text: TCRAP_Public/170622.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Thursday, June 22, 2017, Vol. 20, No. 123 HeadlinesA U S T R A L I AAUSTRADIA PTY: Axes 18 Jobs at Topshop Australia Head OfficeBMQ DENTAL: First Creditors' Meeting Set for June 29DICK SMITH: Shareholders Launch Class Action vs. InsurersICONIC ENTERTAINMENT: First Creditors' Meeting Set for June 28REDZED TRUST 2015-1: S&P Raises Rating on Cl. F Notes to B+ROYALE ADELAIDE: Second Creditors' Meeting Set for June 27SOCIAL CREATIVE: Second Creditors' Meeting Set for June 27SYDNEY PROJECT: First Creditors' Meeting Set for June 28XIANG RONG: First Creditors' Meeting Set for June 28C H I N AJIANGSU HANRUI: Fitch Affirms BB+ Long-Term IDR; Outlook StableREWARD SCIENCE: Fitch Lowers IDR to B; Outlook StableSHANDONG RUYI: Moody's Rates Proposed USD Sr. Unsec. Notes (P)B3H O N G K O N GNOBLE GROUP: Defers Bond Coupon Payment Due June 26NOBLE GROUP: Loan Extension No Impact on Moody's Caa1 CFRROAD KING: Moody's Rates Proposed USD Senior Perpetual Notes B1I N D I AAVADH COTEX: ICRA Reaffirms B+ Rating on INR15cr LT LoanAVADH COTTON: ICRA Reaffirms 'B' Rating on INR4.50cr LoanCORNERVIEW CONSTRUCTIONS: ICRA Cuts Rating on INR110cr Loan to DG.R.K. THEATRES: CARE Assigns B+ Rating to INR10cr LT LoanHARIKISHAN TEJMAL: CARE Reaffirms B+/A4 Rating on INR22cr LoanJAI AMBEY: CARE Reaffirms B+ Rating on INR12cr Long Term LoanK.C. PRINTING: CARE Reaffirms B+ Rating on INR7cr LT LoanMADHAV OIL: ICRA Withdraws B+ Rating on INR9.25cr Cash LoanMANJU SHREE: ICRA Reaffirms B+ Rating on INR7.21cr LoanMONNET ISPAT: Lenders Begin Insolvency ProcessNEW VARDHMAN: ICRA Reaffirms B Rating on INR19.82cr Term LoanOMKAMAL STEEL: CARE Assigns 'B+' Rating to INR4.65cr LT LoanOPTIONS LAWNS: CARE Assigns B+ Rating to INR7.85cr LT LoanPATEL COTTON: CARE Assigns B Rating to INR14.13cr LT LoanPMT MACHINES: CARE Assigns 'D' Rating to INR428.27cr LT LoanR.R. ENERGY: CARE Assigns 'B' Rating to INR66cr LT LoanSAMARTTHA TRIMURTI: CARE Assigns B+ Rating to INR15cr LT LoanSHAKUMBHRI PULP: ICRA Reaffirms B+ Rating on INR6.10cr LoanSHREE RAMANJANEYA: CARE Assigns B+ Rating to INR14.91cr LT LoanSILVERTONES SPECIALITY: ICRA Reaffirms B+ Rating on INR20cr LoanSLN CNC: ICRA Reaffirms B+ Rating on INR4.50cr Cash LoanSONATA FINANCE: ICRA Cuts Rating on INR3.19cr Sec. to B+(SO)STERLING BIOTECH: CARE Assigns 'D' Rating to INR3,768cr LoanSTERLING BIOTECH LTD: CARE Assigns D Rating to INR1,434.92cr LoanSTERLING OIL: CARE Assigns 'D' Rating to INR299.72cr LT LoanSTERLING PORT: CARE Assigns 'D' Rating to INR244.35cr LoanSUMMA REAL: ICRA Reaffirms B+ Rating on INR12.50cr Term LoanVARIETY LUMBERS: ICRA Reaffirms B+ Rating on INR2cr Cash LoanVIJAY LATEX: ICRA Withdraws 'D' Rating on INR11.93cr LoanJ A P A NTAKATA CORP: Bankruptcy Means Air Bag Victims Get Less MoneyTOSHIBA: Chooses Gov't-Led Group as Preferred Bidder for UnitN E W Z E A L A N DDC ROSS: Scott Technology Buys Firm Out of Receivership - - - - -=================A U S T R A L I A=================AUSTRADIA PTY: Axes 18 Jobs at Topshop Australia Head Office------------------------------------------------------------Emma Koehn and Dominic Powell at SmartCompany report that therehave been 18 redundancies at the head office of TopshopAustralia, with administrators Ferrier Hodgson continuing to workwith the UK owner of the Topshop brand to "resize" the businessafter it collapsed into voluntary administration in May.When administrators were called in, the Australian franchise ofthe Topshop and Topman brands had six standalone stores and 17concessions inside the outlets of department store Myer, whichowns a 20% stake in the franchise, SmartCompany relates."The administrators are continuing discussions with ArcadiaGroup, with a focus on right sizing the Topshop Topman Australianbusiness. Some restructuring has already commenced, which hasunfortunately resulted in 18 head office redundancies," aspokesperson for the administrators confirmed to SmartCompany onJune 21.Austradia Pty Ltd (trading as 'Topshop/Topman'), one ofAustralia's best known fast fashion retailers, was placed intovoluntary administration on May 24.Ferrier Hodgson partners James Stewart, Jim Sarantinos, and RyanEagle were appointed voluntary administrators by the company'sboard of directors.Topshop and Topman are the foundational brands of Arcadia GroupLtd, a British multinational fashion retailer. The separatelyowned and operated Australian franchise, Topshop/Topman, openedlocally in 2011.BMQ DENTAL: First Creditors' Meeting Set for June 29----------------------------------------------------A first meeting of the creditors in the proceedings of BMQ DentalPty Ltd will be held at the offices of Pilot Partners, Level 101 Eagle Street, in Brisbane, Queensland, on June 29, 2017, at10:00 a.m.Nigel Markey and Ann Fordyce of Pilot Partners were appointed asadministrators of BMQ Dental on June 19, 2017.DICK SMITH: Shareholders Launch Class Action vs. Insurers---------------------------------------------------------Frank Chung at news.com.au reports that the insurers of theformer directors of Dick Smith could be hit with a hefty billfrom disgruntled shareholders if a class-action lawsuit gets thego-ahead and proves successful.Just under 1,000 former shareholders, who individually lostanywhere from AUD500 to nearly AUD2 million when the company wentunder in January 2016, have signed up for the class actioninitiated by Bannister Law and underwritten by internationallitigation funder Vannin Capital, according to news.com.au.Kris Pierce, who runs a small horticulture business in CoffsHarbour, lost about AUD8,000 in Dick Smith shares, the reportdiscloses. news.com.au relates that Mr. Pierce said he's only acasual investor but does his due diligence and studies themarkets before making a share purchase."I wanted to support an Australian company," the report quotesMr. Pierce as saying. "It just seemed like a strong, solid retailcompany - there was no detail to say otherwise."The report relates that Mr. Pierce said despite the share pricedips, nothing in the company's financials suggested it wasthe beginning of the end. "For things to go so bad, so quicklyafter a positive financial report, something was clearly wrong.There were certainly no external factors that explain that rapidcollapse."According to news.com.au, Bannister Law has applied for leavewith the Supreme Court of NSW to file the class action, with ahearing scheduled for later this month. The law firm requires thecourt's permission as the company in liquidation.The report says the claim alleges Dick Smith breached itscontinuous disclosure obligations under the Corporations Act. Itis alleged that during 2015, the company made decisions aboutwhat stock to purchase primarily based on the rebates that couldbe obtained from suppliers, rather than what customers wanted tobuy.This led to an increase in bad stock that could not be sold andan increase in debt. In November 2015, the company was forced toannounce a AUD60 million writedown of bad stock, leading to ashare price rout.news.com.au adds that the suit alleged Dick Smith was aware ofthe accumulation of bad stock earlier in 2015 and failed toadvise the market, in breach of its legal obligations. It is alsoalleged that the accounting treatment of the rebates - reportingthem under profit before the stock to which they were attachedhad been sold - was not in accordance with Australian AccountingStandards.The shareholders allege the effect of the accounting treatmentwas to artificially inflate Dick Smith's profits as reported inits 2015 financial statements, in contravention of theCorporations Act, the report relates. They allege the share pricewas inflated as a result of the breaches, leading to loss anddamage.Bannister Law's Diane Chapman was also critical of the company'sdecision to pay a dividend in late 2015, news.com.au notes. "Themost horrible thing is [these shareholders] actually lost moneyin the period between August 2015 when the annual report cameout, and January 2016 when the company went into receivership,"news.com.au quotes Ms. Chapman as saying."Because the share price was going down, they thought it was abargain. The company was such a good brand, and it did pay adividend, which would indicate to more sophisticated investorsthat the company was in good health."In October, when they had their consultants do the stock audit,they did have to announce at the time there would be a writedownof inventory. We're going to allege they had to have had someknowledge [of the situation], and to pay a dividend in thosecircumstances was really not the best indication for the market."With the company in liquidation, Ms. Chapman said any money froma successful outcome would come from the insurance companies ofthe directors and officers, news.com.au relays."We're actually suing the company via the directors' andofficers' insurance policies," she said. "The directors andofficers have insurance policies which cover them for negligentacts. We believe that the information that was provided to themarket and the way the rebates fell within the company reportingis sufficient to bring a claim."Earlier this year, receivers Ferrier Hodgson took separate actionin the NSW Supreme Court against eight former Dick Smithexecutives and directors - former chief executive Nick Abboud,chief financial officer Michael Potts, and directors Bill Wavish,Phil Cave, Rob Murray, Jamie Tomlinson, Robert Ishak and LornaRaine, news.com.au recounts.news.com.au says the executives and directors have been accusedof breaching their duty to exercise reasonable care ahead of thecompany's financial collapse.But the law firm representing Mr. Murray, Mr. Tomlinson,Ms. Raine and Mr. Ishak said in a statement that the four non-executive directors would vigorously defend the receivers'allegations that they failed to put in place adequate systems tomanage supplier rebates and inventory, the report relates.It is understood the other executives and directors will alsodefend the matter, news.com.au notes. About Dick SmithDick Smith Holdings Limited Ltd (ASX:DSH) --http://dicksmithholdings.com.au/-- was a retailer of consumer electronics products. The Company sold a range of productsacross four categories: office, mobility, entertainment, andother products and services. The Company had two segments: DickSmith Australia and Dick Smith New Zealand. The Company connectedwith its customers through four physical store formats, cateringfor three distinct consumer demographics: Dick Smith, MOVE, DavidJones Electronics Powered by Dick Smith and MOVE by Dick SmithSydney International Airport. The Company's store networkconsisted of approximately 393 stores across Australia andNew Zealand, which include approximately 351 Dick Smith stores,approximately 10 MOVE stores, approximately four MOVE by DickSmith stores and approximately 28 David Jones Electronics Poweredby Dick Smith stores.As reported in the Troubled Company Reporter-Asia Pacific onJan. 6, 2016, Dick Smith Holdings Ltd was placed in receivershipon Jan. 5 following the appointment of Voluntary Administrators.Ferrier Hodgson partners James Stewart, Jim Sarantinos andRyan Eagle were appointed Receivers and Managers over DSH anda number of associated entities. The appointment was made by asyndicate of lenders which hold security over the group.The TCR-AP, citing Otago Daily Times, reported on July 26, 2016,that the creditors of Dick Smith have voted in favor ofliquidation. According to the report, administratorMcGrathNicol will take over as liquidator of 10 companies withinthe Dick Smith group following the vote by creditors at a meetingin Sydney on July 25. ODT related that McGrathNicol will continueto focus on the exact reasons for Dick Smith's collapse, and whois to blame.ICONIC ENTERTAINMENT: First Creditors' Meeting Set for June 28-------------------------------------------------------------A first meeting of the creditors in the proceedings of IconicEntertainment Pty Ltd will be held at Level 5, 123 Pitt Street,in Sydney, NSW, on June 28, 2017, at 10:30 a.m.David Iannuzzi and Vincent Pirina of Veritas Advisory wereappointed as administrators of Iconic Entertainment on June 17,2017.REDZED TRUST 2015-1: S&P Raises Rating on Cl. F Notes to B+-----------------------------------------------------------S&P Global Ratings raised its ratings on five classes of notesissued by Perpetual Trustee Co. Ltd. as trustee of RedZed Trustin respect of Series 2015-1. At the same time, S&P affirmed itsratings on the senior notes.The rating actions reflect: -- S&P's view of the credit risk of the underlying collateral portfolio, which consists of loans to nonconforming borrowers originated by RedZed Lending Solutions Pty Ltd. As of April 30, 2017, the pool has a current weighted- average loan-to-value ratio of 71% and weighted-average seasoning of 3.3 years. Interest-only loans make up 36.7% of the pool balance, with most loans reverting to fully amortizing by 2019. S&P's view is that the interest-only feature can create payment shock when the payments revert to fully amortizing during the remaining term of the loan. -- Asset performance has been stable since inception and cumulative net losses have been minimal, at about A$54,000 of the original pool balance. As of April 30, 2017, 6.8% of the asset pool is in arrears, with 1.6% in arrears by more than 90 days. S&P has assumed that loans in arrears for more than 90 days have defaulted, in line with its "Australian RMBS Rating Methodology And Assumptions" criteria, published Sept. 1, 2011. -- Due to the sequential payment structure for the majority of the transaction's life to date, significant credit support has built up to each class of notes. The amount of credit support provided to each class of notes exceeds the minimum amount S&P assess as being commensurate with each respective rating level and is thereby currently sufficient to withstand the stresses commensurate with the ratings. -- S&P's rating analysis on the arising risk of borrower concentration as the pool continues to amortize. S&P views that the lower rated notes are more susceptible to tail-end risk and back-end losses; however, S&P expects that credit support available to rated notes will continue to build due to the transaction's structural features, whereby the class G notes do not receive any principal until all rated notes are fully repaid. The availability of a retention amount built from excess spread up to the call date, which is applied to reduce the balance outstanding of the most subordinated rated note at that time and serves to create overcollateralization in the transaction. Approximately A$2.6 million of overcollateralization has been created to the date of this review. S&P's expectation that the various mechanisms to support liquidity within the transaction, including a liquidity facility equal to 2.5% of outstanding balance of the notes, and principal draws are sufficient under S&P's stress assumptions to ensure timely payment of interest. Also the buildup of yield enhancement that is available as liquidity support to the senior expenses, class A1, and class A2 notes.RATINGS RAISEDClass Ratings To Ratings FromB AAA (sf) AA (sf)C AA (sf) A (sf)D A (sf) BBB (sf)E BB+ (sf) BB (sf)F B+ (sf) B (sf)RATINGS AFFIRMEDClass RatingA-1 AAA (sf)A-2 AAA (sf)ROYALE ADELAIDE: Second Creditors' Meeting Set for June 27----------------------------------------------------------A second meeting of creditors in the proceedings of The RoyaleAdelaide Club Pty Ltd has been set for June 27, 2017, at10:30 a.m., at the offices of DuncanPowell, Level 4, 70 PirieStreet, in Adelaide, South Australia.The purpose of the meeting are (1) to receive the report by theAdministrator about the business, property, affairs and financialcircumstances of the Company; and (2) for the creditors of theCompany to resolve whether the Company will execute a deed ofcompany arrangement, the administration should end, or theCompany be wound up.Creditors wishing to attend are advised proofs and proxies shouldbe submitted to the Administrator by June 26, 2017, at 4:00 p.m.Peter James Lanthois, Andrew George and Ashbrook Langshaw ofDuncanPowell were appointed as administrators of The RoyaleAdelaide on June 15, 2017.SOCIAL CREATIVE: Second Creditors' Meeting Set for June 27----------------------------------------------------------A second meeting of creditors in the proceedings of The SocialCreative Pty Ltd has been set for June 27, 2017, at 9:30 a.m., atthe offices of DuncanPowell, Level 4, 70 Pirie Street, inAdelaide, South Australia.The purpose of the meeting are (1) to receive the report by theAdministrator about the business, property, affairs and financialcircumstances of the Company; and (2) for the creditors of theCompany to resolve whether the Company will execute a deed ofcompany arrangement, the administration should end, or theCompany be wound up.Creditors wishing to attend are advised proofs and proxies shouldbe submitted to the Administrator by June 26, 2017, at 4:00 p.m.Peter James Lanthois, Andrew George and Ashbrook Langshaw ofDuncanPowell were appointed as administrators of The SocialCreative on June 15, 2017.SYDNEY PROJECT: First Creditors' Meeting Set for June 28--------------------------------------------------------A first meeting of the creditors in the proceedings of SydneyProject Group Pty Ltd and S.E.T. Services Pty Ltd will be held atConference Room 4, Radisson Blu Plaza Sydney, 27 O'ConnellStreet, in Sydney, NSW, on June 28, 2017, at 11:30 a.m.Michael Hogan & Christian Sprowles of Hogan Sprowles wereappointed as administrators of Sydney Project on June 16, 2017.XIANG RONG: First Creditors' Meeting Set for June 28----------------------------------------------------A first meeting of the creditors in the proceedings of Xiang Rong(Australia) Investment Group Pty Ltd will be held at the officesof Hall Chadwick, Level 40, 2 Park Street, in Sydney, NSW, onJune 28, 2017, at 11:00 a.m.Steven Gladman of Hall Chadwick was appointed as administrator ofXiang Rong on June 19, 2017.=========C H I N A=========JIANGSU HANRUI: Fitch Affirms BB+ Long-Term IDR; Outlook Stable---------------------------------------------------------------Fitch Ratings has affirmed Jiangsu HanRui Investment HoldingCo.,Ltd.'s Long-Term Foreign- and Local-Currency Issuer DefaultRatings (IDR) at 'BB +'. The Outlook is Stable.Fitch has also affirmed the 'BB+' long-term foreign-currencyratings on the USD490 million 4.9% senior unsecured notes due2019 issued by Hanrui Overseas Investment Co., Ltd.The notes are unconditionally and irrevocably guaranteed byHanrui International Investment Company Limited (HII), HanRui'swholly owned subsidiary. Under the keepwell structure, HanRuiundertakes to ensure HII has sufficient assets and liquidity tomeet its obligations.KEY RATING DRIVERSLinked to Zhenjiang Municipality: HanRui's ratings are credit-linked with those of Zhenjiang municipality in Jiangsu province.The link reflects strong oversight and supervision of HanRui bythe Zhenjiang government and the company's strategic importanceas the flagship local government funding vehicle (LGFV) platformfor public-sector construction in Zhenjiang New Area, a national-level economic and technological development zone. Hence, HanRuiis classified as a public-sector entity under Fitch's criteria.Zhenjiang's Creditworthiness: Zhenjiang's economy is backed by atraditionally strong secondary industry and the expandingtertiary industry has also become an important driver as part ofthe municipality's economic transformation. Zhenjiang maintainedstrong gross regional product (GRP) growth of 9.3% in 2016,outperforming both Jiangsu and the national average. Zhenjianghas a favourable socio-economic profile, despite its smallereconomy, with population inflow and GRP per capita that rankedfifth among Jiangsu's 13 municipalities. These strengths mitigatethe city's moderately high continent liabilities arising from itsstate-owned entities.Legal Status 'Mid-Range': HanRui is registered as a wholly state-owned limited liability company under Chinese company law and isunder the direct supervision of Zhenjiang State-Owned AssetsSupervision and Administration Commission (SASAC). ZhenjiangSASAC has full control over HanRui and HanRui's daily operationsare supervised by the administrative committee of Zhenjiang NewArea on behalf of Zhenjiang SASAC. The government has no plan todilute its shareholding in HanRui.Control 'Stronger': HanRui's financing plan and debt level areclosely monitored by the municipality. HanRui reports its budgetperformance on a regular basis and its board members, except foremployee representatives, are all appointed by Zhenjiangmunicipality.Strategic Importance 'Stronger': HanRui is Zhenjiang's flagshipurban development LGFV and helps fund infrastructure and socialhousing construction within the Zhenjiang New Area. Zhenjiang NewArea and HanRui play an important role in driving thetransformation of Zhenjiang's economy, which would suffersignificant consequences from a default. Hence, this attributehas been given more weight for the rating.Integration 'Stronger': HanRui has received consistent governmentfinancial support, including subsidies and capital injections.Annual subsidies have averaged 148% of the company's net profitover the previous three years, demonstrating the government'scommitment in maintaining HanRui as a going concern. Fitchexpects continued government support to partly fund HanRui'scapital expenditure and debt servicing, considering its highstrategic importance.Weak Standalone Profile: HanRui's financial profile is borne bylarge capital expenditure, negative free cash flow and highleverage. Its weak standalone credit metrics are not likely tosee any significant improvement in the near term. Fitch expectsongoing government financial support to mitigate this risk,despite HanRui's infrastructure developments in Zhenjiang NewArea.RATING SENSITIVITIESA stronger or more explicit support commitment from Zhenjiangmunicipality may trigger positive rating action on HanRui.Significant changes to HanRui's strategic importance, a dilutedmunicipal shareholding or reduced explicit and implicitmunicipality support could lead to a wider rating gap betweenHanRui and Zhenjiang.An upgrade of Fitch's internal credit view of Zhenjiang maytrigger positive rating action on HanRui. A weaker fiscalperformance or higher municipality indebtedness could lead to alowering of Fitch's internal assessment of Zhenjiang'screditworthiness and thus trigger negative rating action onHanRui.REWARD SCIENCE: Fitch Lowers IDR to B; Outlook Stable-----------------------------------------------------Fitch Ratings has downgraded Reward Science and TechnologyIndustry Group Co., Ltd.'s (Reward Group) Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'B' from 'B+'. TheOutlook is Stable. Fitch has also downgraded the Chinese consumerand dairy product producer's senior unsecured rating to 'B' from'B+' with Recovery Rating of 'RR4'.The downgrade reflects Reward Group's volatile operatingperformance, higher-than-expected FFO-adjusted net leverage of2.3x at end-2016 and lower-than-expected EBITDA margin of 14.8%in 2016. Both financial metrics reached levels at which Fitchwould consider negative rating action, and Fitch does not expectsubstantial improvement in the next two years. The higherleverage was mainly due to weaker margin in daily consumerproducts, higher selling and administrative costs, and greaterworking capital outflow caused by larger receivables in 2016.KEY RATING DRIVERSRecent Performance Volatile: The unpredictable performance ofReward Group's earnings is one of its key credit weaknesses. In2016, the company posted strong revenue growth of 36.2%, butEBITDA margin dropped to 14.8% from 19.9% in 2015, mainly due tohigher advertising costs, a larger share of sales from low-marginOEM daily consumer products, and product discounts offered in theyear.The company's quarterly financial performance has been volatile,affected by factors such as advertising, seasonal promotioncampaigns and timing of sales. Reward Group's revenue rose byaround 60% yoy but it posted an EBIT loss in 4Q16, compared witha 25.4% EBIT margin in 3Q16. EBIT turned positive in 1Q17, withEBIT margin of 17.4%.Weak Market Position, Execution Risks: Fitch views thesignificant variation in quarterly performance as a reflection ofReward Group's small market share and limited capacity inhandling external market changes. Reward Group only has lowsingle-digit market shares in its respective business segments.There is also limited product differentiation, and most of RewardGroup's products face fierce competition from both local andoverseas brands. Reward Group's new-business initiatives havelimited synergy with existing businesses, and execution risk ishigh due to the company's short track record in these areas.Rising Gross Debt: Reward Group has started to tap the domesticbond market in an effort to adjust its debt tenors. At end-2016,Reward had outstanding domestic bonds of CNY5.0 billion, andtotal debt of CNY6.1 billion. Total debt increased to CNY7.9billion by end-March 2017. Fitch expects the cash interest burdento rise in line with higher gross debt, which is likely to hurtReward Group's FFO margin and reduce the company's fixed-chargecoverage.Financial Profile Supports Ratings: Reward's balance sheetremains healthy despite the recent rise in gross debt, whichmitigates its weaker business profile. Fitch expects FFO-adjustednet leverage to remain below 3.0x (end-2016: 2.3x) in the nextfew years and for FFO fixed-charge coverage to remain above 2.5x(end-2016: 9.8x). Liquidity is also sufficient - the company'scash and cash equivalents and unutilised credit facilities at theend of 2016 were more than enough to cover the CNY2.2 billion ofdebt maturing within one year.Shareholding Concentration, Limited Transparency: Reward Group isa privately owned company that discloses fewer financial detailsthan listed companies and is not audited by one of the Big Fouraccounting firms. Reward Group's founder Mr. Hu Keqin and hisfamily own over 96% of company's shares. The concentratedshareholding results in limited board oversight, with twoindependent board members only appointed in 2016. Fitch views ofthe company's shareholding and transparency has not changed sinceFitch previous assessment and these factors will remainconstraints on the ratings unless the shareholding structure orfinancial disclosures significantly improve.DERIVATION SUMMARYReward Group is outranked by its 'BB-' and 'B+' rated peers basedon revenue and EBITDA. These peers include PT Japfa ComfeedIndonesia Tbk (Japfa, BB-/Stable), Agri Business Holding MiratorgLLC (Miratorg, B+/Stable) and Avon Products, Inc (Avon,B+/Negative). Reward Group's financial metrics are also of weakerquality than those of these higher-rated peers, because itsmetrics are more volatile intra-year.Reward has similar revenue and EBITDA to 'B' rated peers, such asYasar Holding A.S. (Yasar, B/Stable) and Premier Foods Plc(Premier Foods, B/Negative). Despite Reward's better coverage andleverage ratios, it is rated at the same level as these companiesbecause of its weaker business profile. Reward Group's rating isconstrained to the 'B' category due to its shareholderconcentration, lower transparency and limited earningsvisibility.KEY ASSUMPTIONSFitch's key assumptions within its ratings case for the issuerinclude: - Revenue to grow 15% in 2017 and 3% in 2018. - Around 15% EBITDA margin in 2017-2018 - Capital expenditure will remain at CNY450 million annually for the next two years. - Panrosa US acquisition completed in 2017 - No common dividendsRATING SENSITIVITIESFuture Developments That May, Individually or Collectively, Leadto Positive Rating Action - EBITDA margin sustained above 15% - FFO fixed-charge coverage sustained above 4x - FFO-adjusted net leverage sustained below 2xFuture Developments That May, Individually or Collectively, Leadto Negative Rating Action - FFO-adjusted net leverage sustained above 3.5x - FFO fixed charge coverage sustained below 2.5x - EBITDA margin sustained below 12% - Failure to provide regular accounting disclosuresLIQUIDITYAdequate Liquidity: Reward Group had CNY4.76 billion of cash andequivalents at end-2016. According to the company's management,its unutilised credit facilities from local banks remained atCNY500 million at end-2016. These would be adequate to cover theoutstanding short-term debt of CNY2.16 billion at end-2016.Limited Funding Channels: Reward Group is a non-listed companyand has relatively limited funding channels. It plans to listsome of its onshore subsidiaries, but this is likely to take awhile, given the unfavourable environment for A-share IPOs now.It relies mainly on bank loans and domestic bonds for financing.Reward Group's main banking relationships are with Industrial andCommercial Bank of China, Agricultural Bank of China, Bank ofBeijing, Huaxia Bank and Pudong Development Bank.FULL LIST OF RATING ACTIONSReward Science and Technology Industry Group Co., Ltd. -- Foreign Currency Long Term IDR downgraded to 'B' from 'B+'; Outlook Stable -- Senior unsecured rating downgraded to 'B' from 'B+', Recovery Rating of 'RR4'Issued by Reward International Investment Co. Ltd with guaranteefrom Reward Group -- USD200 million 7.25% senior notes due 2020 downgraded to 'B' from 'B+', Recovery Rating of 'RR4'SHANDONG RUYI: Moody's Rates Proposed USD Sr. Unsec. Notes (P)B3----------------------------------------------------------------Moody's Investors Service has assigned a provisional (P)B3 ratingto the proposed USD senior unsecured notes to be issued by PrimeBloom Holdings Limited - a wholly owned subsidiary of ShandongRuyi Technology Group Co., Ltd. (Ruyi, B2 stable) - and supportedby unconditional and irrevocable guarantees from Ruyi and itswholly owned subsidiary, Forever Winner International DevelopmentLimited (unrated).The rating outlook is stable.The provisional status of the rating on the notes will be removedonce Ruyi has completed the notes issuance upon satisfactoryterms and conditions, and obtained proper registrations of theguarantees with the State Administration of Foreign Exchange inChina (China, Government of, A1 stable).The proceeds from the proposed notes will be used for refinancingexisting indebtedness, as well as for Ruyi's working capitalneeds.RATINGS RATIONALE"The proposed notes will improve Ruyi's liquidity position anddebt maturity profile," says Chenyi Lu, a Moody's Vice Presidentand Senior Credit Officer."The proposed notes will have no impact on Ruyi's rating, giventhe small increase in Ruyi's debt level and no change to thecompany's debt deleveraging through growth in earnings," adds Luwho is the Lead Analyst for Ruyi.The proposed notes will improve Ruyi's weak liquidity position.At end-2016, the company's cash - including pledged deposits - ofRMB8.6 billion was low relative to its RMB9.1 billion of debtmaturing over the next 12 months, and short-term bills payable ofRMB5.5 billion.But the proposed notes will add new debt to the company, becausethe proceeds will not be used entirely for debt refinancing.The company's debt leverage -- as measured by adjusteddebt/EBITDA -- will increase slightly to 7.9x from the 7.7x thatMoody's forecasted for end-2017.Moody's expects that Ruyi's revenue will grow about 16% in 2017and 5% in 2018. Such growth will be supported by: (1) newly addedproduction capacity in the yarn and fabrics business; and (2) thefact that SMCP Group's (B1 stable) business will grow throughinternational expansion outside France, especially in Asia.Moreover, during 2017-2018, Moody's expects that Ruyi's adjustedEBITDA margin will improve to 12.0%-12.5% from 10.1% in 2016, dueto cost control measures and SMCP's better profit margins, whichwill increase its contributions to Ruyi's EBITDA.Consequently, Moody's continues to expect that Ruyi willdeleverage from the high of an adjusted debt/EBITDA of 9.3x atend-2016 to around 7.4x by end-2018.Ruyi's B2 corporate family rating reflects its established trackrecord in operating an integrated textile manufacturing business- with a global sales network - and its ability to enhanceprofitability through downstream expansion into the manufactureand retail sale of apparel.On the other hand, Ruyi's rating is constrained by its strongappetite for acquisitions, non-textile business investments, highfinancial risk from debt-funded growth, and weak liquidityposition.The rating of the proposed notes has been notched down fromRuyi's corporate family rating of B2, because the investors ofthe notes will be exposed to the subordination risk arising fromthe high levels of priority debt at Ruyi's operatingsubsidiaries, which was equivalent to 20% of the company's totalassets at end-2016.The stable outlook on the proposed USD senior unsecured notesreflects Moody's expectation that Ruyi will: (1) maintain growthin its revenues and profits in its textile and apparelbusinesses; (2) continue deleveraging; and (3) be able torefinance its short-term debt.Upward rating pressure is limited in the near term, because thecompany's debt leverage is high for Ruyi's B2 corporate familyrating.However, Ruyi could face upgrade rating pressure, if it: (1)shows a track record of disciplined acquisitions and investments;and (2) improves its liquidity management and debt leverage.Indicators of upgrade rating pressure include cash/short-termdebt of 1.0x and adjusted debt/EBITDA below 4.5x-5.0x on asustained basis.On the other hand, the rating could face downward pressure if:(1) the company takes on further debt-funded expansion oracquisitions, such that its credit metrics remain weak. Inparticular, if its adjusted debt/EBITDA exceeds 7.5x-8.0x on asustained basis; or (2) its liquidity position deteriorates.The principal methodology used in this rating was Retail Industrypublished in October 2015.Established in 2001, Shandong Ruyi Technology Group Co., Ltd. isa vertically integrated textile company that engages in textilemanufacturing, trading, the manufacturing and retailing ofapparel, and cotton and wool production.The company has two listed subsidiaries, namely, the ShenzhenStock Exchange-listed Shandong Jining Ruyi Woolen Textile Co.Ltd. (unrated), and Tokyo Stock Exchange-listed RenownIncorporated (unrated).================H O N G K O N G================NOBLE GROUP: Defers Bond Coupon Payment Due June 26---------------------------------------------------Reuters reports that Noble Group Ltd on June 20 confirmed it hadextended a key debt deadline and was in "constructive" talks withpotential investors, but the crisis-hit trader also pushed backpayment of the coupon on a closely watched bond.The decision to defer payment of the coupon on its US$400 millionperpetual securities, due June 26, worried investors, who saidthe failure to pay US$12 million sent a negative signal andsuggested lenders may have asked the group to defer payment wherepossible, Reuters says."While non payment of the perpetual bond coupon will not triggera default event, it is a further hit to the company's reputation.This is hurting investor confidence," said one Hong Kong-basedanalyst, who declined to be named, Reuters relays.Reuters relates that Noble - which has sold billions of dollarsin assets over the past two years - from its US energy unit toits agribusiness, also said it could sell more and cut costsfurther to boost liquidity.The remaining assets and investments on its books are smaller -from vessels used by its logistics business to stakes inAustralian and Indonesian coal miners, Reuters notes.At its height, Hong Kong-based Noble was Asia's largest commoditytrader, a powerhouse in coal and oil to rival larger Europeanplayers like Glencore.Questions over its accounting and the sharp downturn in commoditymarkets since 2012, however, have left the company struggling tomeet its debt obligations, forcing it to dramatically reduce thescale of its operations, says Reuters.It has been buffeted by a collapsing share price, creditdowngrades, management upheavals and a series of writedowns andasset sales. Its shares were trading on June 20 at SGD0.465 -down from a 2011 peak of around SGD17, Reuters discloses.According to Reuters, Noble said on June 20 its revolving creditfacility would be extended by 120 days from June 20, confirmingreports last week.A person familiar with the matter told Reuters on June 16 thatNoble had extended the US$2 billion credit line, but was told tofind a strategic investor.Reuters relates that Noble said it was also continuing talks withits bankers in relation to a revolving credit facility dueMay 2018. Its bankers, based in Europe, the United States andAsia, have hired legal and financial advisers, Noble said.Noble has a bond worth about US$379 million due in March and aUS$1.1 billion loan due in May 2018, Reuters discloses. About Noble GroupHong Kong-based Noble Group Limited (SGX:N21) --http://www.thisisnoble.com/-- engages in supply of agricultural, industrial and energy products. The Company supplies agriculturaland energy products, metals, minerals and ores. Agricultureproducts include grains, oilseeds and sugar to palm oil, coffee,and cocoa. Energy business includes coal, gas and liquid energyproducts. In metals, minerals and ores (MMO), it supplies ironore, aluminum, special ores and alloys. The Company operatesnearly in 140 locations. It supplies growth demand markets inAsia and Middle East. Alcoa World Alumina and Chemicals is thesubsidiary of this company.As reported in the Troubled Company Reporter-Asia Pacific onMay 24, 2017, S&P Global Ratings lowered its long-term corporatecredit rating on Noble Group Ltd. to 'CCC+' from 'B+'. Theoutlook is negative. At the same time, S&P lowered the long-termissue rating on Noble's outstanding senior unsecured notes to'CCC' from 'B'. In addition, S&P lowered its long-term GreaterChina regional scale rating on the company to 'cnCCC+' from'cnBB-' and on the notes to 'cnCCC' from 'cnB+'.S&P downgraded Noble because it believed the company's capitalstructure is not sustainable. This is due to continuing weakcash flows and profitability, and Noble's access to funding willhave further weakened following its weak results for the threemonths ending March 31, 2017.The TCR-AP reported on May 18, 2017, that Moody's InvestorsService has downgraded Noble Group Limited's corporate familyrating and senior unsecured bond ratings to Caa1 from B2, and therating on its senior unsecured medium-term note (MTN) program to(P)Caa1 from (P)B2. The ratings outlook remains negative.NOBLE GROUP: Loan Extension No Impact on Moody's Caa1 CFR---------------------------------------------------------Moody's Investors Service said that Noble Group Limited'sextension of the maturity on the senior secured borrowing baserevolving credit facility -- which is borrowed by its subsidiaryNoble Americas Corp -- for 120 days from June 20, 2017, will haveno immediate impact on its Caa1 corporate family rating or thenegative rating outlook."Although the extension of the maturity on the secured creditfacility temporarily alleviates the significant pressure onNoble's liquidity, Moody's expects the company's liquidity riskto remain elevated given its large debt maturities over the next12 months," says Gloria Tsuen, Moody's Vice President and SeniorAnalyst."Moody's also expects its cash flow to remain weak over the next12 months, given its deteriorating operating performance andworking capital constraints," adds Tsuen.Noble had around $600 million outstanding in loans under thesecured credit facility as of end-1Q 2017. In addition, it has$378 million in senior notes due in March 2018 and $1.1 billionin bank debt due in May 2018.The combined $2.1 billion in debt due over the next 12 monthscannot be covered by Noble's liquidity headroom -- includingreadily available cash and unutilized committed facilities --which would be around $1.2 billion based on 1Q 2017 financialsand following the company's repayment of a term loan and thematurity of another revolving credit facility in May 2017.Noble remains in talks with potential investors concerning thesale of an interest in itself, its subsidiaries, or parts of itsbusiness. It is also seeking to further reduce overhead expenses.The company also said it deferred coupon payment of $12 millionon its $400 million perpetual securities due on June 26, 2017,which in Moody's view indicates its tight liquidity situation.Moody's does not expect the company will return to profitabilitythis year, and expects for EBITDA to be at depressed levels, thusdriving debt leverage -- as measured by net debt/EBITDA -- to beabove 10x.The principal methodology used in these ratings was TradingCompanies published in June 2016.Noble Group Limited is the largest global physical commoditiessupply chain manager in Asia by revenue. Its diversifiedactivities across the supply chain include the sourcing, storage,processing, transportation, and distribution of over 20 commodityproducts.Founder and Chairman Emeritus, Mr. Richard Elman, holds anapproximate 18% stake in the company. China InvestmentCorporation - the Chinese sovereign wealth fund - owns about 10%.ROAD KING: Moody's Rates Proposed USD Senior Perpetual Notes B1---------------------------------------------------------------Moody's Investors Services has assigned a B1 senior unsecureddebt rating to the proposed USD senior perpetual capitalsecurities to be issued by RKI Overseas Finance 2017 (A) Limitedand guaranteed by Road King Infrastructure Limited (B1 stable)and some of its subsidiaries.The rating outlook is stable.Road King plans to use the proceeds from the proposed USD seniorperpetual securities primarily for general corporate purposes.RATINGS RATIONALE"Although the proposed USD senior perpetual securities willincrease Road King's debt level in 2017, Moody's expects that itsdebt leverage -- as measured by revenue/adjusted debt - willremain appropriate for its B1 rating over the next 12-18 months,because of the increased level of revenue recognition," saysAnthony Lee, a Moody's Analyst and the Lead Analyst for RoadKing.Road King's acceleration in debt growth is within Moody'sexpectation, because the company needs to fund higher levels ofland acquisitions and construction costs to support its growingscale. In addition, it has to address the funding needs of itsdevelopment projects in Hong Kong, which have a longer cashcollection cycle than those of its projects in China.At the same time, Moody's also expects Road King to recognizebetter revenue and profit over the next 12-18 months, based onthe strong 69% year-on-year growth in contracted sales to RMB17.6billion in 2016, and the higher average selling prices itrecorded in 2016.As a result, Moody's expects that Road King's adjustedrevenue/debt and EBIT interest coverage will register around 70%and 3.0x-3.5x over the next 12-18 months, respectively, comparedto the strong 83% and 4.1x in 2016. Such levels will continue tosupport its B1 rating level.Moody's views the proposed perpetual securities as pure debtinstruments and accordingly does not apply any equity treatmentto these securities.The B1 rating for the perpetual securities reflects the followingfactors:(1) The perpetual securities will be irrevocably andunconditionally guaranteed by Road King, which implies that therating on the perpetual securities is closely linked to RoadKing's rating; and(2) The securities will at all times rank pari passu with allother present and future unsecured and unsubordinated obligationsof Road King.However, the rating on the perpetual securities could be lowered - relative to the company's senior unsecured rating - if debtwith deferral features becomes a substantial portion of itscapital structure, or if Moody's expects that the company willdefer many payments in advance of default.Road King's B1 corporate family rating reflects its track recordin property development and cautious approach to landacquisitions and financial management. As a result, the companyhas maintained adequate liquidity throughout the cycles.The rating also takes into account the stable cash flow from thecompany's toll road investments, stable debt leverage andfinancial metrics that are well positioned among the company'sB1-rated Chinese property development peers.On the other hand, the rating is constrained by the company'ssmall scale and the geographic concentration of its land bank, aswell as volatility in its contracted sales.The outlook on Road King's corporate family rating is stable,reflecting Moody's expectation that Road King will maintain itsprudent financial management while growing its propertydevelopment and toll road businesses; thereby preserving stablecredit metrics and an adequate liquidity position.Upward rating pressure could emerge, if Road King: (1) grows inscale without sacrificing its profit margins; (2) grows its tollroad dividends and improves its interest coverage from netrecurring income above 0.6x on a sustained basis; (3) maintainsstable credit metrics, with a homebuilding EBIT/interest above3.0x and revenue/debt of 80% or above; and (4) holds adequateliquidity, with cash/short-term debt above 1.0x on a sustainedbasis.On the other hand, Road King's rating could face downwardpressure if: (1) its liquidity position deteriorates because ofweaker sales, aggressive land acquisitions or delays in itsrefinancing plans; or (2) the operating performance of thecompany's property segment deteriorates, such that its grossmargin declines below 20% on a sustained basis.Credit metrics indicative of downward rating pressure include ahomebuilding EBIT/interest below 2.5x or revenue/debt below 65%on a sustained basis.The principal methodology used in this rating was HomebuildingAnd Property Development Industry published in April 2015.Listed in Hong Kong, Road King Infrastructure Limited had aproperty development portfolio with a land bank of seven millionsquare meters at December 31, 2016 across Beijing, Shanghai,Tianjin, Henan, Hebei, Shandong, Jiangsu, Zhejiang, Hunan,Guangdong and Hong Kong.The company also invests in toll road projects, mainly comprisingfive major expressways across four provinces in China: Anhui,Hebei, Hunan and Shanxi.=========I N D I A=========AVADH COTEX: ICRA Reaffirms B+ Rating on INR15cr LT Loan--------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating assigned to theINR15.00-crore fund-based limits of Avadh Cotex Private Limitedat [ICRA]B+. The outlook on the long-term rating is 'Stable'.ICRA has also reaffirmed the short-term rating assigned to theINR1.50-crore short-term, fund based limits of ACPL. Furthermore,ICRA has reaffirmed the rating of ICRA]B+(Stable)/A4 for theINR0.45-crore unallocated limits of ACPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Fund- based Limits 15.00 [ICRA]B+(Stable); Reaffirmed Short-term Fund- based Limits 1.50 [ICRA]A4; Reaffirmed Unallocated Limit 0.45 [ICRA]B+(Stable)/[ICRA]A4; ReaffirmedRationaleThe ratings reaffirmation continue to factor in the weakfinancial profile of ACPL, characterised by thin profitabilitymargins, stretched capital structure and moderate coverageindicators. The ratings also takes into account the commoditisednature of the company's products and vulnerability ofprofitability to adverse movements in cotton prices, which aresubject to seasonality and crop harvest. The company's operationsare also exposed to regulations governing the industry such asrestrictions on cotton exports and minimum support price (MSP).Furthermore, the ratings are also constrained by the highlyfragmented nature of the industry, due to a large number ofginners, which coupled with low-entry barriers, lead to stiffcompetition that pressurise pricing and margins.The ratings, however, continue to derive comfort from the longexperience of the promoters in the cotton ginning industry andthe proximity of the company's manufacturing unit to raw materialsources, easing procurement.Key rating driversCredit strengths * Extensive experience of the promoters in the cotton industry * Locational advantage by virtue of proximity to raw materialsCredit weaknesses * Weak financial profile characterised by thin profitability margins, stretched capital structure and moderate coverage indicators * Limited value addition in cotton ginning business and commoditised nature of products * Highly fragmented industry structure due to the presence of large number of manufacturers and traders; low-entry barriers result in high competition * Operations exposed to regulatory restrictions on cotton export and MSPDescription of key rating drivers:ACPL curtailed production of cotton bales during the decliningpricing scenario in FY2016, owing to which the capacityutilisation for cotton bales reduced significantly to ~33% inFY2016 compared to 47% in FY2015. However, with market conditionsimproving due to correction in cotton prices, the capacityutilisation of ACPL's cotton bales improved marginally to ~36% inFY2017. ACPL has traded higher quantity of cotton seeds in FY2017owing to which the proportion of cotton seed to total sales hasincreased to ~36% in FY2017 compared to ~19% in FY2016 and ~10%in FY2015. The cotton ginning industry is a highly fragmented andcompetitive as there are many organised and unorganised playersbecause of low-entry barriers. Additionally, Gujarat attractsmore companies as it is a favorable location for cottonprocurement, further intensifying the competition for ACPL.Moreover, the value addition in the ginning process is low, whichcoupled with strong competition and commoditised nature of theproduct, limits the ability of the company to achieve highmargins.ACPL's operating income fell by ~3% to INR115.23 crore in FY2016from INR118.52 crore in FY2015 on account of dip in sales volumeand realisation of cotton bales. However, with increased tradingactivity of cotton seed along with improved average salesrealisation of cotton seed, ACPL has reported ~3% growth in itsoperating income in FY2017 (Provisional) to INR118.81 crore. Theprofitability generally remains low in the cotton ginningbusiness because of the highly fragmented and competitive natureof the cotton ginning industry. Consequently, the operatingmargin remained low at 1.24% in FY2017 as against 1.34% inFY2016. The OPM remained suppressed in FY2007 due to bad debtincurred to the tune of INR0.99 crore. In line with low operatingmargin and high financial charges, the net margin also remainedlow at 0.07% in FY2016 and 0.18% in FY2017. On account of the lowprofitability, the return indicators also remained weak with ROCEat 6.77% and RONW at 4.71% in FY2017. The capital structurecontinues to remain leveraged though it witnessed marginalimprovement as reflected in the gearing of 3.34 times as on March31, 2017, as compared to 3.83 times as on March 31, 2016. Thecoverage indicators remained modest with OPBDITA/I&F at 1.34times and NCA/Debt at 2% for FY2017.Going forward, the company is expected to register moderaterevenue growth in FY2018, given the expectation of tight cottonavailability and firmer cotton prices in the near term. In ICRA'sview, the ability of the company to manage the impact of rawmaterial price fluctuations on its profitability in a highlycompetitive business environment and improve its capitalstructure by managing working capital requirements will remainthe key rating sensitivities.Incorporated in February 2006, Avadh Cotex Private Limited (ACPL)is involved in ginning and pressing of raw cotton for theproduction of cotton bales and cottonseeds. ACPL's manufacturingfacility is located at Shapar in Rajkot District of Gujarat, andis currently equipped with 26 ginning machines and a pressingmachine with aproduction capacity of 240 cotton bales per day(24-hour operations). The promoters, Mr. Bharat Bhalala and Mr.Sanjay Bhalala, have an extensive experience in the cottonindustry.For the year FY2017, as per provisional financials, the companyreported an operating income of INR118.81 crore and profit aftertax of INR0.21 crore.AVADH COTTON: ICRA Reaffirms 'B' Rating on INR4.50cr Loan---------------------------------------------------------ICRA Ratings has reaffirmed its long-term rating assigned to theINR4.50 crore cash credit cum ODBD facility and the INR1.43 croreterm loan facility of Avadh Cotton Industries at [ICRA]B. Theoutlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based-Cash Credit cum ODBD 4.50 [ICRA]B (Stable); Reaffirmed Fund-based-Term Loan 1.43 [ICRA]B (Stable); ReaffirmedRationaleThe rating action is based on the best available information. Aspart of its process and in accordance with its rating agreementwith ACI, ICRA has been trying to seek information from thecompany so as to undertake a surveillance of the ratings and hadalso sent repeated reminders to the company for payment ofsurveillance fee that became overdue, but despite repeatedrequests by ICRA, the company's management has remained non-cooperative. In the absence of requisite information, ICRA'sRating Committee has taken a rating view based on best availableinformation. In line with SEBI's Circular No.SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, thecompany's rating is now denoted as: "[ICRA]B (Stable) ISSUER NOTCOOPERATING". The lenders, investors and other marketparticipants may exercise appropriate caution while using thisrating, given that it is based on limited or no updatedinformation on the company's performance since the time it waslast rated.Key rating driversCredit strengths * Manufacturing unit favourably located in cotton producing belt of Gujarat, provides regular and easy access to raw materialsCredit weaknesses * Modest scale of operations with limited track record * Financial profile characterised by modest profitability and high gearing level due to recently incurred debt fund capex and reliance on external working borrowings during the cotton season * Highly competitive and fragmented nature of cotton ginning industry with limited value addition, which restricts pricing flexibility * Profitability vulnerable to adverse movement in agricultural produce prices * Being a partnership firm, any substantial withdrawals from capital account would impact the net-worth and thereby the gearing levelsDescription of Key Rating Drivers:ACI gins and presses raw cotton to produce cotton bales andcottonseeds at its plant at Moti Banugar in Jamnagar (Gujarat),which has an installed production capacity of 225 cotton balesper day (24 hours' operation). Its manufacturing facility isequipped with 24 ginning and a pressing machine. The firmcommenced operations from December 2014. The cotton ginningindustry is highly fragmented with numerous players operating inGujarat, leading to high competition in the field. The industryis also exposed to regulatory risks with the Government imposingminimum support price (MSP) on the purchase of raw cotton duringover-supply in the market and restricting export of cotton balesto support the domestic cotton textile industry.Avadh Cotton Industries was established in January 2014 as apartnership firm by Mr. Rohitbhai Sitapara and five otherpartners. The firm is engaged in the ginning and pressing of rawcotton. In December 2014, the firm commenced ginning operations.The operations of the firm are managed by Mr. ShaileshbhaiChikani, Mr. Rashikbhai Vaishnav and Mr. Rohitbhai Sitapara. Themanufacturing plant of the firm is at Moti Banugar in theJamnagar district of Gujarat. It is equipped with 24 ginningmachines and a pressing machine with an installed productioncapacity of 225 cotton bales per day (24 hours' operation).CORNERVIEW CONSTRUCTIONS: ICRA Cuts Rating on INR110cr Loan to D----------------------------------------------------------------ICRA Ratings has revised the long-term rating to [ICRA]D from[ICRA]BB- for the INR110.00 crore non-convertible debentures ofCornerview Constructions & Developers Pvt. Ltd. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Non 110.00 [ICRA]D; revised from Convertible [ICRA]BB-(Stable) DebenturesRationaleThe revision in rating factors in the past instances of delays inservicing interest payments by the company owing to stretchedliquidity. Low bookings and weak advance inflows owing toslowdown in the real estate industry adversely impact thecompany's cash flows, thereby delaying the interest payments onunlisted non-convertible debentures.Key rating driversCredit strengths * Support of a strong parent, Acme Group, with an experience of over four decades in real estate developmentCredit weaknesses * Delays in interest servicing on account of stretched liquidity Position * Slowdown in real estate industry resulting in low booking and advance inflows * Delay in project executionDescription of key rating drivers:CCDPL is part of the Acme Group of Companies, promoted by theMumbai-based Doshi family. The Group is currently undertakingeight different projects (including Acme Ozone being the majorone) with a total saleable area of 47.23 lakh sq. ft. The projectis located near Manpada, Off Ghodbunder Road, Thane. It issituated in proximity to Ghodbunder Road, located ~0.4 km off themain road as well as the proximity to Eastern Express highway (~3km) provides it with ease of accessibility and connectivity.While, the project completion was scheduled in March 2020, thecompletion of MMRDA building has been delayed by more than ninemonths, while the scheduled completion date of other towers hasbeen revised by three to nine months. The budgeted cost of theproject is estimated to be INR1,562.24 crore (revised fromINR1,355 crore) and the company incurred a total cost of 57% tillSeptember 2016. Taking into consideration the units identified bythe investor in three buildings (Dandelia, Alpinia and Herbilia),the project is relatively in early stages of execution. Theproject's market risk remains high as around 95% of the area inidentified units remains unsold.Incorporated in FY2014, CCDPL is a closely held private limitedcompany. It is part of the Acme Group of companies (Acme),promoted by the Mumbai-based Doshi family. The group is primarilyengaged in real estate development and caters to the residential,commercial and retail space in Mumbai through various groupcompanies. The group has many on-going projects acrossresidential and commercial spaces in Mumbai. A major projectbeing Acme Ozone, which is a residential project being developedby Ascent Construction Private Limited. CCDPL has acquired 96units in the project, funded through Non-convertible Debentures(NCDs) of INR70.00 crore. The units would, thereafter, be sold byCCDPL. The sales proceeds thus generated would be utilised asexit options for investors. CCDPL has no other on-going projects.G.R.K. THEATRES: CARE Assigns B+ Rating to INR10cr LT Loan----------------------------------------------------------CARE Ratings has assigned rating to the bank facilities of G.R.K.Theatres Private Limited, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 3.77 CARE B+; Stable Assigned Long-term Bank Facilities 10 CARE B+; Stable Assigned Short-term Bank Facilities 6.23 CARE A4 AssignedDetailed Rationale & Key Rating DriversThe ratings assigned to the bank facilities of G.R.K. TheatresPrivate Limited is constrained by highly leveraged capitalstructure, modest scale of operations and profit margins. Theratings, however, derive strength from the long experience of thepromoter in the line of business and the diversification ofbusiness lines.Ability of the company to improve its profit margins, effectivelymanage its working capital requirements and improvement itscapital structure are key rating sensitivities.Detailed description of the key rating driversKey Rating Strengths -- Vast experience of promoters in the industry: The promotershave over 34 years of experience in the film and retailentertainment business. Mr. Dorairaj who has almost 2 decades ofexperience manages the 3 theatres namely Krishnalaya, Balaji andMariyappan theatres in Cuddalore, Pondicherry and Neyvelirespectively. Apart from entertainment business the promotersalso have presence in auto dealership and restaurant business. -- Diversified business activities albeit with modest scale ofoperations: G.R.K. reported a total revenue of INR33.54 crore inFY16 with a healthy growth of around 72% from INR19.51 crore inFY15.The auto dealership business contributed 69% of the totalsales in FY16.Key Rating Weaknesses -- Highly Leveraged Capital structure: The company's financialrisk profile is marked by small net worth, high leverageindicators and modest debt protection metrics. The companyreported debt equity ratio and overall gearing at 3.88x and 7.91xas on March 31, 2016 as compared to 2.32x and 7.25x respectivelyfor the previous year. TDGCA reported high at 26.42 for FY16which was 20.29 for FY15. The interest coverage ratio also wentdown from 1.64x in FY15 to 0.79x in FY16. -- Cyclical nature of Auto industry: The auto industry isinherently vulnerable to the economic cycles and is highlysensitive to interest rates and fuel prices. Increase in theinterest rate would increase the cost of vehicle impacting thepurchase decision of an individual. Some other factors thatinfluence the buying pattern are the monsoon and the festiveseason. In India 70% of the population lives in rural areas whichhighly influence the demand and supply mechanism of the countryand results in price volatility.G.R.K Theatres Private Limited was established by Mr.Radhakrishnan in the year 1983. The company was predominantlyoperating in entertainment business but post 2012 company decidedto diversify its business by entering into Auto dealership andconstruction of commercial complex. GRK gets its biggest share ofrevenues from Auto Dealership business with two showrooms inPondicherry and one in Cuddalore. GRK primarily sells 3 models ofTATA including TATA 'Aria, Storme and Sumo through theseshowrooms. Since 2002, the day to day operations are managed byMr. Dorairaj, son of Mr. Radhakrishnan.HARIKISHAN TEJMAL: CARE Reaffirms B+/A4 Rating on INR22cr Loan--------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofHarikishan Tejmal & Company (HKTC), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term/Short- 22.00 CARE B+; Stable/ term Bank CARE A4 Reaffirmed FacilitiesDetailed Rationale & Key Rating DriversThe ratings assigned to the bank facilities of Harikishan Tejmal& Company (HKTC) continue to remain constrained on account of itsfluctuating Total Operating Income (TOI) during last threefinancial years ended FY16 (refers to the period April 1 toMarch 31) and its financial profile marked by thin profitabilitymargins on account of trading nature of business, weak solvencyposition and debt coverage indicators and working capitalintensive nature of operations.The ratings further, remain constrained on account ofsusceptibility of the firm's profitability margins to fluctuationin the prices of commodities due to seasonality associated, itspresence in the highly fragmented and government regulatedagro industry and its constitution as a partnership concern.The ratings, however, continue to favorably take into account thelong standing experience of the partners in the industrywith its established track record of operations and strategiclocation of the firm with close proximity to suppliers.HKTC's ability to increase its scale of operations withimprovement in profitability margins and capital structure aswell as efficient working capital management shall be the keyrating sensitivities.Detailed description of the key rating driversKey Rating Weakness -- Fluctuating scale of operations with thin profitability: Thescale of operations of HKTC as indicated by TOI has shownfluctuating trend during the last three financial years endedFY16. TOI declined in FY15 vis-a-vis FY14, although the same grewby around 14% and stood at INR107.54 crore in FY16, on the backof increase in revenue generated from trading of wheat, paddy andurad.Furthermore, the profitability of the company continued to remainthin owing to trading nature of the business. During FY16, thePBILDT margin of the firm declined by around 10 bps owing tohigher cost of traded goods along with other operating expenses.In line with decline in PBILDT margin, PAT margin of the firmalso declined by around 3 bps in FY16. -- Weak solvency position and working capital intensive natureof operations: Its capital structure deteriorated and continuedto remain highly leveraged with an overall gearing of 9.03 timesas on March 31, 2016, mainly on account of higher total debtlevel following infusion of unsecured loan by the promoters alongwith higher utilization of working capital bank borrowings as onbalance sheet date. Furthermore, due to lower profitability andhigher debt, debt coverage indicators of the firm also remainedweak.Moreover, the firm's business is working capital intensive innature with net working capital forming around 97% of totalcapital employed as on March 31, 2016, along with moderateliquidity ratios and moderate working capital cycle of 50days in FY16. -- Seasonality associated with agro commodities and presence inhighly fragmented and government regulated industry withconstitution as a partnership concern: The industry ischaracterized by high fragmentation and competition along withhigh degree of government control both in procurement and salesof agriculture commodities. Furthermore, prices of commoditieshave exhibited fluctuation and are dependent on demand and supplyconditions prevailing in the market with strong linkage to theglobal market. Moreover, HKTC's constitution as a partnershipfirm restricts its overall financial flexibility.Key Rating Strengths -- Long standing experience of the partners with establishedtrack record of operations and location advantage: Mr. RajeshKumar Nyati, the key partner, has an extensive experience in thetrading of commodities of more than three decades and looks afterthe overall management of the firm. Furthermore, HKTC is engagedin the trading of agriculture commodities mainly wheat, soyabean,urad, rice, sarso, paddy, maize and dhania, which are easilyavailable in the areas in Rajasthan in proximity to its locationresults in benefit derived from easy availability of commoditieswith lower transportation cost.Bundi-based (Rajasthan) HKTC was formed as a partnership concernby its key promoter, Mr. Tejmal Nyati along with his familymembers in 2006. Subsequently, there was change in thepartnership deep and currently, HKTC is currently owned andmanaged by Mr. Rajesh Kumar Nyati along with his wife Ms PrernaNyati with profit & loss sharing ratio of 67:33 respectively.HKTC since inception has been engaged in the business of tradingof different agriculture commodities including wheat, soyabean,sarso, paddy, rice, urad, maize and dhania. Furthermore, it isalso engaged in grading of wheat. The firm procures theagriculture commodities from local mandis and thereafter suppliesto various processing and end user manufacturing units as well astraders in Rajasthan, Gujarat and Maharashtra. Moreover, HKTCalso supplies wheat under its own brand name of 'Kisan King'.During FY16 (Aud.) (refers to the period April 1 to March 31),HKTC reported a total operating income of INR107.54 crore(FY15: INR94.14 crore) with a PAT of INR0.03 crore (FY15: INR0.05crore). Furthermore, as per FY17 provisional results, the firmhas reported net sales of INR67.71 crore.JAI AMBEY: CARE Reaffirms B+ Rating on INR12cr Long Term Loan-------------------------------------------------------------CARE Ratings reaffirmed ratings on certain bank facilities ofJai Ambey Wire EX-IM Private Ltd (JAWEPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 12 CARE B+; Stable ReaffirmedDetailed Rationale and key rating driversThe rating assigned to the bank facilities of Jai Ambey Wire EX-IM Private Ltd (JAWEPL) continues to be constrained by its shorttrack record and small scale of operations with low profitmargins, working capital intensive nature of operations, moderatecapital structure with moderately weak debt coverage indicatorsand intense competition due to low entry barriers. The rating,however, derives strength from its experienced promoters.The ability of JAWEPL to increase its scale of operations withimprovement in profit margins and effective management ofworking capital will be the key rating sensitivities.Detailed description of the key rating driversKey Rating Weaknesses -- Short track record and small scale of operations with lowprofit margins: The scale of operations of JAWEPL remained smallmarked by total operating income of INR59.87 crore with a PAT ofINR0.17 crore in FY17 (provisional). Furthermore, the profitmargins remained low marked by the PBILDT margin of 1.69% and PATmargin of 0.28% in FY17. -- Working capital intensive nature of operations: The operationof JAWEPL is working capital intensive. The company allows creditof around a month to its customers whereas it receives credit ofaround a week from its suppliers. Furthermore, the companymaintains stock of traded goods for timely supply of its clientsdemand. Accordingly, the average utilization of fund based limitwas around 76% during last twelve months ended in May 2017. -- Moderate capital structure with moderately weak debt coverageindicators: The capital structure of the company improved as onMarch 31, 2017 and remained moderate at 1.75x as on March 31,2017. The debt protection metrics of the company remainedmoderately weak marked by high Total debt to GCA and moderateinterest coverage ratio of 1.20x and total debt to GCA of 41.09xin FY17. -- Intense competition due to low entry barriers: JAWEPL is intotrading of iron and steel products which is highly fragmented andcompetitive in nature due to low entry barriers. Furthermore, allthe entities trading the same products with a little productdifferentiation resulting into price driven sales. Intensecompetition restricts the pricing flexibility of the company inthe bulk customer segment.Key Rating Strengths -- Experienced promoters: JAWEPL is managed by Mr. Arbind KumarDubey (Director) who is having about three decades of experiencein iron and steel industry through its associate concern JaiAmbey Wire Private Ltd. He is further assisted by otherdirectors: Mr. Prashant Kumar Dubey and Ms Nisha Dubey who arealso having about a decade of experience in this line ofbusiness. The company is deriving benefits from the wideexperience of the promoters.JAWEPL was incorporated in February 2014 by Dubey family ofRaipur, Chhattisgarh. Since its inception, JAWEPL has beenengaged in trading of iron and steel products like mild steelround, TMT bars, hard bright (HB) wires, galvanized iron (GI)wires etc.During FY17 (Provisional; refers to the period April 1 toMarch 31), JAWEPL reported PAT of INR0.17 crore (Rs.0.12 crorein FY16) on total operating income of INR59.87 crore (Rs.46.69crore in FY16).K.C. PRINTING: CARE Reaffirms B+ Rating on INR7cr LT Loan---------------------------------------------------------CARE Ratings reaffirmed ratings on certain bank facilities ofK.C. Printing (KCPA), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7 CARE B+; Stable Reaffirmed Short-term Bank Facilities 3 CARE A4 ReaffirmedDetailed Rationale and key rating driversThe ratings assigned to the bank facilities of K.C. Printing(KCPA), continue to remain constrained by small scale ofoperations coupled with low net worth base, leveraged capitalstructure and elongated collection period. The ratings arefurther constrained by its presence in a highly competitiveindustry and constitution of the entity as a proprietorship firm.The ratings, however, continue to draw comfort from KCPA'S longtrack record of operations, experience of the proprietor in theprinting industry along with moderate profitability margins.Going forward; ability of the firm to profitably increase itsscale of operations while improving its capital structure shallbe the key rating sensitivities.Detailed description of the key rating driversKey Rating Weakness -- Small scale of operations coupled with low net worth base:For the period FY14-FY16 (refers to the period April 01 to March31), KCPA's total operating income grew from INR11.05 crore inFY14 to INR20.17 crore in FY16 reflecting a compounded annualgrowth rate (CAGR) of 35.10%. Though, the scale of operations hasbeen growing on y-o-y basis, it continues to remain small asmarked by total operating income of INR20.17 crores and net worthof INR2.80 crore. Small scale limits the firm's financialflexibility in times of stress and deprives it from scalebenefits. -- Leveraged capital structure: The capital structure of thefirm improved; however, it continued to remain leveraged markedby overall gearing of 2.89x as on March 31, 2016 as against 3.83xas on March 31, 2015 due to low capital base and high dependenceon working capital borrowing. The improvement in the capitalstructure was on account of accretion of profits to proprietor'scapital.Constitution of the entity being a proprietorship firm K.C.Printing & Allied Works (KCPA) constitution as a proprietorshipfirm has the inherent risk of possibility of withdrawal of theproprietor's capital at the time of personal contingency and firmbeing dissolved upon the death/retirement/insolvency ofproprietor. Moreover, proprietorship firms have restricted accessto external borrowing as credit worthiness of partners would bethe key factors affecting credit decision for the lenders. -- Competitive nature of industry: KCPA faces directcompetition from various organized and unorganized players in themarket. There are number of small and regional players who arelocated in and around area and catering to the same market whichhas limited the bargaining power of the firm and has exertedpressure on its margins.The firm provides gets the order through the tender-based system.The firm is exposed to the risk associated with the tender-basedbusiness, which is characterized by intense competition. Thegrowth of the business depends on its ability to successfully bidfor the tenders and emerge as the lowest bidder. Furthermore, anychanges in the Government policy or Government spending onprojects are likely to affect the revenues of the firm. -- Moderate profitability margins: Margins of the firm havewitnessed an erratic trend during last three years FY14-FY16owing to tender driven nature of business which pose hugecompetition and pressure on the profit margins of the firm. InFY16 PBILDT margin of the firm improved at 8.28% as against 7.34%in FY15 as the firm was able to fetch contracts with betterprofitability. The PAT margin of the firm also improved in FY16over previous financial year on account of improvement registeredin PBILDT margin and extraordinary income. -- Elongated collection period: The collection period stoodelongated at 164 days in FY16. KCPA customers base normallycomprises of government boards and universities and on account ofprocedural delays, there is normally delay in realizationresulting into high average collection period in FY16. The firmprocures the raw material only which is based on deliveryschedules and receives credit up to 90 days from its suppliers. -- Long track record of operations coupled with experiencedproprietor: KCPA, was established in 1979 as a proprietorshipfirm, by Mr. Kali Charan Agrawal. However, the business iscurrently managed by Ms Mahima Agrawal who has an experience ofmore than two decades in this printing business through herassociation with KCPA.Mathura-based (Uttar Pradesh) KCPA, was established in 1979 asproprietorship firm by Mr. Kali Charan Agrawal. The firmis currently being managed by Ms Mahima Agrawal. KCPA is engagedin printing of books such as text books, printed answer sheets,mark sheets, degrees and other printed education material forvarious state education board and universities in Uttar Pradesh,Rajasthan, Madhya Pradesh, Himachal Pradesh, Chattisgarh, Biharand Haryana. The firm procures the raw material (paper, ink,chemical) from local traders and distributors. It gets orderthrough tendering and bidding process.During FY16 (refers to the period April 01 to March 31), KCAP hasachieved a total operating income (TOI) of INR20.17 crore withPAT of INR1.19 crore as against TOI of INR19.95 crore with PAT ofINR0.50 crore during FY15. Furthermore, the firm has achievedtotal operating income of INR21.00 crore in FY17 (refers to theperiod April 1 to March 31; based on provisional results).MADHAV OIL: ICRA Withdraws B+ Rating on INR9.25cr Cash Loan-----------------------------------------------------------ICRA Ratings has withdrawn the long-term rating of [ICRA]B+outstanding on the INR1.22-crore term loan facility and theINR9.25-crore cash credit facility of Madhav Oil Industries. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Term Loan 1.22 [ICRA]B+; Withdrawn Fund-based Cash Credit 9.25 [ICRA]B+; WithdrawnRationaleThe long-term rating assigned to Madhav Oil Industries has beenwithdrawn at the request of the firm based on the no objectioncertificate provided by its banker.Key rating drivers: Not applicableMadhav Oil Industries is a partnership firm established in 2010,which is engaged in the business of crushing and de-lintingcottonseeds. Four partners -- Mr. Saurinbhai Parikh, Mr.Daksheshbhai Patel, Mr. Bhaveshbhai Patel and Mr. AshishbhaiTrivedi -- manage the operations of the firm. Its manufacturingfacility is located at Kundal in Kadi (Gujarat). It has 16expellers, six delinting machines, and a mini pressing machinewith an installed production capacity for 2,800 MTPA ofcottonseed oil, 22,000 MTPA of cottonseed oil cake and 1,900 MTPAof linter cotton. However, in FY2016, the firm stopped itsdelinting operations and went ahead with its crushing operationsalone. MOI has a group company, as Pashupati Cotton Industries(PCI) (rated [ICRA]B (Stable)/A4), which was established as apartnership firm in 1999. PCI is currently engaged in ginning andpressing of raw cotton and trading of cottonseed relatedproducts. The entire sales of MOI are routed through its groupconcern, PCI.MANJU SHREE: ICRA Reaffirms B+ Rating on INR7.21cr Loan-------------------------------------------------------ICRA Ratings has reaffirmed its long-term rating at [ICRA]B+ onthe INR7.21-crore fund-based bank facilities and INR1.66-croreunallocated facilities of Manju Shree Syntex Pvt Ltd. The outlookon the long term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based limits 7.21 [ICRA]B+ (Stable); Reaffirmed Unallocated 1.66 [ICRA]B+ (Stable); ReaffirmedRationaleThe rating continues to factor in the extensive experience ofMSPL's promoters in the textile industry coupled with thefavourable location of the company's weaving facilities lendingeasy accessibility to raw materials and processing houses.However, the rating is constrained by the decline in MSPL'srevenue in FY2016. As part of its process and in accordance withits rating agreement with MSPL, ICRA had sent repeated remindersto the society for information and payment of surveillance feethat became overdue; however despite multiple requests; thesociety's management has remained non-cooperative. ICRA's RatingCommittee has taken a rating view based on best availableinformation. In line with SEBI's Circular No.SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, thecompany's rating is now denoted as: "[ICRA] B+ (Stable) ISSUERNOT COOPERATING". The lenders, investors and other marketparticipants may exercise appropriate caution while using thisrating, given that it is based on limited or no updatedinformation on the company's performance.Incorporated in 2005 as a private limited company, MSSPL isengaged in the manufacturing of grey and finished fabric forsuiting at its unit in Bhilwara for direct sales under its brandname "Spectrum" and "Da Vinchi" as well as on job-work basis forits clients. The company started its operations in 2007 byinstalling 20 Dornier looms. Thereafter, in 2009, the companyinstalled 8 Sulzer double width looms while another 21 Sulzerlooms (16 double width and 5 single width) were added in February2012. In April 2013, the company sold its 20 Dornier looms and atpresent it is operating 29 Sulzer looms (5-single width and 24-double width).MSPL reported a net profit of INR0.05 crore on operating incomeof INR18.70 crore in FY2016, as against a net profit of INR0.05crore on operating income of INR19.07 crore in the previous year.MONNET ISPAT: Lenders Begin Insolvency Process----------------------------------------------The India Express reports that with banks planning to take updebt-laden Monnet Ispat & Energy for corporate insolvencyresolution process (CIRP) under the Insolvency and BankruptcyCode, 2016, the company's shares surged on the bourses.The stock closed higher by 16.94 per cent to INR35.20 on the BSEon June 20, the report discloses. Among other companies, whichare facing bankruptcy action, Bhushan Steel rose by 8.91 per centand Amtek Auto by 9.17 per cent.According to Indian Express, lenders are likely to explore theprocess of resolution of the company's non-performing assets(NPAs) through various options. Once the case is referred to theNational Company Law Tribunal under the Insolvency and BankruptcyCode, an interim insolvency professional is appointed and willtake control of the assets and form a creditors committee, thereport says. The committee will appoint a resolution professionalto oversee the process and could change management of the debtor.Indian Express says the committee also has to come up with aresolution plan (approved by 75% majority of the creditors) ordecide to liquidate the assets. If the resolution plan is notaccepted by the NCLT or no plan is formed within 180 days (it canbe extended by 90 days), the company would go into liquidation.Monnet which has a debt of over INR12,000 crore posted a loss ofINR1,733 crore and a revenue of INR1,375 crore in fiscal March2017, Indian Express discloses. For the March quarter, the losswas at INR459 crore and revenue INR384 crore. While the promoterholding in the company is 25.27 per cent, banks hold a sizeablestake, Indian Express says.According to the report, a bank official said all the 12 casesidentified by the RBI will be taken up by the lenders in thecoming days following the regulator's directive. The InternalAdvisory Committee (IAC) of the RBI recommended for IBC reference12 accounts with fund and non-fund based outstanding amounts inexcess of INR5,000 crore, with 60 per cent or more (Rs 3000 croreor more) classified as non-performing by banks as on March 31,2016.The India Express meanwhile reports that in Delhi, steel ministerChaudhary Birender Singh ruled out any possibility of publicsector Steel Authority of India Ltd (SAIL) taking over MonnetIspat. When asked about SAIL's plans to take over Monnet Ispat,the minister said "why should we (SAIL) take it". Talking toreporters on the sidelines of an event on June 20, Singh,however, said that steps are being taken to resolve the stress inthe sector, the report relates.In March, an official had said that the government was examiningthe possibility of SAIL undertaking 'operation and maintenance'of ailing Monnet Ispat till the lenders find a buyer for thecompany, the report recalls. "We (steel sector) are now about 28per cent of the stressed debt but for last about 6-8 months,there is smooth repayment . . . If the new methodology is to beapplied for six top defaulters then let us see what it comesout," the steel minister, as cited by the Indian Express, said onJune 20.IDBI Bank has already started insolvency resolution processagainst Lanco Infratech Ltd on June 20 following a directive fromthe RBI, the report states. Steel companies account for 50% of 12large corporate defaulters identified by the Internal AdvisoryCommittee of the RBI for insolvency proceedings, the reportdiscloses.Monnet Ispat & Energy Limited engages in the production and saleof sponge iron, structural steel, and ferro alloys. The companyalso engages in the generation and sale of power; and providesconsultancy services in the fields of exploration, exploitation,and beneficiation coal and other minerals.NEW VARDHMAN: ICRA Reaffirms B Rating on INR19.82cr Term Loan-------------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating of [ICRA]B onthe INR34.82-crore fund-based bank facilities of New VardhmanVitrified Private Limited (NVVPL). The outlook on the long-termrating is 'Stable'. ICRA has also reaffirmed the short-termrating of [ICRA] A4 to the INR6.75 crore non-fund basedfacilities of NVVPL. The non-fund based facilities also includeINR37.00 crore Foreign Letter of Credit (sub-limit of term loan)and INR5.00 crore Letter of Credit (sub-limit of cash credit).Further, ICRA has also reaffirmed the long-term rating of [ICRA]Band short-term rating of [ICRA]A4 to the INR43.18 croreunallocated limits of NVVPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based-Cash Credit 15.00 [ICRA]B (Stable); Reaffirmed Fund-based-Term Loan 19.82 [ICRA]B (Stable); Reaffirmed Non Fund-based- Bank Guarantee 6.75 [ICRA]A4; Reaffirmed Non Fund-based- Foreign Letter of Credit (37.00) [ICRA]A4; Reaffirmed Non Fund-based- Letter of Credit (5.00) [ICRA]A4; Reaffirmed Unallocated 43.18 [ICRA]B (Stable)/A4; ReaffirmedRationaleThe ratings reaffirmation continues to take into account NVVPL'sweak financial risk profile characterized by moderateprofitability, weak return indicators and leveraged capitalstructure. The ratings also factors in the weak financial profileof the parent company (Nitco Limited), as is evident from itsdeclining turnover and significant losses from operations, whichhas adversely impacted its capital structure and liquidityposition. This would also impact the sales volumes of NVVPL, withsignificant sales (~98% in FY2016) being made to Nitco. Theratings are further constrained by the vulnerability of NVVPL'sprofitability to fluctuation in input prices; however, the sameis significantly mitigated under the supply agreement with Nitco.ICRA also take into account the vulnerability of profitabilityand cash flows to cyclicality inherent in the real estateindustry, which is the main consuming sector and intensecompetition in ceramic industry due to presence of numerous tilemanufacturers.The ratings, however, draws comfort from the experience ofNVVPL's promoters in the ceramic industry by virtue of theirassociation with various tile manufacturing entities andlogistical advantages enjoyed by the company from its location inIndia's ceramic hub, with easy access to quality raw material.The company is also benefitted from the supply contract and itsassociation with Nitco in terms of savings in marketing anddistribution overheads as well its established brand name.ICRA expects NVVPL's revenues to improve at a moderate pace,going forward; although the same would remain contingent uponhealthy off-take by Nitco Limited. Its profitability wouldcontinue to remain vulnerable to fluctuations in prices of rawmaterial and natural gas. In ICRA's opinion, the company'sability to scale up its operations while improving profitabilityand thereby improve debt coverage indicators, manage workingcapital requirement efficiently and ensuring timely debtrepayments would remain important from a credit perspective.Key rating driversCredit strengths * Extensive experience of promoters in the ceramic industry * Majority of sales to Nitco leads to savings in marketing and distribution overheads * Favourable location of the unit in Morbi (Gujarat), India's ceramic hub, with easy access to quality raw materialsCredit weaknesses * Weak financial risk profile characterised by moderate profitability, weak return indicators and leveraged capital structure * Weak financial profile of Nitco Limited likely to impact the supply arrangement and subsequently business risk profile of the company * Vulnerability of profitability and cash flows to cyclicality inherent in the real estate industry, which is the main consuming sector * Intense competition due to presence of numerous organized and unorganised players in the tiles industry * Profitability remain exposed to availability and prices of raw material and gas (a major source of fuel for tile manufacturers); however the same is significantly mitigated under the supply contract with Nitco LimitedDescription of key rating drivers:NVVPL manufactures vitrified floor tiles, digital ceramic walltiles and glazed vitrified tiles, with its promoters having richexperience in the ceramic industry. NVVPL is a subsidiary ofNitco Limited and the majority sales of the company (~98% inFY2016) are made to Nitco, thereby leading to significant savingsin terms of marketing and distribution overheads. The companybenefits from the 'Nitco' brand as well as the establisheddistribution network of Nitco (one of the leading players in theorganised segment of tiles industry with an established franchiseand distribution network). High customer concentration remains amajor concern with lower off-take by Nitco following thecontinuous decline in its turnover in the recent past. However,from FY2017 onwards, the company has started diversifying itscustomer base with the addition of few new customers, which wouldmitigate the risk to some extent.The company witnessed a marginal de-growth of ~2% in itsoperating income from INR170.54 crore in FY2015 to INR167.58crore in FY2016 on the backdrop of dip in sales realisations. Theoperating income further declined to ~Rs. 131 crore on account ofdecline in sales realisations as well as volumes due to loweroff-take by Nitco. The profitability of the company remainsmoderate and is vulnerable to the cyclicality inherent in thereal estate industry as well as to the fluctuations in prices ofkey raw materials and natural gas. NVVPL is also exposed tointense competition in the ceramic industry due to the presenceof numerous organized and unorganized players in the tilesindustry. However, the company is benefited in terms of easyavailability of quality raw material by virtue of its location inMorbi (Gujarat), India's ceramic hub.Incorporated in July 2011, New Vardhman Vitrified Private Limitedmanufactures vitrified floor tiles, digital ceramic wall tilesand glazed vitrified tiles (GVT). NVVPL's manufacturing facilityis located at Morbi (Gujarat), having the annual installedcapacity to produce 43.20 lakhs square metre (sq. mtr.) vitrifiedfloor tiles, 28.80 lakhs sq. mtr. ceramic wall tiles and 18.00lakhs sq. mtr. glazed vitrified tiles.The company was initially promoted by Mr. Vitenkumar H Kavar andRajesh J Likhiya, along with other members; however, in March2012, Nitco Limited (Nitco) acquired 51% of the shareholding inthe company and hence NVVPL became a subsidiary of NITCO Limited.OMKAMAL STEEL: CARE Assigns 'B+' Rating to INR4.65cr LT Loan------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofOmkamal Steel Private Limited (OKSPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 4.65 CARE B+; Stable AssignedDetailed Rationale& Key Rating DriversThe rating assigned to the bank facility of Omkamal Steel PrivateLimited (OKSPL) is constrained by relatively small scale ofoperation with low profitability margin, susceptibility to rawmaterial price volatility, highly competitive and fragmentedindustry, it's leveraged capital structure and cyclical nature ofiron and steel industry. The rating, however, derives strengthfrom experience of the promoter and strategic location of plant.Going forward, the ability of the company to increase its scaleof operations with improvement in profitability margins andeffective management of working capital will be the key ratingsensitivities.Key Rating Weaknesses -- Relatively small scale of operation with low profitabilitymargin OKSPL's level of operation remained relatively small witha PAT of INR0.06 crore on total income of INR57.31 crore in FY16:The small size acts as a hindrance to achieve economies of scalefor the company. This apart, the PBILDT margin and PAT margin ofthe company was 1.88% and 0.10% respectively, in FY16. As onJanuary 31, 2017, the company has achieved a turnover of INR50.00crore. -- Highly competitive & fragmented industry: The spectrum ofthe steel industry in which the company operates is highlyfragmented and competitive marked by the presence of numerousplayers in India owing to relatively low entry barriers. Hence,the players in the industry do not have pricing power and areexposed to competition induced pressures on profitability. -- Susceptibility to raw material price volatility: OKSPL doesnot have its own captive mine and neither does it have any long-term tie-up for supply of raw materials with any company. Since,raw material is the major cost driver for the company, anyunfavourable downward movement of finished goods price, with nodecline in raw material price result in adverse performance ofthe company.OKSPL does not have any backward integration for its rawmaterials and procures the same from outside, exposing thecompany to price volatility risk. -- Cyclical nature of the iron & steel industry: The steelindustry is cyclical in nature. Steel consumption and, in turn,production mainly depends upon the economic activities in thecountry. Construction and infrastructure sectors drive theconsumption of steel. Slowdown in these sectors leads to declinein demand for steel. -- Leveraged capital structure: OKSPL's capital structure isadverse marked by high overall gearing ratios as on last threeaccount closing dates. However, long term debt equity ratioremained comfortable as on March 31, 2016. Overall gearing ratiohas improved marginally from 3.18x as on March 31, 2015 to 2.22xas on March 31, 2016 on account of lower utilisation of workingcapital limits and accretion of profits to reserve.Experienced promoters with long track record of operationOKSPL is managed by Mr. Mahesh Bansal (Promoter and CEO), havingclose to two decades of experience in the steel industry.Further, the company started its operation since 2010 andaccordingly has a moderate track record of operation.OKSPL's plant is located at Bhilai, Chhattisgarh which is in thevicinity of steel manufacturing companies of Chhattisgarh; fromwhere OKSPL procures its raw materials. The proximity to the rawmaterial sources reduces the transportation cost to the company.OmKamal Steel Private Limited (OKSPL), incorporated in August2010, was set up to carry on manufacturing of HB Wire, MS Wire,Binding Wire, G.I Wire, Barbed Wire, Stay wire etc. Themanufacturing facility is located 16-G, Heavy Industrial Area,Hathkhoj, Bhilai, Durg, Chhattisgarh. The commercial operationstarted from October 2010 with an installed capacity of around29,200 MTPA. The day to day affairs of the company are lookedafter by Mr. Mahesh Bansal, with adequate support from otherdirectors and a team of experienced personnel.OPTIONS LAWNS: CARE Assigns B+ Rating to INR7.85cr LT Loan----------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofOptions Lawns Private Limited (OLPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7.85 CARE B+; Stable AssignedDetailed Rationale & Key Rating DriversThe rating assigned to the bank facilities of Options Lawns isconstrained by the risk emanating from debt-funded projectundertaken with financial closure pending, presence in the highlyfragmented industry with intense competition and seasonality ofbusiness. The above weaknesses are partially offset by extensiveexperience of the promoters in diverse sectors for more than adecade and strategic location of the upcoming resort. The abilityof the company to execute the project in a timely manner withoutany cost overruns and successfully commence operations whileachieving envisaged level of occupancy and profitability is a keyrating sensitivity.Detailed Rationale & Key Rating DriversKey Rating Strengths -- Experienced promoters: OLPL is promoted by Mr. Rajneesh Vermain the strength of Director. Mr. Rajneesh Verma has an experienceof 15 years in infrastructure segment through Rajneesh VermaBuilders and Contractors (RVBC). The promoter also operates arestaurant by the name of "Options Lawns" in Jabalpur which isoperational since 2002. Being in the industry for over one and ahalf decades has helped the promoter in gaining adequate acumenabout diverse industries and is expected to benefit in the smoothoperations of the OLPL. -- Strategic location of the resort: The resort is located inBhedaghat road in Madhya Paradesh, which is promoted by MadhyaPradesh Tourism. Located on the outskirts of Jabalpur, the areais a popular tourist spot and is famous for marble rock mountainson the banks of Narmada river. The Dhuadhar water fall is anothertourist attraction in the area along with the Chausath YoginiTemple. Hence, the resort is likely to benefit from the touristattractions located in the vicinity.Key Rating Weaknesses -- Project execution risk: The company is executing the projectfor setting up a resort with a total cost of INR10.56 crore. Itfaces risk of timely completion and stabilization of operationsas envisaged in light of pending financial closure for theproject. -- Presence in the highly fragmented industry with intensecompetition: The company operates in a highly competitivehospitality industry of Bhedaghat. The Bedaghat area is a famoustourist destination with many small players comprising of hotels,resorts and recreational centers operating in the area. Thus,OLPL faces high competition from the established players in theBedaghat area. -- Seasonality of business: Revenue of the company is season innature as tourist inflow tends to increase in summer seasonand holiday season making operations seasonal in nature.Furthermore, there is high dependence on the tourism industryin Madhya Pradesh and in Bhedhaghat area.Jabalpur-based (Madhya Pradesh) Options Lawns Private Limited(OLPL) was incorporated in April 1, 2016, by Mr. Rajneesh Verma,having an experience of around 15 years in diverse businessessuch as hospitality and infrastructure. The company is promotedby Riqueza Capital Investments Limited along with Mr. RajneeshVerma and Ms Sakshi Verma. Riqueza Capital Investments Limited(RCIL) is a Hong Kong-based leading financial/business consultingfirm having a strong global presence in Singapore, India, UK,Dubai and Mauritius directly or indirectly through its networkpartners & associates.OLPL is proposed to operate in an area of 70000 sq ft onBedhaghat road, Jabalpur, and have facilities, namely, 3 banquethalls, 1 garden restaurant, pub, camping site, spa and wellnesscentre, etc, along with stay facility. The resort is proposed tohave 52 rooms for stay purpose. Total cost of the project isINR10.56 crore which will be funded with a DER of 2.78x. Thefacility is expected to commence operations in April 2018.PATEL COTTON: CARE Assigns B Rating to INR14.13cr LT Loan---------------------------------------------------------CARE Ratings has assigned rating to the bank facilities of PatelCotton Industries (PCI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 14.13 CARE B; Stable AssignedDetailed Rationale & Key Rating DriversThe rating assigned to the bank facilities of Patel isconstrained on account of its leveraged capital structure on backof small partner's capital base, moderate debt coverageindicators, thin profitability margins and working capitalintensive operations. The rating is further constrained by itspresence in a fragmented and cyclical cotton industry along withsusceptibility of business to changes in Government policies.The weaknesses are partially off-set by, experienced partners andstrategic location of its manufacturing facilities in thecotton producing cluster.Increases in scale of operations along with improvement inoperating efficiency are the key rating sensitivities. PCI'sability to pass on the volatility associated with cotton pricesto its customers and efficient management of working capitalrequirements are also crucial from a credit perspective.Detailed description of the key rating driverKey Rating Weaknesses -- High leverage and moderate debt coverage indictors: The firmhad leveraged capital structure as marked by high overall gearingof 2.82 times as on March 31, 2017. The capital structure isleveraged due to small partner's capital base and working capitalintensive nature of operations. Furthermore, it had weak debtcoverage indicators on account of thin profitability. -- Working capital intensive nature of operations: Theoperations of PCI are working capital intensive as the firmpurchases most of its raw material i.e. raw cotton in cash whileit extends credit period of 20 days to its customers and keepsinventory of 20-30 days of raw materials. The liquidityindicators of PCI were modest marked by high utilization ofworking capital limits to fund its working capital requirements. -- Susceptibility of profitability to volatile cotton prices andpresence in the highly fragmented and competitive industry:PCI's profitability margins are susceptible to volatilityassociated with cotton prices. PCI operates in a highlyfragmented and unorganized market of the textile industry markedby a large number of small sized players. The industry ischaracterized by low entry barrier due to minimal capitalrequirement and easy access to customers and supplier.Key Rating Strengths -- Experienced promoters: The partners of PCI have over twodecades of experience in cotton ginning and pressing, which hashelped it in terms of raw material procurement, ease of managingday-to-day operations and marketing. Strategically locatedmanufacturing unit: PCI's presence in the cotton producing regionhas geographical advantage in terms of lower logisticsexpenditure (both on the transportation and storage) & readyavailability of raw materials.Rajkot based, PCI was formed in 1997 as a partnership firm.Currently, there are four partners in the firm. Mr. RajnikantGhodasara is the key managing partner and looks after the overallmanagement of the firm. PCI is involved in the business of cottonginning & pressing. As on March 31, 2017, PCI had an installedcapacity of manufacturing 16,500 metric tone per annum (MTPA).As per audited financials of FY16 (refers to the period April 1to March 31), PCI reported total operating income (TOI) ofINR188.01 crore with profit after tax (PAT) of INR0.22 crore.Based on provisional financials of FY17, PCI reported TOI ofINR140.41 crore with PAT of INR0.40 crore.PMT MACHINES: CARE Assigns 'D' Rating to INR428.27cr LT Loan------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities of PMTMachines Ltd (PMT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 428.27 CARE D AssignedDetailed Rationale & Key Rating DriversThe ratings reflect on-going delays in servicing of interest anddefault in repayment of debt obligation by the company on accountof its weakened liquidity position.Detailed description of the key rating driversKey Rating WeaknessesDue to the weakened liquidity position, there are on-going delaysin servicing of interest and default in repayment of debtobligation by the company.PMT Machines Ltd (PMT) was incorporated on September 8, 1961 asTraub India Pvt. Ltd, promoted by TRAUB, a leading German MachineTool Company with a major shareholding of 70%, along with Mr. D.L. Shah. In 1979, TRAUB divested its entire stake in favor of Mr.D. L. Shah. Later on in September 1989, it became deemed publiclimited company and was renamed as PMT Machines Ltd. Subsequentlyin 1994, Mr. D. L. Shah sold the company to the Sandesara groupand in 2003-04 the name was change to PMT Machines Ltd. It is oneof the oldest and leading machine tools producers in India. Itspecializes in production of metal-working machine tools.Sterling Biotech Ltd (SBL; rated 'CARE D/CARE D') is the flagshipand a listed company of the Vadodara based Sandesara group. It ismainly engaged in the manufacturing of pharmaceutical gradegelatin which has wide range of applications such as capsules,tablets, etc. It is one of the leading manufacturers ofpharmaceutical grade gelatin in India with good presence inU.S.A. which is the largest market for Pharmaceuticals. It alsomanufactures Di-calcium Phosphate (DCP, a byproduct of gelatine)and Co-enzyme Q10 (CoQ10). The group has over 27 years ofindustrial experience and has diversified interests ranging fromPharmaceuticals, Healthcare, Oil & Gas, EngineeringInfrastructure, etc. The other companies of the Sandesara groupare Sterling Oil Resources Ltd (rated 'CARE D'), Sterling SEZ &Infrastructure Ltd (rated 'CARE D'), Sterling Port Ltd (rated'CARE D'), etc.During FY16 (9 months ended March), PMT reported a loss of INR78crore on an operating income of INR55 crore vis-Ö-visFY15 (12 months ended June), wherein it reported loss of INR58crore on an operating income of INR98 crore.R.R. ENERGY: CARE Assigns 'B' Rating to INR66cr LT Loan-------------------------------------------------------CARE Ratings has assigned rating to the bank facilities of R.R.Energy Limited (RREL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 66.00 CARE B; Stable Assigned Short-term Bank Facilities 18.10 CARE A4 AssignedDetailed Rationale & Key Rating DriversThe ratings assigned to the bank facilities of R.R. Energy areconstrained by its small scale of operations, exposure tovagaries of nature on account of usage of agro-based rawmaterial, volatile raw material prices, significant exposure inother loss making companies, working capital intensive nature ofoperations, weak financial performance during FY14-FY16 (refersto the period April 1 to March 31) and weak debt protectionmetrics. The ratings however, derive strength from itsexperienced promoters, adequate raw material availability, powerpurchase agreement (PPA) with Chhattisgarh State PowerDistribution Company Limited (CSPDCL), moderate capital structureand improvement in financial performance and debt protectionmetrics in FY17 (Provisional).The ability of the company to efficiently operate the powerplant, sell power at remunerative tariff, improve theprofitability and efficient management of working capital with nofurther debt funded capex plan are the key rating sensitivities.Detailed description of the key rating driversKey Rating WeaknessesSmall scale of operations: RREL's scale of operations remainedsmall over the past years. Small scale of operations restrictsthe financial flexibility of the company in times of stress andit suffers on account of economies of scale. Exposure to vagariesof nature, due to agro-based raw material: Rice husk is theprimary raw material for the plant and availability of the sameis dependent on the rice production for that year. Ricecultivation is highly dependent on the timing of arrival ofmonsoon and mount of rainfall. Therefore, market price for ricehusk is very volatile and dependent on weather conditions.Significant exposure in other loss making companies: RREL hadsignificant exposure in the form of investments and loans(forming about 71% of its net worth as on March 31, 2017(Provisional) in its associate companies having weak creditprofile.Working capital intensive nature of operations: RREL's operationsare working capital intensive as a large part of itsworking capital remained blocked in its inventories which mainlyinclude rice husk and slow moving stock of fly ash bricksand ferro alloys.Weak financial performance during FY14-FY16 along with weak debtprotection metrics: The financial performance of the companyremained weak over the past three years due to continuous declinein its ferro alloys sales and absence of any PPA till March,2016. The debt protection metrics of the company also remainedweak over the past years (FY14-FY16) due to its weak financialperformance.Key Rating StrengthsExperienced promoters: The promoters of RREL are well establishedand experienced in their respective line of business in the stateof Chhattisgarh. Presently, Mr. Aman Agrawal, (son of Mr.Ramavtar Agrawal) looks after the day to day affairs of thecompany with support from other directors.Adequate raw material availability: RREL procures locallyavailable rice husk generated from rice mills, a bio-massresource, as the main fuel for generating electricity. There isabundant supply of rice husk in the Raigarh and surroundingareas. The coal required for running the power plant is generallyof lower calorific value which is procured locally.Power Purchase Agreement with CSPDCL: The company has executed along term PPA with CSPDCL for 20 years (from March 2016).Existence of long term PPA indicates revenue visibility for thecompany.Moderate capital structure: The capital structure of the companyremained moderate as on the past three account closing dates.Though, debt equity ratio and the overall gearing ratio improvedfrom 1.02x and 1.30x respectively as on March 31, 2014 to 0.83xand 1.27x as on March 31, 2016, it remained moderate. In FY16,the promoters has infused equity and subordinated unsecured loansaggregating to INR2.65 crore to support the business operations.The debt equity ratio and the overall gearing ratio furtherimproved to 0.75x and 1.16x respectively as on March 31, 2017(Provisional) due to accretion of profit to net worth andrepayment of term loans.Improvement in financial performance and debt protection metricsin FY17 (Provisional): In FY17 (Provisional), the total operatingincome of the company increased by about 74% driven by increasedrevenue from the power segment and the company also earned aPBILDT margin of 26.34% in FY17 (Provisional). Further in FY17(Provisional), RREL has also posted net profit and earned a GCAof INR9.63 crore. The interest coverage ratio which remainedbelow unity in FY15 and FY16 improved to 1.85x in FY17(Provisional). Total debt/GCA also remained moderate at 8x as onMarch 31 2017(Provisional).RREL, was incorporated in April, 2004 by Raigarh-based(Chhattisgarh) Mr. Amar Agrawal, Mr. Ashok Agrawal, Mr. RajendraKumar Agrawal, Mr. Ramavtar Agrawal and Mr. S C Singhal. RREL isengaged in generation of bio mass power with a 15MW plant andmanufacturing of ferro alloy (mainly Ferro and Silicon Manganese)with an installed capacity of 30,000 MTPA in Raigarh. The companystarted its operation in 2007 with its bio mass power plant.Further in September 2010, the company also installed a fly ashbrick manufacturing plant with a capacity of 100,000 bricks perday to utilize the fly ash generated from power plant. The ferroalloy plant commenced operation from July, 2013. Howevercurrently, both the bricks and ferro alloys plants are notoperational. Currently, RREL has a power purchase agreement (PPA)with CSPDCL for 20 years (from March' 2016) for sale of 13MWpower. As per the audited results for FY16, RREL reported a netloss of INR30.77 crore on a total operating income of INR44.90crore as against net loss of INR9.35 crore on a total operatingincome of INR98.60 crore in FY15. Based on provisional resultsfor FY17, RREL reported total operating income of INR77.02 croreand a PAT of INR0.38 crore.Status of non-cooperation with previous CRA: CRISIL conducted thereview on the basis of best available information and classifiedR.R.Energy Ltd. as "Issue not cooperating" vide its press releasedated June 13, 2017.SAMARTTHA TRIMURTI: CARE Assigns B+ Rating to INR15cr LT Loan-------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofSamarttha Trimurti Properties (STP), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facility 15 CARE B+; Stable AssignedDetailed Rationale & Key Rating DriversThe rating assigned to the bank facilities of Samarttha TrimurtiProperties (STP) is constrained on account of the projectexecution risk with pending financial disclosure and highdependence on customer advances and low booking status. Therating further takes into account cyclical nature of industry andpresence in a highly competitive environment.The rating, however, continues to derive strength from experienceof the promoter in real estate development in Pimpri-Chinchwad,receipt of approvals and clearances for the project and strategiclocation of the project.The ability of the firm to complete the project as per theschedule within envisaged cost, thereby enabling timely inflowof the receivables and sell the inventory as estimated rates arethe key rating sensitivities.Detailed Rationale & Key Rating DriversKey Rating StrengthsExperienced promoter group in real estate development in Pune:STP is a part of Samarth Group which is one of the establishedreal estate groups of Pune. The group has been engaged in realestate business since, past fifteen years and has completedaround fifteen residential and commercial projects with an areaof 18.73 lsf. Also, the group currently has nine on-goingprojects in Pune with total saleable area of 12.40 lsf.Receipt of approvals and clearances for the project: STP hasreceived all the necessary clearances and approvals for theproject related to land acquisition and construction. Therequisite sanction plan of the buildings of the said project hasbeen approved by the Pimpri Chinchwad Municipal Collectorate.Commencement certificate from the Pimpri Chinchwad MunicipalCorporation has been received. Furthermore, the said land hasalso been converted to non-agriculture use and environmentalclearance for the project has also been obtained. Strategiclocation of the project: STP is currently developing a projectnamely 41 Estara at Punawale, Pune which is very well connectedto Mumbai Pune Highway. The project is residential project withmodern amenities targeting customers from the middle class andbusiness class. In addition, the project is situated in area witheasy access to basic civic amenities such as schools, hospitals,colleges, malls, situated close by and has close by and has closeproximity to Hinjewadi IT park and Pune Mumbai Expressway.Key Rating WeaknessesProject execution risk and funding risk: The total cost of theproject is INR45.08 crore which is to be funded with a DE ratioof 1.25x. The project is expected to be completed by May 2021. Ason May 31, 2017, the firm has incurred 8.07% of the total projectcost (funded through promoter's contribution). However, thefinancial closure for the project has not been achievedincreasing the risk of execution. The ability of the entity tocomplete the project as per schedule within the envisaged costand achieve the project sales at the assumed price will becritical from credit perspective.Cyclical nature of the real estate industry: The firm is exposedto the cyclicality associated with the real estate sector whichhas direct linkage with the general macroeconomic scenario,interest rates and level of disposable income available withindividuals. In case of real estate companies, the profitabilityis highly dependent on property markets. A high interest ratescenario could discourage the consumers from borrowing to financethe real estate purchases and may depress the real estate market.Established in the year 2012, Samartha Trimurti Properties (STP)is the special purpose vehicle of Samartha Group (SG). SG is oneof the reputed real estate group in Pune. The group has completed15 projects in the last 15 years, with a total saleable area of1737500 sq. feet.STP was established with a view to execute thereal estate project namely "41 Estara" in Punawale, Pune. Thefirm shall be offering 1 and 2 BHK flats in the said project. Thetotal number of flats offered in the project is 216. The projectcomprises of 5 buildings and 16 row houses of which two buildingsand 16 row houses have been constructed as Phase I of theproject. The total saleable area of Phase I consists of 1.2 lsf.Phase I has been fully sold. Under the phase II of the projectthe firm is developing three buildings C, D & E with a total areaof 278632 sq. feet. The project will be officially launched inthe month of July 2017 and is expected to be completed by May2021. The total cost of the project is INR45.08 crore to befunded by promoter's contribution of INR12 crore, term loan frombank of INR15 crore and customer advances of INR18.08 crore. Thefirm has not sold any flats yet under Phase II. The two buildingsnamely Building C and Building E are residential apartmentscomprising of 14 floors with 8 flats per floor with a totalsaleable area of 194000 sq. feet.SHAKUMBHRI PULP: ICRA Reaffirms B+ Rating on INR6.10cr Loan-----------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ andshort-term rating of [ICRA]A4 on the INR8.10-crore bankfacilities of Shakumbhri Pulp & Paper Mills Limited (SPPML). Theoutlook on the long-term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term fund based 6.10 [ICRA]B+ (Stable); Reaffirmed Short-term non fund based 2.00 [ICRA]A4; ReaffirmedRationaleAs part of its process and in accordance with its ratingagreement with SPPML, ICRA has been trying to seek informationfrom the company so as to undertake a surveillance of theratings, but despite repeated requests by ICRA, the company'smanagement has remained non-cooperative. ICRA's Rating Committeehas taken a rating view based on best available information. Inline with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, datedNovember 1, 2016, the company's rating is now denoted as:"[ICRA]B+ (Stable)/[ICRA]A4; ISSUER NOT COOPERATING". Thelenders, investors and other market participants may exerciseappropriate caution while using this rating, given that it isbased on limited or no updated information on the company'sperformance since the time it was last rated.SPPML was incorporated in 1986 and is engaged in themanufacturing of kraft paper at Muzzaffarnagar, Uttar Pradesh.Presently, SPPML has an installed capacity of 10,000 MetricTonnes Per Annum (MTPA); it manufactures kraft paper of 16 burstfactor with 80-120 grams per square meter (GSM). The presentpromoters of the company acquired control of SPPML in 2009 fromits erstwhile promoters. Presently, the overall management of thecompany is with Mr. Arjun Agarwal and family who are alsomanaging the affairs of another paper manufacturing company. Thecompany is undertaking capex in FY16, to expand its capacity to13,200 MTPA and produce higher quality paper.In FY2015, the company reported a profit after tax (PAT) ofINR0.14 crore on an operating income (OI) of INR19.38 crore, asagainst a PAT of INR0.10 crore on an OI of INR19.76 crore in theprevious year.SHREE RAMANJANEYA: CARE Assigns B+ Rating to INR14.91cr LT Loan---------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities of ShreeRamanjaneya Hotels Private Limited (SRHPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 14.91 CARE B+; Stable AssignedDetailed Rationale & Key Rating DriversThe rating assigned to the bank facilities of Shree RamanjaneyaHotels Private Limited (SRHPL) is constrained by nascent stage &small scale of operations albeit healthy growth over last 3 yearsended FY17 (prov.) (refers to the period April 1 to March 31),highly leveraged capital structure, weak debt coverage indicatorsand presence in competitive, seasonal & cyclical hospitalityindustry.The rating, however, derives strength from long track record ofFidalgo Group's (FG) operations coupled with established hotelbrand presence, highly experienced and resourceful promoters withover four decades of experience and demonstrated financialsupport, healthy profit margins and comfortable operating cycle.The ability of SRHPL to increase its scale of operations andmaintain profit margins, along with improving capital structureand liquidity position with efficient working capital managementis the key rating sensitivity.Detailed description of the key rating driversKey Rating Strengths -- Long track record of Fidalgo Group coupled with establishedbrand presence: SRHPL belongs to FG, which also operates anothercompany named Maberest Hotels Private Limited (MHPL). MHPLoperates a 4-star hotel in Panjim, Goa, since 2002. All thehotels operated by FG are run under its own brand "Fidalgo" whichhas got a renowned local presence in Panjim and Pune. -- Highly experienced promoters with over four decades ofexperience in hotel industry: The overall operations of SRHPL arelooked after by Mr. Jayant Shetty with his brother Mr. GaneshShetty and brother-in-law Mr. Harish Shetty, who possess acumulative experience of over a decade in the field ofhospitality business. Further the promoters have supported theoperations of the company by infusion of funds. -- Healthy profit margins albeit operating losses in the pastand moderate liquidity: The PBILDT margin of SRHPL stood healthyat 29.63% in FY17. However, the company posted operating lossesover the past owing to higher expenses towards lease rentals forHyderabad hotel, coupled with nascent stage of operations.The operations of SRHPL are less working capital intensive innature with minimal funds blocked in inventory and debtors.The inventory holding stood low in the range of 10-15 days owingto low level of food & beverages inventory requirementon account of daily consumption and ready availability of thesame, whereas the collection period also stood low in therange of 4-12 days owing to a low credit period of over 15 daysextended to the corporate customers. On the other hand, anadequate credit period of over 40-50 days is extended by the food& beverages suppliers to the company.Key Rating Weaknesses -- Nascent stage & small scale of operations albeit healthygrowth over last 3 years: SRHPL's operations are nascent in stagewith only 5 years of operations and FY13 being the first fullyear of operations. Given this, the scale of operations stoodsmall with small tangible net-worth base. However, the same hasgrown at a healthy rate of 30.51% CAGR over FY14-FY17 owing tosteady increase in occupancy levels and ARR over the same period,coupled with commencement of commercial operations of Pune hotelin FY17. -- Highly leveraged capital structure and weak debt coverageindicators: The capital structure of SRHPL stood highlyleveraged, given the high reliance on unsecured loans coupledwith small tangible net-worth base owing to losses incurred inthe past. However, comfort can be derived from the fact that69.77% of the total debt outstanding as on March 31, 2017,comprised interest-free unsecured loans from the promoters.SRHPL's debt coverage indicators stood weak, given the highreliance on debt coupled with healthy profitability. -- Presence in competitive, seasonal & cyclical industry: SRHPLoperates in a competitive hospitality industry wherein alarge number of players operate hotels all over the cities,thereby intensifying the competition for the company.Moreover, the hotel operations are also prone to seasonality &cyclicality, thereby leading to fluctuations in occupancyrates.Incorporated in 2011 by Mr. Jayant Shetty, Mr. Ganesh Shetty, Mr.Harish Shetty and Mrs Pratibha Shetty, SRHPL is engaged inproviding hospitality services under its own brand Fidalgo,whereas it operates a 69-room, 3-star hotel in Pune, Maharashtra.Until FY16, the company operated only one 94-room, 3-star hotelin Hyderabad, Telangana, which was obtained by the company on a20-year lease agreement, whereas the Pune hotel (set up of atotal project cost of INR43 crore) became operational in July2016. Thereafter, the company wounded up the operations of theHyderabad hotel with effect from October 2016. The ARR of Punehotel is INR2,500, whereas ~85% occupancy was achieved by it overJuly 2016 - March 2017.During FY17 (prov.), the total operating income of the companystood at INR8.05 crore (vis-a-vis INR5.31 crore in FY16),whereas the PAT during the same year stood at INR0.12 crore(vis-a-vis a net loss of INR2.01 crore in FY16).SILVERTONES SPECIALITY: ICRA Reaffirms B+ Rating on INR20cr Loan----------------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ andshort-term rating of [ICRA]A4 on the INR32.00-crore bankfacilities of Silvertones Speciality Textiles Private Limited(SSTPL). The outlook on the long-term rating is stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term fund Based 20.00 [ICRA]B+ (Stable); Reaffirmed Long-term/Short- 12.00 [ICRA]B+ (Stable)/[ICRA]A4; term non fund based ReaffirmedRationaleAs part of its process and in accordance with its ratingagreement with SSTPL, ICRA has been trying to seek informationfrom the company so as to undertake a surveillance of theratings, but despite repeated requests by ICRA, the company'smanagement has remained non-cooperative. ICRA's Rating Committeehas taken a rating view based on best available information. Inline with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, datedNovember 1, 2016, the company's rating is now denoted as:"[ICRA]B+ (Stable)/[ICRA]A4; ISSUER NOT COOPERATING". Thelenders, investors and other market participants may exerciseappropriate caution while using this rating, given that it isbased on limited or no updated information on the company'sperformance since the time it was last rated.Incorporated in 2005, SSTPL is engaged in manufacturing PVCleather (rexine) and flock fabric. The company has twomanufacturing units - Mehatpur (Himachal Pradesh) and Dharuhera(Haryana). As on March 31, 2016 the company had an installedcapacity of 20,000 Metric Tonnes Per Annum (MTPA) formanufacturing PVC leather and flock fabric.In FY2015, the company reported a profit after tax (PAT) ofINR0.24 crore on an operating income (OI) of INR94.09 crore, asagainst a PAT of INR0.43 crore on an OI of INR82.61 crore in theprevious year.On provisional basis, SSTPL registered an OI of INR102.76 croreand PAT of INR0.52 crore in FY2016.SLN CNC: ICRA Reaffirms B+ Rating on INR4.50cr Cash Loan--------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ tothe INR4.50-crore fund-based limits and INR1.16-crore term loanof SLN CNC Tech Private Limited (SCTPL). ICRA has also reaffirmedthe short-term rating of [ICRA]A4 to the INR1.00-crore fund-basedlimits, INR0.75-crore non-fund based limits and [ICRA]B+/[ICRA]A4rating for INR2.59-crore unallocated limits of the company. Theoutlook on the long-term rating is Stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Cash Credit 4.50 [ICRA]B+(Stable) Reaffirmed Fund-based Term Loan 1.16 [ICRA]B+(Stable) Reaffirmed Fund-based Packing Credit 1.00 [ICRA]A4 Reaffirmed Non-fund Based 0.75 [ICRA]A4 Reaffirmed Unallocated FB/ NFB 2.59 [ICRA]B+(Stable)/A4 ReaffirmedThe rating action is based on the best available informationFY2015 audited numbers, H1FY2016 provisional numbers and otherinformation. As part of its process and in accordance with itsrating agreement with SCTPL, ICRA has been seeking informationfrom the company so as to assess the ratings. However, thecompany's management has remained non-cooperative despiterepeated requests by ICRA. In the absence of requisiteinformation, ICRA's Rating Committee has taken a rating viewbased on the best available information. In line with SEBI'sCircular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,the company's rating is now denoted as "[ICRA]B+(Stable)/[ICRA]A4ISSUER NOT COOPERATING". The lenders, investors and other marketparticipants may exercise appropriate caution while using thisrating, given that it is based on limited or no updatedinformation on the company's performance since the time it waslast rated.Established in 2008, SCTPL is involved in the manufacturing ofprecision at its CNC machining facility. Based out of Bangalore,Karnataka, the company is promoted by Mr. M V Ashok and Mr. M LGowda and specialises in manufacturing aluminium, stainlesssteel, titanium, nimonic, inconel and cobalt alloy products. Thecompany caters to clients in the aviation, automotive, space,defence, power generation and telecommunication sectors.SONATA FINANCE: ICRA Cuts Rating on INR3.19cr Sec. to B+(SO)------------------------------------------------------------ICRA Ratings has reaffirmed/downgraded the ratings for PTCs under2 micro loan securitization transactions originated by SonataFinance Private Limited (Sonata), as:1. Mithras IFMR Capital 2015* Amount after Initial May 17 Amount Payout Facilities (INR cr) (INR cr) Rating Action ---------- -------- -------- ------------- PTC Series A2 2.89 1.85 [ICRA]A-(SO) Reaffirmed PTC Series A3 3.19 3.19 [ICRA]B+(SO) Downgraded from [ICRA]BB+(SO)2. Cimber IFMR Capital 2016 Amount after Initial May 17 Amount Payout Facilities (INR cr) (INR cr) Rating Action ---------- -------- -------- ------------- PTC Series A1 17.08 5.81 [ICRA]A-(SO) Reaffirmed PTC Series A2 1.55 1.55 [ICRA]BBB-(SO) Downgraded from [ICRA]BBB(SO)* PTC Series A1 of Mithras IFMR Capital 2015 has been withdrawnin May 2017 as the payouts to the investors have been made and nofurther payment is due to the investors.RationaleBoth the pools comprise of receivables from micro loan contracts.The receivables have been assigned to the respective trusts atpar and each trust has issued PTCs backed by the same. The ratingaction is driven by weaker than expected collection performanceand high delinquencies witnessed in these pools postdemonetisation.Key rating driversCredit Strengths * High to moderate amortization of senior PTCs resulting in high Cash Collateral (CC) cover available for the balance PTC payouts, especially for the senior PTC tranche;Credit Weaknesses * High delinquency level in the pools, primarily driven by the demonetization event * The pools have a notable share of contracts from some of the regions where the asset quality remains weak post demonetizationDescription of key rating drivers highlighted above:The performance of the pools was healthy till October 2016, withcumulative collection efficiency in the range of 99% - 100% forboth of these pools. However, post the unexpected demonitisationevent, the monthly collection efficiency levels declined toaround 70-81% in the months between November 2016 and April 2017.Both the pools have notable share of contracts from regions wherethe asset quality has been weak post demonetization.Though the collections have been weak in the recent months, thesenior PTCs (PTC Series A2 in Mithras and PTC Series A1 inCimber) have amortised significantly resulting in sizeable buildup in credit enhancement for the remaining payouts.In both the transactions, only the interest amount is promised ona monthly basis (with principal amount promised to the PTCinvestors only on the final maturity date). ICRA will continue tomonitor closely the performance of these transactions. Anyfurther rating action will be based on the performance of thepools and the availability of credit enhancement relative toICRA's expectations.Analytical approach:The rating actions are based on the performance of the pools tillApril 2017 (collection month), the present delinquency profile ofthe pool contracts, geographical spread of the pool contracts,performance expected over the balance pool tenure, and the creditenhancement available in these transactions.Sonata Finance Private Limited (Sonata) is an NBFC-MFI that wasincorporated in 1995 and registered as non-deposit taking NBFC in2001. The company's microfinance operations were started in 2006by Mr. Anup Kumar Singh who is the Managing Director of thecompany at present and had acquired Sonata in 2005 along withother promoter group. Sonata primarily caters to the ruralpopulation, though it has some borrowers in semi-urban and urbanareas. Sonata offers credit to economically backward womenengaged in income generation activities like processing andmanufacturing, service and animal husbandry. Its key product isthe income generating group loan for which it replicates GrameenBank model of lending.As on December 31, 2016, Sonata had operations through 355branches across 8 states of India. Uttar Pradesh formed thelargest share with ~ 55% and the other states in which Sonata hadpresence were Madhya Pradesh, Uttarakhand, Haryana, Bihar,Rajasthan, Punjab and Maharashtra with a total managedportfolio of INR1,131 crore as on December 31, 2016. Theportfolio as on April 30, 2017 was INR981.2 crore.Sonata reported profit after tax (PAT) of INR10.59 crore8 duringFY2017 on a total managed asset base of INR1,589.24 crore8 as onMarch 31, 2017 as against PAT of INR27.20 crore during FY2016 ona total managed asset base of INR1,384.03 crore as on March 31,2016.STERLING BIOTECH: CARE Assigns 'D' Rating to INR3,768cr Loan------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofSterling Biotech Limited (SBL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 3,768.00 CARE D Assigned Short-term Bank Facilities 69.68 CARE D AssignedDetailed Rationale & Key Rating DriversThe ratings reflect on-going delays in servicing of interest anddefault in repayment of debt obligation by the company on accountof its weakened liquidity position.Detailed description of the key rating driversKey Rating WeaknessesDue to the weakened liquidity position, there are on-going delaysin servicing of interest and default in repayment of debtobligation by the company.Sterling Biotech Limited (SBL), promoted by Mr. Nitin Sandesara(Managing Director), is the flagship and a listed company of theVadodara based Sandesara group. SBL is mainly engaged in themanufacturing of pharmaceutical grade gelatin which has widerange of applications such as capsules, tablets, etc. It is oneof the leading manufacturers of pharmaceutical grade gelatin inIndia with good presence in U.S.A. which is the largest marketfor Pharmaceuticals. It also manufactures Di-calcium Phosphate(DCP, a by-product of gelatine) and Co-enzyme Q10 (CoQ10). DCP ismainly used by poultry feed manufacturers while CoQ10 is used asa dietary supplement used to boost human memory and immunity.SBL's manufacturing facility is located at Vadodara, Gujarat. Thegroup has over 27 years of industrial experience and hasdiversified interests ranging from Pharmaceuticals, Healthcare,Oil & Gas, Engineering Infrastructure, etc. The other companiesof the Sandesara group are Sterling Port Ltd (rated 'CARE D'),Sterling Oil Resources Ltd (rated 'CARE D'), Sterling SEZ &Infrastructure Ltd (rated 'CARE D'), PMT Machines Ltd (rated'CARE D'), etc.During FY17 (12 months ended March), SBL reported a loss ofINR412 crore on an operating income of INR404 crore vis-Ö-visFY16 (15 months ended March), where-in it reported loss of INR450crore on an operating income of INR568 crore.STERLING BIOTECH LTD: CARE Assigns D Rating to INR1,434.92cr Loan-----------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofSterling Biotech Ltd, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 1434.92 CARE D AssignedDetailed Rationale & Key Rating DriversThe ratings reflect on-going delays in servicing of interest anddefault in repayment of debt obligation by the company on accountof its weakened liquidity position.Detailed description of the key rating driversKey Rating WeaknessesDue to the weakened liquidity position, there are on-going delaysin servicing of interest and default in repayment of debtobligation by the company.Sterling SEZ & Infrastructure Ltd (SSIL, erstwhile Sterling SEZPrivate Limited), formerly known as M/s Sterling Erection andInfrastructure Private Limited (SEIPL), is a Special PurposeVehicle (SPV) promoted by Sandesara group through SterlingBiotech Ltd. SSIL was incorporated on June 22, 2006 for thedevelopment of a multi-product SEZ in the Jambusar Taluka,Bharuch District of Gujarat. The SEZ was aimed at providingworld-class industrial, commercial, residential and socialinfrastructure facilities along with utilities, on an integratedbasis to potential users of the SEZ.Sterling Biotech Ltd (SBL; rated 'CARE D/CARE D') is the flagshipcompany of the Vadodara based Sandesara group. SBL, a listedcompany, is mainly engaged in the manufacturing of pharmaceuticalgrade gelatin which has wide range of applications such ascapsules, tablets, etc. It is one of the leading manufacturers ofpharmaceutical grade gelatin in India with good presence inU.S.A. which is the largest market for Pharmaceuticals. It alsomanufactures Di-calcium Phosphate (DCP, a by-product of gelatine)and Co-enzyme Q10 (CoQ10). The group has over 27 years ofindustrial experience and has diversified interests ranging fromPharmaceuticals, Healthcare, Oil & Gas, EngineeringInfrastructure, etc. The other companies of the Sandesara groupare Sterling Port Ltd (rated 'CARE D'), Sterling Oil ResourcesLtd (rated 'CARE D'), PMT Machines Ltd (rated 'CARE D'), etc.STERLING OIL: CARE Assigns 'D' Rating to INR299.72cr LT Loan------------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofSterling Oil Resources Limited (SORL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 299.72 CARE D AssignedDetailed Rationale & Key Rating DriversThe ratings reflect on-going delays in servicing of interest anddefault in repayment of debt obligation by the company onaccount of its weakened liquidity position.Detailed description of the key rating driversKey Rating WeaknessesDue to the weakened liquidity position, there are on-going delaysin servicing of interest and default in repayment of debtobligation by the company.Sterling Oil Resources Limited (SORL), incorporated in March2007, a Sandesara Group company, was incorporated in India forundertaking oil exploration and production activities in oilprolific areas across the globe. SORL through its 100%subsidiaries in Mauritius and British Virgin Island (BVI) holds90% stake in Sterling Oil Exploration & Energy Production CompanyLimited (SEEPCO, the operator of the oil block; rated 'CARE D'),a company incorporated in Nigeria to acquire and operate OilExploration and Production businesses in Nigeria. SterlingBiotech Limited (SBL; rated 'CARE D/CARE D') is the flagshipcompany of the Vadodara based Sandesara group. SBL, a listedcompany, is mainly engaged in the manufacturing of pharmaceuticalgrade gelatin which has wide range of applications such ascapsules, tablets, etc. It is one of the leading manufacturers ofpharmaceutical grade gelatin in India with good presence inU.S.A. which is the largest market for Pharmaceuticals. It alsomanufactures Di-calcium Phosphate (DCP, a by-product of gelatine)and Co-enzyme Q10 (CoQ10). The group has over 27 years ofindustrial experience and has diversified interests ranging fromPharmaceuticals, Healthcare, Oil & Gas, EngineeringInfrastructure, etc. The other companies of the Sandesara groupare Sterling Port Ltd (rated 'CARE D'), Sterling SEZ &Infrastructure Ltd (rated 'CARE D'), PMT Machines Ltd (rated'CARE D'), etc.During FY16, SORL reported PAT of INR0.68 crore on an operatingincome of INR61.68 crore, vis-Ö-vis FY15, where-in it reportedPAT of INR4.76 crore on an operating income of INR404.36 crore.STERLING PORT: CARE Assigns 'D' Rating to INR244.35cr Loan----------------------------------------------------------CARE Ratings has assigned rating to the bank facilities ofSterling Port Ltd (SPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 244.35 CARE D AssignedDetailed Rationale & Key Rating DriversThe ratings reflect on-going delays in servicing of interest anddefault in repayment of debt obligation by the company onaccount of its weakened liquidity position.Detailed description of the key rating driversKey Rating WeaknessesDue to the weakened liquidity position there are on-going delaysin servicing of interest and default in repayment of debtobligation by the company.Sterling Port Ltd (SPL) was incorporated on September 29, 2006,as a Special Purpose Vehicle in the name of Sterling Port PrivateLimited (SPPL) to develop an all-weather direct-berthing port forhandling dry bulk, liquid bulk and container cargoes. The companyreceived a Letter of Intent on January 03, 2009, from GujaratMaritime Board (GMB) and concessional agreement was signedbetween them for developing of a greenfield port at Dahej,Gujarat. Subsequently, in March 2009, the name of the company waschanged to SPL. The project is promoted by Sterling Biotech Ltd(SBL; rated 'CARE D / CARE D'), which is the flagship company ofthe Vadodara based Sandesara group. SBL, a listed company, ismainly engaged in the manufacturing of pharmaceutical gradegelatin which has wide range of applications such as capsules,tablets, etc. It is one of the leading manufacturers ofpharmaceutical grade gelatin in India with good presence inU.S.A. which is the largest market for Pharmaceuticals. It alsomanufactures Di-calcium Phosphate (DCP, a by-product of gelatine)and Co-enzyme Q10 (CoQ10). The group has over 27 years ofindustrial experience and has diversified interests ranging fromPharmaceuticals, Healthcare, Oil & Gas, EngineeringInfrastructure, etc. The other companies of the Sandesara groupare Sterling Oil Resources Ltd (rated 'CARE D'), Sterling SEZ &Infrastructure Ltd (rated 'CARE D'), PMT Machines Ltd (rated'CARE D'), etc.SUMMA REAL: ICRA Reaffirms B+ Rating on INR12.50cr Term Loan------------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+assigned to the INR15.00-crore term loans, INR4.00-crore cashcredit facilities of Summa Real Media Private Limited. SRMPL'sletter of credit facility of INR15 crore is a sub limit of theterm loan facility, for which also ICRA has reaffirmed an[ICRA]B+ rating. ICRA has also reaffirmed a short term rating of[ICRA]A4 for the INR2 crore non fund based limits of SRMPL. Theoutlook on the long term rating is Stable. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Term Loan-I 2.50 [ICRA]B+ (Stable) Reaffirmed Term Loan-II 12.50 [ICRA]B+ (Stable) Reaffirmed Letter of Credit (15.00) [ICRA]B+ (Stable) Reaffirmed Cash Credit 4.00 [ICRA]B+ (Stable) Reaffirmed Bank Guarantee 2.00 [ICRA]A4 ReaffirmedThe rating action is based on the best available information. Aspart of its process and in accordance with its rating agreementwith SRMPL, ICRA has been trying to seek information from thecompany so as to undertake a surveillance of the ratings and alsohad sent repeated reminders to the company for payment ofsurveillance fee that became overdue, but despite repeatedrequests by ICRA, the entity's management has remained non-cooperative. In the absence of requisite information, ICRA'sRating Committee has taken a rating view based on best availableinformation. In line with SEBI's Circular No.SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the entity'srating is now denoted as: "[ICRA]B+ (Stable)/[ICRA]A4 ISSUER NOTCOOPERATING". The lenders, investors and other marketparticipants may exercise appropriate caution while using thisrating, given that it is based on limited or no updatedinformation on the entity's performance since the time it waslast rated.SRMPL was incorporated in January 2010 and is promoted by Dr.Manojranjan Nayak. SRMPL is engaged in the business of printingand distribution of an Odiya language daily newspaper, by thename of 'Prameya'. The operations commenced in May, 2011, withfull fledged commercial operations being in place from 2013onwards.VARIETY LUMBERS: ICRA Reaffirms B+ Rating on INR2cr Cash Loan-------------------------------------------------------------ICRA Ratings has reaffirmed the long-term rating at [ICRA]B+assigned to the INR2.00-crore fund based facility of VarietyLumbers Private Limited (VLPL). ICRA has also reaffirmed theshort-term rating at [ICRA]A4 assigned to the INR20.00-crore nonfund based facility of VLPL. The outlook on the long-term ratingis 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 2.00 [ICRA]B+ (stable); Reaffirmed Import Letter of Credit cum Buyer's Credit 20.00 [ICRA]A4; ReaffirmedRationaleThe reaffirmation of ratings continues to remain constrainedrelatively small scale of operations and volatility in operatingincome coupled with weak financial risk profile marked by lowoperating profitability, aggressive capital structure and weakdebt coverage indicators. The ratings also take into account thehighly fragmented and competitive timber industry, susceptibilityof VLPL's margins to fluctuation in timber prices and adversemovements in foreign exchange, given the high dependence onimports in absence of formal hedging policy. The ratings,however, continues to positively consider the extensiveexperience of the promoters in the timber industry, theirestablished relations with the overseas suppliers and the plant'sproximity to Kandla port which results in ease of logisticaladvantage.Going forward, the company's ability to grow its scale ofoperations, improve its operating margins in a sustainable mannerand maintain comfortable liquidity position will remain the keyrating sensitivity.Key rating driversCredit strengths * Long experience of promoters in the timber industry with established relations with overseas suppliers * Proximity to Kandla port results in ease of logistics and procurement of imported timberCredit weaknesses * Weak financial risk profile marked by low profitability indicators, aggressive capital structure and weak coverage indicators * Relatively small scale of operations; operating income (OI) remained range-bound over last four fiscal * Profitability remains vulnerable to currency fluctuations due to import oriented nature of operations and absence of formal hedging policy * Highly fragmented nature of industry with intense competition from number of organised and unorganised players coupled with little product differentiation restricting pricing flexibility and thereby profit marginsDescription of key rating drivers:The promoters of the company have over two decades of experiencein the timber industry. The company deals in radiate pinewoodwhich is majorly imported from New Zealand. High dependence onimports in absence of formal hedging policy exposes the company'sprofitability to foreign exchange fluctuation risk. The scale ofoperations remained small with stagnant revenues for FY2015 andFY2016; however, the operating income registered ~14% growth fromINR32.33 crore in FY2016 to INR36.99 crore in FY2017 followingincrease in demand from the existing customers, which majorlybelongs to packaging industry. The operating profitabilityremained low and further moderated from 5.65% in FY2016 to 4.25%in FY2017 owing to increase in employee expenses. The capitalstructure of the company continues to remain aggressive withgearing at 2.26 times as on March 31, 2017 as against 2.11 timesas on March 31, 2016 owing to higher reliance of external debtcoupled with modest net-worth base. High debt coupled with lowprofitability has kept the coverage indicators weak. The companybenefits in terms of ease of logistics and procurement ofimported timber due to close proximity of Gandhidham (Gujarat)with the Kandla port. However, the same has attracted numeroustimber players in Gandhidham region resulting into intensecompetition which restricts the company's pricing flexibility.Incorporated in 2002, Variety Lumbers Private Limited processesand trades timber logs and also manufactures wooden pallets. VLPLdeals in radiate pine logs which are majorly imported from NewZealand and Singapore. The plant is located at Gandhidham inGujarat which is close to Kandla port. The company is promoted bythe Dubey family with key promoters being Mr. Swami Nath Dubeyand his son Mr. Jay Kumar Dubey. The promoters have more than 25years of experience in timber business.VIJAY LATEX: ICRA Withdraws 'D' Rating on INR11.93cr Loan---------------------------------------------------------ICRA Ratings has withdrawn the rating of [ICRA]D assigned to theINR20.00 crore bank facilities of Vijay Latex Products PrivateLimited in accordance with ICRA's policy on withdrawal andsuspension and as desired by the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limits 11.93 [ICRA]D withdrawn Non-fund based Limits 3.00 [ICRA]D withdrawn Unallocated amount 5.07 [ICRA]D withdrawnRationale: The rating is withdrawn as desired by the company.Incorporated in 1992 by Mr. Jitendra Salot, Vijay Technologies(I) Private Limited (VTIPL) was dormant till FY 2007 andcommenced commercial operations from FY 2009 as a manufacturer ofrubber gloves. VTIPL then acquired its parent company which wasengaged in the same line of business effective from April 2010.The company then changed its name to Vijay Latex Products PrivateLimited in June, 2013. The company has its factory located inUmbergaon, Gujarat and has its head office in Andheri, Mumbai.Its group company - Vijay Sabre Safety Private Limited is engagedin manufacture and trading of fire and safety equipments (rated[ICRA]C and [ICRA]A4 by ICRA).=========J A P A N=========TAKATA CORP: Bankruptcy Means Air Bag Victims Get Less Money------------------------------------------------------------Tom Krisher at The Associated Press reports that a bankruptcyfiling by Takata Corp will leave little money for dozens ofpeople who sued the company over deaths and injuries caused byits exploding air bag inflators, according to outside legalexperts and lawyers suing the company.Takata and its U.S. operations are likely to seek bankruptcyprotection by the end of June in a deal that would sell itsassets to competitor Key Safety Systems Inc., a person briefed onthe talks said, AP relates. The person didn't want to beidentified because discussions are in progress.According to the report, the price Key will pay is unknown, butmuch of it likely will go toward paying a $1 billion U.S.criminal settlement. Most of the settlement money will go toautomakers as restitution for recall costs.AP relates that Key is expected to buy Takata's assets "free andclear" of past liabilities, and lawyers said there won't beenough money to give victims what they would have received ifthey were suing a healthy company.So far, the faulty inflators have killed 11 people in the U.S.and 16 worldwide. Over 180 people have been injured, AP says. Theproblem touched off the biggest recall in U.S. automotivehistory, involving 19 automakers, 42 million vehicles and up to69 million inflators. About 100 million inflators have beenrecalled worldwide.Some victims have serious facial injuries from metal shrapnel andwould win large verdicts if Takata were financially strong,lawyers said, the AP relates. Kevin Dean, a South Carolinalawyer who has 25 cases pending against Takata, said one of hisclients, a 26-year-old man, will never be able to smile due tonerve damage."It destroys people's faces. It's just a horrible injury," saidKent Emison, a Missouri, lawyer whose firm is considering alawsuit against Takata and others on behalf of a woman whosetrachea was punctured by shrapnel, the AP relays.The news agency notes that Takata's troubles stem from use of theexplosive chemical ammonium nitrate in the inflators to deployair bags in a crash. The chemical can deteriorate when exposed tohot and humid air and burn too fast, blowing apart a metalcanister and spewing out metal fragments.In February, Takata pleaded guilty to fraud and agreed to the $1billion settlement, the report recalls. Lawyers acknowledged incourt that the company would have to be sold to fund thesettlement. According to the report, automakers would get$850 million in restitution for recall costs and a $25 millionfine would be paid to the government. Takata already has paid$125 million into a fund for victims, the report discloses. About Takata CorpJapan-based Takata Corporation (TYO:7312) --http://www.takata.com/en/-- develops, manufactures and sells safety products for automobiles. The Company offers seatbelts,airbags, steering wheels, child seats and trim parts. TheCompany has subsidiaries located in Japan, the United States,Brazil, Germany, Thailand, Philippines, Romania, Singapore,Korea, China and other countries.In May 1995, a voluntary recall in the U.S. affecting 8 millionpredominantly Japanese built vehicles made from 1986 to 1991 withseat belts manufactured by the Takata was conducted.Large recalls of vehicles due to faulty Takata-made airbags beganin 2013.Takata is presently facing massive costs of recalling 100 milliondefective airbag inflators worldwide and lawsuits tied to atleast 16 deaths and numerous injuries.As of May 19, 2015, Takata has already recalled 40 millionvehicles across 12 vehicle brands for defective airbags.In November 2015, Takata was fined $200 million by U.S. federalregulators for mishandling the way it recalled its air baginflators. The fine is the largest civil penalty in NHTSAhistory.TOSHIBA: Chooses Gov't-Led Group as Preferred Bidder for Unit-------------------------------------------------------------Japan Today reports that Toshiba Corp has chosen a U.S.-Japanconsortium as the preferred bidder in the sale of its lucrativememory chip business. The troubled Japanese electronics giant hashad deep recent losses and has been selling pieces of itsoperations to ensure its survival.According to Japan Today, Toshiba said on June 21 the board ofdirectors selected the consortium of Innovation Network Corp ofJapan, Bain Capital Private Equity and the Development Bank ofJapan as the preferred bidder in the sale of Toshiba Memory Corp.The report says the company's U.S. Westinghouse nuclearoperations have racked up massive red ink. Reactors it has beenbuilding are still unfinished, partly because of beefed up safetyregulations following the 2011 Fukushima nuclear disaster.Westinghouse Electric Co filed for bankruptcy protection inMarch.Toshiba's attempt to gain cash from the chip operations sale hasnot gone smoothly, the report relates.Western Digital of the U.S., which has acquired some SanDisk chipoperations, including a joint venture with Toshiba in Japan,reiterated its opposition to such a move, Japan Today says. Itsaid in a statement that Toshiba "has no right" to transfer thejoint venture without its consent.It said it filed a request for arbitration last week. Japan Todayrelates that Toshiba has accused Western Digital of interferingwith its sales efforts. Such sales can be sensitive because theyinvolve the transfer of technology.Others had also expressed interest, including Hon Hai of Taiwan,also known as Foxconn, a major supplier to Apple, which hasacquired Japanese electronics company Sharp Corp, Japan Todaysays.According to Japan Today, Toshiba wants to reach an agreementwith the consortium and clear legal and other procedures beforeits June 28 general shareholders' meeting.The Innovation Network Corp of Japan is made up of 26 big-nameJapanese corporate investors, including Sony Corp, Canon Inc,Toyota Motor Corp and Sumitomo Mitsui Banking Corp, the reportdiscloses. Bain Capital Private Equity, based in Boston, is oneof the world's leading investment firms. The Development Bank ofJapan is backed by the government of Japan.Japan Today notes that Toshiba's earnings reports have failed toget endorsements from its auditors, given the company'sprecarious finances over the U.S. projects. The reports are beinggiven as projections, not results - a 950 billion yen ($8.6billion) loss for the fiscal year ended March.In 2015, Toshiba acknowledged that it had been systematicallyfalsifying its books since 2008, as managers tried to meet overlyambitious targets. An outside investigation found profits hadbeen inflated and expenses hidden across the board.Some experts said Toshiba still needs to deal with accountabilityand governance issues, Japan Today adds."Toshiba appears plagued by a legacy of opaqueness. Without acomplete overhaul of its organization, Toshiba will have a verydifficult road to recovery of its reputation and trust, essentialingredients to its existence," Japan Today quotes Shuri Fukunaga,chief executive of Burson-Marsteller Japan, a communicationsconsultancy firm that helps companies in crises, as saying. About ToshibaToshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is a Japan-based manufacturer involved in five business segments.The Digital Products segment offers cellular phones, hard discdevices, optical disc devices, liquid crystal televisions, camerasystems, digital versatile disc (DVD) players and recorders,personal computers (PCs) and business phones, among others. TheElectronic Device segment provides general logic integratedcircuits (ICs), optical semiconductors, power devices, large-scale integrated (LSI) circuits for image information systems andliquid crystal displays (LCDs), among others. The SocialInfrastructure segment offers various generators, powerdistribution systems, water and sewer systems, transportationsystems and station automation systems, among others. The HomeAppliance segment offers refrigerators, drying machines, washingmachines, cooking utensils, cleaners and lighting equipment. TheOthers segment leases and sells real estate.As reported in the Troubled Company Reporter-Asia Pacific onJune 19, 2017, S&P Global Ratings said it has kept its 'CCC-'long-term and 'C' short-term ratings on Japan-based capital goodsand diversified electronics company Toshiba Corp. on CreditWatchwith negative implications. The long- and short-term ratings onToshiba have remained on CreditWatch with negative implicationssince December 2016, when S&P also lowered the long-term ratingsbecause of a likelihood that the company might recognize massivelosses in its U.S. nuclear power business. S&P kept them onCreditWatch negative when it lowered the long- and short-termratings in January 2017 and when S&P lowered the long-termratings in March 2017.The ratings remain on CreditWatch, reflecting S&P's view thatcreditor banks' support for Toshiba together with the company'sliquidity levels warrant continued close monitoring because itsplan to sell its memory business has yet to materialize andadditional losses or financial burdens might still arise inconnection with its U.S. nuclear power business. S&P continuesto hold the view that without unanticipated, significantlyfavorable changes in Toshiba's circumstances, the company mightbecome unable to fulfill its financial obligations in a timelymanner or might undertake a debt restructuring S&P classifies asdistressed in the next six months.====================N E W Z E A L A N D====================DC ROSS: Scott Technology Buys Firm Out of Receivership-------------------------------------------------------The New Zealand Herald reports that Scott Technology has boughtDunedin engineering firm DC Ross out of receivership and,separately, plans to expand its existing facilities in the Otagocity.According to the report, the industrial robotics firm expects topay less than NZ$500,000 for the assets of DC Ross, which wastipped into receivership last September. Scott Technology intendsto keep a number of the company's 12 staff and continue toservice the engineering firm's customers, the report says."DC Ross operates a small engineering business known forproducing high-quality fine blanking press parts," the reportquotes chairman Stuart McLauchlan and managing director ChrisHopkins as saying in a statement. "The main assets are metalblanking presses and metal tool-making machinery, similar to whatScott currently uses, along with the knowledge and skills of theengineering team."At the same time, Dunedin-based Scott Technology is in the finalstages of planning to extend its facilities, which it anticipateswill double the available floor space and which it says issupported by the firm's plans to grow, the report relates. The DCRoss deal was separate but complementary to the expansion plans,it said.Last month, DC Ross's receiver Malcolm Hollis of PwC said in hissecond report on the administration that he hadn't received anybids for the business and had liquidators appointed by FletcherSteel, which was owed about NZ$610,000 as a third ranking securedcreditor, the Herald recalls.The engineering firm's first secured creditor was Bank of NewZealand owed NZ$4.3 million, followed by Baird McConnon's AorangiLaboratories with NZ$13.8 million of outstanding debt, the Heralddiscloses.After the failed sales process, Mr. Hollis said he had receivedinterest from a potential buyer and was in negotiations, theHerald adds. *********Tuesday's edition of the TCR-AP delivers a list of indicativeprices for bond issues that reportedly trade well below par.Prices are obtained by TCR-AP editors from a variety of outsidesources during the prior week we think are reliable. Thosesources may not, however, be complete or accurate. The TuesdayBond Pricing table is compiled on the Friday prior topublication. Prices reported are not intended to reflect actualtrades. Prices for actual trades are probably different. Ourobjective is to share information, not make markets in publiclytraded securities. Nothing in the TCR-AP constitutes an offeror solicitation to buy or sell any security of any kind. It islikely that some entity affiliated with a TCR-AP editor holdssome position in the issuers' public debt and equity securitiesabout which we report.A list of Meetings, Conferences and Seminars appears in eachWednesday's edition of the TCR-AP. Submissions about insolvency-related conferences are encouraged. Send announcements firstname.lastname@example.com's edition of the TCR-AP features a list of companies withinsolvent balance sheets obtained by our editors based on thelatest balance sheets publicly available a day prior topublication. At first glance, this list may look like thedefinitive compilation of stocks that are ideal to sell short.Don't be fooled. Assets, for example, reported at historicalcost net of depreciation may understate the true value of afirm's assets. A company may establish reserves on its balancesheet for liabilities that may never materialize. The prices atwhich equity securities trade in public market are determined bymore than a balance sheet solvency test. *********S U B S C R I P T I O N I N F O R M A T I O NTroubled Company Reporter-Asia Pacific is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills,Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, RouselElaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro andPeter A. Chapman, Editors.Copyright 2017. All rights reserved. ISSN: 1520-9482.This material is copyrighted and any commercial use, resale orpublication in any form (including e-mail forwarding,electronic re-mailing and photocopying) is strictly prohibitedwithout prior written permission of the publishers.Information contained herein is obtained from sources believedto be reliable, but is not guaranteed.TCR-AP subscription rate is US$775 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the samefirm for the term of the initial subscription or balancethereof are US$25 each. For subscription information, contactPeter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268. *** End of Transmission ***