of the
firm.
PRAKASH PLASTIC: CARE Keeps 'D' Debt Ratings in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Prakash
Plastic Industries (PPI) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short- 7.50 CARE D; Issuer not cooperating;
Term Bank Based on best available
Facilities Information
Short-term 6.40 CARE D; Issuer not cooperating;
Bank Facilities Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 20, 2019, placed
the rating(s) of PPI under the 'issuer non-cooperating' category as
PPI had failed to provide information for monitoring of the rating.
PPI continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a
letter/email dated April 09, 2020, April 10, 2020 and April 13,
2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on February 13, 2019 the following was
the rating weakness:
Key Rating Weaknesses
* On-going delay in debt servicing: Owing to weak liquidity
position, there are on-going delays in debt servicing.
Dadra, Silvassa (Union Territory) based PPI was formed in March
2003 in the name of Prakash Plastic Industries by Bhimrajka family.
PPI is into the business of manufacturing of HDPE/PP Woven
Fabric/Bags. PPI is operating from its sole manufacturing plant
located in Dadra with an installed capacity of 2700 metric tonnes
per annum (MTPA) as on March 31, 2017. HDPE/PP Woven Fabric/Bags
find applications in the wide range of industry such as chemicals,
fertilizers, cement, polymers, salt, sugar, paper, textiles, flour,
food grains etc.
PRAYAG POLYTECH: CARE Cuts INR219cr Loan to 'D', Not Coop.
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Prayag Polytech Private Limited (PPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 28.11 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE B+; Stable;
Issuer not cooperating on the
basis of best available
information
Short Term Bank 219.00 CARE D; ISSUER NOT COOPERATING;
Facilities–Fund Revised from CARE A4; Issuer
Based not cooperating on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 18, 2019, placed
the ratings of PPPL under the 'issuer non-cooperating' category as
PPPL had failed to provide information for monitoring of the
rating. PPPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter dated April 21, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised on account of the ongoing delays and
the classification of account as Non-Performing Asset by the
lenders.
Detailed description of the key rating drivers
At the time of last rating on February 18, 2019, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* Working capital intensive operations with elongated collection
period: Prayag group has working capital intensive operations on
account of high collection period. During FY17 working capital
cycle stood at 116 days with collection period of 122 days.
* Leverage capital structure: On a combined basis, the combined
entity's capital structure remains leveraged as exhibited by
overall gearing of 1.86x as on March 31, 2017 (PY:1.87x) on account
of higher debt outstanding. The Total debt/GCA although improved
owing to improved profitability during FY17 but still remains high
at 9.87x as on March 31, 2017(PY:13.55x).
* Susceptibility of margins to volatility in raw material prices
and foreign exchange fluctuations: The profitability margins of
Prayag group are susceptible to fluctuations in raw material prices
as the group procures raw material in bulk quantities to save
logistics cost. Furthermore, prices of polymers, colours, additives
and pigments are volatile in nature as their prices move in tandem
with price of crude oil. As such, the profitability margins of
Prayag group remain exposed to foreign exchange fluctuation risk.
* Exposure to regulatory risk: The market for masterbatches is
driven by growth in its end user industries as well as increasing
penetration of plastic products in the market. Use of plastics is
being regulated by Ministry of Environment & Forests, Government of
India.
* Highly fragmented nature of industry: Masterbatches is a
scattered industry in India, with unorganized sector accounting for
around 50% of the industry. Furthermore, the industry is highly
competitive as it has low entry barriers.
Key Rating Strengths
* Experienced promoters: Prayag group is promoted by Mr Ravinder
Kumar Aggarwal, Mr Devender Kumar Aggarwal and their family
members. Mr Ravinder Kumar and Mr Devendra Kumar Aggarwal have more
than 35 years of experience in the corporate world.
* Long track record of operations with established market position
in the global market for masterbatches: Prayag group has been
engaged in manufacturing of masterbatches since 1996 and over the
years have increased its scale of operations with expansion of its
production capacity. Furthermore, Prayag group is one of the
largest manufacturers and exporters of masterbatches from India.
The group has been catering to the export market for more than 10
years and has established its presence across the world.
Prayag Polytech Private Limited (PPPL) is promoted by Mr. Ravinder
Kumar Aggarwal, Mr. Devender Kumar Aggarwal and their family
members. The company was incorporated in August, 1982 under the
name of R.B.M. Internationals Private Limited. The name of the
company was changed to Prayag Polytech Private Limited on June 27,
1994. The company is engaged in manufacturing and export of
masterbatches, which are available in granular form, are used for
coloring and enhancing properties of plastics by mixing them with
raw polymer during the plastic manufacturing process.
RADHA KRISHNA: CARE Cuts INR7.30cr LT Loan Rating to B-, Not Coop.
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Radha Krishna Agro Products (RKAP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.30 CARE B-; Stable; Issuer Not
Facilities Cooperating Revised from
CARE BB-; Stable; on the basis
of best available information
Short-term Bank 0.32 CARE A4; ISSUER NOT
Facilities COOPERATING; Based on best
Available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from RKAP to monitor the ratings
vide letters/emails dated April 28, 2020, April 30, 2020, May 4,
2020 and numerous phone calls. However, despite CARE's repeated
requests, the entity 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 RKAP's bank facilities will
now be denoted as 'CARE B-; Stable; ISSUER NOT COOPERATING and 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.
The revision in the rating takes into account the non- availability
of information and no due diligence conducted due to non-
cooperation by RKAP with CARE's efforts to undertake a review of
the outstanding ratings.
Detailed description of the key rating drivers
At the time of last rating on February 22, 2019 the following were
the rating weaknesses and strength.
Key Rating Weaknesses
* Small scale of operations with low profitability margins: RKAP
is a relatively small player in the rice milling industry with
total operating income of INR40.31 crore (Rs.37.40 crore in FY16)
and PAT of INR0.07 crore (Rs.0. 06 crore in FY16) in FY17. Further,
the net worth base and total capital employed was low at INR3.55
crore and INR8.28 crore, respectively, as on March 31, 2017. The
firm has reported total operating income of INR40.37 crore in
11MFY18. Furthermore, the profitability margins of the firm
remained low marked by PBILDT of 2.38% (2.85% in FY16) and PAT
margin of 0.18% (0.17% in FY16) in FY17.
* Volatile agro-commodity (paddy) prices with linkages to vagaries
of the monsoon: RKAP is primarily engaged in the processing of
rice products in its rice mills. Paddy is mainly a 'kharif' crop
and is cultivated from June-July to September-October and the peak
arrival of crop at major trading centers begins in October. The
cultivation of paddy is highly dependent on the monsoon.
Unpredictable weather conditions could affect the output of paddy
and result in volatility in price of paddy. In view of seasonal
availability of paddy, working capital requirements remain high at
season time owing to the requirement for stocking of paddy in large
quantity.
* Regulated nature of the industry: The Government of India (GoI),
every year decides a minimum support price (MSP) to be paid to
paddy growers which limits the bargaining power of rice millers
over the farmers. The MSP of paddy was increased during the crop
year 2019-20 to INR1815/quintal from INR1750/quintal in crop year
2019-20. The sale of rice in the open market is also regulated by
the government through levy of quota, depending on the target laid
by the central government for the central pool. Given the market
determined prices for finished product vis-à-vis fixed acquisition
cost for raw material, the profit margins are highly vulnerable.
* Working capital intensive nature of business: Paddy is mainly a
'kharif' crop and is cultivated from June-July to September-October
and the same is processed by rice millers throughout the year.
Hence, the millers are required to carry high levels of raw
material inventory in order to mitigate the raw material
availability risk, resulting in relatively high inventory period.
Accordingly the average inventory holding period was on the higher
side in the range of 43 days to 48 days during last three years
(FY16-FY17). Further, company pays upfront to its suppliers whereas
it needs to provide credit of around a week to its customers.
Therefore the operations of the company remained working capital
intensive in nature. The average utilization of working capital
limits was high at around 90% during last 12 months ended in
February 2018.
* Moderate capital structure and debt coverage indicators: The
capital structure of the firm remained moderate marked by debt
equity and overall gearing ratios at 0.09x and 1.33x respectively
as on March 31, 2017. However, the leverage ratios were improved as
on March 31, 2017 due to lower utilisation of working capital,
repayment of the term loan and accumulation of profit into capital.
The debt coverage indicators remained moderate marked by interest
coverage ratio of 1.84x and total debt to GCA of 11.35x in FY17.
* Partnership nature of constitution: RKAP 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/insolvency of the partners. Furthermore, partnership
entities have restricted access to external borrowing as credit
worthiness of partners would be the key factors affecting credit
decision for the lenders.
* Intensely competitive nature of the industry with presence of
many unorganized players: Rice milling industry is highly
fragmented and competitive due to presence of many small players
operating in this sector owing to its low entry barriers, due to
low capital and technological requirements. Hooghly and nearby
districts of West Bengal are a major paddy growing area with many
rice mills operating in the area. High competition restricts the
pricing flexibility of the industry participants and has a negative
bearing on the profitability.
Key Rating Strengths
* Experienced partners with satisfactory track record of
operations: The firm is into rice milling business since 2012 and
thus has satisfactory operational track record. The key partner Mr.
Dilip Kumar Shaw is associated with the firm since its inception.
He is having more than two decade of experience in rice industry,
looks after the day to day operations of the firm supported by
other partners and a team of experienced personnel.
* Proximity to raw material sources with favourable industry
scenario: RKAP's plant is located at Burdwan, West Bengal, which
is in the vicinity to a major rice growing area, thus, resulting in
logistic advantage. The raw material requirement is met locally
from the farmers and in some cases it is being procured from
Jharkhand, Bihar, and Chhattisgarh through brokers. Furthermore
rice, being one of the primary food articles in India, demand is
high throughout the country and with the change in life style and
health consciousness; by-products of the same like rice bran oil
etc. are in huge demand.
Established in March 2009, Radha Krishna Agro Products (RKAP) was
promoted by the Shaw family at Burdwan, West Bengal. The firm has
been engaged in milling and processing of rice at its plant located
at Belari, Dist.-Burdwan, West Bengal with an installed capacity of
28,800 metric ton per annum.
RAJVIR INDUSTRIES: CARE Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Rajvir
Industries Limited (RIL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 172.51 CARE D; Issuer not cooperating;
Term Bank Based on best available
Facilities Information
Long-term/ 10.00 CARE D/CARE D; Issuer not
Short-term Cooperating Based on best
Bank Facilities Available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated January 02, 2019, placed the
rating(s) of RIL under the 'issuer non-cooperating' category as RIL
had failed to provide information for monitoring of the rating. RIL
continues to be noncooperative despite repeated requests for
submission of information through e-mails including and an email
dated April 17, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on January 2, 2019, the following were
the rating strengths and weaknesses (updated for the information
available from BSE)
Key Rating Weaknesses
* Delays in debt servicing owing to weak liquidity position: There
are continuing delays in debt servicing on account of liquidity
constraint. Also, the auditor has reported delays in the Audit
Report for FY19. The company has registered a net loss of INR37.08
crore in FY19 when compared to loss of INR21.71 crore in FY18.
* Weak financial risk profile and cash losses for FY19: The
capital structure of the company is highly leveraged with entire
net worth of the company having been eroded owing to accumulated
losses. The PBILDT interest coverage also deteriorated to -0.99x in
FY19 (PY: 0.09x), due to weak profitability margins, the debt
coverage indicators have been adversely affected. The operating
margins of the company also declined significantly during FY18. The
company has reported cash losses for FY19 backed by low operating
margins coupled with high capital charge.
* Working capital intensive nature of operations: Spinning is
primarily a working capital intensive business as the raw material
availability is seasonal which results in high inventory holding
period. Further, the procurement is primarily on cash basis which
results in high working capital utilization during the months of
availability which is October to April.
Key Rating Strengths
* Established track record of promoters: IL is promoted by Mr.
U.K. Agarwal. Mr. Agarwal has more than 40 years of experience in
cotton industry. He is the Chairman of the company and has
expertise in cotton selection process. Mr. Ritesh K. Agarwal is the
Managing Director and looks after all the managerial activities
handling departments including marketing, finance, exports and
production. The board of RIL also comprises of Sri. K. C. Reddy,
Mr. Vijay Kumar Gupta and Ms. Padma Vijay. By virtue of being in
the industry for about four decades, the promoters have established
long standing relationship with a diversified customer base
Rajvir Industries Limited (RIL) was incorporated on September 1,
2004. RIL is engaged in manufacturing of cotton yarn, mélange,
synthetics, modal, dyed products, compact yarn, flame-retardant,
supima, silk, wool, cashmere and angora blend with its facilities
located in Mahboobnagar (one unit), Tandur (one unit) and a dyeing
plant at Mahboobnagar. The company has facilities from ginning to
spinning of different kinds (raw white, mélange) and varied counts
(10-40, 20-25, 10-60, 40-60 etc.).The company has range that covers
everything from 100% cotton/ organic/fair-trade/combed yarns,
blended yarns (polyester, viscose, modal, spun silk and flame-
retardant) etc. As on March 31, 2017 the company has installed
capacity of 1, 11,840 spindles.
RELIANCE COMM: Ambani Ordered to Pay $700MM+ to 3 Chinese Banks
---------------------------------------------------------------
Jonathan Browning at Bloomberg News reports that former billionaire
Anil Ambani was ordered by a London judge to pay more than $700
million to a trio of Chinese banks following a dispute over
defaulted loans.
Bloomberg relates that Mr. Ambani offered a personal guarantee on
the banks' loans to his Reliance Communications Ltd. in 2012, Judge
Nigel Teare said in a ruling May 22. The tycoon, who has said his
net worth is "zero," has 21 days to make the payment.
Bloomberg says Mr. Ambani had always contested that he had made a
personal guarantee -- something he'd dismissed as an "extraordinary
potential personal liability" -- but the summary judgment ruling
means a full trial will no longer go ahead.
A spokesman for Ambani said that other Reliance group operations
will not be affected by the ruling. Reliance Communications filed
for bankruptcy last year.
The Chinese banks "made their claim based on an alleged guarantee
that was never signed by Mr. Ambani and he has consistently denied
having authorized anyone to execute any guarantee on his behalf,"
the spokesman said, Bloomberg relays. "The amount ordered to be
paid based on an alleged guarantee, will in any case reduce
substantially upon the imminent resolution of" Reliance
Communication's debt.
The 60-year-old is the younger brother of Mukesh Ambani, the
wealthiest man in Asia, the report notes. Mukesh has bailed his
brother out in the past, making a last-minute payment in an Indian
case that could have seen Anil imprisoned.
Meanwhile, Anil Ambani told a London court earlier this year that
the value of his investments has collapsed.
"I do not hold any meaningful assets which can be liquidated for
the purposes of these proceedings," he said in February.
The claim was filed by three state-controlled Chinese banks
including Industrial & Commercial Bank of China Ltd, the report
discloses.
About Reliance Communications
Based in Mumbai, India, Reliance Communications Ltd is a
telecommunications service provider. The Company operates through
two segments: India Operations and Global Operations. India
operations segment comprises wireless telecommunications services
to retail customers through global system for mobile communication
(GSM) technology-based networks across India; voice, long distance
services and broadband access to enterprise customers; managed
Internet data center services, and direct-to-home (DTH) business.
Global operations comprise Carrier, Enterprise and Consumer
Business units. It provides carrier's carrier voice, carrier's
carrier bandwidth, enterprise data and consumer voice services. The
Company owns and operates Internet protocol (IP) enabled
connectivity infrastructure, comprising over 280,000 kilometers of
fiber optic cable systems in India, the United States, Europe,
Middle East and the Asia Pacific region.
As reported in the Troubled Company Reporter-Asia Pacific on May
10, 2019, The Economic Times said the National Company Law Tribunal
on May 9 allowed Reliance Communications (RCom) to exclude the 357
days spent in litigation and admitted it for insolvency. With
this, RCom, which owes over INR50,000 crore to banks, has become
the first Anil Ambani group company to be officially declared
bankrupt after the NCLT on May 9 superseded its board and appointed
a new resolution professional to run it and also allowed the
SBI-led consortium of 31 banks to form a committee of creditors.
SAFFRON MET: CARE Cuts Rating on INR9.75cr LT Loan to B, Not Coop.
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Saffron Met Yarns Limited (SMYL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 9.75 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 had, vide its press release dated March 27, 2019 placed the
ratings of SMYL under the 'issuer non-cooperating' category as SMYL
had failed to provide information for monitoring of the ratings as
agreed to in its Rating Agreement. SMYL continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and emails dated April 08, 2020,
April 13, 2020 and April 15, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the ratings on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating done on March 27, 2019 the following
were the rating weaknesses (updated for publically available
information).
The revision in rating takes into account moderate scale of
operations with low profit margins, moderate capital structure and
debt coverage indicators FY19 (refers to the period April 1 to
March 31). The rating further continues to remain constrained on
account of labour intensive nature of its operations along with
presence in fragmented industry with limited value addition and
susceptibility of profit margins to volatility in raw material
prices. The ratings, however, derive strength from experienced
promotes and location advantage.
Key Rating Weaknesses
* Moderate scale of operations along with low profit margins: TOI
of SMYL remained stable during FY19 at INR27.70 crore as against
INR23.68 crore during FY18. Further, during FY19 SMYL booked
operating loss of INR0.69 crore as against operating profit of
INR0.26 crore during FY18 due to higher cost of raw material
consumed. However, SMYL booked net profit of INR0.93 crore during
FY19 as against net loss of INR0.77 crore during FY18 owing to
income from sale of fixed assets during the year.
* Moderate capital structure and debt coverage indicators: As on
March 31, 2019, financial risk profile improved and remained
moderate marked by an overall gearing of 0.95 times as against 3.23
times as on March 31, 2018 while debt coverage indicators of SMYL
also remained moderate marked by total debt to GCA (TDGCA) of 2.48
years as on March 31, 2019. However, interest coverage ratio
remained weak owing to operating losses booked during FY19.
* Labour intensive nature of operations along with presence in
fragmented industry with limited value addition and susceptibility
of profit margins to volatility in raw material prices: Zari
manufacturing is based on the skill set of artisans which are
skilled people who possess the knowledge for preparation of zari.
Further, zari manufacturing is fragmented industry with a very low
level of automation and limited value addition. The major inputs
are gold, silver, copper, good quality water, power, gilding
chemicals, dyes and spirit. There are high fluctuations in the
prices of the basic raw materials such as gold, silver, and copper
prices which are dependent upon global demand-supply scenario.
Key Rating Strengths
* Experienced promotes and location advantage: SMYL is promoted by
Mr. Brijendra Kishanlal Chopra (Director) who has an experience of
about 30 years in the zari business. He looks after overall
management of company. Further, SMYL's presence in textile hub
results in benefit derived from lower logistic expenditure, easy
availability and procurement of raw materials at effective prices.
SMYL was incorporated in September 2009 as Saffron Met Yarns Pvt.
Ltd. (SMYL) by Mr. Brijendra Kishanlal Chopra and Mrs. Surinderkaur
Chopra. Subsequently, during December 2010, the company got
converted into public limited company and resumed its current name.
SMYL is engaged in manufacturing of Jari Kasab which finds its
application in handicrafts and fashion segment. The major end uses
of the zari thread manufactured in Surat include sarees (as a
weaving thread for the world famous Banarasi and Kanjeevaram
sarees), dress material, and upholstery made ups; for craft- laces
and borders, embroidery, rakhi, bangles, badges and gift articles.
SMYL operates from its ISO 9001:2008 manufacturing facility located
at Surat (Gujarat) with an installed capacity to manufacture 1650
tonnes per annum of zari on March 31, 2017. SMYL sells Jari in the
brand names of "Saffron".
SARASWATI EDUCATIONAL: Ind-Ra Moves 'D' Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Saraswati
Educational Charitable Trust's bank facilities' ratings to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using the ratings. The ratings will
continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the
agency's website.
The detailed rating actions are:
-- INR299 mil. Term loan (long-term) due on March-June 2022
migrated to non-cooperating category with IND D (ISSUER NOT
COOPERATING) rating; and
-- INR300 mil. *Proposed term loan (long-term) is withdrawn;
-- INR50 mil. Working capital facility (long-term) migrated to
non-cooperating category with IND D (ISSUER NOT COOPERATING)
rating.
* The provisional rating has been withdrawn as it has been
outstanding for more than 90 days and the agency no longer expects
it to be converted to the final rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
June 11, 2019. Ind-Ra is unable to provide an update as the agency
does not have adequate information to review the rating
COMPANY PROFILE
Saraswati Educational Charitable Trust has colleges near Lucknow.
It also runs an aviation academy, a medical college, and a 410-bed
hospital.
SARNA MARBLES: CARE Keeps D INR25cr Debt Rating in Not Cooperating
------------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sarna
Marbles Private Limited (SMPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 25.00 CARE D; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Detailed Rationale & Key rating Drivers
CARE had, vide its press release dated January 29, 2019, placed the
ratings of SMPL under the 'issuer non-cooperating' category as SMPL
had failed to provide information for monitoring of the rating and
had not paid the surveillance fees for the rating exercise as
agreed to in its Rating Agreement. SMPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and an email dated April
24, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on January 29, 2019, the following were
the rating strengths and weaknesses. (Updated for the information
available from Registrar of Companies):
Key Rating Weakness
* Delay in the debt servicing: There was on-going delay in debt
servicing in past owing to poor liquidity position.
Jaipur (Rajasthan) based Sarna Marbles Private Limited (SMPL) was
incorporated in 2006 by Mr Bajrang Lal Khetan and Mr Ramchandra
Khetan. Later on, the management was acquired by Mr Arvind Khetan,
son of Mr Bajrang Lal Khetan. The company is engaged in the
business of manufacturing of High Density Polyethylene (HDPE) and
Rigid PVC pipes and sells its product in the brand name of
“Khetan”. The promoter family also manages Ashoka Impex, Khatu
Stone, Ashoka Natural Stone Private Limited, Sunil Gartex Private
Limited, Ashoka Build State Development Private Limited and Ashoka
Granimarmo Private Limited.
SHANKAR PARVATI: CARE Cuts Rating on INR6.0cr Loan to B, Not Coop.
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shankar Parvati Industries (SPI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.00 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 had, vide its press release dated March 14, 2019 placed the
ratings of SPI under the 'issuer non-cooperating' category as SPI
had failed to provide information for monitoring of the ratings as
agreed to in its Rating Agreement. SPI continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and emails dated April 08, 2020,
April 13, 2020, April 15, 2020 and April 20, 2020. In line with the
extant SEBI guidelines, CARE has reviewed the ratings on the basis
of the best available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The rating assigned to the bank facilities of SPI has been revised
on account of non-availability of requisite information. The rating
assigned to the bank facilities of SPI continued to remain
constrained on account of its moderate scale of operations and
financial risk profile marked by thin profitability, moderate
capital structure and weak debt coverage indicators. The rating is
further constrained on account of its partnership nature of
constitution, susceptibility of its profit margins to cotton price
fluctuations, exposure to adverse changes in the government
regulations along with its presence in highly fragmented and
seasonal cotton industry with limited value addition.
The rating, however, continues to derive benefit from the vast
experience of partners in cotton ginning business with established
track record of firm and strategic location in the cotton-producing
belt of Gujarat.
Detailed description of the key rating drivers
At the time of last rating done on March 14, 2019 the following
were the rating strengths and weaknesses:
Detailed description of key rating drivers
Key Rating Weaknesses
* Moderate scale of operations and thin profitability: The scale of
operations as marked by total operating income (TOI) of the firm
remained moderate at INR58.60 crore during FY17 as against INR74.77
crore in FY16. The operating profits of the firm as marked by
PBILDT remained low at INR0.84 crore while net profit remained at
INR0.06 crore in FY17. Moderate capital structure, weak debt
coverage indicators The capital structure of the firm stood
moderate marked by an overall gearing of 2.01 times as on March 31,
2017. On the back of low cash accruals, the debt coverage
indicators remained weak marked by total debt to gross cash accrual
(TDGCA) of 19.26 years as on March 31, 2017, while the interest
coverage stood moderate at 1.52 times during FY17.
* Partnership nature of constitution: There is inherent risk of
possibility of withdrawal of capital and dissolution of the firm in
case of death/retirement/insolvency/personal contingency of any of
the partners.
* Susceptibility of operating margin to cotton price fluctuation
and presence in a fragmented and seasonal cotton industry with
limited value addition along with exposure to adverse changes in
the government regulations: The profitability of SPI is exposed to
fluctuations in raw cotton, which being an agricultural commodity
is subject to the vagaries of monsoon. SPI operates in an industry
characterized by high fragmentation and intense competition on
account of presence of a large number of small and medium-scale
units due to minimal technological and financial
investment requirement. Furthermore, due to limited value addition,
players present in this segment operate at a very
low bargaining power against its customers as well as suppliers.
Furthermore, the cotton supply and prices in India are
highly regulated by the government through Minimum Support Price
(MSP) and export regulations.
Key Rating Strengths
* Experienced partners in cotton ginning business with established
track record of firm: SPI was established in 2005 and was promoted
by Mr. Vinodkumar Kantilal Patel, Mr. Kantilal Ambalal Patel, Ms.
Daxaben Vishnubhai Patel & Ms. Shilpaben Patel. All the partners
are active and manage day to day operations of the firm. Hence,
considering around a decade of experience of the partners in the
same line of business, the partners are able to establish
good contacts with suppliers and customers.
* Strategically located within the cotton-producing belt of
Gujarat: SPI's manufacturing facilities are located in Mehsana
district of Gujarat which is one of the largest state producing raw
cotton in India. It enjoys benefits in terms of lower logistics
expenditure, easy availability of raw material, labour, water and
power connection.
Mehsana-based (Gujarat), SPI is a partnership firm established in
2005, engaged in ginning and pressing of cotton bales and seeds.
SPI operates from its plant located in Kadi, Mehsana having an
installed capacity of manufacturing 370 units of cotton bales per
day and 99 MT of cotton seeds per day.
SHIVANGAN SPINNER: CARE Cuts INR4.65cr Loan Rating to B, Not Coop.
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Shivangan Spinner Export India LLP (SSEIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 4.65 CARE B; Stable; Issuer Not
Facilities Cooperating Revised from
CARE B+; Stable; on the basis
of best available information
Short-term Bank 2.00 CARE A4; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key rating Drivers
CARE had, vide its press release dated February 15, 2019, placed
the ratings of SSEIL under the 'issuer non-cooperating' category as
SSEIL had failed to provide information for monitoring of the
rating and had not paid the surveillance fees for the rating
exercise as agreed to in its Rating Agreement. SSSEIL continues to
be noncooperative despite repeated requests for submission of
information through e-mails, phone calls and an email dated April
24, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings of Shivangan Spinner Export India LLP (SSEIL) have been
revised on account of non-availability of requisite information.
The ratings, further, continue to remain constrained on account of
its nascent stage of operation and highly fragmented, competitive
and seasonal industry with vulnerability of margins to fluctuation
in raw material prices.
The ratings, however, continue to favorably take into account
experience proprietor and management in textile processing
industry.
Detailed description of the key rating drivers
At the time of last rating on February 15, 2019, the following were
the rating strengths and weaknesses.
Key Rating Weakness
* Nascent Stage of Operation: SSEIL started its operation in FY18
and they have achieved total operating income of INR0.80 crore with
PBILTD and PAT margin of 52.76% and 1.64%. The capital structure of
company stood leveraged with overall gearing of 3.82 times and
Total debt to GCA of 18.94 times. However, interest coverage stood
moderate at 7.53 times in FY18. The current ratio and quick ratio
of the company stood below unity at 0.36 times and 0.31 times
respectively in FY18. Moreover, the cash and bank balance of
company stood at INR0.14 Crores.
* Highly fragmented, competitive and seasonal industry with
vulnerability of margins to fluctuation in raw material prices:
The firm operates in the textile manufacturing and processing
industry which is highly fragmented industry with presence of
numerous independent small-scale enterprises owing to low entry
barriers leading to high level of competition in the processing
segment. The intense competition in highly fragmented textile
processing industry also restricts ability to completely pass on
volatility in input cost to its customers, leading to lower profit
margins.
Key Rating Strengths
* Experience proprietor and management in textile processing
industry: The board of SSEIL consists of three partners namely, Mr
Doongar Singh, Mr Kishan Singh Bhati and Mrs Santosh who actively
participate in day to day management of the firm. Mr Doongar Singh,
a LLB by qualification, has around 30 years of experience in the
textile retail industry and looks after overall management of the
firm. Prior to incorporation of SSEIL, Mr Doongar Singh was
involved in retail and trading activity of textile cloth. Mr Kishan
Singh Bhati completed his masters and undergone through training
for production of acrylic yarns in Ethiopia prior to incorporation
of SSEIL.
Jaipur (Rajasthan) based Shivangan Spinner Export India LLP (SSEIL)
was formed as a limited liability partnership concern in August,
2015 by Mr Doongar Singh along with his son Mr Kishan Singh Bhati
and his wife Mrs Santosh with an objective to set up Greenfield
project for manufacturing and export of acrylic yarn. SSEIL set up
a spinning unit at a total cost of INR7.50 crore funded through
debt equity ratio of 2:1 and partial commercial production started
from July 2017 and envisaged to be completed by January 2018.
SHREE DULICHAND: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shree Dulichand
Chemicals Private Limited's Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND B+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR60 mil. Fund-based working capital limits migrated to non-
cooperating category with IND B+ (ISSUER NOT COOPERATING) /
IND A4 (ISSUER NOT COOPERATING) rating;
-- INR15 mil. Non-fund-based working capital limits migrated to
non-cooperating category with IND A4 (ISSUER NOT COOPERATING)
rating;
-- INR40 mil. Proposed fund-based working capital limits migrated
to non-cooperating category with Provisional IND B+ (ISSUER
NOT COOPERATING) / Provisional IND A4 (ISSUER NOT
COOPERATING) rating; and
-- INR35 mil. Proposed non-fund-based working capital limits
migrated to non-cooperating category with Provisional IND A4
(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
April 3, 2019. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Shree Dulichand Chemicals was incorporated on August 13, 1986 in
Secunderabad, Telangana. The company is promoted by Mrutynjai
Agarwal. It trades in chemicals and supplies the same to industries
such as oil, metal, agrochemicals, fertilizers, petrochemicals,
pharmaceutical, and polymers.
SHREEYA PEANUTS: CARE Keeps B+ Debt Ratings in Not Cooperating
--------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Shreeya
Peanuts Private Limited (SPPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.46 CARE B+; ISSUER NOT COOPERATING;
Facilities Based on best available
Information
Long-term/Short 15.00 CARE B+; Stable/CARE A4; Issuer
term Bank not cooperating; Based on best
Facilities available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated May 28, 2019 placed the
ratings of SPPL under the 'issuer non-cooperating' category as SPPL
had failed to provide information for monitoring of the ratings as
agreed to in its Rating Agreement. SPPL continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and emails dated April 08, 2020,
April 13, 2020 and April 15, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the ratings on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating done on May 28, 2019, the following were
the rating strengths and weaknesses (updated for details available
from publicly available information)
Detailed description of key rating drivers
Key Rating Weaknesses
* Moderate scale of operations and profitability, leveraged capital
structure and moderate debt coverage indicators: The scale of
operations as marked by Total Operating Income (TOI) of SPPL
remained moderate during FY18 at INR67.31 crore as against INR40.24
crore in FY17. PBILDT margin decreased by 286 bps y-o-y and
remained moderate at 6.17% in FY18 as against 9.03% in FY17.
However, SPPL has booked net profit of INR0.30 crore in FY18 as
against net loss of INR0.26 crore in FY17. As on March 31, 2018,
financial risk profile continued to remain leveraged marked by an
overall gearing of 4.32 times as against 5.08 times as on March 31,
2017 while debt coverage indicators of SPPL remained moderate
marked by interest coverage ratio of 2.07 times and total debt to
GCA of 10.11 times as against interest coverage ratio of 1.94 times
and total debt to GCA of 12.40 times as on March 31, 2017.
* Presence in highly competitive and fragmented industry with
seasonality associated with availability of raw material; thus
exposing profitability to fluctuation in raw material prices: The
Indian edible oil industry is characterized by a high degree of
competition, resulting from high fragmentation due to the low entry
barriers and low capital intensity of the business. Further, the
prices of agricultural commodities are volatile in nature and are
linked to production in domestic market and global demand-supply
situation. The prices of agro commodities are also affected by the
changes in government regulations and vagaries of weather affecting
production of peanuts. With limited value addition and raw material
being the major cost component, its profitability is exposed to
fluctuation in raw material prices.
Key Rating Strengths
* Experienced Promoters: SPPL's is managed by Mr Dayabhai Thumar
and Mr Usmanbhai Kasmani. Mr Dayabhai Thumar, Chief Executive
Officer, has more than three decades of experience in the industry
and Mr Usmanbhai Kasmani (Director) has six years of experience in
the industry.
* Proximity to raw material procurement area of Gujarat: The
processing facility of SPPL is located at Gondal (Gujarat). Gujarat
is considered as one of the leading groundnut growing
states in the country. SPPL's presence in groundnut producing
region results in benefit derived from lower logistic expenditure,
easy availability and procurement of raw materials at effective
prices and consistent demand for finished goods resulting in
sustainable and clear revenue visibility.
Incorporated in October 2013, Shreeya Peanuts Private Limited
(SPPL) is engaged in groundnut oil milling, solvent extraction and
refinery of edible oil with an installed capacity for the oil mill
plant is 22,000 MTPA, 44,000 MTPA for the solvent plant and 22,000
MTPA for the refinery plant.
SHRI GURU: CARE Lowers Rating on INR20cr LT Loan to B-, Not Coop.
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Shri
Guru Gorakh Nath Rice Mill (SGGRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 20.00 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 had, vide its press release dated February 19, 2019, placed
the ratings of SGGRM under the 'issuer non-cooperating' category as
SGGRM had failed to provide information for monitoring of the
rating.
SGGRM continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a letter
dated April 21, 2020. 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.
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
The ratings have been revised on account of non-receipt of
requisite information due to which CARE is not able to conduct a
proper credit risk analysis.
At the time of last rating on February 19, 2019, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* Modest scale and low margins: The firm registered total
operating income of INR77.97 crore (PY: INR71.22 crore) with a PAT
of INR0.24 crores (PY: INR0.10 crores) during FY17. The increase in
total income was on account of the revival in the basmati rice
industry with stable paddy supply and good international demand.
The PBILDT Margin during FY17 (refers to the period April 01 to
March 31) declined to 3.32% (PY: 3.93%) on account of higher raw
material cost. However, the PAT margin improved to 0.31% (PY:
0.14%) primarily on account of lower interest expense.
* Weak financial risk profile: Total debt of firm increased from
INR20.09 crore on March 31, 2016 to INR22.46 crore as on March 31,
2017 and consequently, the overall gearing of the firm only
marginally improved to 2.27x (PY: 2.29x) at end of FY17 owing to
improvement in net-worth on account of accretion of profits. The
interest coverage ratio marginally improved though remained weak at
1.25x during FY17 (PY: 1.17x). The total Debt/GCA also remained
weak at 43.97x during FY17 (PY: 48.27x) primarily on account of
lower interest expense during the year.
* Working capital intensive nature of operations: The total
operating cycle of SGGRM improved to 131 days during FY17 primarily
on account of improvement in the inventory period offset by the
elongation in average collection period to 105 days in FY17 (PY: 93
days). The operations of the firm continue to remain working
capital intensive in nature and average working capital limit
utilization remains high.
* Fragmented nature of industry and constitution as a partnership
firm: The firm faced competition from presence of both large
players and unorganized sector in the rice industry which is highly
fragmented and thereby has a bearing on the margins of industry
players. Further, the organizational structure of SGGNRM as a
partnership firm restricts avenues of raising external borrowing
and investments.
Key Rating Strengths
* Experienced Partners: SGGRM has been founded by Mr. Bankey Lal
Goel also the managing partner of the firm and has extensive
experience of over two decades of operating the rice milling
business. The other partners in the firm Mr. Brijesh Kumar and Ms.
Pushpa Rani have are also both experienced businessmen. Further,
being the family business, the partners are aided by other family
members and have built a sound second line of leadership.
* Location advantages: SGGRM's plant is located at Dadri in Gautam
Buddha Nagar District, U.P. which is in proximity to the paddy
growing areas of the country. Hence, SGGRM's presence in the paddy
growing region results in benefits derived from a lower logistic
cost, easy availability and procurement of raw materials at
competitive prices.
Shri Guru Gorakh Nath Rice Mill (SGGRM) was established in 1990 as
a partnership firm with three partners Ms. Pushpa Devi, Mr. Brijesh
Kumar and Mr. Bankey Lal with profit and loss sharing ratio of
1:2:2. The firm is primarily engaged in milling and processing of
basmati rice at its sole processing facility situated at Dadri,
Uttar Pradesh which has a processing capacity of 8 metric tons per
hour (MTPH) of paddy as on March 31, 2017. The firm sells its
product under the brand name 'Pankhi' and 'Ten Star' in the
domestic market and exports its products to Middle East, Europe and
US markets. Mr. Bankey Lal looks after the overall operations of
the firm and is the managing partner of the firm.
SREE HARI: CARE Lowers Rating on INR12cr LT Loan to 'B', Not Coop.
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sree
Hari Agro Products Private Limited (SHAPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 12.00 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 had, vide its press release dated March 25, 2019, placed the
ratings of SHAPPL under the 'issuer non-cooperating' category as
company had failed to provide information for monitoring of the
rating. The company continues to be non-cooperative despite
repeated requests for submission of information through e-mails,
phone calls and email dated April 30, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating takes into account the non-availability
of requisite information due to non-cooperation by Sree Hari Agro
Products Private Limited with CARE's efforts to undertake a review
of the outstanding ratings as CARE views information availability
risk as key factor in its assessment of credit risk profile.
Detailed description of the key rating drivers
At the time of last rating on March 25, 2019 the following were the
rating strengths and weakness
Key Rating Weakness
* Small scale of operations with low net worth base: Although, the
company has a long track record, the total operating income (TOI)
of the company remained low at INR36.31 crore in FY18 with a low
net worth base of INR4.04 crore as on March 31, 2018 as compared to
other peers in the industry. Vulnerability of the tobacco business
to government regulations and to climatic risks affecting tobacco
availability Tobacco products form a major source of revenue in the
form of taxes to both central as well as state government and hence
there are regular modifications in taxation laws/tax rates with
respect to the same. Due to the harmful nature of the product, the
various state governments have banned Manufacture and sale of
various tobacco products under the Food Safety and Standards
(Prohibition and Restrictions on Sales) Regulations, 2011 and
availability of tobacco is highly susceptible to the factors like
area under cultivation, Climatic risk, crop yield. Hence, the
profitability margins of the company are vulnerable to government
regulations on tobacco products and availability of tobacco.
* Working capital intensive nature of operations due to high
inventory holding period: The company has been still in working
capital intensive nature of operations due to high inventory
holding period. Owing to trading nature of business and
availability of tobacco is seasonal in nature (susceptible to
climatic risks), the company has to buy the tobacco depending on
availability. Due to market demand fluctuations, the company holds
the inventory till it gets better pricing. Hence the company has
elongated inventory holding period of 125 days in FY18. SHAPPL's
average creditor days were marked nil in FY18 as the company almost
always made upfront payment to its suppliers to procure tobacco.
However, the company received payment from its customers within
30-60 days from the date of invoice, in order to give a comfortable
credit period as set by the peers in the local industry. The
operating cycle of the company stood at 173 days in FY18.
Key Rating Strengths
*Experience of the promoters for about a decade in tobacco
business: The company is promoted by Mrs. Chaluvadi Jayasree and
Mr. Sanagapallipardha Saradhi Rao, who have more than a decade
of experience in the trading of tobacco.
* Increase in total operating income during the review period: The
total operating income of the company increased from INR35.98 crore
in FY17 to INR36.31 crore in FY18, at back of increase in sales
volume with repetitive orders from existing customers.
* Increasing in PBILDT margins albeit decreasing PAT margins In
FY18: The PBILDT/ TOI improved marginally from 4.70 in FY17 to
4.91 in FY18.However, PAT margins are deteriorated from 0.62 in
FY17 to 0.40 in FY18.
* Stable outlook of tobacco industry: Cigarettes currently
represent one of the most popular forms of tobacco, accounting for
nearly 90% of the global tobacco sales value. The global cigarette
market today represents a multi-billion dollar market and according
to IMARC group, its total revenues reached values worth US$ 816
Billion in 2017, representing a CAGR of around 7% during 2009-2017.
Despite falling volumes in developed markets as a result of an
increasing awareness on the harmful effects of cigarette smoking,
manufacturers have been able to increase value growth. Factors
driving the cigarette market include a continuous increase in the
prices of cigarettes and an increasing popularity of premium
products. Another major factor driving the growth is the rising
consumption of cigarettes in developing countries. Owing to the
aforementioned reasons, the outlook for tobacco industry looks
stable for the medium term.
Andhra Pradesh based, Sree Hari Agro Products Private Limited
(SHAPPL) was established in the year 1997. The company is engaged
in the trading of tobacco and is promoted by Mrs. Jayasree
Chaluvadi and Mr. Sanagapallipardha Saradhi Rao. The company
purchases tobacco from local farmers and traders, and sells the
same to its clients located across Andhra Pradesh.
SREE VARASIDHI: CARE Lowers INR5.40cr Loan Rating to B, Not Coop.
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sree
Varasidhi Vinayaka Cottons, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.40 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 had, vide its press release dated March 7, 2019, placed the
ratings of Sree Varasidhi Vinayaka Cottons under the 'issuer
non-cooperating' category as company had failed to provide
information for monitoring of the rating. Sree Varasidhi Vinyaka
Cottons continues to be non-cooperative despite repeated requests
for submission of information through e-mails, phone calls and
email dated April 30, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating takes into account the non-availability
of requisite information due to non-cooperation by Sree Varasidhi
Vinayaka Cottons with CARE's efforts to undertake a review of the
outstanding ratings as CARE views information availability risk as
key factor in its assessment of credit risk profile.
Detailed description of the key rating drivers
At the time of last rating on March 7, 2019 the following were the
rating strengths and weakness
Key Rating Weakness
* Short track record of the firm: The firm started its commercial
operations from November 2017 and FY18 was the first year of
operations. The firm has small scale of operations i.e., the total
operating income (TOI) of the firm remained small at INR21.94 crore
in FY18 with low net worth base of INR2.10 crore as on March 31,
2018.
* Financial risk profile marked by thin profitability margins,
leveraged capital structure and weak debt coverage indicators: In
FY18, the firm has thin profitability margins marked by PBILDT
margin and PAT margin of 3.69% and 0.12% respectively. The capital
structure of the firm remained leveraged and weak debt coverage
indicators marked by debt equity and overall gearing ratios of
1.51x and 3.96x respectively as on March 31, 2018. Furthermore, the
firm has interest coverage ratio of 1.72x and total debt to GCA at
1.63x in FY18.
* Partnership nature of constitution with inherent risk of
withdrawal of capital: Constitution as a partnership firm has the
inherent risk of possibility of withdrawal of the partner's capital
at the time of personal contingency which can affect its capital
structure. Further, partnership concern has restricted access to
external borrowing which limits their growth opportunities to some
extent.
* Susceptibility of profits to volatile price fluctuation and
seasonality associated with availability of cotton: The cotton
prices are volatile in nature and depend upon factors like, monsoon
condition, area under cultivation, yield for the year,
international demand supply scenario, export policy decided by the
government and inventory carry forward of last year. Cotton being a
seasonal crop is sown upto October and harvesting is done between
January and may in peninsular part of India. Prices of cotton are
at their lowest in harvesting season and trend up thereafter,
depending upon supply-demand dynamics which results into a higher
inventory holding period for the business. Furthermore, the quantum
of cotton produced in a particular year is dependent on factors
such as rainfall and vagaries of nature and government policies.
Thus SSG's operations are contingent on it sourcing the requisite
quantum of cotton at an appropriate price.
* Highly fragmented industry with intense competition from large
number of players: The firm is engaged in manufacturing of cotton
bales which is highly fragmented industry due to presence of large
number of organized and unorganized players in the industry
resulting in huge competition.
Key Rating Strengths
* Experienced promoters for more than two decades in cotton
industry: Mrs. Y Rajyalakshmi was a graduate in commerce and has
vast line of experience in cotton industry. She had worked as the
managing partner of M/s Vararakshmi cotton Ginning Mills from:1990
to 2000 and later she actively took part in administration of M/s
Vijayarakshmi pressing Mills as partner.So, she has over all
experience of around 27 years in the same line of business. Mrs.V
Revathi was a graduate in commerce and started her career in cotton
industry from 2000 onwards. She has started a proprietorship firm
by name M/s Sree Varasidhi Vinayaka Cotton Traders, Bellary in the
year 2000. So, she has more than 17 years of experience in the same
line of business. Due to long term presence in the market by the
promoters they have established good relations with customers and
suppliers.
* Comfortable working capital cycle: The firm operates in working
capital intensive nature of operations. However, the operating
cycle of the firm remained comfortable and stood at 18 days in
FY18. The firm receives payment from its customer within 17 days
and makes the payment to its suppliers in 15 days. The inventory
days remained at 16 days as on March 31, 2018 as cotton being agro
commodity its production is seasonal (harvesting) from November to
June in a year.
* Stable outlook of cotton industry: Amongst all the cotton
growing countries of the world, India ranks number one in cotton
cultivation area spreading out to about 95 lakh hectares. Although
only the second in cotton production in the world, India has
several distinctions to its credit. The ginning outturn of the
Indian cotton also presents a wide spectrum of variations from 24%
to 42%.The purpose of ginning is to separate cotton fibers from the
seed. The ginning process is the most important mechanical
treatment that cotton undergoes before it is converted into yarns
and fabrics. Any damage caused to the quality of fibers during
ginning cannot be rectified later in the spinning or subsequent
processes. Most of the ginneries in India were in primitive
condition and running with poor efficiency. There are over 3500
factories in India dispersed in nine major cotton-growing states.
Out of these, over 2600 factories perform only ginning operation
and over 2000 factories has installed capacity of as small as 6-12
double roller gins. With these developments, ginning infrastructure
in the country seems to be well on its way to secure a firm
foundation. The cotton textile industry in India can look forward
to meet its major raw material requirements through indigenous
supply of clean cotton.
Sree Varasidhi Vinayaka Cottons (SVVC), was established in 2017 as
a Partnership firm by Mrs.Y.Rajyalakshmi and Mrs.V.Revathi. The
firm has a cotton ginning and pressing factory with a total
installed capacity of 1,51,200 Quintals p.a. at its manufacturing
unit located at Jogulamba Gadwal District, Telangana State. The
firm has major customers like Sri Lakshmi Saraswathi Textiles Arni
Limited and Subbaraju Cotton Mill Private Limited among others.
SVVC purchases raw cotton from farmers in and around Telangana
state.
SRINIVASAN CHARITABLE: Ind-Ra Keeps 'D' Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Srinivasan
Charitable & Educational Trust's bank loan rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will
continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating action is:
-- INR2.370 bil. Bank loans (long-term) maintained in non-
cooperating category with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The rating was last reviewed on May
31, 2017. Ind-Ra is unable to provide an update as the agency does
not have adequate information to review the ratings.
COMPANY PROFILE
Srinivasan Charitable & Educational Trust was established in 2006
by Shri. A. Srinivasan. The trust runs five educational
institutions in Tamil Nadu. It offers engineering, polytechnic,
nursing, and medical courses and operates a hospital in Perambalur
district.
SRINIVASAN HEALTH: Ind-Ra Keeps 'D' Loan Rating in Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Srinivasan
Health & Educational Trust's bank loan rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will
continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the
agency's website.
The detailed rating action is:
-- INR1.80 bil. Bank loans (Long-term) maintained in non-
cooperating category with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The rating was last reviewed on May
31, 2017. Ind-Ra is unable to provide an update as the agency does
not have adequate information to review the ratings.
COMPANY PROFILE
Srinivasan Health & Educational Trust was founded by A. Srinivasan
in 2009 with an objective to promote, set up, and run charitable
institutions, educational institutions, and hospitals.
SUBHANG CAPSAS: CARE Cuts INR5.46cr Loan Rating to 'B', Not Coop.
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Subhang Capsas Private Limited (SCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.46 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 had, vide its press release dated March 15, 2019, placed the
rating(s) of SCPL under the 'issuer non-cooperating' category as
SCPL had failed to provide information for monitoring of the
rating. SCPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter/email dated April 09, 2020, April 10, 2020 and April
13, 2020. 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.
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 rating factored in deterioration in capital
structure and debt coverage indicators in FY19(Audited, refers to
period April 1 to March 31). The rating also takes into account its
modest scale of operations, thin profit margins and stretched
liquidity. The rating also factored in its susceptibility of its
operating margin to raw material price fluctuation and presence in
highly competitive and fragmented plastic industry. However, rating
derives strength from experienced promoters, well established
marketing network and reputed client profile.
Detailed description of the key rating drivers
At the time of last rating on March 15, 2019 the following were the
rating strengths and weaknesses: (updated from the information
available from company register).
Key Rating Weaknesses
* Modest scale of operations with thin profit margins: During FY19
(A), the total operating income has increased marginally but stood
modest at INR20.91crore as against INR19.77crore during FY18.
Further, the operating margins improved due to decrease in material
cost and other manufacturing cost during FY19 but stood moderate at
8.67% during FY19 (A) as compared to 7.57% during FY18. However,
the PAT margin dipped marginally due to increase in interest and
depreciation cost and remained thin at 1.22% in FY19
against 1.42% during FY18.
* Deterioration in capital structure and debt coverage indicators:
On back of increase in debt level, capital structure deteriorated
and remained leveraged as reflected by an overall gearing ratio of
2.22 times as on March 31, 2019 as compared to 1.81 times as on
March 31, 2018. As a result of deterioration in leveraged position,
debt coverage indicators also deteriorated and remained weak marked
by total debt to GCA ratio amd interest coverage ratio of 14.79
times and 1.76 times in FY19 as against 12.97 times and 1.77 times
during FY18.
* Elongated operating cycle: During FY19 operating cycle elongated
due to elongation in collection days and inventory holding days and
remained at 150 days as against 138 days in FY18.
* Operating margins are susceptible to raw material price
fluctuation: The price of its raw material i.e. polypropylene
granules (PP) is dependent on crude oil prices which are highly
volatile. Further, the company does not have any long term
contracts with the suppliers for the purchase of raw materials.
Hence, the profitability of the company could get adversely
affected with any sudden spurt in the raw material prices.
* Presence in highly competitive and fragmented plastic industry:
The industry is highly fragmented with a large number of small to
medium scale unorganised players. Further, fungible nature of
products with no visible differentiators has also resulted in a
highly competitive market.
Key Rating Strengths
* Experienced promoters: The management of SCPLcomprises of
Mr.Jasbir Singh Arora and Mr.Angad Arora who holds experience of
more than three decades in the same line of business.
* Well established marketing network and reputed client profile:
Within a very short span of time SCPL has made a good presence in
the market and selling its products to Silvassa, Baroda,
Maharashtra, Indore and Gurgaon. Its client portfolio is also
well-diversified in the domestic market and includes well
established companies from the domestic market.
Liquidity Analysis: Stretched
Liquidity was stretched marked by negative cash flow from
operations at INR8.45 crore in FY19 as against positive CFO of
INR0.55 crore during FY18. Cash & Bank remained low at INR0.05crore
as on March 31, 2019 as against INR0.20crore as on March 31, 2018.
Average working capital utilization for the past 12 months ending
March 31, 2020 remained at 70%. During FY19, GCA remained tightly
matched at INR0.74crore as against repayment obligation of
INR0.72crore for FY20.
Silvassa (U.T., D.N.H.) based SCPL was incorporated in the year
2011and it is engaged in manufacturing of moulding products for
packaging solutions. At present, the company manufactures blow
moulded containers with the capacity ranging from 15 litres to 120
litres. The company's manufacturing unit is located at Silvassa
only and operates with an installed capacity of 1440 MT Per Annum.
SUN SHINE: CARE Cuts Rating on INR10cr Loan to 'B', Not Cooperating
-------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sun
Shine Autos Private Limited (SSAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 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 had, vide its press release dated November 13, 2017, placed
the rating(s) of SSAPL under the 'issuer non-cooperating' category
as SSAPL had failed to provide information for monitoring of the
rating and had not paid the surveillance fees for the rating
exercise as agreed to in its Rating Agreement. SSAPL continues to
be noncooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter/email dated
April 21, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating has been revised on account of non-cooperation by SSAPL
and CARE's efforts to undertake a review of the ratings
outstanding. CARE views information availability risk as a key
factor in its assessment of credit risk.
Detailed description of the key rating drivers
At the time of last rating on February 20, 2019 the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
* Modest scale of operations coupled with low networth: SAPL's
total operating income has declined during the period FY17-19 and
remained at INR102.38 crore in FY19 vis-à-vis INR102.52 crore in
FY18. SAPL's PBILDT margin remained low (in the range of – 1.85%
to 0.27% during FY17 to FY19) on account of increase in other
direct expenses along with additional cash discount offered (for
promotion).
* Leveraged capital structure and weak debt coverage indicators:
The capital structure of the company remained leveraged with
overall gearing of 2.60x as on March 31, 2019. Moreover, owing to
high gearing level and low profitability, the debt coverage
indicators also stood weak.
* Weak liquidity position: The liquidity position is marked by low
current ratio and high level of utilization of its working capital
limits. Further the working capital cycle remained at 42 days
during FY19.
* Cyclicality of auto industry & presence in highly competitive
market: The auto industry is inherently vulnerable to the economic
cycles and is highly sensitive to the interest rates and fuel
prices of petrol and diesel. A hike in interest rates increases the
costs associated with the purchase leading to deferral. Fuel prices
have a direct impact on the running costs of the vehicle and any
hike in the same would lead to reduced disposable income of the
consumers, influencing new car purchase decision. The company thus
faces significant risks associated with the dynamics of the auto
industry. Further, the company is exposed to external competition
from dealers of other automobile manufacturers such as Maruti,
Tata, Hyundai and others which are all present in Bihar. In order
to capture the market share, the auto dealers generally have to
offer better buying terms like providing credit period or allowing
discounts on purchases. Such discount creates margin pressure and
may negatively impact the earning capacity of the company.
Key rating strengths
* Experienced promoters with established presence in automobile
dealership market in Aurangabad (Bihar): The overall management of
SAPL is vested in the hand of its promoter and MD, Mr. Sunil Kumar
Singh, who has been engaged in automobile dealership business for
more than two decades and looks after the day to day operations of
the company. Further, he is also supported by other three
directors of the company i.e. Mrs. Gayatri Singh, Mrs. Arti Singh
and Mr. Shashank S. Singh who are also actively involved in the
business having average experience of more than a decade and also
looks after the day to day operations of the company. The
promoter's extensive experience has helped the company to establish
strong relationship with reputed automobile company and has derived
automobile dealership in Aurangabad, Bihar for Mahindra and
Mahindra Limited.
Sun Shine Autos Private Limited (SAPL) was incorporated in 2008 by
Mr. Sunil Kumar Singh and family members. SAPL is a dealer of
passenger cars, spares & accessories of Mahindra & Mahindra Limited
for Aurangabad (Bihar) having a showroom and services center
located at Aurangabad and stockyard at M.G. road (Aurangabad city).
SAPL is the sole Mahindra dealer in Aurangabad, Bihar. SAPL has two
group companies namely Pushpanjali Coal and Coke Private Limited
and Sun Shine Fules.
SURYA MANUFACTURING: CARE Cuts Rating on INR24cr LT Loan to 'D'
---------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Surya Manufacturing Private Limited (SMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 24.00 CARE D; Issuer Not Cooperating;
Facilities Revised from CARE BB-; Stable;
Issuer not cooperating on the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 19, 2019, placed
the ratings of SMPL under the 'issuer non-cooperating' category as
SMPL had failed to provide information for monitoring of the
rating. PPPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter dated April 21, 2020. 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.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised on account of ongoing delays and
classification of the account as a Non-Performing Asset by the
lenders. CARE also takes cognizance of an impending money
laundering case having been initiated against the family members
and promoters of the company.
Detailed description of the key rating drivers
At the time of last rating on February 19, 2019, the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* Deterioration in the operational performance: SMPL's total
operating income (TOI) declined by ~54% y-o-y basis and stood at
INR70.76 crore during FY18 (PY: INR153.12 crore), as the turnover
was reportedly impacted with the implementation of high slab rate
of 28% goods and services tax (GST) on plywood in July 2017.
Further, the company has reported estimated sale of INR1.86 crore
only till May 31, 2018.
* Weakening of liquidity position: SMPL's operating cycle
elongated to 220 days as on March 31, 2018 (PY: 76 days), driven by
stretched collection period and increase in the stock of unsold
goods. The company has changed its customer base and it has
consciously chosen to deal with customers wherein margin is higher.
The fund based working capital limit remains fully
utilized.
* Low profitability margins attributable to the highly fragmented
and competitive industry: PBILDT margin improved to 6.74% in FY18
from 3.44% in FY17 on account of change in the customer base.
Consequently, PAT margin also improved to 0.23% in FY18 (PY:
0.04%). However, the margins continue to be low due to highly
competitive and fragmented nature of industry.
Key Rating Strengths
* Experienced promoters and long track record of operations: Key
promoter – Mr. Aditya Kejriwal has an experience of more than 2
decades in the plywood industry. The company has a track record of
more than 2 decades, which coupled with extensive experience of the
promoters enabled it to develop established procurement channels
and marketing arrangements with approximately 150 dealers PAN
India.
* Moderate financial risk profile: The company's overall gearing
stood at 0.60x as on March 31, 2018 (PY: 0.55x). Interest coverage
ratio remained moderate at 1.65x in FY18 (PY: 1.74x). However,
total debt to gross cash accruals increased and stood high at
18.64x as on March 31, 2018 (PY: 12.46x).
SMPL was incorporated in 1995 as a private limited company by Mr.
Mahavir Prasad Kejriwal. Currently, the company's operations are
being managed by his grandson, Mr. Aditya Kejriwal. SMPL is
primarily engaged in the manufacturing of various types of plywood,
block boards, flush doors, gurjan plywood, triple pressed &
calibrated teak plywood and decorative veneers. The manufacturing
facilities of the company are located in Araria (Bihar) and Jhajjar
(Haryana) with total installed capacity of 1,25,100 cubic meters
per annum as on September 30, 2017.
VIDHATA INDUSTRIES: CARE Keeps B+ INR10cr Debt Rating in Not Coop.
------------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Vidhata
Industries Private Limited (VIPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.00 CARE B+; Issuer not cooperating;
Facilities on the basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from VIPL to monitor the ratings
vide e-mail communications/letters dated February 10, 2020,
February 14, 2020, February 19, 2020, February 26, 2020, March 03,
2020, March 06, 2020, March 11, 2020 and March 14, 2020, March 19,
2020, April 22, 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 VIPL's
bank facilities will now be denoted as CARE B+; Stable; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating takes into account the small & fluctuating scale with
weak overall solvency position and inherent risk associated with
the trading business. The rating is further constrained by
susceptibility of margins to the fluctuation in raw material
prices, fragmented nature of industry and linkage of fortunes of
the company to demand from the cyclical real estate industry. The
rating however, derives strength from the experienced promoters,
established business relationships with customers and suppliers and
flexibility in production to manufacture diverse products at a
favorable location of operations.
Detailed description of the key rating drivers
At the time of last rating on April 2, 2019, the following were the
rating strengths and weaknesses:
Key Rating Weaknesses
* Small & fluctuating scale with weak overall solvency position:
The scale of operation of the company has remained small and
fluctuating in nature. The operating income of the company
increased by ~8% in FY19 (refers to the period from April 1 to
March 31) to INR59.92 cr. The company's capital structure remained
weak as marked by long-term debt to equity and overall gearing
ratios of 0.95x and 1.93x, as on March 31, 2019 (PY: 1.08x and
2.07x, respectively). The total debt to GCA ratio also remained at
a weak level of 19.68x, as on March 31, 2019 (PY: 20.72x). The
interest coverage ratio, however, stood moderate in FY19.
* Inherent risk associated with the trading business: The company
is exposed to the risks associated with the trading nature of
business like inherently low profitability margins, low product
differentiation, etc.
* Susceptibility of margins to fluctuation in raw material prices
and fragmented nature of industry: The prices of wood have remained
volatile in the past, which coupled with highly competitive and
fragmented nature of the industry leads to susceptibility of VIPL's
profitability margins to fluctuations in the raw material prices.
* Fortunes linked to demand from the cyclical real estate industry:
VIPL supplies primarily to the real estate sector which is
cyclical in nature with the performance dependent upon the overall
economic conditions in the country. Further, the real estate
industry is also expected to be affected by the ongoing spread of
COVID-19.
Key Rating Strengths
* Experienced promoters: The operations of the company are
currently being managed by Mr. Vishal Juneja and Mr. Amit Juneja.
The promoters are having experience of over 10 years in the
industry through their association with VIPL and prior engagement
in the plywood industry.
* Established business relationship with customers and suppliers:
Presence of VIPL in the plywood industry for more than a decade and
favorable location of the plant in Punjab has led to development of
long term relationships with the suppliers and therefore easy
procurement of raw materials. On the customer side, this has
enabled the company to establish strong business relationships with
its clientele (long standing relationship of around 5-7 years with
some of the clients) in the market.
* Flexibility in production to manufacture diverse products at a
favorable location of operations: VIPL manufactures various
products such as Plywood, Block Boards, Decorative Veneers and
Doors and various sub segments in these products in various
specifications. Further, VIPL's manufacturing unit is located in
Ludhiana, Punjab, leading to easy availability of wood from Punjab
and surrounding states. The presence of VIPL in vicinity to the
wood producing regions gives it an advantage over competitors in
terms of easy availability of the raw material as well as favorable
pricing terms.
Vidhata Industries Private Limited (VIPL) started its operations in
2008 with Mr. Vishal Juneja and Mr. Amit Juneja (brothers), as its
directors. The company is engaged in the trading and manufacturing
of Plywood, Block Boards, Decorative Veneers and Doors at its
manufacturing facility in Ludhiana, Punjab. The company has its
presence in overall 14 states in India with major
revenue accounting from states of Punjab, Madhya Pradesh and
Maharashtra.
=========
J A P A N
=========
MITSUBISHI HEAVY: Plans to Slash Workforce at Regional Jet Unit
---------------------------------------------------------------
The Japan Times reports that Mitsubishi Heavy Industries Ltd. is
planning to slash the number of employees working on its struggling
regional jet business amid bleak demand for aircraft due to the
coronavirus pandemic, sources close to the matter have said.
The Japan Times relates that the plan, revealed May 22, comes as
its aircraft subsidiary, Mitsubishi Aircraft Corp., has repeatedly
delayed the first delivery of a small passenger jet, called the
Mitsubishi SpaceJet and previously known as the Mitsubishi Regional
Jet, due to parts problems.
The Mitsubishi Heavy unit plans to downsize mass production of the
90-seat class passenger jet it aims to begin delivering in fiscal
2021 or later, the sources said, the report relays.
The Japan Times says the aircraft would be Japan's first
domestically developed passenger jet. Mitsubishi Heavy hoped the
jet could have potential in the commercial aircraft market as many
airlines shift to small and midsize planes from larger ones due to
mileage efficiency.
But the coronavirus pandemic has taken a toll on the airline
industry worldwide, dampening demand for purchases of new aircraft
as many airlines face huge profit losses, the report states.
When Mitsubishi Heavy released its earnings report for fiscal 2019,
it revealed the company's plan to reduce the budget for the
development of the homegrown passenger jet to about JPY60 billion
($560 million) in the current business year from around JPY140
billion in fiscal 2019, according to The Japan Times.
According to The Japan Times, Mitsubishi Aircraft had already
pushed back the first delivery of its passenger jet to next year or
later, in its sixth schedule delay.
The company initially planned to begin delivering the jetliner in
2013, but the plan was repeatedly revised due to changes in design,
reviews of the manufacturing process and a delay in parts
delivery.
Under the current plan, Mitsubishi aims to start development of a
smaller 70-seat class passenger jet after completing development of
the 90-seat class jet.
Mitsubishi Heavy anticipates high demand for the smaller jet in the
North American market. But progress on finishing the 90-seat class
jet remains stalled, as the timing of transporting the latest
prototype model to the United States for test flights has not been
decided due to the outbreak.
Based in Japan, Mitsubishi Heavy Industries, Ltd. --
http://www.mhi.co.jp/indexe.html-- was founded by Yataro Iwasaki
in 1884 as a shipbuilding firm called Nagasaki Shipyard & Machinery
Works, which was later named Mitsubishi Shipbuilding Co. Ltd., and
then again launched as Mitsubishi Heavy Industries, Ltd. in 1934 as
a private firm that manufactured ships, heavy machinery, airplanes
and railroad cars.
In 1950, Mitsubishi Heavy was divided into three separate entities
on a law aimed toward dissolving Nagasaki Shipyard & Machinery
Works and thus dismantling the overconcentration of economic power.
It was later consolidated in 1964 and repborn as Mitsubishi Heavy
Industries, Ltd.
NISSAN MOTOR: Mulls to Cut More Than 20,000 Jobs in Europe
----------------------------------------------------------
The Japan Times reports that Nissan Motor Co. is looking to cut
over 20,000 jobs or about 15 percent of its global workforce as
part of its restructuring plan due to slumping sales hit by the new
coronavirus outbreak, sources close to the matter said.
The report relates that Japan's third-largest automaker by volume
is considering labor reduction in Europe and some emerging
countries, the sources said.
The Japan Times says the global spread of the novel coronavirus has
led to the suspension of Nissan's domestic and overseas plants,
pressuring its sales in major markets such as North America and
Europe.
According to The Japan Times, Nissan said in July that it would cut
12,500 jobs at 14 production bases globally by March 2023 as part
of restructuring.
But its deepening business slump amid the pandemic has pushed it to
work on additional reform measures including closing plants in
Spain as well as Indonesia and some other emerging markets, the
report relates.
The Japan Times notes that Nissan has been in turmoil since the
November 2018 arrest of former Chairman Carlos Ghosn, with an aging
car lineup and management paralysis denting its outlook. The
automaker warned last month it expects to post a loss for the
latest fiscal year through March, as the pandemic shuttered
dealerships in major markets and the economic fallout hurt consumer
demand for new cars.
The Japan Times says Nissan plans to cut about JPY300 billion ($2.8
billion) in annual fixed costs and book restructuring charges as
the pandemic further depresses the carmaker's sales, another source
with knowledge of the measures said last week.
The Yokohama-based company will phase out the Datsun brand, shut
down one production line in addition to the recently closed
operation in Indonesia and reach the reduced spending target this
year by cutting marketing, research and other costs, the source, as
cited by The Japan Times, said.
About Nissan Motor
Nissan Motor Company Ltd, usually shortened to Nissan, is a
Japanese multinational automobile manufacturer headquartered in
Nishi-ku, Yokohama, Japan.
As reported in the Troubled Company Reporter-Asia Pacific on April
21, 2020, Egan-Jones Ratings Company, on April 6, 2020, downgraded
the foreign currency and local currency senior unsecured ratings on
debt issued by Nissan Motor Co., Ltd. to BB from BBB.
=====================
N E W Z E A L A N D
=====================
SMITHS CITY: Placed Into Receivership to Hasten Sale
----------------------------------------------------
Radio New Zealand reports that Smiths City has been placed into
receivership to allow a quick sale to Polar Capital, a private
investment company. The sale needed only shareholder approval, but
the Board opted for receivership to avoid a time consuming vote,
the report says.
RNZ relates that in a letter to shareholders the Board apologised
for its course of action but justified its decision.
"Further delay risked jeopardising the completion of the sale and a
reduction in the amount available to secured and unsecured
creditors. The business cannot function without the confidence of
suppliers and customers."
"The Board considered an insolvency process was inevitable. If
shareholders rejected the transaction, the Board would have
requested that receivers be appointed as the financial position of
the company was not sustainable.
"In the knowledge that shareholder value was gone, the Board's duty
became to preserve as much value as possible for creditors. The
appointment of receivers today was necessary to fulfil that duty."
According to RNZ, details of the NZD60 million deal were released
earlier last week, and included the closure of seven stores and job
losses for just over 100 staff.
Polar Capital is owned by Colin Neal, the founder of the
refrigerated logistics company, Big Chill, the report discloses.
Smiths City signalled in March the Covid-19 pandemic was having a
significant impact on the business, and in its letter on May 22
reiterated the impact had been "catastrophic".
RNZ relates that Board chairperson Alastair Kerr said the situation
had been challenging.
"Compounded by unprecedented circumstances . . . we sincerely
regret that directors have had to take this action. However, while
this outcome is extremely disappointing for both the Board and
shareholders, we have been able to take steps to protect Smiths
City's legacy and the hundreds of jobs that will transition to the
new business.
"The Board will now work to ensure an orderly transition of Smiths
City Group to the receivers."
Colin Gower and Diana Matchett of BDO Christchurch and Andrew
Bethell of BDO Auckland have been appointed as the joint receivers
and managers, RNZ discloses. Immediately on appointment the
receivers waived the remaining condition and settled the sale.
RNZ adds that stores will trade as usual, and the ones marked for
closure will wind down in the coming weeks. Those stores are:
Mount Wellington, Porirua, Lower Hutt, Kapiti, Whangārei, the
Invercargill clearance centre and the Christchurch outlet store.
Smiths City Group Limited -- https://www.smithscity.co.nz/ --
engages in retail trading and consumer finance businesses in New
Zealand. It is involved in the retailing of heating solutions,
consumer electronic products, kitchen appliances, indoor and
outdoor furniture, bedding, lawnmowers, cycles, and camping
equipment to middle to lower income household.
=================
S I N G A P O R E
=================
HYFLUX LTD: Clarifies Report in Middle Eastern Media on Utico
-------------------------------------------------------------
The Business Times reports that Hyflux on May 21 clarified a report
in Middle Eastern news service The National, which said that white
knight Utico was planning a US$500 million sukuk issuance to pay
down debt, and that Utico had taken a 95 per cent stake in Hyflux
last November with a total investment of SGD400 million.
"That is incorrect," Hyflux said in a filing to the Singapore
Exchange on May 21.
"The company wishes to clarify that, while the restructuring
agreement was signed with Utico on Nov. 26, 2019 . . . as at
November 2019 (being the time referred to in the article) as well
as the date of this announcement, completion has yet to occur and
Utico has neither taken a 95 per cent stake in the company nor made
a total investment of SGD400 million (or any investment) in the
company."
According to BT, meetings for the reorganisation should have taken
place in the months of April and May this year, but due to the
Covid-19 pandemic, Hyflux last month filed urgent applications to
the High Court to change the timelines to convene the scheme
meetings, at which creditors will vote on Utico's rescue deal.
BT says the court has since ordered that the scheme meetings on
April 22 and 23 be postponed to a later date to be decided. The
moratorium was also extended to July 30.
About Hyflux
Singapore-based Hyflux Ltd -- https://www.hyflux.com/ -- provides
various solutions in water and energy areas worldwide. The company
operates through two segments, Municipal and Industrial. The
Municipal segment supplies a range of infrastructure solutions,
including water, power, and waste-to-energy to municipalities and
governments. The Industrial segment supplies infrastructure
solutions for water to industrial customers. It has business
operations across Asia, Middle East and Africa.
As reported in the Troubled Company Reporter-Asia Pacific on May
24, 2018, Hyflux Ltd. said that the Company and five of its
subsidiaries, namely Hydrochem (S) Pte Ltd, Hyflux Engineering Pte
Ltd, Hyflux Membrane Manufacturing (S) Pte. Ltd., Hyflux Innovation
Centre Pte. Ltd. and Tuaspring Pte. Ltd. have applied to the High
Court of the Republic of Singapore pursuant to Section 211B(1) of
the Singapore Companies Act to commence a court supervised process
to reorganize their liabilities and businesses. The Company said
it is taking this step in order to protect the value of its
businesses while it reorganises its liabilities.
The Company engaged WongPartnership LLP as legal advisors and Ernst
& Young Solutions LLP as financial advisors in this process. On
Jan. 29, WongPartnership applied to discharge themselves due to
difficulties relating to "loss of confidence and good cause" in
working with the client. The Company subsequently appointed
Clifford Chance and Cavenagh Law as its legal advisers in WongP's
place.
In November 2019, Hyflux entered into a restructuring deal with
United Arab Emirates-based utility Utico FZC, according to Reuters.
=============
V I E T N A M
=============
VIETNAM: S&P Affirms 'BB/B' Sov. Credit Ratings, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' long-term and 'B' short-term
sovereign credit ratings on Vietnam. The outlook is stable. The
transfer and convertibility assessment remains unchanged at 'BB'.
Outlook
The stable outlook reflects S&P's expectation that Vietnam's
economy will continue to expand rapidly, exemplifying gradual
improvements in its policymaking settings and underpinning credit
metrics.
Upside scenario
S&P may raises its ratings over the next one to two years if
Vietnam's strong economy translates into fiscal outcomes that are
better than we expect, or if systemic risks in the country's
banking sector recede further.
Downside scenario
S&P said, "We may lower the rating if the economic downturn in
Vietnam persists well beyond 2020. Potential risks include a
longer-lasting, more severe global pandemic and the emergence of
considerable stress in the country's banking system.
"We may also downgrade Vietnam if its fiscal performance
deteriorates markedly, leading to a higher annual change in net
general government debt relative to GDP."
Rationale
S&P's ratings on Vietnam reflect its lower-middle-income economy,
legacy banking sector weaknesses, and evolving institutional
settings. These weaknesses are weighed against the economy's strong
growth prospects and sound external position. Vietnam's broadly
balanced external accounts, and its ability to attract consistently
strong foreign direct investment (FDI), provide further support to
the ratings.
Institutional and economic profile: Vietnam's economy should
recover quickly following the COVID-19 pandemic
-- Vietnam's economy should achieve a strong recovery following a
deep slowdown owing to the COVID-19 pandemic this year.
-- Beyond 2020, S&P expects export-led growth and strong domestic
demand to keep Vietnam's trend growth rate well above the average
of its peers.
-- Despite the highly centralized nature of Vietnam's policy
environment, S&P believes that institutional settings will support
strong development outcomes over time.
In tandem with the global economy, Vietnam's economic growth will
be hit hard by the COVID-19 pandemic and the associated downturn.
S&P forecasts real GDP growth to fall to 1.2% this year, with
precipitous declines in global trade and tourism taking a
considerable toll on the economy's near-term prospects. However,
Vietnam's economy is well-placed to achieve a rapid recovery,
assuming that the pandemic is largely contained toward the end of
2020 or the beginning of 2021. Under these circumstances, S&P
expects real GDP growth to rebound in 2021, before settling closer
to Vietnam's long-term trend rate of growth between 6.0%-7.0% from
2022 onward. Vietnam's attractiveness as a premier destination for
FDI in Southeast Asia, along with its young, increasingly educated,
and competitive workforce, should help to keep the country's
long-term development trajectory intact.
Although Vietnam has a lower-middle-income economy, its GDP per
capita has risen quickly over recent years from a relatively low
base. A recent upward revision of the country's official nominal
GDP, meant to better capture activity from emerging industries,
measures GDP per capita in 2019 at US$3,449, versus US$1,964 in
2011. Vietnam's economy is increasingly well-diversified, with a
burgeoning manufacturing sector that is largely funded by FDI.
Continued improvements in macroeconomic stability have supported
the manufacturing sector's attractiveness to global firms in the
electronics, mobile phone, and textiles industries. Vietnam's
robust FDI-oriented economy continues to fuel stronger domestic
activity, particularly through private consumption. The outlook for
these growth drivers over the next year is poor, owing to weakening
global trade and labor market conditions, as well as cautious
consumer sentiment. However, low household leverage in Vietnam
provides space for private consumption growth to rebound quickly
once the global economy begins to recover.
S&P said, "Despite consistently strong credit growth prior to 2019,
and the considerable scale of banking sector assets relative to
GDP, we do not observe credit being the primary driver of economic
growth. Still, the global economic downturn will test rising land
prices and strong real estate development trends in major cities
such as Hanoi and Ho Chi Minh over the last few years. We expect
Vietnam's 10-year weighted average growth of real GDP per capita to
be approximately 5.2%, significantly higher than the average of the
country's peers at a similar income level."
Vietnam is well-placed to recover following the containment of the
pandemic, but the economy faces a variety of domestic and external
risks. On the external front, trade disputes between major
economies and the impact of the COVID-19 pandemic, especially on
its key trading partners, will very likely undermine export
momentum over the short term. S&P expects key trading partners such
as China, South Korea, the U.S., and Japan to face substantial
economic damage from the pandemic over the near term. Given the
extraordinarily large share of trade relative to the size of its
economy and exposure to risks from disruption to the global supply
chain, Vietnam faces elevated risks associated with the severe
decline in global trade flows. Domestically, a higher fiscal
deficit this year and moderate public indebtedness mean that new
sources of funding will likely be needed to continue to spur strong
infrastructure investment. Relatively weak banks in Vietnam,
characterized by low levels of capitalization and mixed asset
quality, also pose a degree of risk to the economic outlook.
The Vietnam government's socioeconomic development plans provide
useful policy anchors that have improved macroeconomic stability
and inflation management over recent years. This has translated
into consistently high real GDP growth, averaging 6.5% annually
since 2013.
The country's government has delivered strong development outcomes
since the global financial crisis and its own domestic banking
sector crisis in the early 2010s. S&P siad, "In our opinion, checks
and balances within the government are limited, but the social
compact between the government and citizens remains strong. The
Communist Party's mandate is contingent upon its ability to
consistently provide broad-based improvements in income levels and
quality of life. On the basis of this relationship, we believe the
government faces limited challenges to its legitimacy in the medium
term." The government's successful management of the COVID-19
outbreak thus far should solidify public support, and speaks to the
competencies of Vietnam's institutions.
Nevertheless, decision-making in Vietnam remains highly centralized
under its one-party system, and transparency is impaired, in S&P's
opinion. These considerations are factored into our broader
assessment of the country's institutional settings, along with our
overall ratings.
S&P believes Vietnam's accession as a founding signatory to the
Comprehensive and Progressive Agreement to Trans-Pacific
Partnership (CPTPP) in late-2018 and the recently ratified European
Union-Vietnam Free Trade Agreement (EVFTA) reflects the
government's willingness to adopt and implement constructive
reforms, especially in the state sector, over the long term.
The country's global ranking in the World Bank's annual Doing
Business survey surged to 70th in 2019, from 99th in 2013, with
strong gains in contract enforcement, regulatory environment, and
improvements in access to credit and tax payment.
Vietnam's Ministry of Finance (MoF) announced a delay in payment on
a government-guaranteed debt obligation last year, which the
government had already repaid at that point. The government had not
received an official request from the creditors at the time of its
repayment on the obligation. In S&P's view, the administrative time
gap does not indicate financial resource stress on the part of
Vietnam's government.
In the ensuing months, the government tightened administrative
procedures to ensure such delays do not reoccur. It also made the
MoF wholly responsible for making full and immediate payment on
debt obligations.
Vietnam still faces relatively high levels of corruption, but the
Communist Party has adopted a much more aggressive approach toward
corrupt practices over the past three years, and we expect this
approach to continue through 2020. S&P believes these improvements
will support strong and balanced economic growth over the coming
years.
Flexibility and performance profile: Fiscal profile at risk owing
to pandemic
-- Although S&P's forecast roughly stable debt levels relative to
GDP at the general government level, fiscal measures aimed at
supporting the economy will hamper consolidation efforts over the
next one to two years.
-- The government will be challenged to maintain budgetary support
from its equitization program in the midst of the global pandemic.
Vietnam's external profile remains a strength for S&P's ratings,
even in the context of an acute weakening in external trade flows.
Foreign exchange buffers are ample, and export growth should
recover from 2021 onward.
S&P said, "We view Vietnam's shortfall in basic services to the
population and in infrastructure to be a constraint on fiscal
performance. This factor is likely to result in spending pressure
for a long time. Officials have successfully curtailed growth in
government guarantees, which has stabilized Vietnam's broader
measure of public and public-guaranteed debt well below the
self-mandated cap of 65% of GDP. However, stricter standards for
the provision of these guarantees may constrain financing
conditions for infrastructure projects, especially electricity
generation. The government's net indebtedness relative to the size
of the economy has also fallen, owing to a significant upward
revision to Vietnam's GDP figures.
"We expect the Vietnam Asset Management Co. (VAMC) to begin issuing
debt to fund the purchase of bad assets in 2020. We have included
this debt in our calculation of general government indebtedness in
the forecast years." Legislation empowered the VAMC in 2017 to
purchase and resolve nonperforming assets with cash; the VAMC's
previous process relied solely on exchanging special bonds for
troubled assets from banks. Over time, this should contribute to
the development of more sophisticated bad debt markets in Vietnam,
leading to greater financial market stability.
Vietnam's fiscal deficit is likely to rise beyond 5% of GDP this
year as the government employs measures to support the economy, and
revenue growth weakens. Even as the country's economy begins to
reopen, deep linkages with the global economy will cap growth
potential and affect a wide variety of businesses. As such, the
government could introduce additional measures to support
vulnerable individuals and prevent structural damage to the
economy.
S&P said, "In our opinion, Vietnam's fiscal settings could face
additional stress over the medium term, in the absence of more
structural consolidation measures. Although the equitization of
state-owned firms has provided significant budgetary support in
past years, we do not believe this mechanism represents a
sustainable source of long-term revenue.
"Despite the very weak outlook on external demand this year,
Vietnam's external metrics still support our ratings." The
country's current account is likely to remain in modest surplus
annually to 2023. Robust manufacturing and services (mainly
tourism), exports, and large (and rising) remittances will
counteract strong growth in the import of capital and consumption
goods.
Strong FDI in manufacturing continued in 2019 despite a challenging
external environment due to increased protectionism, demonstrating
Vietnam's resilient investment environment. The country's
competitive unit labor costs, improving educational standards, and
constructive demographics imply continued growth in FDI and goods
exports. Participation in free trade agreements such as the CPTPP
and EVFTA could provide further upside to Vietnam's export
earnings. S&P expects the country to continue pursuing enhanced
market access via bilateral and multilateral free trade
initiatives, including the Regional Comprehensive Economic
Partnership.
Vietnam's external metrics are generally sound and stable. The
country's external debt stock position--as measured by narrow net
external debt (the ratio of gross external debt less official
reserves and financial sector external assets to current account
receipts [CARs])--continues to improve, and we expect it to average
12% over 2020-2023. Vietnam has accumulated foreign exchange
reserves at a rapid pace over recent years owing to its high
balance of payments surpluses, and these reserves can act as an
additional buffer during periods of external stress.
S&P said, "At the same time, we project external liquidity
needs--measured by the ratio of gross external financing needs to
CARs and usable reserves--to remain below 90% over the period. We
do not expect a marked deterioration in Vietnam's external
financing due to a reduction in disbursements from donors, or a
destabilizing shift in FDIs or portfolio equity investments."
The government's external indebtedness has been declining, at
approximately 39% of total borrowings as of end-2019. That said,
gross external indebtedness, at the economy-wide level, has grown
markedly in recent years. Vietnam's external data lack consistency,
with persistently high errors and omissions in its balance of
payments.
The country's domestic banks benefit from being in an external net
asset position, with still-limited linkages to global markets.
However, its system stability is hampered by elevated nonperforming
assets and cross-ownership, connected lending, and legacy exposure
to borrowers still affected by the 2009-2012 real estate downturn.
Capital adequacy is in some cases borderline, and may be pressured
further amid the ongoing implementation of stricter Basel II
standards. Unclear loan classification and provisioning, combined
with government policies directed at the resolution of distressed
banks through the VAMC, weigh on a fuller assessment of the
condition and outlook for Vietnam's financial system.
Relative to GDP, the total banking system size is large for a
sovereign at this development level. S&P said, "We classify
Vietnam's banking sector in group '9' under our Banking Industry
Credit Risk Assessment (with '1' being the highest assessment and
'10' being the lowest). For these reasons, we expect the sovereign
to face moderate contingent liability risk from the banking sector.
System credit growth declined notably in 2018 and remained at
moderate levels since then; we view this trend as constructive for
the stability of the banking sector, should it continue."
S&P said, "In our view, the State Bank of Vietnam has a limited
ability to support sustainable economic growth while attenuating
economic or financial shocks. This reflects chiefly its limited
independence, which weakens its ability to calibrate monetary
policies with fiscal, economic, and development policies; use of
market-orientated instruments to conduct policy; and record in
maintaining low inflation, which we believe has strengthened in
recent years."
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
Ratings Affirmed
Vietnam
Sovereign Credit Rating BB/Stable/B
Transfer & Convertibility Assessment BB
Senior Unsecured BB
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S U B S C R I P T I O N I N F O R M A T I O N
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