/raid1/www/Hosts/bankrupt/TCRAP_Public/130812.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, August 12, 2013, Vol. 16, No. 158
Headlines
A U S T R A L I A
ALLCO FINANCE: Late Founder's Estate Pursued in Class Action
LM INVESTMENT: High Court Appoints BDO as Receiver to Fund
OCTAVIAR LIMITED: Public Trustee Spent AUD13.31MM on Fees
RETAIL ADVENTURES: Administrators Disagree With Payout Estimates
* AUSTRALIA: Insolvencies to Keep Rising in 2014, Expert Warns
C H I N A
CHINA SCE: S&P Cuts LT Corporate Credit Rating to 'B'
GREENTOWN CHINA: S&P Raises LT Corporate Credit Rating to 'BB-'
SPG LAND: Moody's Eyes Upgrade of B3 CFR, Caa1 Sr. Debt Ratings
TEXHONG TEXTILE: First Half 2013 Results Support Moody's Ba3 CFR
* Chinese SOEs' Credit Quality to Keep Diverging, Says Moody's
I N D I A
ALIDHRA MACHINES: ICRA Rates INR5cr LT Cash Credit at 'BB-'
ANAND ENTERPRISE: ICRA Assigns 'B' Rating to INR8cr Cash Credit
EAGLE EXTRUSION: ICRA Reaffirms 'B' Ratings on INR10.2cr LT Loans
KIJALK INFRASTRUCTURE: ICRA Assigns 'B' Rating to INR18cr Loan
METALLURGICAL PRODUCTS: ICRA Rates INR8.5cr Term Loan at 'BB-'
M.G. HUSSAIN: ICRA Assigns 'B' Ratings to INR4.16cr Loans
PANDIT AUTOMOBILES: ICRA Assigns 'B+' Ratings to INR9.5cr Loans
PARAMOUNT TOWERS: ICRA Lowers Rating on INR100cr Term Loan to 'D'
SARAWAGI AUTOMOBILES: ICRA Rates INR8.38cr Loans at 'B+'
SP SUPERFINE: ICRA Reaffirms 'D' Ratings on INR103.46cr Loans
SR CONSTRUCTIONS: ICRA Reaffirms 'B' Ratings on INR18cr Loans
THIRUMATHI MUTHAMMAL: ICRA Ups Ratings on INR9cr Loans to 'BB-'
J A P A N
* Japan Needs Higher Growth to Support Debt Burden Says Moody's
N E W Z E A L A N D
APPAREL HOUSE: Strip Will be Ready Despite Supplier Liquidation
T A I W A N
TAIWAN FINANCE: Fitch Affirms Viability Rating at 'bb'
- - - - -
=================
A U S T R A L I A
=================
ALLCO FINANCE: Late Founder's Estate Pursued in Class Action
------------------------------------------------------------
Michael West at The Sydney Morning Herald reports that the estate
of the late David Coe, whose death on a skiing holiday in Aspen in
January at age 58 shocked the corporate world, is being pursued in
a shareholder class action to recoup losses from the collapse of
his Allco Finance Group.
SMH relates that the claim for false and misleading conduct and
breaches of disclosure laws has also been brought against Allco's
auditor KPMG.
According to the report, Mr. Coe founded the Allco Finance Group
in 1979 with Sydney businessman John Kinghorn, who was subject to
corruption findings by the Independent Commission Against
Corruption early this month.
SMH notes that during the sharemarket boom Allco expanded
aggressively, taking on billions of dollars in debt, and Mr. Coe
even led a leveraged takeover bid for Qantas. That deal came
unstuck at the eleventh hour but Allco's debts were still its
undoing and Mr. Coe's financially engineered maze of companies
imploded in the global crisis, owing billions of dollars, the
report relays.
According to SMH, the class action, to be filed by law firm
Maurice Blackburn in the Federal Court on August 15, alleges gross
and continuous failures of disclosure to the sharemarket. It
claims that the failures occurred between August 21, 2007, and
February 27, 2008, during which time Allco shares dived from
AUD9.20 to AUD1.03.
It is open to any shareholders who suffered losses during this
time and so the claims may run into hundreds of millions of
dollars, SMH adds.
About Allco Finance
Allco Finance Group Ltd. is an integrated global financial
services business, specializing in asset origination, funds
creation and funds management. The company is a fund manager of
alternative assets in its core asset classes, which include
aviation, rail, shipping, infrastructure, property, private equity
and financial assets. Its primary focus is on commercial
property, predominately completed office buildings and select
development opportunities. It also purchases new and existing
commercial passenger and cargo aircraft for lease to commercial
airlines.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 6, 2008, Allco Finance Group appointed Tony McGrath and
Joseph Hayes of McGrathNicol as the voluntary administrators of
the company and certain of its subsidiaries. Subsequent to the
appointment of administrators to Allco, the company's banking
syndicate appointed Steve Sherman and Peter Gothard of Ferrier
Hodgson as receivers. Allco has more than AUD1 billion in total
debt.
LM INVESTMENT: High Court Appoints BDO as Receiver to Fund
----------------------------------------------------------
The future for investors in LM First Mortgage Income Fund (FMIF)
is more certain after a court appointed a receiver to it on August
8. The Queensland Supreme Court appointed David Whyte of BDO.
The move effectively takes control for the winding up out of the
hands of the liquidators appointed to FMIF's responsible entity,
LM Investment Management Limited (LM). Until their appointment as
liquidators, John Park and Ginette Muller of FTI consulting, had
been acting as voluntary administrators of LM since March 2013.
ASIC Commissioner Greg Tanzer said, "The appointment will see the
winding up proceed in the most efficient and cost effective way.
We want to see the maximum returned for investors."
The move follows ASIC's intervention in May this year, in a court
case about the future of the FMIF. ASIC sought orders to wind up
the FMIF and to appoint registered liquidators as receivers to the
FMIF. Mr Park and Ms Muller had been resisting any attempt to
remove them from control of the FMIF.
ASIC's intervention followed a concern that Mr Park and Ms Muller
were not putting the interests of unitholders of the FMIF before
their own when they called a meeting of unitholders in April this
year to change the responsible entity of the fund.
ASIC was concerned the meeting had not been validly called. ASIC
was also concerned, after Mr. Park and Ms. Muller had recommended
strongly against the changing of the responsible entity, that the
outcome of the meeting (which was held on June 13) would be
largely pointless and not in the broader interests of unitholders.
In dealing with the conduct of Mr. Park and Ms. Muller, Justice
Dalton said:
"The administrators of [LM] have, in my view, demonstrated a
preparedness to act in a way inconsistent with those owing duties
as responsible entity and trustee under the Corporations Act. My
view is that they have preferred their own commercial interests to
the interests of the fund. This is demonstrated in the conduct . .
. in relation to the 13 June 2013 meeting; their dealings with
ASIC, and their conduct with this litigation. It extends to the
point where both administrators have sworn to matters which they
either conceded were wrong on cross-examination . . . or in my
view are not consonant with reality . . . In a winding-up where
conflicts may well arise, and may involve questions of some
complexity, I feel no assurance that the current administration
would act properly in the interests of members of the fund in
identifying those issues or dealing with them. In my view, that
makes it necessary that someone independent have charge of
winding-up FMIF. . .."
Trilogy Funds Management Limited (Trilogy) also applied to be
appointed by the court as a temporary responsible entity for the
FMIF. The court ruled Trilogy's application to be incompetent and
further found that for a number of reasons, including potential
conflicts of interest, it did not regard the appointment of
Trilogy as responsible entity as being in the interests of members
of the FMIF.
Prior to the proceedings, Deutsche Bank, a secured creditor of the
FMIF, appointed McGrathNicol as receiver of the FMIF. ASIC
anticipates that orders will be made for the incoming receiver to
work in conjunction with Deutsche Bank's receiver for an orderly
realisation of the assets of the FMIF.
ASIC's inquiries into the collapsed Gold Coast-based fund manager
LM Investment Management, which controls FMIF, are continuing.
Investors and unitholders caught up in the LM collapse should
check ASIC's dedicated LM webpage for further information.
Mr Whyte was previously appointed to wind up the Equititrust
Premium Income Fund, following ASIC's application, in 2011.
New Zealand Herald reported that voluntary administrators have
been appointed to LM Investment Management, a beleaguered
Australian firm that controlled a frozen mortage fund which
New Zealanders had more than NZ$100 million tied up in. LM
directors on March 19, 2013, appointed John Park and Ginette
Muller of FTI Consulting as voluntary administrators, blaming the
move on liquidity problems caused by a smear campaign.
LM is the responsible entity of these registered managed
investment schemes:
-- LM Cash Performance Fund;
-- LM First Mortgage Income Fund;
-- LM Currency Protected Australian Income Fund;
-- LM Institutional Currency Protected Australian Income Fund;
-- LM Australian Income;
-- LM Australian Structured Products Fund; and
-- The Australian Retirement Living Fund.
LM also operates the unregistered LM Managed Performance Fund.
The Supreme Court of Queensland in April appointed KordaMentha and
its affiliate firm Calibre Capital as joint trustees of the AUD350
million Gold Coast-based LM Managed Performance Fund (LMPF).
Ms. Muller and Mr. Park were appointed liquidator of LM Investment
Management Limited on August 1.
OCTAVIAR LIMITED: Public Trustee Spent AUD13.31MM on Fees
---------------------------------------------------------
Lisa Allen at The Australian reports that one of the entities
charged with protecting the interests of hundreds of retail
investors in the collapsed property and financial services group
MFS -- now known as Octaviar Ltd -- has spent AUD13.31 million on
legal fees, financial and accounting advice, even though investors
are yet to receive any return.
The 560 noteholder members of creditor the Octaviar Note Trust,
once one of the key investment vehicles of MFS, have been
represented by Queensland's Public Trustee since the collapse of
MFS in 2008.
The Australian says the noteholders will meet in Brisbane on
August 13 to decide whether the Public Trustee should continue to
act for them.
Following the MFS collapse, another major MFS creditor, the
Premium Income Fund, which has 10,000 unit holders, argued for a
deed of company arrangement that would have seen all five
creditors, including the Octaviar Note Trust, paid 22.5c in the
dollar, according to The Australian.
The Public Trustee blocked such a move, the report says.
According to the report, Wellington Capital managing director
Jennifer Hutson, the responsible entity for the Premiun Income
Fund, estimates that if a DOCA had proceeded, PIF's 10,000
investors would have received 5c in the dollar as well as the
proceeds from the sale of PIF's extensive real estate holdings.
"The deed of company arrangement proposed in 2008 would have been
a far superior outcome for PIF unit holders than the position they
find themselves in today as a consequence of the commercial
decisions taken by the Public Trustee," the report quotes
Ms. Hutson as saying.
"I find it beyond extraordinary that the Public Trustee, which is
a proud Queensland institution established by the government for
the benefit of those people in Queensland who need the Public
Trustee to administer their affairs, has decided to spend $13m-
plus dollars on this issue."
But in a statement to The Weekend Australian a Public Trustee
spokesperson said: "The Public Trustee took advice and the Supreme
Court of Queensland decided that the DOCA was 'contrary to the
interests of creditors . . . as a whole'. Some of the evidence
before the Supreme Court included whether creditors would likely
ever receive the 22.5c the DOCA promised," notes the report.
According to documents obtained by The Weekend Australian, says
the report, the Public Trustee has spent AUD$13.31 million in
costs which "must be reimbursed to the Public Trustee before any
distribution to noteholders".
A Public Trustee spokesperson said the noteholders will receive a
monetary return only after further distributions by the
liquidators, the report adds.
"The liquidators make the decisions as to when the distributions
are made, especially final distributions. The liquidators have
further work to do, including finalising litigation against a
number of parties. The Public Trustee will, after deducting costs
and expenses, pass on distributions to noteholders as soon as
possible," the spokesperson, as cited by The Australian, said.
Apart from blocking the DOCA, the Public Trustee brought
proceedings to remove Deloitte as provisional liquidators,
appointing Bentleys liquidators Kate Barnet and William Fletcher,
reports The Australian.
About Octaviar Limited
Australian-based Octaviar Limited, formerly known as MFS Limited,
operated as an investment management business with a portfolio of
businesses and assets.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
Sept. 15, 2008, Octaviar Limited appointed John Greig and
Nicholas Harwood of Deloitte as Voluntary Administrators. The
directors of three Octaviar subsidiaries, Octaviar Financial
Services Pty Ltd, Octaviar Investment Notes Limited and Octaviar
Investment Bonds Limited, also appointed Messrs. Greig and
Harwood as Voluntary Administrators. Fortress Credit Corporation
(Australia) II Pty Ltd., one of Octaviar Limited's major
creditors, also appointed Stephen James Parbery and Anthony
Milton Sims of PPB Advisory as receivers and managers for
Octaviar.
In December 2008, Octaviar's creditors voted for a deed of
company arrangement over two entities in the Octaviar group,
Octaviar Limited, and Octaviar Administration Pty Limited. The
three other companies in the group were subsequently wound up.
The TCR-AP reported on Aug. 4, 2009, that the Supreme Court of
Queensland placed Octaviar Ltd into liquidation. Justice
Philip McMurdo terminated a deed of company arrangement that has
been in place since December 2008, naming company administrators
John Greig and Nick Harwood at Deloitte, as provisional
liquidators.
Administrators and liquidators Greig and Harwood at Deloitte were
then replaced by Bentleys Corporate Recovery under court order.
According to The Age, creditors are yet to recover about
AUD2.5 billion from the Group, which was found to have
AUD1 billion in intercompany loans.
RETAIL ADVENTURES: Administrators Disagree With Payout Estimates
----------------------------------------------------------------
Melinda Oliver at SmartCompany reports that administrators for Jan
Cameron's collapsed business, Retail Adventures, have warned
creditors that they disagree with her company's estimates of
return under a liquidation scenario.
SmartCompany relates that Ms. Cameron's company, DSG Holdings
Australia, which bought Retail Adventures out of administration
earlier this year, is reportedly aiming for support for a deed of
company arrangement that would see unsecured creditors receive
about 5c in the dollar, higher than the result of liquidation.
DSG has suggested creditors would receive between 2.57c and 9.04c
in the dollar through liquidation, the report says.
However, in a letter to creditors, administrator Vaughan
Strawbridge of Deloitte has warned creditors that the
administrators disagree with this estimate, SmartCompany reports.
According to SmartCompany, Mr. Strawbridge said the return to
creditors through liquidation was likely to be between 22c and 48c
in the dollar. This figure would depend on whether administrators
found that half of Ms. Cameron's AUD77 million secured debt to
Retail Adventures was invalid, if the company was insolvent when
security was granted, SmartCompany relates citing a Fairfax
report.
About Retail Adventures
Retail Adventures Pty Ltd is an Australia-based discount variety
retailer and operates nationally under brand names Chickenfeed,
Go-Lo, Crazy Clark's, and Sam's Warehouse. The company operates
around 270 stores across the four brands.
Deloitte Restructuring Services Partners Vaughan Strawbridge,
David Lombe and John Greig have been appointed Joint Voluntary
Administrators of Retail Adventures Pty Limited, effective
Oct. 26, 2012.
Mr. Strawbridge said a license agreement is in place between
Retail Adventures Pty Ltd and DSG Holdings Australia Pty Ltd for
them to manage the 238 Crazy Clark's and Sam's Warehouse stores.
About 20 Chickenfeed stores in Tasmania have been closed and
staff paid entitlements.
* AUSTRALIA: Insolvencies to Keep Rising in 2014, Expert Warns
--------------------------------------------------------------
Patrick Stafford at SmartCompany reports that the current state of
insolvencies in Australia is the worst seen in recent history, but
brace yourselves -- the economy is set for more pain.
While the insolvency figures from the 2012-13 year are not yet
finalised, figures for the first 11 months show insolvency
appointments reached 14,452 -- up by 183 from the same period in
the previous year, SmartCompany relates.
According to the report, a large chunk of these insolvencies come
from industries most exposed to deteriorating conditions, such as
manufacturing, construction and retail. A large chunk are placed
into insolvency by the Australian Taxation Office, once it
ascertains a company isn't about to maintain its debt payments,
the report notes.
But even five years after the global financial crisis, insolvency
experts said the pain isn't yet over.
"It's a bit of a strange one, because last year it appeared as
though insolvency figures may have peaked," Dissolve liquidator
Cliff Sanderson told SmartCompany.
"But in April and May of this year, they were the highest April
and May on record. So it's been bubbling along at a high level,
sometimes going upwards or slightly below the peak. But they are
stubbornly refusing to go down."
=========
C H I N A
=========
CHINA SCE: S&P Cuts LT Corporate Credit Rating to 'B'
-----------------------------------------------------
Standard & Poor's Ratings Services had lowered its long-term
corporate credit rating on China-based property developer China
SCE Property Holdings Ltd. (CSCE) to 'B' from 'B+'. The outlook is
stable.
"At the same time, we lowered our issue rating on the company's
senior unsecured notes to 'B-' from 'B'. In addition, we affirmed
our 'cnBB-' long-term Greater China scale credit rating on CSCE
and the 'cnB+' rating on the notes. We lowered the rating on CSCE
to reflect our expectation that leverage will remain high over the
next 12 months even though the company has improved its sales
execution and revenue recognition," said Standard & Poor's credit
analyst Christopher Lee.
"Our view reflects the aggressive increase in CSCE's borrowings
over the past six months to fund land acquisitions. The company's
greater appetite for debt and growth may make it vulnerable to a
sudden market downturn, given the tightening credit environment.
In our view, CSCE's concentration risk will remain high for the
next two years, although geographical concentration in Quanzhou
has improved somewhat since 2012. The company's sales are highly
sensitive to regulatory changes in Quanzhou, where the
government's home purchase restrictions have yet to be applied,"
to 'B'
"In our base case, we expect CSCE to generate property contract
sales of Chinese renminbi (RMB) 8 billion-RMB9 billion and
maintain an EBITDA margin of about 26% in 2013. We believe CSCE's
profit margins are unlikely to recover to the 2011 level, after
declining in 2012," S&P said.
"We anticipate that CSCE's total debt will grow to about RMB10
billion by the end of 2013 from RMB7.86 billion in 2012. The
company is likely to recognize revenue of about RMB6.5 billion-
RMB7 billion in 2013, significant growth from a year earlier
because more projects are due to be completed and delivered. The
stable rating outlook reflects our view that CSCE's increased
revenue recognition and stabilizing margins will partly offset
higher borrowings, resulting in reduced leverage for 2013 compared
with 2012," said Mr. Lee.
"Nevertheless, we expect the projected leverage ratios will remain
high in the next 12 months and be reflective of a "highly
leveraged" financial risk profile. We also expect CSCE to
generate strong property sales and maintain adequate liquidity
during its business expansion," S&P said.
"We could lower the rating on CSCE in the next 12 months if the
company's revenue recognition and margins are significantly weaker
than we expected and its debt-funded expansion is more aggressive
than we anticipated, such that its EBITDA interest coverage ratio
is less than 1.5x or its liquidity position deteriorates. This
could happen if the company's total debt significantly exceeds
RMB10 billion or its EBITDA margin is materially lower than 26% in
2013," S&P said.
"We could upgrade CSCE if it smoothly executes its accelerated
business expansion and its leverage weakens through a more
disciplined growth and debt appetite and improved sales execution,
such that its debt-to-EBITDA ratio recovers to below 5x on a
sustainable basis and its geographical diversification improves,"
S&P said.
GREENTOWN CHINA: S&P Raises LT Corporate Credit Rating to 'BB-'
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term corporate
credit rating on China-based real estate developer Greentown China
Holdings Ltd. to 'BB-' from 'B'. The outlook is stable.
Standard & Poor's also raised its issue rating on the company's
senior unsecured notes to 'B+' from 'B-'. At the same time, we
raised the long-term Greater China regional scale rating on
Greentown to 'cnBB+' from 'cnBB-' and that on the notes to 'cnBB'
from 'cnB+'.
"We raised the ratings by two notches to reflect our view that
Greentown can sustain its improved financial performance for 2012
in 2013-2014," said Standard & Poor's credit analyst Christopher
Lee.
The company reduced its leverage and improved its cash flow
significantly after it adopted a more cautious financial strategy.
"The improvement in Greentown's business and financial position
has led us to revise our assessment of the company's business risk
profile to "fair" from "weak" and its financial risk profile to
"aggressive" from "highly leveraged," S&P said.
Greentown received a capital injection in 2012 of about Hong Kong
dollar (HK$) 5.1 billion from Wharf (Holdings) Ltd. to help it
stave off a liquidity crunch. Subsequently, Greentown sold
assets, reduced its debt, and improved its property sales to focus
on cash flow generation. Greentown increased its financial
flexibility, particularly its access to funding, after the capital
injection from Wharf. Wharf is the second-largest shareholder in
Greentown with a 24.6% stake. In our view, Wharf is likely to
continue to provide oversight over investment and financial
discipline, ensuring that Greentown's leverage will remain
relatively sound.
"We expect Greentown's property sales in 2013 to remain stable.
The company has ample inventory for sale and has slowed its
expansion since 2012. The steady sales growth outlook reflects
the company's revised strategy to focus on cash flow generation
and balance sheet management. In our view, the broader real
estate market is favorable to Greentown, but purchase restrictions
will continue to affect its high-end property offerings," S&P
said.
"In our opinion, Greentown's profitability is unlikely to improve
materially in the next 12 months. Coupled with stagnant sales,
operating profits will likely stay flat or decline somewhat," said
Mr. Lee.
"In our base case, we expect average selling price to be unchanged
in 2013. Greentown's sales rose 54.6% to Chinese renminbi (RMB)
54.6 billion (or RMB27.3 billion on an attributable basis) in
2012. Property sales in the first six months of 2013 were RMB29.4
billion (or RMB15.3 billion on an attributable basis), equaling
53.5% of its full-year budget.
It will take time before Greentown realizes results from its more
stringent cost controls and increasing focus on more affordable
mass-market properties as it continues to sell its higher-cost
inventory over the next two years. The company's high-cost land
bank and a property development period that is longer than its
peers' make controlling costs a little more difficult.
We believe Greentown's leverage is likely to improve in the next
12 months with more disciplined land acquisitions and further debt
reduction. The company has reduced its total borrowings to
RMB38.68 billion as of the end of 2012, from RMB61.02 billion at
the end of 2011. In our view, Greentown's management has abandoned
its previous aggressive expansion strategy. We believe Wharf's
participation in Greentown's board of directors and investment
committee will further temper such expansion. Wharf will become
the largest shareholder in 2014 if it exercises the option on its
convertible bonds in Greentown," S&P said.
"In our view, Greentown will continue to improve its financial
flexibility with the benefit from Wharf's ownership and its
stronger financial standing. After Greentown's significant fund-
raising in the offshore market during the first half of 2013, the
company extended its maturity profile and reduced its average
funding costs. Greentown has repaid all its high-cost trust loans
by the end of July 2013. As of the end of 2012, Greentown has
RMB15.63 billion in borrowings due in 12 months against
unrestricted cash of RMB6.16 billion.
Greentown's corporate structure is complex and involves extensive
related-party transactions. The company's leverage would have
been higher if the borrowings of joint ventures are
proportionately consolidated. We believe the complex corporate
structure will continue to be a rating constraint over the next
two years," S&P said.
"In our view, visibility is still low over the cash movements and
liabilities of Greentown's large number of joint ventures. These
joint ventures could require cash injections from shareholders to
meet obligations if they have financial difficulties. After
Greentown sold equity in nine projects to Sunac China Holdings
Ltd., it acquired several new projects together with Sunac and
Wharf. As Greentown's partnership with Sunac and Wharf increases,
we expect the transparency over the joint ventures to improve as
these are public companies," S&P said.
"In our base-case forecast, we expect Greentown's revenue to be
flat at about RMB36 billion in 2013. This is based on our
expectation that contracted sales (on an attributable basis) will
be above RMB33 billion and EBITDA margin no less than 23%. We
also anticipate that the company's total debt will remain at RMB36
billion-RMB40 billion in 2013 from RMB38.67 billion in 2012. In
2013, Greentown's ratio of adjusted total debt to EBITDA is likely
to be steady at about 4.5x (2012: 4.4x) and EBITDA interest
coverage will be 2.5x-3x (2012: 2.5x). These figures are
comparable to most 'BB-' rated peers'," S&P said.
"In calculating Greentown's total debt at the end of 2012, we use
its reported debt of RMB21.38 billion and adjust it for RMB7.12
billion due to related parties, RMB8.05 billion in financial
guarantees, and RMB2.06 billion in convertible bonds issued to
Wharf.
"We expect Greentown's capital expenditure to remain high in the
next 12 months. But we believe the company has the flexibility to
lower spending to preserve its liquidity if market conditions
deteriorate.
"We understand that Greentown has about RMB48 billion in undrawn
banking facilities in China. Nevertheless, we do not include
these facilities in our liquidity assessment because of their
uncommitted nature and the uncertainty over their timely
availability," S&P said.
As of the end of 2012, Greentown is in compliance of its bond
covenants.
"We expect the company to maintain sufficient headroom in the
financial covenants for its bond and its offshore bank loan in the
next 12 months.
"The stable outlook on the long-term corporate credit rating
reflects our expectation that Greentown will be cautious in
expanding and can increase sales while maintaining satisfactory
margins. We expect the company will maintain its leverage at less
than 5x debt to EBITDA, consistent with our assessment for an
"aggressive" financial risk profile," said Mr. Lee.
"We may lower the rating if: (1) Greentown's property sales,
including newly acquired projects, are materially below our
expectation of RMB33 billion; or (2) Greentown's borrowings are
significantly higher than we expected without an accompanying
growth in property sales, such that its debt-to-EBITDA ratio rises
above 5x. This could happen if China's property market suddenly
turns downward or the government introduces administrative
measures to control credit and property prices.
The rating upside is limited in the next 12 months. However, we
may review the rating for an upgrade if Greentown demonstrates a
record of consistent and cautious financial management,
disciplined investment policy, and sustains lower leverage," S&P
said.
SPG LAND: Moody's Eyes Upgrade of B3 CFR, Caa1 Sr. Debt Ratings
---------------------------------------------------------------
Moody's Investors Service continues to review for upgrade SPG Land
(Holdings) Ltd.'s B3 corporate family rating and Caa1 senior
unsecured rating.
Moody's had placed SPG Land's ratings on review on May 9, 2013
after it announced a share subscription agreement and an
investment agreement with Gluon Xima International Limited, an
indirect wholly-owned subsidiary of Greenland Holding Group, which
is a major China-based property conglomerate.
Ratings Rationale:
"The ratings review has been extended following SPG Land's
decision to accept Greenland as its majority shareholder," says
Franco Leung, a Moody's AVP/Analyst.
SPG Land announced that all the resolutions set out in the notice
of the extraordinary general meeting were duly passed on August 5,
2013. The company targets to complete the transaction on August
27, 2013.
The rating review will close upon the satisfactory completion of
the share subscription by Greenland.
"If the share subscription is completed, SPG Land's rating could
be upgraded by more than one notch," adds Leung, also the lead
analyst for SPG Land.
Moody's expects SPG Land's credit profile will improve upon
completion of the transaction. It will have a stronger equity base
and an improved liquidity position through new equity injected by
Greenland.
SPG Land's improving performance also supports positive rating
actions. It reported a much improved 1H 2013 results, with a
strong 300% year-on-year growth in revenue to RMB3.5 billion in
1H2013. Profits for the period increased to approximately RMB201
million compared to a loss for the same period in 2012.
SPG Land's improved profitability has also strengthened led to an
improvement in EBITDA/interest coverage to around 1.4x for the
last 12 months to June 2013 from 0.2x in 2012.
At the same time, SPG Land reported a 7% year-on-year increase in
contracted sales to RMB1.9 billion for the first seven months of
2013.
The principal methodology used in this rating was the Global
Homebuilding Industry Methodology published in March 2009.
SPG Land is principally engaged in the development of large-scale,
high-end residential communities, city center integrated projects,
and travel & leisure projects that target the middle-to-high-end
customer segment. At June 30, 2013, the company held a land bank
of 3.7 million sqm across Shanghai, Kunming, Huangshan, Suzhou,
Changshu, Wuxi, Haikou, Ningbo and Taiyuan.
Gluon Xima International Limited is incorporated in Hong Kong and
is an indirect wholly-owned subsidiary of Greenland Holding Group
and independently operated.
Greenland Holding Group is headquartered in Shanghai and is a
comprehensive enterprise group whose main businesses include real
estate development, energy, and finance activities. As a leading
developer in the China real estate market, Greenland Holding Group
operates real estate projects in over 70 cities across 25
provinces.
TEXHONG TEXTILE: First Half 2013 Results Support Moody's Ba3 CFR
----------------------------------------------------------------
Moody's Investors Service says the 1H 2013 results for Texhong
Textile Group Limited are within Moody's expectation and continue
to support its Ba3 corporate family and senior unsecured bond
ratings.
The ratings outlook remains stable.
"Texhong's 1H 2013 improved results are because of capacity
expansion in Vietnam where operating costs are lower than in
China," says Alan Gao, a Moody's Vice President and Senior
Analyst.
Texhong reported 8% year-on-year revenue growth to RMB3.6 billion,
while its total capacity increased to 1.17 million spindles and 30
open-end spinning machines in June 2013 from 1.0 million spindles
in December 2012 following the commissioning of Phase 1 of its
facility in the northern part of Vietnam.
Texhong's total capacity will further grow by 50% to around 1.8
million spindles in 2H 2013 following the commissioning of newly
added production facilities in China and Vietnam. Accordingly,
revenue in 2013 will grow by more than 20% year-on-year to over
RMB9.0 billion.
Beyond China and Vietnam, Texhong plans new facilities in Turkey
and Uruguay. While such a move could help the company diversify
its high revenue concentration away from China, which accounted
for 82% of its total 1H 2012 revenue, it poses new challenges on
resource management and raises execution risk.
On the other hand, Moody's notes that recent margin improvements
support Texhong's Ba3 rating. Its gross margin stood at 21.4% in
1H 2013, in line with 21.7% in 2H 2012, but substantially higher
than 13.6% in 1H 2012.
The margin recovery was driven by declining cotton prices and the
relocation of production facilities from China to Vietnam where
there is no import tariff on cotton and labor costs are lower.
As a result, EBIT reached RMB549 million in 1H 2013, up 115% from
RMB255 million in 1H 2012, and up 20% from RMB457 million in 2H
2012.
With the improved profit margins, Texhong's credit metrics are
within the Ba3 rating range. EBITDA interest coverage improved to
7.7x at end-June 2013 from 6.1x at end-2012. But adjusted
debt/EBITDA deteriorated slightly to 3.1x from 2.7x after the
issuance of $200 million senior notes for funding capital
expenditure and working capital.
The principal methodology used in this rating was the Global
Manufacturing Industry Methodology published in December 2010.
Established in 1997 and listed on the Hong Kong Stock Exchange
since 2004, the Texhong Textile Group specializes in producing
core-spun yarn and textile products. The company currently
operates 14 yarn production bases: 12 in the Yangtze River Delta
in China and two in Vietnam. Its chairman, Tianzhu Hong, holds a
52.2% stake and is the majority shareholder of the company.
* Chinese SOEs' Credit Quality to Keep Diverging, Says Moody's
--------------------------------------------------------------
Moody's Investors Service says that the credit quality of Chinese
non-financial state-owned enterprises (SOEs) will diverge further
following economic and SOE reforms that the central government
will enact over the next five to 10 years. As a result, long-term
investors will need to more carefully consider which SOEs are
better positioned to maintain credit quality during this period
from those which are not.
"The reforms will not materially affect the strategically
important sectors. The state will continue to allocate resources,
including capital and government-sponsored research, to
strategically important sectors like energy and defense," says Kai
Hu, a Moody's Vice President and Senior Credit Officer.
"This continued support will likely maintain the credit quality of
SOEs in those sectors, such as China National Petroleum
Corporation, China Petrochemical Corporation, China National
Offshore Oil Corporation and State Grid Corporation of China,
whose Aa3 ratings and stable outlooks reflect their already very
high level of government support," adds Hu.
Hu was speaking on the release of Moody's special comment on
Chinese SOEs. The report is titled "Credit Quality of China's
Central SOEs Will Diverge Further Amid Economic Reforms."
The reports states that the outlook is more challenging for SOEs
operating in sectors that are seen by the state as having less
strategic importance.
The state will gradually reduce its investment, support and
involvement in these sectors, as it is seen as less important for
it to retain control over them.
Reducing its stake in related SOEs in these sectors will allow the
government to direct the sales proceeds and other state resources
to strategically more important industries.
But, Moody's expects important SOEs that are leaders in these
industries, such as Baosteel Group Corporation (A3 negative), will
continue to benefit from state support.
As a result, long-term investors will need to differentiate
between SOEs most likely to remain in government ownership and
those that will not.
In particular, Moody's expects the risks will increase for
subsidiaries of SOEs operating in less important sectors. These
may not benefit from support to the same extent as their parents,
and the parent SOEs may divest these subsidiaries over time, or
opt not to bail them out when they are in difficulty.
This risk will be greatest for SOEs in sectors with excess
capacity, such as steel and metal, building materials and
construction and where the impact of slower economic growth and
economic transition will be more painful.
=========
I N D I A
=========
ALIDHRA MACHINES: ICRA Rates INR5cr LT Cash Credit at 'BB-'
-----------------------------------------------------------
ICRA has assigned a long-term rating of '[ICRA]BB-' to the INR5.00
crore fund-based bank limit of Alidhra Machines Private Limited.
The outlook assigned to the long-term rating is 'Stable'.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Long-Term Fund-Based 5.00 [ICRA]BB- (Stable)
Limit-Cash Credit Assigned
The assigned rating is constrained by modest profitability
margins, weak return indicators and high working capital intensity
of operations on account of significant inventory level. The
rating also factors in the high competitive intensity, dependence
on the cyclical textile sector which results in volatile revenue
and cash flow and vulnerability of profitability to fluctuation in
raw material price. In ICRA's view, maintaining delivery timelines
remains crucial for the company to maintain regular cash flows.
The rating however, favorably factors in the long experience of
the promoters in the textile machinery sector and favorable
location of the company at Silvassa, which is a textile hub, thus
giving it access to a large customer base. The rating also takes
comfort from the competitive cost structure though backward
integration into manufacturing of machine components through its
group companies, its comfortable gearing levels and moderate
coverage indicators.
Alidhra Machines Private Limited was established as a partnership
firm in 1983 and was later reconstituted as a private limited
company in 1997. It is engaged in manufacturing of draw
texturising and winding machines used for synthetic yarn
processing to make draw textured yarn. The company has its
registered office in Surat and its manufacturing unit in Silvassa
(Dadra and Nagar Haveli).
Recent Results
AMPL recorded a profit before tax (PBT) of INR1.25 crore on an
operating income of INR35.49 crore for the year ending March 31,
2013 (Provisional numbers) and a PBT of INR0.75 crore on an
operating income of INR8.46 crore for the quarter ending June 30,
2013 (Provisional numbers).
ANAND ENTERPRISE: ICRA Assigns 'B' Rating to INR8cr Cash Credit
---------------------------------------------------------------
The rating of '[ICRA]B' has been assigned to the INR8.00 crore
cash credit facility of Anand Enterprise.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Cash Credit 8.00 [ICRA]B assigned
The assigned rating is constrained by AE's modest scale of
operations and weak financial profile as reflected from the thin
profit margins, stretched capital structure and poor debt coverage
indicators. The rating is further constrained by the highly
competitive and fragmented industry structure owing to low entry
barriers; and the vulnerability of the firm's profitability to raw
material (i.e. cotton) prices, which are subject to seasonality,
crop harvest and regulatory risks. ICRA also notes that as AE is a
partnership firm, any significant withdrawals from the capital
account by the partners would adversely affect its net worth and
thereby its capital structure; this remains a key rating
sensitivity. The assigned rating, however, favourably factors in
the long track record of the firm in the cotton ginning business
and favourable location of the firm's manufacturing facility in
Veraval (Shapar), Rajkot in Gujarat, giving it an easy access to
quality raw material.
Anand Enterprise was established as a partnership firm in
September 2005 and is engaged in the business of ginning and
pressing of raw cotton. The firm's manufacturing facility is
located at Veraval (Shapar), Rajkot in Gujarat and is equipped
with twenty four ginning machines and one pressing machine. The
current partners of the firm are Mr. Ramesh L. Changela, Mr.
Ramesh M. Kaneriya and two other relatives.
Recent Results
During FY 2013 (provisional financials), AE reported an operating
income of INR38.10 crore and profit after tax of INR0.05 crore as
against an operating income of INR30.03 crore and profit after tax
of INR0.05 crore during FY 2012.
EAGLE EXTRUSION: ICRA Reaffirms 'B' Ratings on INR10.2cr LT Loans
-----------------------------------------------------------------
ICRA has reaffirmed the long-term rating of '[ICRA]B' and the
short-term rating of '[ICRA]A4' assigned to the fund based limits
and non-fund based limits aggregating to INR10.66 crore of Eagle
Extrusion Private Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Long Term: Term Loans 6.20 [ICRA]B reaffirmed
Long Term: Fund based 4.00 [ICRA]B reaffirmed
Limits
Short Term: Non Fund 0.46 [ICRA]A4 reaffirmed
Based Limits
The reaffirmation of ratings takes into account the small scale of
operations of the company and its weak financial profile
characterised by weak profitability indicators, high gearing
levels, subdued debt protection metrics and stretched liquidity
position. The ratings are further constrained by the
susceptibility of the profitability to volatility in raw material
prices, currency fluctuations and the intense competitive pressure
in the highly fragmented aluminium products industry.
The ratings however, draw comfort from the long track record of
the promoters in the field of manufacturing aluminium based
products, the well diversified product portfolio targeted towards
both dealers and institutional clients, and the established dealer
network employed by the company.
Eagle Extrusion Private Limited (EEPL) was incorporated in the
year 2008 and is engaged in the manufacturing of aluminium
profiles and sections, and other industrial products. The company
has its manufacturing unit located in Surat, Gujarat which has a
total capacity of 1,800 MTPA. The main raw materials used in the
manufacturing process are aluminium scraps and ingots which are
melted in a gas fired furnace in order to manufacture aluminium
billets which are further extruded to profiles & sections of
different dimensions depending upon the requirements of the
customers. The product portfolio of the company is comprised of
window frames and sections, pharmaceutical components, embroidery
pipes, heat sinks, electrical panels, irrigation pipes, green
house structure, hardware items, door closure, electric motors,
bus doors and windows, foot rests and carriers. The company's
products are sold to both dealers engaged in the building
construction space, as well as institutional clients,
predominantly in the textile and pharmaceutical industries.
During FY 2013, the company reported a net loss of INR0.75 crore
on an operating income of INR28.45 crore (provisional). During FY
2012, the company had reported a net loss of INR0.07 crore on an
operating income of INR13.99 crore.
KIJALK INFRASTRUCTURE: ICRA Assigns 'B' Rating to INR18cr Loan
--------------------------------------------------------------
ICRA has assigned a long term rating of '[ICRA]B' to the INR18.00
crore fund based bank facility of Kijalk Infrastructure Private
Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Fund Based Limit- 18.00 [ICRA]B assigned
Term Loan
The rating takes into account, the small scale of operations and
the weak financial risk profile of KIPL as characterized by a high
gearing and moderate debt protection indicators at present. The
rating also factors in the absence of any termination clause and
take-or-pay clause in the power power agreement which expose the
company to higher business risks. The low plant load factor of the
project during FY 13 as well as the inadequate performance track
record of solar power manufacturing equipment along with the
exposure to the risk of gradual degradation of efficiency of the
project also has an impact on the ratings; however, the same is
mitigated to a large extent by the minimum performance guarantee
provided by Tata BP Solar. The rating is supported by the
confirmed power purchase agreement in place of KIPL with JSEB for
the entire generation capacity for a period of 25 years as well as
the EPC and O&M agreement with Tata BP Solar which has strong
execution and maintenance capabilities.
Incorporated in 2006, KIPL is engaged in the generation of solar
power having a capacity of 2 MW. The plant of the company is
located at village Rajnagar in district Saraikela in Jharkhand
state. The company has entered into a power purchase agreement
with Jharkhand State Electricity board for a period of 25 years
for the entire power generated from the project at a rate of
INR17.96 per unit. The EPC and O&M contract for the project is
being undertaken by Tata BP Solar.
Recent Results
KIPL reported a profit after tax (PAT) of INR1.73 crore in 2012-13
(provisional) on the back of an operating income (OI) of INR4.18
crore.
METALLURGICAL PRODUCTS: ICRA Rates INR8.5cr Term Loan at 'BB-'
--------------------------------------------------------------
ICRA has assigned an '[ICRA]BB-' rating to the INR8.50 crore term
loan of Metallurgical Products (India) Private Limited. The
outlook on the long-term rating is "Stable". ICRA has also
assigned an '[ICRA]A4' rating to the INR6.50 crore short-term
unallocated bank facility of the company.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Term Loan 8.50 [ICRA]BB- (Stable) assigned
Short-term proposed 6.50 [ICRA]A4 assigned
bank limits
The assigned ratings take into account the long experience of the
promoters in the manufacture of tantalum and niobium based
products and the company's status as one of the leading suppliers
of such products in India. The ratings also take into
consideration the favorable business relationship that the
promoters have with the suppliers in Nigeria and UK, which ensures
smooth supply of raw materials at competitive rates. The business
performance of the company has improved over the last two years
due to rising demand from end-user industries and its
competitiveness too has improved after the Government of China
imposed an export duty of 30% on exports of these products.
However, the ratings are constrained by high sales and geographic
concentration risks on account of the fact that MPIL's top four
buyers accounted for almost entire sales in 2012-13 and almost 90%
of its total sales happened to two countries namely, Japan and UK.
The ratings also reflect a leveraged capital structure and weak
coverage indicators of MPIL, notwithstanding an improvement in the
last two years and its small scale of operations which limit the
scope for economies of scale. ICRA also notes that the company
remains exposed to forex risks, given the company's status as a
100% export oriented unit (EOU) and its significant dependence on
imports and its high inventory holding period, which exposes the
company to price risks.
Established in 2001, MPIL is engaged in the manufacture and export
of tantalum and niobium based products with its facility located
at Taloja, MIDC in the Raigad district of Maharashtra. MPIL
exports its products to Japan, UK and Belgium and its products
find application mainly in carbide tools, aerospace, defence,
electronics, optics and healthcare sectors.
Recent Results
In 2011-12, MPIL reported a net profit of INR0.79 crore on the
back of net sales of INR23.1 crore. As per the provisional results
for 2012-13, the company reported a net profit of INR0.61 crore on
the back of net sales of INR28.04 crore.
M.G. HUSSAIN: ICRA Assigns 'B' Ratings to INR4.16cr Loans
---------------------------------------------------------
ICRA has assigned a long-term rating of '[ICRA]B' to the INR0.30
crore term loan, INR3.00 crore overdraft limit and unallocated
limits of INR0.86 crore of M/s M.G. Hussain. ICRA has also
assigned a short term rating of '[ICRA]A4' to INR2.00 crore bank
guarantee limits of MGH.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Term Loan 0.30 [ICRA] B Assigned
Overdraft (OD) 3.00 [ICRA] B Assigned
Unallocated 0.86 [ICRA] B Assigned
Bank Guarantee 2.00 [ICRA] A4 Assigned
The assigned ratings take into account MGH's established track
record of over two decades in the road construction business which
has helped in establishing cordial relationship with large clients
namely P.W.D. (Public Works Department) and Mangalore City
Corporation amongst others. Besides, limited interest cost and
long drawn debt tenure help reduce repayment obligations; these
factors collectively result in comfortable coverage ratios.
The ratings are however constrained by the entity's modest scale
of operations (INR12.44 crore for FY13); negligible order book
size with total unexecuted orders of -INR3.00 Crore as on March
31st, 2013 reduces future revenue visibility. Besides, the rating
is also constrained by high geographic and sectoral concentration
of its operations given that MGH is completely dependent on
various road development organizations in and around Mangalore for
order flow. The rating is further deterred due to the highly
competitive and fragmented nature of the industry resulting out of
low complexity of work which has led to low margins (PAT margin of
~3% in the last two fiscals) for the entity. Going forward, MGH's
ability to increase its scale and margins would be the key rating
sensitivities.
Mr. M.G. Hussain is a Class-1 PWD civil contractor in Mangalore
and is mainly involved in executing civil works contract i.e.
formation of tar and concrete road for various government/ semi
government departments P.W.D., Mangalore City Corporation,
Municipal Corporation of Mangalore and Zilla Panchayat amongst
others. Mr. Hussain employs more than 100 labourers and has
presence in and around Mangalore.
Recent Results
For FY2013, (Provisional), MGH's APAT (Adjusted Profit after Tax)
stood at INR0.41 crore on an operating income of INR12.44 crore,
against a net profit of INR0.31 crore on operating income of
INR9.87 crore for the financial year 2011-12.
PANDIT AUTOMOBILES: ICRA Assigns 'B+' Ratings to INR9.5cr Loans
---------------------------------------------------------------
ICRA has assigned Long Term Rating of '[ICRA]B+' and Short Term
Rating of '[ICRA]A4' for INR9.50 crore bank facilities of Pandit
Automobiles Private Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Fund Based Cash 8.00 [ICRA]B+
Credit
Term Loan 0.16 [ICRA]B+
Unallocated 0.34 [ICRA]B+/[ICRA]A4
Non Fund Based 1.00 [ICRA]B+
Bank Guarantee
The assigned rating takes into account PAPL's presence as an
authorised dealer of MSIL, the leader in PV market in India as
well as the experience of its promoters. The ratings are, however,
constrained by the company's thin profit margins and weak dept
protection parameters, both inherent in dealership business. The
ratings also consider PAPL's weak capital structure which is
likely to deteriorate further due to future expansion plans of the
promoters. Further, apart from susceptibility to slowdown in PV
segment, PAPL is also subject to high competitive intensity, with
pressure to pass-on discounts to end customers.
Pandit Automobiles Pvt. Ltd. a private limited company was
incorporated by Mr. Jitender Sharma in 1998. The company is an
authorized dealer of passenger vehicles for Maruti Suzuki India
Limited. Mr. Sharma is the CEO of the company and handles the day
to day affairs of the company.
PARAMOUNT TOWERS: ICRA Lowers Rating on INR100cr Term Loan to 'D'
-----------------------------------------------------------------
ICRA has revised the rating to '[ICRA]D' from '[ICRA]BB' for
INR100.00 crore term loan of Paramount Towers Private Limited.
The stable outlook on the rating is withdrawn.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Term Loan 100.00 Revised to [ICRA]D
The rating revision takes into account PTPL's constrained
liquidity profile leading to delays in debt servicing in the
recent past. The rating also factors in PTPL's moderate scale of
operations, rising input costs which exert pressure on the
profitability, weak demand in the industry given high interest
rates and economic slowdown and relatively low profitability in
the project. ICRA has also taken into consideration the usage of
excess funds in other projects (group companies) which has
impacted the liquidity profile of PTPL and may strain the cash
flows of the company given the sizeable debt repayment obligations
and payment of balance installments for land cost. ICRA has,
however, taken note of healthy sales level achieved by the
company, its good collection efficiency and low execution
risk for the project as a significant part of work has already
been completed. Further ICRA has taken note of the strengths
arising from the long track record of the promoters in real estate
sector, clear land title of the project and its decent
connectivity to National Capital Region (NCR).
Paramount Towers Private Limited is one of the companies in the
Paramount Group which is in the domain of real estate development.
PTPL was incorporated in December 2009 as a private limited
company with 97.4% shareholding by paramount group and rest 2.6%
by Gaursons India Limited.
During FY13 the share of Gaurson's group has been acquired by
Paramount Group. PTPL is constructing a project, Paramount
Floraville, a 1,561 flats housing project at 12.50 acre land
parcel at sector 137, Noida. The project comprises of 16 towers
and had been launched in October 2009 and the construction for the
same started in FY2011. The project is scheduled to be completed
by December 2013.
Recent Results
PTPL reported an Operating Income of INR154.40 crore and profit
after tax of INR3.05 crore in FY2013 (provisional numbers) as
compared to operating income of INR175.74 crore and Profit after
Tax of INR1.86 crore in FY2012.
SARAWAGI AUTOMOBILES: ICRA Rates INR8.38cr Loans at 'B+'
--------------------------------------------------------
ICRA has assigned '[ICRA]B+' rating to the INR8.38 Crore fund-
based facilities of Sarawagi Automobiles Private Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Fund Based Facilities 8.38 [ICRA]B+ Assigned
The assigned rating takes into account the strength derived from
SAPL's dealership of Tata Motors Limited, which is the market
leader in the CV segment in India. The rating also favorably
factors in the company's wide network comprising of two 3S
facilities and six 1S facilities with plans to set up two more 1S
facilities in the near term which is expected to increase
penetration in the rural markets. ICRA also notes that one of the
promoters has long standing experience in the dealership business.
The ratings are, however, constrained by stretched capital
structure of SAPL characterized by high level of gearing. Further,
the company faces competition for sales due to the presence of
other OEM dealerships in the area and for service and spares due
to the presence of other TML dealership. Although the company is
present in a comparatively better performing segment in the
automobile industry, going forward, the company's ability to
improve the financial risk profile, increase share of service and
spares business and increase the scale of operations would be the
key rating sensitivities.
Sarawagi Automobiles (P) Limited (incorporated in May 2009) is the
exclusive Tata Motors dealership for Small, Light and Intermediate
Commercial Vehicles in the Ganganagar and Hanumangarh districts of
Rajasthan. In May 2009 letter of intent from Tata Motors Ltd. was
issued to the company and in the same month the company was
incorporated. As per LOI and company norms, infrastructure for
workshop and showroom was raised and commencement of business was
started in May 2010. Presently, the company has a 3S facility each
at Sri Ganganagar & Hanumangarh district, Headquarter and 1S
facilities at Suratgarh, Raisinghnagar, Anoopgarh, Gharsana, Nohar
& Bhadra.
SP SUPERFINE: ICRA Reaffirms 'D' Ratings on INR103.46cr Loans
-------------------------------------------------------------
ICRA has reaffirmed a long-term rating of '[ICRA]D' for the
outstanding INR93.58 crore term loan facilities and the INR8.00
crore fund based facilities of SP Superfine Cotton Mills Private
Limited. ICRA has also reaffirmed the short-term rating of
'[ICRA]D' for the INR1.88 crore non-fund based facilities of the
Company.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Term Loan facilities 93.58 [ICRA]D/reaffirmed
Fund based facilities 8.00 [ICRA]D/reaffirmed
Non-fund based facilities 1.88 [ICRA]D/reaffirmed
The ratings take into account the sharp deterioration in the
Company's financial profile following huge losses reported during
2011-12, owing to sluggish demand for yarn, steep fall in yarn
realisations and escalation in operating costs driven by
persistent power issues in Tamil Nadu (TN). On account of these
factors, the Company's financial profile is presently
characterised by accumulated losses, weak coverage indicators and
stretched debt protection metrics. The ratings further consider SP
Superfine small scale of operations, which restrict scale
economies and the intense competition prevalent in the spinning
industry which restricts the Company's pricing flexibility to an
extent.
The ratings also factor in the experience of promoters in the
textile industry which has supported the Company's operations over
the years, maintaining the viability of the business in a highly
competitive industry. Going forward, ability to increase scale of
operations and sustain margins would be crucial to generate
sufficient cash flows to service the debt obligations, failing
which the Company's ability to service debt repayment obligations
would be severely undermined.
SP Superfine Cotton Mills Private Limited, incorporated in 1995,
is located in Attur, Tamil Nadu and is closely held by its
directors and family members. The company is engaged in the
production of cotton yarn, in 40s to 80s count range, and started
its commercial production with an installed capacity of 14,112
spindles. Over the years, the company has increased its installed
capacities in a phased manner and presently has an installed
capacity of 28,224 spindles.
SR CONSTRUCTIONS: ICRA Reaffirms 'B' Ratings on INR18cr Loans
-------------------------------------------------------------
ICRA has reaffirmed the long term rating of '[ICRA]B' to the
INR17.80 crore fund based limits (enhanced from INR14.06 crore)
and INR0.20 crore unallocated limits of SR Constructions. ICRA has
also reaffirmed the short term rating of '[ICRA]A4' to the
INR50.00 crore (enhanced from INR12.00 crore) non-fund based
limits of SRC.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Fund based limits 17.80 [ICRA]B reaffirmed
Unallocated 0.20 [ICRA]B reaffirmed
Non Fund based limits 50.00 [ICRA]A4 reaffirmed
The rating reaffirmation factors in the long experience of the
promoters in the civil construction business, improvement in
financial profile of the firm owing to growth in revenues and
profitability in FY 13 and an unexecuted orderbook of ~Rs. 352
crore as on March 31, 2013 which provides strong revenue
visibility over the near term. The rating is however constrained
by the stretched liquidity position of the firm on account of
procedural delays in government contracts given the requirement of
relatively larger number of approvals resulting in delays in
billings and collections and the high geographical concentration
with a major proportion of revenues being derived from Karnataka
based projects of the Karnataka Housing Board (KHB) and Karnataka
Industrial Area Development Board (KIADB).
The rating also factors in SRC's focus on relatively low value
construction works of typically low complexity exposing the firm
to competitive risks that can impact the margins going forward.
Existence of counter-party risks and the pressure on profitability
in a scenario of rising input prices are the other factors
constraining the rating. Besides these, the rating also factors in
the risks inherent in partnership firms inter alia the
continuation of the firm in the event of the death/retirement of
any partner and the ability to withdraw capital from the firm to
fund the partners' external commitments.
Going forward, ability of the firm to raise funds in a timely
manner to meet the increasing working capital requirements of its
large unexecuted order book would be the key rating sensitivity.
SR Constructions, incorporated as a partnership firm in the year
1998 operates as a contractor, mainly undertaking civil and
structural works for public infrastructure & residential buildings
etc. in Andhra Pradesh and Karnataka. The firm has its registered
office in Anantapur, Andhra Pradesh and an administrative office
in Bangalore, Karnataka. It is owned and managed by its three
partners Mr. Raja Gopal, Mr. Surendra Babu & Mr. D Venkatesh each
having an equal share in profits.
Recent Results
SRC has, for the year ended March 31, 2012, reported an operating
income of INR101.15 crore and a net profit of INR6.36 crore
whereas the provisional financial statements prepared for the year
ended March 31, 2013 reported an operating income of INR129.97
crore and a net profit of INR7.96 crore.
THIRUMATHI MUTHAMMAL: ICRA Ups Ratings on INR9cr Loans to 'BB-'
---------------------------------------------------------------
ICRA has upgraded the long-term rating outstanding on the INR4.73
crore term loan facilities, INR3.00 crore fund based facilities
and INR1.27 crore proposed facilities of Thirumathi Muthammal
Textiles Private Limited to '[ICRA]BB-' from '[ICRA]B+'. The
outlook on the long-term rating is stable.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
LT-Term loan 4.73 upgraded to [ICRA]BB- (Stable)
Facilities from [ICRA]B+
LT-Fund based 3.00 upgraded to [ICRA]BB- (Stable)
facilities from [ICRA]B+
LT-Proposed 1.27 upgraded to [ICRA]BB- (Stable)
facilities from [ICRA]B+
The ratings upgrade factors in healthy growth in revenues and
margins during 2012-13 aided by revival in yarn demand alongside
improvement in realizations. Also, equity infusion by the
promoters during 2012-13 coupled with sizeable accretion to
reserves translated to higher net worth resulting in moderation in
gearing levels to an extent as on March 31, 2013, despite
significant debt funded capital expenditure incurred during the
aforementioned period. The rating also takes into account the
experience of promoters in spinning industry of over three
decades. The rating is, however, constrained by the Company's
small scale of operations which restricts scale economies and
financial flexibility, intense competition in the industry
restricting pricing flexibility and vulnerability of textile
industry to competitive pressures from other low-cost countries.
The rating also considers the stress on operating margins
attributable to spike in power costs on the backdrop of adverse
power scenario in Tamil Nadu.
Going forward, the ability of the Company to enhance its scale of
operation, sustain profitability and improve its capital structure
will remain the key rating sensitivities.
Incorporated in 1980, Thirumathi Muthammal Textiles Private
Limited is a closely held entity primarily engaged in producing
polyester-cotton blended yarn with counts ranging from 30s to 70s.
The Company operates with an installed capacity of 19,824 spindles
and is expected to add 2,000 spindles in this fiscal. The
manufacturing facility of the Company is located in Tiruchirapalli
(Tamil Nadu).
Recent Results
The Company reported net profit of INR0.4 crore on an operating
income of INR31.6 crore during 2012-13 as against a net loss of
INR0.3 crore on an operating income of INR25.1 crore during 2011-
12.
=========
J A P A N
=========
* Japan Needs Higher Growth to Support Debt Burden Says Moody's
---------------------------------------------------------------
Moody's Investors Service says that generating economic growth is
an essential element of a credible long-term fiscal adjustment
policy, a necessary (but not sufficient) condition for reducing
Japan's heavy level of government indebtedness.
And while spurring growth and ending deflation would support the
sovereign's credit profile, a tipping point for creditworthiness
would eventually loom if growth remains elusive and the
government's debt and refinancing needs remain at very high
levels.
Moody's conclusions were contained in a just-released article,
entitled "Higher Growth Essential To Reduce Japan's Large
Government Debt Burden." The article is part of a series of
Moody's reports looking at the credit implications of Abenomics in
Japan.
Moody's further notes that ending Japan's economic stagnation of
two decades is contingent on stimulating private capital
formation.
During the past two decades, the economy has only grown and the
budget deficit only declined when global conditions were buoyant
and companies responded by expanding capital expenditure,
increasing workforces, raising wages, and paying more income
taxes.
The lackluster outlook for the global economy over the next two or
three years exerts pressure on the government to devise a stronger
domestic policy response to spur stronger and sustainable economic
growth. Achieving the revitalization strategy's objectives of
annual average real GDP growth of 2% and nominal growth of 3% over
the next decade would support the sovereign's credit profile,
given that it would increase government revenues and improve key
credit metrics.
Currency weakness, increased bank lending and higher productivity
would also be conducive to growth, employment and company
profitability, as well as increasing corporate, personal and
consumption tax revenues.
Tax reform and containment of social security expenditure would
further reduce the government's budget deficit and enhance its
debt-servicing capacity.
In contrast, if the revitalization strategy does not generate
sustainable growth, the government's stimulatory policies risk
aggravating Japan's existing credit challenges. Without an
improvement in private capital investment, the government's
willingness to expand its deficit and attempt to inflate the
economy into a recovery will be of limited effect, instead merely
adding to the government's already very high debt stock.
At some point, investors may demand a premium for funding Japan's
growing debt. Such a development could threaten to undermine
sovereign creditworthiness and erode confidence in the JGB market,
potentially destabilizing the country's financial system.
Long-term government debt exceeds 200% of GDP and annual debt-
refinancing needs are the highest among mature economies.
====================
N E W Z E A L A N D
====================
APPAREL HOUSE: Strip Will be Ready Despite Supplier Liquidation
---------------------------------------------------------------
Wayne Martin at nelsonmail.co.nz reports that the Tasman Rugby
Union is confident that the Makos' 2013 playing strip will be
available for their ITM Cup season opener despite the New Zealand
supplier's recent liquidation.
nelsonmail.co.nz relates that Auckland-based Apparel House, which
held the New Zealand licence for sportswear manufacturer BLK, went
into receivership on July 25 with gear for several provincial
unions, including Tasman, waiting to be shipped from its
warehouse. But the Tasman union's finance manager, Leanne
Hutchinson, said plans are already well advanced to ensure the
playing strip will be available on time, the report relays.
"We're really confident that the gear will be here," the report
quotes Mr. Hutchinson as saying. "Basically BLK in Australia, as
soon as they realised there was a situation, they stepped in."
nelsonmail.co.nz notes that besides Tasman, the BLK brand also
provides gear for the Canterbury and Wellington provincial rugby
teams, as well as the New Zealand Rugby League and Kiwis national
team. According to the report, the new BLK licensee, Direct
Sport, negotiated a deal with the receiver, Andrew Bethell of BDO,
on August 9 to buy up stock, including the Tasman Makos' official
playing kit, to ensure it arrived for Tasman's opening provincial
game of the season against Southland in Invercargill on August 17.
===========
T A I W A N
===========
TAIWAN FINANCE: Fitch Affirms Viability Rating at 'bb'
------------------------------------------------------
Fitch Ratings has affirmed six Taiwanese bills finance companies:
International Bills Finance Corporation (IBF), China Bills Finance
Corporation (CBF), Dah Chung Bills Finance Corporation (DCBFC),
Taching Bills Finance Corporation (TCBFC), Grand Bills Finance
Corporation (GBF) and Taiwan Finance Corporation (TFC).
At the same time, the related support-driven ratings of Waterland
Financial Holdings (WFH) and Waterland Securities Corporation
(WSC) have been affirmed. The Outlooks are all Stable.
The affirmation of the six bills finance companies reflects their
ability to maintain stable credit profiles despite earnings
pressure from persistently low interest rates. Prudently managed
asset quality, a stable liquidity environment, and potential
regulatory support in liquidity will continue to support their
ratings. The ratings also underline Fitch's expectation of
adequate management in their capitalisation and liquidity.
Key Rating Drivers - Issuer Default Ratings (IDRs) and National
Ratings
The IDRs and National Ratings of IBF, CBF, DCBFC, TCBFC and GBF
are driven by their intrinsic creditworthiness, as reflected in
their Viability Ratings (VR). TFC's IDRs reflect the potential for
institutional support from its largest shareholders, as reflected
in its Support Rating.
Rating Sensitivities - IDRs and National Ratings
The IDRs and National Ratings of IBF, CBF, DCBFC, TCBFC and GBF
are sensitive to same factors that could change their respective
VRs. A change in Fitch's assessment of the propensity or ability
of TFC's largest shareholders to provide support is likely to
result in a change in its IDRs and National Ratings.
Key Rating Drivers -VRs
The six bills finance companies are differentiated by their
franchises, financial flexibility and risk governance capability.
Smaller-sized firms (DCBFC, TCBFC, GBF and TFC) have limited
market position and underwriting capacity. This, together with
their higher concentration risk in borrowers and bond repo
funding, constrains their ratings at a lower level. However, their
consistent focus on creditworthy corporates and high-quality
underlying collaterals against repo help mitigate potential risks.
CBF and IBF are rated at 'BBB', the highest among peers,
reflecting their well-established franchise in Taiwan's money
market, long-standing customer relationships, as well as their
adequate financial strength. Fitch expects CBF and IBF to maintain
a robust market presence, supported by their sustained leadership
in guarantee underwriting and by their strong primary/secondary
market-making among peers.
Among smaller-sized companies, TCBFC reported strong guarantee
growth (33% in 2012; sector average: 8.2%). However, its capital
levels remain adequate against the overall risk profile,
considering its moderate guarantee/equity ratio and portfolio
rebalancing toward short-term bills positions.
GBF's notable growth in guarantees and fixed-rate commercial
papers (FRCP) are manageable given the company's focus on
creditworthy conglomerates and its effective capital management.
Fitch expects GBF to maintain its capital adequacy ratio (CAR) at
above 13% while growing its credit portfolio. TFC's Viability
Rating is rated lower than those of peers as a result of its small
franchise and modest profitability, which limits its ability to
absorb potential credit or market losses.
Rating Sensitivities - VRs
The VRs have little upside potential, due to sector-wide
structural issues, including limited business scope, reliance on
wholesale funding, and susceptibility to sharp interest-rate
swings. Negative rating action may result from any deterioration
in asset quality possibly from above-trend guarantee growth, a
surge in risk-taking without commensurate enhancement in
liquidity, funding and capital, or unexpected market dislocation
resulting in capital erosion.
Key Rating Drivers - SR and SRF
CBF's and IBF's SR and SRF reflect a limited probability of
government support, if needed. The small franchises of DCBFC,
TCBFC and GBF mean support from the government cannot be relied
upon and is reflected in their SRs and SRFs. TFC's IDRs and SR are
driven by expected support from its bank shareholders.
Rating Sensitivities - SR and SRF
The SRs and SRFs of IBF, CBF, DCBFC, TCBFC and GBF are sensitive
to changes in assumptions around the propensity or ability of the
government to provide timely support. TFC's IDRs and SR may be
downgraded if support willingness or ability from its top
shareholders were deemed to be reduced.
Key Rating Drivers - WFH and WSC
WFH's and WSC's IDRs and National Ratings parallel those of IBF,
the principal operating subsidiary in the group. On a standalone
basis, WFH and WSC have maintained their balance sheet strength
with healthy financial performance.
Rating Sensitivities - WFH and WSC
WFH's ratings are driven by the financial strength of its
principal operating subsidiary, IBF. Negative rating action may
result from the weakening of IBF's credit profile, and/or WFH's
standalone liquidity and leverage. WSC's ratings are aligned with
its parent, WFH.
The rating actions are:
IBF:
Long-Term IDR affirmed at 'BBB'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb'
Support Rating affirmed at '4'
Support Rating Floor affirmed at 'B+'
WFH:
Long-Term IDR affirmed at 'BBB'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb'
WSC:
Long-Term IDR affirmed at 'BBB'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
CBF:
Long-Term IDR affirmed at 'BBB'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A+(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb'
Support Rating affirmed at '4'
Support Rating Floor affirmed at B+'
DCBFC:
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
TCBFC:
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
GBF:
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'
TFC:
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'A(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1(twn)'
Viability Rating affirmed at 'bb'
Support Rating affirmed at '2'.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Frauline S. Abangan,
and Peter A. Chapman, Editors.
Copyright 2013. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***