/raid1/www/Hosts/bankrupt/TCRAP_Public/140116.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, January 16, 2014, Vol. 17, No. 11
Headlines
A U S T R A L I A
AFS GROUP: Owes More Than AUD11.3MM to Creditors, Report Shows
FORTESCUE METALS: Cuts Junk-Rated Debt by a Further $1.6BB
C H I N A
CHINA MEDIA: HKCMCPA Company Raises Going Concern Doubt
GUANZHOU R&F: Fitch Puts Rating on $1-Bil. Sr. Unsec. Notes at BB
MODERN LAND: Fitch Rates Proposed Yuan-Denominated Notes at 'B'
MODERN LAND: Moody's Puts 'B2' Rating on Sr. Unsecured Notes
SHIMAO PROPERTY: Moody's Assigns 'Ba3' Sr. Unsecured Debt Rating
SHIMAO PROPERTY: S&P Assigns 'BB-' Rating to Proposed US$ Notes
TEXHONG TEXTILE: Positive Profit Alert Supports Moody's Ba3 CFR
I N D I A
AADIT ENTERPRISES: CARE Rates INR20cr LT Bank Loans at 'B+'
ADARSH SHIKSHAN: CARE Lowers Rating on INR11.75cr LT Loans to 'D'
AIR INDIA: To Sell 3 'Costly' Boeings to Pare Debt
AIR INDIA: Likely to Sell Four Flats to A National Bank
ANSAL LANDMARK: ICRA Suspends 'D' Rating on INR75cr Loans
ANTILLA BREWERIES: CRISIL Assigns 'B' Rating to INR65MM Loans
AVINASH RAMAKRISHNA: ICRA Assigns 'B+' Rating to INR35.75cr Loan
BHISTI EXPORTS: ICRA Suspends 'D' Rating on INR11.82cr Loans
BSCC INFRASTRUCTURE: CRISIL Reaffirms B+ Ratings on INR150MM Loan
CHIMAKURTHI HOME: ICRA Assigns 'B-' Ratings to INR6cr Loans
CONCEPT SHAPERS: CRISIL Reaffirms 'D' Ratings on INR125MM Loans
ENERSHELL ALLOYS: CARE Cuts Ratings on INR60.10cr Loans to 'D'
G. G. DANDEKAR: CRISIL Reaffirms 'B' Ratings on INR100MM Loans
G.N.R COTTON: ICRA Assigns 'B-' Rating to INR20cr LT Loans
G.S. RADIATORS: CARE Raises Rating on INR4.62cr Loans to 'B'
GATI MOTORS: CARE Reaffirms 'B+' Rating on INR13.57cr LT Loans
HEATH VIEW: CRISIL Reaffirms 'B-' Rating on INR150MM Term Loan
JAGAT AGRO: CRISIL Assigns 'B' Ratings to INR100MM Loans
KAMAL CONSTRUCTION: ICRA Suspends 'B/A4' Rating on INR6.6cr Loan
MACHHI RAM: CRISIL Reaffirms 'B' Rating on INR200MM Loans
MIRACLE DEVELOPERS: CRISIL Rates INR60MM Term Loan at 'B+'
PURPLE ADVERTISING: ICRA Reaffirms 'D' Rating on INR24cr Loans
RAHUL FERROMET: ICRA Assigns 'B+' Ratings to INR11cr Loans
RAMA KRISHNA: CRISIL Reaffirms 'B+' Ratings on INR101.5MM Loans
RBA FERRO: ICRA Reaffirms 'B' Rating on INR3cr Loan
RHL PROFILES: ICRA Suspends 'B+' Rating on INR19.5cr Loans
SAHELI METALS: ICRA Revises Rating on INR7cr Loan to 'B'
SANSKAR BHARTI: ICRA Assigns 'B' Rating to INR8cr Term Loans
SAUMYA DSM: ICRA Suspends 'D' Rating on INR98.65cr Term Loans
SERVALAKSHMI PAPER: CARE Cuts Ratings on INR336.01cr Loans to 'D'
SEVEN ELEVEN: ICRA Suspends 'D' Rating on INR7.5cr Loans
SHAZ PACKAGING: ICRA Assigns 'B' Ratings to INR9.5cr Loans
SHREE HARI: CRISIL Reaffirms 'B' Ratings on INR265MM Loans
SHREE SACHIDANAND: CRISIL Upgrades Rating on INR120MM Loans to B-
SIDDHANATH SUGAR: CARE Rates INR110.58cr LT Loans at 'B+'
SRI BALAJI: ICRA Assigns 'B-' Rating to INR20cr LT Loans
STEEL EXCHANGE: ICRA Lowers Ratings on INR307.75cr Loans to 'B'
STEEL MAX: ICRA Reaffirms 'B+' Rating on INR9.5cr Loans
STEELMAX ALLOYS: ICRA Reaffirms 'B+' Rating on INR4cr Loans
SUNSHINE INDUSTRIES: ICRA Assigns 'B' Rating to INR5.25cr Loan
THAR OASIS: ICRA Assigns 'B' Ratings to INR7.35cr Loans
TIRUPATI JUTE: ICRA Assigns 'B+' Ratings to INR13.52cr Loans
I N D O N E S I A
ANEKA TAMBANG: Moody's Puts Ba3 CFR on Review For Poss. Downgrade
ANTAM PERSERO: S&P Puts 'B+' CCR on CreditWatch Negative
J A P A N
JAPAN AIRLINES: Another Malfunction in Boeing 787 Battery
LEOPARD ONE: S&P Affirms BB+ Rating to JPY0.151BB Class E Notes
* JAPAN: Corporate Bankruptcies Hit 22-Year Low in 2013
M Y A N M A R
MYANMAR CONSOLIDATED: Judge Throws Out Liquidation Application
S I N G A P O R E
BW GROUP: $500MM Tender Offer is Credit Positive, Moody's Says
X X X X X X X X
* Moody's Gives Stable Outlook for North Asian Sovereigns in 2014
- - - - -
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A U S T R A L I A
=================
AFS GROUP: Owes More Than AUD11.3MM to Creditors, Report Shows
--------------------------------------------------------------
Milana Pokrajac at Money Management reports that AFS Group owes
more than AUD11.3 million to its creditors and is unlikely to be
able to pay a dividend to any one of them, a report shows.
Money Management relates that the report, submitted to the
Australian Securities and Investments Commission (ASIC) by
liquidator BDO Australia in December last year, shows the group
owes the sum to 83 creditors.
One creditor is secured and is owed AUD7.7 million, while 63
unsecured creditors are owed a total of AUD2.7 million. The
remaining 19 are classed as "priority" creditors, to whom AFS
Group owes almost AUD900,000, according to Money Management.
However, the author of the report and BDO partner advisory,
business recovery and insolvency Rachel Burdett-Baker, indicated
she did not expect that a dividend would be paid to any class of
creditor, Money Management relays.
AFS Group entered voluntary administration in April last year due
to financial woes caused by the outflow of aligned practices to
ANZ, BT Financial Group and InFocus Wealth Management, the report
notes. Further trouble erupted after it was decided that AFS
advisers would not be receiving the money held in the AFS' Group
Brokerage Account, which included commissions and fees generated
from the advice provided.
BDO expects to finish its work on AFS in November this year, the
report adds.
Rachel Burdett-Baker and Luke Targett of BDO, on April 23,
2013, were appointed administrator of the following companies of
the AFS Group:
-- AFS Group Limited (ACN 055 796 211)
-- Australian Financial Services Limited (ACN 116 900 362)
-- MDA Private Pty Ltd (ACN 151 974 006)
-- Strategy Portfolio Limited (ACN 094 486 003)
FORTESCUE METALS: Cuts Junk-Rated Debt by a Further $1.6BB
----------------------------------------------------------
Fortescue Metals Group has issued two voluntary redemption
notices for: i) the remaining US$1.04 billion Senior Unsecured
Notes due in 2015; and ii) the US$600 million Senior Unsecured
Notes due 2016.
The Notes will be redeemed on March 14, 2014.
The announcement comes less than a month after Fortescue repaid an
initial US$1.0 billion of the 2015 Notes and takes total debt
repayments since November 2013 to US$3.07 billion, including the
recent repayment of the CSI lease facility.
At its peak, Fortescue's gross debt was US$12.7 billion.
Following the redemption of the Notes, other capital management
initiatives undertaken and cash on hand at 31 December 2013 of
US$2.92 billion, Fortescue's gross debt will fall to US$9.6
billion, with net debt of approximately US$7.8 billion by the end
of March 2014.
Fortescue CEO Nev Power said the voluntary redemption of the Notes
underscored Fortescue's commitment to repay the debt that funded
the company's expansion to 155 million tonnes per annum. "This is
a pivotal year for Fortescue as we near the completion
of our expansion. The substantial increase in production and
strong market conditions have strengthened our balance sheet and
enabled us to accelerate our debt reduction program."
Fortescue CFO Stephen Pearce said these measures continue to
reduce Fortescue's gearing towards 40%. "We've taken another
significant step in reducing Fortescue's debt levels. The
combination of voluntary debt repayments of US$3.07 billion, in
addition to successfully lowering the cost of remaining debt,
represents an annual interest saving of more than US$300 million
per annum."
Interest savings identified since November 2013 through
Fortescue's capital management initiatives include:
1. Repayment of A$140m (US$130m) of Preference Shares which had a
coupon of 9%, saving US$12m per annum in interest
2. Repricing of the US$4.95 billion Term Loan margin to 3.25%,
saving US$50m. An additional US$25m is anticipated by May
following a further coupon reduction to 2.75%.
3. Repayment of US$2.04 billion 2015 Unsecured Notes, which have a
coupon of 7%, saving US$143m per annum in interest.
4. Repayment of the US$600m Senior Unsecured Notes due 2016,
saving US$38m per annum in interest.
5. Repayment of the CSI lease facility, saving US$36m per annum in
interest.
The key terms of the redemption are listed below:
2015 Notes
Principal value: US$2,040 million
Prior Redemption: US$1,000 million
Redemption value: US$1,040 million
Redemption date: March 14, 2014
Redemption conditions: Notes are redeemable at 103.5% of
principal value at the option of
Fortescue from February 1, 2014,
upon providing a notice to the
trustee.
2016 Notes
Principal value: US$600 million
Prior Redemption: N/A
Redemption value: US$600 million
Redemption date: March 14, 2014
Redemption conditions: Notes are redeemable at 103.188% of
principal value at the option of
Fortescue from February 1, 2014,
upon providing a notice to the
trustee.
About Fortescue Metals
Headquartered in West Perth, Western Australia, Fortescue Metals
Group Limited (ASX: FM) -- http://fmgl.com.au/-- is involved in
the exploration of iron ore through a project to mine iron ore in
the Chichester Ranges, in the Pilbara region of Western Australia
and exporting it from Port Hedland.
* * *
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 19, 2013, Moody's Investors Service has upgraded Fortescue
Metals Group Limited's corporate family rating (CFR) to Ba2 from
Ba3. At the same time Moody's has upgraded FMG Resources (August
2006) Pty Ltd's senior unsecured notes ratings to Ba3 from B1 and
senior secured term loan rating to Baa3 from Ba1. The outlook on
all ratings remains positive.
The upgrade follows announcement that Fortescue has issued a
USD1.0 billion voluntary redemption notice to the trustee of its
USD2.04 billion Senior Unsecured Notes due 2015. As part of the
announcement, the company also stated that it anticipates retiring
the remaining USD1.04 billion of notes in the coming months
subject to market conditions. Announcement follows last week's re-
pricing and amendment of the USD4.95 billion senior secured term
loan facility, which reduces the interest margins and extends the
maturity of the facility.
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C H I N A
=========
CHINA MEDIA: HKCMCPA Company Raises Going Concern Doubt
-------------------------------------------------------
China Media Group Corporation filed with the U.S. Securities and
Exchange Commission on Jan. 10, 2014, its annual report on Form
10-K for the year ended Dec. 31, 2012.
HKCMCPA Company Limited expressed substantial doubt about the
Company's ability to continue as a going concern, citing the
Company has incurred substantial losses this year. As of
Dec. 31, 2012, the Company has an accumulated deficit totaling
US$5.99 million, and its current liabilities exceed its current
assets by US$1.2 million.
The Company reported a net loss of US$7.19 million on US$2.45
million of total net revenue for the year ended Dec. 31, 2012,
compared with a net income of US$355,678 on US$4.3 million of
total net revenue on Dec. 31, 2011.
The Company's balance sheet at Dec. 31, 2012, showed US$1.68
million in total assets, US$4.92 million in total liabilities, and
stockholders' deficit of US$3.24 million.
A copy of the Form 10-K is available at:
http://is.gd/IqginQ
China Media Group Corporation (CHMD) is a media company. The
Company uses technologies and devices combined with media of
television, newspapers, magazines, billboards and Internet. The
Company focuses to offer advertising services in the People's
Republic of China.
GUANZHOU R&F: Fitch Puts Rating on $1-Bil. Sr. Unsec. Notes at BB
-----------------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Guangzhou R&F
Properties Co. Ltd.'s (R&F; BB/Positive) USD1billion 8.5% senior
unsecured notes due 2019 a final rating of 'BB'.
The notes are issued by its subsidiary, Trillion Chance Limited.
R&F has granted a keepwell deed and a deed of equity interest
purchase undertaking to ensure that Trillion Chance has sufficient
assets and liquidity to meet its debt obligations.
Although the notes issue size has been increased to USD1billion,
most of the proceeds will be used to refinance debt that will
mature in 2014 and pay general corporate expenses, which does not
change R&F's credit profile and the ratings. The assignment of
the final rating follows the receipt of documents conforming to
information already received and the final rating is in line with
the expected rating assigned on 6 January 2014.
Superior Margins: Lower land costs and development of commercial
projects have yielded stable EBITDA margins of around 35% in the
past three years, a level that is at the high end of the range
seen at its peers. Fitch expects R&F to maintain the margins for
the next two years due to sufficient land bank and low land costs.
National Presence: R&F has a well-balanced nationwide land bank,
of which 34% of gross floor area is located in first-tier cities
and 63% in second-tier cities. There is no over-concentration in
any one city and even Guangzhou, where R&F first established its
business, only accounted for less than 25% of contracted sales in
1H13. The diversification helps reduce uncertainties inherent in
local policies and local economies.
Sustainable Asset Turnover: The company's ratio of contracted
sales to total debt was more than 1x over the past three years,
even though it incurred substantial debt and market conditions
were challenging in 2H11 and 1H12. Fitch expects the ratio to
improve further in the next two years as the company adds debt at
a slower pace and its contracted sales growth accelerates.
Higher Leverage in 2013: R&F's leverage, as measured by net
debt/adjusted inventory, rose to 49% at end-1H13 from 41% at end-
2012 and is not expected to have decreased materially in 2013.
While sales growth and asset turnover have continued at a healthy
pace, the Positive Outlook on the rating may be pressured if R&F's
leverage does not trend down in the next 6-12 months.
Debt Maturing in 2014: There is over CNY12.8bn of the debt
maturing in 2014, including CNY8.1bn of bonds and CNY1.4bn of
trust loans. Pressure on its short-term liquidity and growth from
the impending maturity may be gradually moderated by its
diversified funding channels and the newly issued USD1bn offshore
notes.
Positive Outlook: R&F's credit metrics are likely to improve to be
commensurate with a 'BB+' profile within the next 12 months if the
company can refinance debt maturing in 2014 with long-term
capital, and improve its asset turnover and leverage.
RATING SENSITIVITIES
Positive: Future developments that may, individually or
collectively, lead to positive rating action include:
-- Refinancing of bonds and trust loans maturing in 2014 with
long-term capital
-- EBITDA margin at above 30% on a sustained basis
-- Net debt/adjusted inventory sustained below 40%
-- Contracted sales/total debt sustained above 1.25x
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Failure to meet the above guidelines over the next
12 months, which would lead to the Outlook being revised
to Stable.
MODERN LAND: Fitch Rates Proposed Yuan-Denominated Notes at 'B'
---------------------------------------------------------------
Fitch Ratings has assigned China-based property developer Modern
Land (China) Co., Limited's (Modern Land; B/Stable/RR4) proposed
yuan-denominated senior unsecured notes an expected rating of
'B(EXP)' and recovery rating of RR4.
The notes are rated at the same level as Modern Land's senior
unsecured rating as they represent direct, unconditional,
unsecured and unsubordinated obligations of the company. The
final rating of the proposed notes is contingent upon receipt of
documents conforming to information already received.
Limited Scale: Modern Land's limited scale in terms of land bank,
contracted sales as well as geographical coverage leaves the
company susceptible to greater volatility in earnings. Modern
Land's contracted sales of CNY4.4bn for 2013 (2012: CNY2.8bn) and
its current land bank of about 1.8 million sqm (excluding presold
properties) as at the end of 1H 2013 is commensurate with
homebuilders rated in the 'B' category (those rated 'B+', 'B' or
'B-').
Low Leverage Gives Flexibility: The company is in a net cash
position as at end-June 2013. It has unrestricted cash of
CNY1.10bn and unutilised onshore credit facilities of CNY1.06bn
(against total debt of CNY856.30m). Fitch expects contracted
sales to increase to around CNY4bn-CNY6bn per annum over the next
two years. The rating also takes into account Fitch's expectation
that as the company ramps up its scale with more land
acquisitions, net debt/adjusted inventory will likely hit 30%
(2012: 9%) with contracted sales/gross debt moderating to around
1.5x (2012: 2.48x) in 2014. A slower asset turnover, however,
would weaken the company's leverage ratio and pressure its credit
metrics -- although this is not in Fitch's rating case.
Product Mix May Dilute Margin: Modern Land has been generating
strong EBITDA margin of 25%-33% over the past three years, a level
higher than Chinese mass market homebuilders in general. This is
due to a combination of high-end products in Beijing, its product
differentiation strategy and the company's comparatively lower
land cost. Modern Land is likely to maintain its margin at the
current level for the next two years, boosted by continuing sale
of high-end products. However, the EBITDA margin would likely
moderate to around 20%- 25% over the medium term because of its
increasing exposure to the mid-end and mass market segments in
lower-tier cities as well as higher land costs (end-1H13:
CNY859/sqm versus recent land acquisition in Nan Chang at
approximately CNY4,000/sqm).
Longer Gestation Period for Niche Product: Modern Land's market
positioning as a niche homebuilder that provides energy-efficient
homes needs a longer gestation period because it will take time
for the company to make its products known, particularly in the
second- and third-tier cities that the company has recently
entered. Gross profit margins for initial launches are likely to
be lower (20%-30%) and the company is only likely to be able to
raise prices in subsequent launches after obtaining market
acceptance following the handover of the initial projects.
Sales Geographically Concentrated. Modern Land currently has six
projects under development in six cities across five provinces.
While the majority of its land bank is in lower-tier cities such
as Xiantao (36.6%) and Changsha (27.6%), the company's contracted
sales for the next two years would likely be still driven by
projects in Beijing and Taiyuan, which have higher value and
margins. In Fitch's view, meaningful geographical diversification
will occur when Modern Land's operations in lower-tier cities
mature and it is able to sustain its profit margins over the
medium term even though a smaller proportion of sales come from
Beijing and Taiyuan.
Positive rating action is not expected in the next 18-24 months
due to Modern Land's small operational scale. However, future
developments that may, individually or collectively, lead to
positive rating action include:
-- Contracted sales sustained above CNY7bn without compromising
leverage
-- EBITDA margin sustained above 25%
Negative: Future developments that may, individually or
collectively, lead to negative rating action include
-- EBITDA margin sustained below 20%
-- Contracted sales/gross debt sustained below 1.0x
-- Net debt/adjusted inventory sustained above 40%
MODERN LAND: Moody's Puts 'B2' Rating on Sr. Unsecured Notes
------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the RMB
senior unsecured notes proposed by Modern Land (China) Co., Ltd.
At the same time, Moody's has affirmed the company's B2 corporate
family rating and B2 senior unsecured debt rating.
The ratings outlook is stable.
The proceeds from the proposed bonds will be used to fund the
company's development of property projects and land purchases.
RATINGS RATIONALE
"The proposed notes will enhance Modern Land's liquidity and
improve its debt maturity profile," says Lina Choi, a Moody's Vice
President and Senior Analyst.
The notes will provide additional cash to the company to fund its
operations and land payments, thereby supporting growth.
Modern Land uses debt to fund growth. The proposed notes fall
within the company's budgeted debt levels for 2014.
Furthermore, its sales performance in 2013 was within Moody's
expectation. As a result, Modern Land's credit metrics should
remain within the range of its B2 rating, after the notes are
issued.
In the next 12 months, Moody's expects Modern Land's
EBITDA/interest to be around 3x.
On the other hand, Modern Land's cash balance will decline if it
steps up its land acquisitions beyond RMB4 billion a year. Moody's
will monitor the company's liquidity profile and land acquisition
strategy.
"The affirmation of Modern Land's B2 rating reflects its solid
pre-sales performance in the past year. We expect the company to
sustain its sales momentum, against the backdrop of stable market
conditions over the next 12 months," says Lina Choi, who is also
the Lead Analyst for Modern Land.
Modern Land's contracted sales for the fiscal year ended December
31 2013 reached its target of RMB4 billion.
In addition, management's good sales execution is reflected in its
careful planning, as seen by the even distribution of contracted
sales throughout the year.
Modern Land's B2 corporate family rating continues to reflect its
successful track record of generating stable sales through its
niche market of developing comfortable and eco-friendly homes.
The rating also considers Modern Land's small scale and its
exposure to market volatility, against the backdrop of its need to
access capital to fund its rapid growth.
On the other hand, the rating also reflects the high profitability
of Modern Land's niche products.
While the company has demonstrated adequate liquidity so far,
given its fast growth and demand on capital, its liquidity
position could become volatile.
Nonetheless, the stable outlook reflects Moody's expectation that
the company will maintain adequate liquidity and will grow sales
as planned, and that it will exercise flexibility in its
expansion, adjusting its plans in accordance with market
conditions to avoid a material deterioration in its credit
profile.
Upward rating pressure could emerge over the medium term if Modern
Land establishes a track record of: (1) achieving planned sales in
new locations outside Beijing over the next 1-2 years; (2)
maintaining a reasonable cash balance of around 10%-12% of total
assets; and (3) demonstrating strong financial discipline in land
acquisitions.
On the other hand downward rating pressure could emerge if: (1)
Modern Land's liquidity position and ability to generate operating
cash flows prove to be weaker than Moody's has anticipated, and
which is due in turn to declining contracted sales, aggressive
land acquisitions, or the emergence of more severe regulatory
controls on China's property sector; (2) prices decline, and
revenue recognition is slower-than-expected, or if profit margins
fall, negatively affecting interest coverage and financial
flexibility; or (3) the company engages in material debt-funded
acquisitions.
In such a situation, balance sheet cash (including restricted and
unrestricted cash) could fall below 10% of total assets or 50% of
short-term debt, and/or its credit metrics could deteriorate, with
EBITDA/interest below 1.5x on a sustained basis.
The principal methodology used in this rating was the Global
Homebuilding Industry published in March 2009. Please see the
Credit Policy page on www.moodys.com for a copy of this
methodology.
Modern Land (China) Co., Limited was founded in 2000 in Beijing by
the company's chairman, Mr. Zhang Lei. The China-based real estate
development company focuses principally on projects in China.
Modern Land specializes in developing comfortable housing units
and is one of the few early pioneers of green and eco-friendly
projects in China.
The company was listed on the Hong Kong Stock Exchange in July
2013 (stock code: 1107). As of 30 June 2013, the company had a
total land bank of 2,277,200 sqm in gross floor area in China
(excluding investment properties held for its own use), located in
Beijing, Jiujiang, Nanchang, Taiyuan, Changsha and Xiantao.
SHIMAO PROPERTY: Moody's Assigns 'Ba3' Sr. Unsecured Debt Rating
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 senior unsecured debt
rating to the USD bonds proposed by Shimao Property Holdings
Limited.
The ratings outlook is stable.
The proceeds from the proposed USD bonds will be used to refinance
its outstanding debt, as well as fund existing and new projects
and general working capital requirements.
RATINGS RATIONALE
"The proposed bonds will provide the additional liquidity that
Shimao needs for funding its business expansion and lengthening
its debt maturity profile," says Franco Leung, a Moody's Assistant
Vice President and Analyst.
This additional liquidity could also help to prefund the company's
land acquisitions and repay some short-term debt to reduce its
average interest costs.
"The proposed bonds will immediately increase Shimao's debt
leverage, but its credit metrics in the next 12-18 months will
stay within levels appropriate for its Ba2 corporate family
rating," says Leung.
Moody's expects Shimao's debt leverage -- as measured by adjusted
debt / adjusted capitalization -- will remain between 50% and 55%
in the next 12-18 months. Moody's also expects adjusted EBITDA
interest coverage will trend above 3.5x over the same period.
Improved sales execution during the last 12 months, which
generated additional pre-sales cash flow, allowed Shimao to reduce
its reliance on debt financing, thereby keeping debt leverage
under control.
Shimao reported RMB61.3 billion in contracted sales for the first
11 months of 2013 -- a 45% year-on-year increase -- exceeding its
annual sales target of RMB55 billion for 2013.
However, Shimao stepped up its land acquisitions in 2013. Moody's
estimated that its land premium payments will amount to about
RMB28-30 billion in FY2013, significantly up from about
RMB9billion in FY2012, RMB11.0 billion in FY2011, and RMB15.0
billion in FY2010.
The company has reaffirmed its intention to manage debt leverage,
such that net debt to equity will be kept below 60%.
Moody's will continue to monitor the impact on Shimao's cash
buffers and related credit metrics of its more active land
acquisition strategy.
Shimao's Ba2 corporate family rating continues to reflect its (1)
diversified and well-located land bank; (2) pricing flexibility in
view of its low-cost land bank, and (3) portfolio of quality
investment properties.
Upward rating pressure could emerge if Shimao (1) continues to
deliver robust sales growth; (2) maintains strong liquidity and
good access to the domestic and offshore bank and capital markets;
(3) shows prudent financial management and land acquisitions.
On the other hand, downgrade rating pressure could emerge if (1)
the company is unable to sustain its solid sales track record; (2)
its liquidity position weakens; or (3) it embarks on aggressive
land acquisitions funded by debt.
The principal methodology used in this rating was the Global
Homebuilding Industry, published in March 2009. Please see the
Credit Policy page on www.moodys.com for a copy of this
methodology.
Shimao Property Holdings Ltd is a Grand Cayman-incorporated
Chinese property developer that was listed on the Hong Kong Stock
Exchange in July 2006. Together with its 64%-owned Shanghai A-
share listed subsidiary, Shanghai Shimao Co Ltd, the company has
an attributable land bank of 37.2 million square meters
distributed across 36 cities, mainly in eastern and northeastern
China. Shanghai Shimao mainly develops commercial properties and
has an attributable land bank of around 7.03 million square
meters. Shimao also has six hotels in operation with a total of
2,700 rooms.
SHIMAO PROPERTY: S&P Assigns 'BB-' Rating to Proposed US$ Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
issue rating and 'cnBB+' long-term Greater China regional scale
rating to a proposed issue of U.S. dollar-denominated senior
unsecured notes by Shimao Property Holdings Ltd. (BB/Stable/--;
cnBBB-/--). The ratings are subject to S&P's review of the final
issuance documentation.
The issue rating is one notch lower than the long-term corporate
credit rating on Shimao to reflect S&P's opinion that offshore
noteholders would be materially disadvantaged, compared with
onshore creditors, in the event of default. S&P anticipates that
the company's ratio of priority debt to total assets will remain
above its threshold of 15% for speculative-grade companies.
Shimao intends to use the proceeds from the proposed issuance to
refinance existing debt, finance existing and new property
development projects, and for general corporate purposes.
S&P expects Shimao's increasing property sales to largely offset
its higher debt level. In S&P's base case, it estimates the debt-
to-EBITDA ratio will stay at 4.5x-5.0x in 2013-2014, below its
downgrade trigger of 5.0x. The ratio was 6.5x in 2012.
The rating on Shimao reflects the company's aggressive expansion
appetite, relative high leverage for the current rating, and
inconsistent financial management. Shimao's established market
position, geographic and project diversity, satisfactory sales and
execution, and reasonable land costs temper the weaknesses.
The stable outlook reflects S&P's expectation that Shimao's
property sales will be satisfactory and its profit margins will
improve in a stable market over the next 12 months. S&P also
anticipates that the company can expand with some discipline,
control debt, and improve its leverage over the next 12 months.
TEXHONG TEXTILE: Positive Profit Alert Supports Moody's Ba3 CFR
---------------------------------------------------------------
Moody's Investors Service says Texhong Textile Group Limited's
positive profit alert for its 2013 consolidated net profit
supports its Ba3 corporate family and senior unsecured bond
ratings.
The ratings outlook remains stable.
"Texhong's improved results in 2013 are within Moody's
expectations and are drivers for changing its rating outlook to
stable from negative in January 2013," says Chenyi Lu, a Moody's
Vice President and Senior Analyst.
On January 10, Texhong announced that its 2013 consolidated net
profit was expected to exceed RMB1.1 billion, versus a net profit
of RMB486 million in 2012.
The expected profit includes a one-off gain of approximately
RMB260 million from the acquisition of Shandong Morigin Textile
Factory Co Ltd (unrated), which was announced on 20 June 2013 and
completed in 2H 2013.
In addition, the company sold more than 280,000 tons of yarn in
2013, versus 243,000 tons in 2012.
Excluding the one-time gain, Texhong's expected solid net profit
in 2013 was driven mainly by: (1) higher revenue that benefited
from its production capacity expansion; and (2) an improved gross
margin due to lower international cotton prices.
The company's capacity expansion in Vietnam has helped improve the
company's gross margin, given the absence of import tariffs on
cotton as well as low labor costs in the country.
Moreover, its total production capacity had expanded to 1.84
million spindles at end-2013, from 1 million spindles at end-2012.
Both its China and Vietnam capacities increased; China's capacity
had increased to 1.11 million spindles at end-2013 from 0.6
million spindles at end-2012, while its Vietnam capacity had grown
to 0.73 million spindles from 0.4 million spindles over the same
period.
The company expects a total capacity of approximately 2.16 million
spindles by end-2Q 2014, including 1.17 million spindles in China
and approximately 0.99 million spindles in Vietnam.
Moody's expected Texhong's revenue to increase by 20% to over RMB9
billion in 2013, driven by the higher capacity but partially
offset by slightly weak yarn selling prices.
With improved revenue and margins, Texhong's debt leverage -
adjusted debt to EBITDA, which is expected to be around 3.0x to
3.5x in 2013 and in the next 12 months -- is likely to be within
the Ba3 rating range.
The principal methodology used in this rating was the Global
Manufacturing Industry published in December 2010. Please see the
Credit Policy page on www.moodys.com for a copy of this
methodology.
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 major shareholder of the company.
=========
I N D I A
=========
AADIT ENTERPRISES: CARE Rates INR20cr LT Bank Loans at 'B+'
-----------------------------------------------------------
CARE assigns 'CARE B+' rating to the long-term bank facilities of
Aadit Enterprises.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 20 CARE B+ Assigned
Facilities
The rating assigned by CARE for proprietorship firms is generally
based on the capital deployed by the proprietor and the financial
strength of the firm at present. The rating may undergo change in
case of the withdrawal of capital or the unsecured loans brought
in by the proprietor in addition to the financial performance and
other relevant factors.
Rating Rationale
The rating assigned to the bank facilities of Aadit Enterprises is
primarily constrained by its very short track record of
operations, weak financial risk profile characterized by the low
profitability margins, leveraged capital structure and stressed
coverage indicators. The rating also factors in AAE's exposure to
risk associated with fluctuating gold prices, competition from the
various organized and unorganized players, susceptibility to
regulatory changes and constitution of the entity being a
proprietorship firm.
The rating, however, draws strength from the experienced
proprietor and the firm being the authorized agent of reputed
jewellery manufacturers.
Going forward, the ability of the firm to increase the scale of
operations, improve the profitability margins and manage its
working capital requirement efficiently would be the key rating
sensitivities.
Aadit Enterprises was established in December 2012 as a
proprietorship concern by Ms Pinky Gupta. Ms Pinky Gupta is
supported by her son, Mr Kapil Gupta, for managing the operations
of the firm. The firm is engaged in the wholesale and retail
trading of gold jewellery, diamond-studded gold jewellery and
silver jewellery. AAE has its retail outlet located at Kamla
Nagar, New Delhi. The firm is an authorized agent of Emerald Jewel
Industry India Limited, Derewala Jewellery Industries Limited
(rated CARE BBB-/A3) for Delhi & NCR region. The firm also sources
gold jewellery, diamond studded gold jewellery and silver
jewellery from other wholesalers.
For FY13 (refers to the period April 01 to March 31), AAE achieved
a total operating income of INR36.46 crore with a PAT INR0.15
crore. For 7MFY14 (based on the unaudited results), the firm
achieved a total operating income of INR84.92 crore.
ADARSH SHIKSHAN: CARE Lowers Rating on INR11.75cr LT Loans to 'D'
-----------------------------------------------------------------
CARE revises the rating assigned to the bank facilities of Adarsh
Shikshan Sansthan.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 11.75 CARE D Revised from
Facilities CARE BB-
Rating Rationale
The revision in the rating of the bank facilities of Adarsh
Shikshan Sansthan takes into account the delays in debt servicing
on account of weak liquidity position.
Adarsh Sikshan Sansthan, incorporated in April 2000 by Mr Ajit
Prasad Jain and Mr Jeevan Kumar Jain, had been set up as a non-
profit education society. Adarsh started its first playway school
at Anand Vihar, New Delhi, in 2003 under the name of 'Sapphire
International School'. For the academic session (AS) 2013-14, the
student strength is 640 students from the age group of 2-5 years.
During FY10 (refers to the period April 1 to March 31), Adarsh
also started a new school under the name of 'Sapphire
International School' in Sector 17, Noida (UP). The construction
of the school was completed in FY10 and the first academic session
for the same was started in June 2010. For the AS 2013-14, the
number of students stood at around 380.
For FY13, Adarsh achieved a total operating income of INR9.57
crore with a surplus of INR0.63 crore as against a total operating
income of INR8.25 crore with surplus of INR0.30 crore in FY12.
AIR INDIA: To Sell 3 'Costly' Boeings to Pare Debt
--------------------------------------------------
The Times of India reports that Air India plans to sell three more
of its Boeing 777-200 Long Range planes as it has found the planes
too costly to suit its plan to turnaround to profitability, its
finance chief said on Jan. 13.
"We tried different configurations for the planes, but saw nothing
is working out. So we are planning to sell those too," S Venkat
told ET.
In October, Air India sold five of the 777 planes to Abu Dhabi-
based Etihad Airways for $350 million, the report relays.
According to the report, Mr. Venkat said the remaining three are
of more recent origin and the airline aims to earn more from the
sale of those. "The total we earn from the sale of eight planes
should be enough to retire debt on them," ET quotes Venkat as
saying. The total debt on the five planes sold to Etihad was
$337 million, ET notes.
According to ET, the airline has total debt of over $8 billion on
its books. State-owned Air India is likely to float tenders for
sale of these planes by the end of February, Mr. Venkat, as cited
by ET, added.
"When we bought the (777) planes, we had made certain projections
as to their fuel burn, maintenance cost and the kind of load
factors we would get. That hasn't worked out," Mr. Venkat said,
explaining why the airline has decided to sell the planes, ET
relays. He added without elaborating that like the last five, Air
India has found ample demand among foreign carriers for these
planes as well, ET reports.
Air India Ltd -- http://www.airindia.com/-- transports
passengers throughout India and to more than 40 destinations
throughout the world. Affiliate Air India Express operates as a
low-fare carrier, mainly between India and destinations in the
Middle East, and Air India Cargo provides freight transportation.
The government of India has merged Air India with another state-
controlled carrier, Indian Airlines, which has focused on
domestic routes. The combined airline, part of a new holding
company called National Aviation Company of India, uses the Air
India brand. The new Air India and its affiliates have a fleet
of more than 110 aircraft altogether.
* * *
The Troubled Company Reporter-Asia Pacific, citing the Hindustan
Times, reported on June 19, 2009, that Air India has been
bleeding cash due to excess capacity, lower yield, a drop in
passenger numbers, an increase in fuel prices and the effects of
the global slowdown. Air India had debts of INR42,570 crore and
accumulated losses of INR22,000 crore as of March 31, 2011,
according to livemint.com.
In April 2012, the Union Cabinet approved an operational
turnaround plan through an equity infusion of INR30,000 crore
(US$5.8 billion) over the next eight years.
"The Cabinet Committee on Economic Affairs (CCEA) has approved
the turnaround plan (TAP) and financial restructuring plan (FRP)
of Air India, under which the government will infuse INR30,000
crore into the airline by 2020-21, subject to certain milestones
that AI will have to meet," civil aviation minister Ajit Singh
said.
AIR INDIA: Likely to Sell Four Flats to A National Bank
-------------------------------------------------------
The Times of India reports that national carrier Air India is in
the final stages of striking a deal with a leading public sector
bank for selling four flats at the posh Sterling Apartments on the
Peddar Road in south Mumbai.
The deal, if gets through, is expected to fetch INR100 crore to
the carrier's coffers, TOI relates citing sources close to the
development.
"We are finalizing the deal with the bank. We are hopeful of
raising around INR100 crore from the sale of these four flats,"
Air India sources said, the report relates. The sources, however,
did not divulge the name of the bank Air India is negotiating but
added, "we are negotiating with a public sector lender."
TOI recalls that Air India had last year floated bids for e-
auctioning of the four of its six flats at the posh Sterling
Apartments on the Peddar Road in South Mumbai, measuring around
8,100 sq ft carpet area.
As per the financial restructuring and turnaround plan approved by
the Cabinet in early 2012 when it had bailed out the carrier with
INR30,000 crore in doles, Air India is required to raise INR5,000
crore over the next 10 years through asset monetization, and its
biggest asset is the iconic Air India building in the tony Nariman
Point area of the city, according to the report.
Earlier, State Bank of India had lent a helping hand to the
carrier in assets monetization programme by leasing four floors in
its 23-storey erstwhile headquarters at Nariman Point business
centre, TOI adds.
Air India Ltd -- http://www.airindia.com/-- transports
passengers throughout India and to more than 40 destinations
throughout the world. Affiliate Air India Express operates as a
low-fare carrier, mainly between India and destinations in the
Middle East, and Air India Cargo provides freight transportation.
The government of India has merged Air India with another state-
controlled carrier, Indian Airlines, which has focused on
domestic routes. The combined airline, part of a new holding
company called National Aviation Company of India, uses the Air
India brand. The new Air India and its affiliates have a fleet
of more than 110 aircraft altogether.
* * *
The Troubled Company Reporter-Asia Pacific, citing the Hindustan
Times, reported on June 19, 2009, that Air India has been
bleeding cash due to excess capacity, lower yield, a drop in
passenger numbers, an increase in fuel prices and the effects of
the global slowdown. Air India had debts of INR42,570 crore and
accumulated losses of INR22,000 crore as of March 31, 2011,
according to livemint.com.
In April 2012, the Union Cabinet approved an operational
turnaround plan through an equity infusion of INR30,000 crore
(US$5.8 billion) over the next eight years.
"The Cabinet Committee on Economic Affairs (CCEA) has approved
the turnaround plan (TAP) and financial restructuring plan (FRP)
of Air India, under which the government will infuse INR30,000
crore into the airline by 2020-21, subject to certain milestones
that AI will have to meet," civil aviation minister Ajit Singh
said.
ANSAL LANDMARK: ICRA Suspends 'D' Rating on INR75cr Loans
---------------------------------------------------------
ICRA has suspended the '[ICRA]D' rating assigned to the INR75.00
crore bank lines of Ansal Landmark Townships Private Limited in
the absence of the requisite information from the company.
According to its suspension policy, ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
ANTILLA BREWERIES: CRISIL Assigns 'B' Rating to INR65MM Loans
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the
bank facilities of Antilla Breweries Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital Facility 65 CRISIL B/Stable
Bank Guarantee 2 CRISIL A4
The ratings reflect ABPL's exposure to high project implementation
risk as its project is in the initial phase of construction, and
its weak expected financial risk profile, driven by its ongoing
debt-funded capital expenditure and expected low accruals. These
rating weaknesses are partially offset by the extensive experience
of the company's promoters in the rice-milling and agro industry.
Outlook: Stable
CRISIL believes that ABPL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' in case of timely and
successful implementation of the project along with better-than-
expected ramp up in operations, leading to better-than-expected
cash accruals. Conversely, the outlook may be revised to
'Negative' if there is a cost or time overrun in the
implementation of ABPL's project, adversely impacting its cash
accruals and further weakening its financial risk profile,
particularly its liquidity.
ABPL was set up in 2012 by the Agarwal family of Siliguri (West
Bengal). The company is in the process of setting up a rice-
milling unit in Maynaguri (West Bengal) with a milling capacity of
6 tonnes per hour. The project cost is around INR95 million,
funded through debt of INR48.5 million and promoter contribution
of INR46.5 million. The unit is expected to start commercial
production from April 2014.
AVINASH RAMAKRISHNA: ICRA Assigns 'B+' Rating to INR35.75cr Loan
----------------------------------------------------------------
ICRA has assigned an '[ICRA]B+' rating to the INR35.75 crore term
loans of Avinash Ramakrishna Developers Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 35.75 [ICRA]B+ assigned
(Term Loans)
The assigned rating takes into account the liquidity tightness
currently being faced by the company because of limited cushion
between current rental inflows and debt service obligations, and
the revenue concentration risks arising out of operating a single
property. The rating is also constrained by the risk of cashflow
mismatch in case of any premature termination of any of the
ongoing lease agreements. The rating continues to be impacted by
the absence of regulatory approvals to construct the two of the
three floors proposed to be constructed on the mall, which in turn
may lead to cost and time over-run. Moreover, ability of the
company to sale out the ongoing/ proposed expansion of the mall at
profitable rates would also remain a concern. The rating, however,
derives comfort from the experience of the promoters in the real
estate business, favourable location of the shopping mall cum
multiplex in close proximity to the central business area of
Bilaspur, Chhattisgarh, which strengthens its attractiveness and a
high occupancy level of the current operational portion of the
mall along with reputed tenant profile.
ARDPL is jointly promoted by two business houses of Chattisgarh,
namely the Avinash group and the Agarwal group. Incorporated in
2007, the company is currently operating one shopping mall cum
multiplex- 'Rama Magneto-The Mall' at Bilaspur, Chhattisgarh with
a leasable area of around 1.5 lakh square feet. The company has
already leased out almost the entire portion of the leasable area
of the mall to reputed tenants such as Easy Day Market (Bharti
Walmart), Big bazaar (Future Group), Pantaloons (Aditya Birla
Group), Dominos (Jubilant Bhartia Group), Reliance Trends,
Reliance Footprint, Metro Shoes, Peter England, PVR Cinemas, etc.
Recent Results
During the first six months of 2013-14, the company has reported a
net profit of INR0.88 crore (provisional) on an operating income
of INR10.07 crore (provisional). The company reported a net profit
of INR1.22 crore on an operating income of INR10.84 crore in 2012-
13.
BHISTI EXPORTS: ICRA Suspends 'D' Rating on INR11.82cr Loans
------------------------------------------------------------
ICRA has suspended '[ICRA]D' rating assigned to the INR11.82 crore
long term loans & working capital facilities & [ICRA]D rating to
the INR2.10 crore, short term non fund based facilities of Bhisti
Exports.
The suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
firm.
According to its suspension policy, ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
Bhisti Exports was constituted as a partnership firm in 2006 by
Bhisti family. The firm is currently owned and managed by four
partners namely, Mr. Iqbal U Bhisti, Mr. Bashir U Bhisti, Mr.
Akbar U Bhisti and Mr.Sajid U Bhisti, having a long experience in
sea food business. It was engaged in trading of sea products and
subsequently established processing and storage unit in FY 2010.
The works of the firms is located at Veraval, Gujarat and Malala
in union territory of Diu. The firm mainly deals in different
varieties of low value fishes which are catered entirely in
different export destinations.
BSCC INFRASTRUCTURE: CRISIL Reaffirms B+ Ratings on INR150MM Loan
-----------------------------------------------------------------
CRISIL's ratings on the bank facilities of BSCC Infrastructure Pvt
Ltd continue to reflect BSCC's large working capital requirements,
offtake-related risks for its Gujarat State Road Transport
Corporation commercial project, and its modest scale of
operations. These rating weaknesses are partially offset by BSCC's
established relationship with customers and above-average
financial risk profile, marked by a low gearing and strong debt
protection metrics.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 60 CRISIL A4 (Reaffirmed)
Cash Credit 15 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term 76.9 CRISIL B+/Stable (Reaffirmed)
Bank Loan Facility
Term Loan 58.1 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that BSCC will maintain its credit risk profile
over the medium term, backed by its established customer
relationships. The outlook may be revised to 'Positive' if the
company significantly increases its scale of operations, supported
by timely execution of current order book and healthy offtake for
its GSRTC project, while efficiently managing the working capital
requirements and maintaining its financial risk profile.
Conversely, the outlook may be revised to 'Negative' in case of
lower-than-expected cash accruals or larger-than-expected working
capital requirements, resulting in significant weakening in the
financial risk profile, particularly its liquidity.
Update
BSCC reported revenue of INR213.2 million in 2012-13 (refers to
financial year, April 1 to March 31), a year-on-year decline of 27
per cent, on account of reliance on a few major customers and low
order book. Although the company has diversified its customer base
in the current year and has a healthy order book position of
INR1.1 billion, providing revenue visibility over the medium term,
the execution of the same is yet to commence. Hence, the company's
scale of operations is likely to remain modest over the medium
term. BSCC has also taken up a GSRTC project for modernisation of
bus terminus and construction of commercial complex at Vadnagar
(Gujarat), expected to be completed over the next two years. The
company will be entitled to the rental income received by leasing
out the commercial complex, and therefore, is exposed to
significant offtake risk over the medium term. The company's
operating margin is expected to remain moderate, at around 7.8 per
cent, in 2013-14.
BSCC has moderate working capital requirements as reflected in
gross current assets of 142 days as on Mach 31, 2013, resulting in
average bank limit utilisation of 84 per cent over the 11 months
through November 2013. However, CRISIL believes that BSCC's
working capital requirements are likely to increase over the
medium term given the large scale and nature of the projects in
hand. Thus, BSCC's liquidity is expected to remain stretched over
the medium term. It is expected to generate net cash accruals of
around INR16 million against repayments of INR4.4 million in 2013-
14.
BSCC has an above-average financial risk profile, marked by a low
gearing and healthy debt protection metrics, albeit constrained by
a small networth. CRISIL believes that the additional working
capital requirements, resulting from the large size and nature of
the projects in hand, will be funded through a mix of incremental
working capital debt and promoter funding. This is expected to
result in deterioration in gearing to over 1.5 times over the
medium term, from 0.3 times as on March 31, 2013, and a moderation
in debt protection metrics. BSCC also had a small networth of
INR61.8 million as on March 31, 2013.
BSCC reported a profit after tax (PAT) of INR1.7 million on an
operating income of INR213.2 million for 2012-13, as against a PAT
of INR10.0 million on an operating income of INR293.6 million for
2011-12.
Based in Mehsana (Gujarat), BSCC is promoted by Mr. Bharat S
Chaudhary; the company is a contractor, and has primarily executed
projects for the Dudhsagar Dairy in Gujarat and GSRTC in the past.
The company is also a distributor for Bharat Sanchar Nigam Ltd
recharge coupons and SIM cards in the Mehsana and Palanpur
districts of Gujarat.
CHIMAKURTHI HOME: ICRA Assigns 'B-' Ratings to INR6cr Loans
-----------------------------------------------------------
ICRA has assigned a long term rating of '[ICRA]B-' to the INR3.50
crore fund based limits and the INR2.50 crore unallocated limits
of Chimakurthi Home Needs.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Fund 3.50 [ICRA]B- assigned
Based Limits
Unallocated Limits 2.50 [ICRA]B- assigned
The assigned rating is constrained by CHN's low scale of
operations, its limited track record as a distributor for
electronic products of Samsung India Electronics Pvt. Ltd.
(Samsung) in Prakasam and Guntur districts of Andhra Pradesh, the
associated geographical concentration risk and the constitution as
a proprietorship concern. CHN's future performance would be
dependent on the growth in the highly competitive domestic
consumer durables market in India and the ability of Samsung
Electronics to maintain its market share. The rating is also
constrained by the low profitability and cash accruals resulting
in high dependence on external borrowings to fund the working
capital requirements thereby resulting in relatively high leverage
ratios and poor interest coverage indicators. The rating however,
draws comfort from CHN's association with a leading brand -
Samsung - and its low debt servicing obligations. CHN's ability to
increase its scale of operations and profitability while managing
the working capital requirement effectively would be the key
rating sensitivities.
CHN, owned and operated by Mr. Chimakurthi is a proprietorship
concern engaged in the business of electronics distributorship
since 2010-11. The firm is the sole distributor for home
appliances of Samsung India Electronics Pvt. Ltd. (Samsung) in
Prakasam and Guntur district of Andhra Pradesh.
Recent Results
For the year ended March 31, 2013, CHN reported an operating
income of INR32.20 crore and a net profit of INR0.16 crore, as
against INR12.01 crore and INR0.09 crore, respectively, for FY
2012.
CONCEPT SHAPERS: CRISIL Reaffirms 'D' Ratings on INR125MM Loans
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Concept Shapers &
Electronics Pvt Ltd continue to reflect instances of delay by
CSEPL in servicing its term debt obligations owing to its weak
liquidity. Liquidity is impacted due to large working capital
requirements and losses in past.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL D (Reaffirmed)
Letter of credit &
Bank Guarantee 10 CRISIL D (Reaffirmed)
Rupee Term Loan 85 CRISIL D (Reaffirmed)
CSEPL is also exposed to risks related to modest business risk
profile, marked by volatility in revenues and profitability. These
rating weaknesses are partially offset by established
relationships with customers.
Set up in 1988 by Mr. M D Raghunarayan, CSEPL designs,
manufactures, assembles, and tests rugged portable computers and
electronic instruments, especially for the defense sector. The
company is based in Mumbai (Maharashtra).
For 2012-13 (refers to financial year, April 1 to March 31), CSEPL
reported a net loss of INR23.6 million on net sales of INR86.4
million, as against a net loss of INR9.0 million on net sales of
INR101.1 million for 2011-12.
ENERSHELL ALLOYS: CARE Cuts Ratings on INR60.10cr Loans to 'D'
--------------------------------------------------------------
CARE revises the ratings assigned to the bank facilities of
Enershell Alloys & Steel Pvt Ltd.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 49.00 CARE D Revised from
Facilities CARE C
Short-term Bank 11.10 CARE D Revised from
Facilities CARE A4
Rating Rationale
The ratings revision of the bank facilities of Enershell Alloys &
Steel Pvt Ltd takes into account the on-going delays in debt
servicing.
Enershell Alloys & Steel Pvt Ltd, incorporated in year 2008, is
promoted by Mr Gaurav Aseem and his family members. EASPL is
engaged in the manufacturing of TMT MS Re-bars (TMT bars). It
manufactures a variety of TMT bars ranging from 8 mm to 32 mm. The
promoters of the company have almost a decade of experience in the
trading of iron scrap, sponge iron and other related products. The
manufacturing facility is located at Chandpur (district Bijnor),
Uttar Pradesh, with an installed capacity of 50,000 TPA for ingots
and a rolling mill of 50,000 TPA for TMT bars as on March 31,
2011. EASPL's power requirement is met by supplies from Uttar
Pradesh State Electricity Board (UPSEB).
G. G. DANDEKAR: CRISIL Reaffirms 'B' Ratings on INR100MM Loans
--------------------------------------------------------------
CRISIL's rating on the bank facilities of G. G. Dandekar Machine
Works Ltd continues to reflect GGD's average financial risk
profile, marked by stretched liquidity and below-average debt
protection metrics; large working capital requirements; and modest
scale of operations. These rating weaknesses are partially offset
by GGD's established brand name and experienced management.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL B/Stable (Reaffirmed)
Term Loan 70 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that GGD will benefit over the medium term from
its established brand in the domestic rice milling equipment
business and established clientele. The outlook may be revised to
'Positive' if the company scales up its operations while improving
its profitability and retaining its capital structure. Conversely,
the outlook may be revised to 'Negative' in case of larger-than-
expected capital expenditure or stretched working capital cycle,
thereby impacting the company's liquidity.
Incorporated in 1979, GGD was established in 1912 by Mr. G G
Dandekar and was acquired by the Kirloskar group in the 1960s. The
company manufactures, installs, commissions, and provides after-
sales service of machines used in processing and milling of rice
and cereals. Its plants are located at Bhiwandi and Nagpur (both
in Maharashtra).
GGD achieved a profit after tax of INR48.7 million on net sales of
INR148.8 million for 2012-13 (refers to financial year, from April
1 to March 31) as against a net loss of INR78.3 million on net
sales of INR131.8 million for 2011-12.
G.N.R COTTON: ICRA Assigns 'B-' Rating to INR20cr LT Loans
----------------------------------------------------------
ICRA has assigned a long term rating of '[ICRA]B-' to INR20.00
crore* fund based facilities of G.N.R.Cotton Corporation.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund 20.00 [ICRA]B- Assigned
Based Limits
The assigned rating is constrained by weak financial risk profile
characterized by low profitability, high gearing and stretched
coverage indicators. The rating is also constrained by
commoditized nature of product and fragmented nature of industry
with high competition from large number of players which limits
the ability to pass on the hike in the input costs and given the
high inventory holding towards end of procurement season (March);
profitability remains vulnerable to adverse fluctuations in lint
prices and the inherent risks associated with partnership nature
of the firm. However, the rating favourably factors in high
growth in operating income by 3.5 times to INR123.16 Cr in FY13
and established track record of the promoter with more than three
decades in cotton trading business; proximity of spinning unit to
cotton growing areas resulting in lower transportation costs.
The ability of the firm to maintain its profitability and continue
to increase its scale of operations would remain the key rating
sensitivities.
G.N.R Cotton Corporation was established in 1999 with ginning and
trading activities as its operations located in Guntur, Andhra
Pradesh by G.Venkataswara Rao and G.Poorna Chandra Rao. The firm
used to operate on job work basis for ginning and pressing of
cotton lint in various ginning mills located in Guntur. Since past
two years the firm is operating in leased facility of M/s. Balaji
Cotton Ginning Mill with 28 gins and 1 press.
G.S. RADIATORS: CARE Raises Rating on INR4.62cr Loans to 'B'
------------------------------------------------------------
CARE revises/reaffirms the rating assigned to the bank facilities
of G.S. Radiators Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 4.62 CARE B Revised from
Facilities CARE C
Short-term Bank 9.00 CARE A4 Reaffirmed
Facilities
Long/Short-term 4.00 CARE B/CAREA4 Revised
Bank Facilities from CARE C
Rating Rationale
The revision in the long-term rating of the bank facilities of
G.S. Radiators Limited factors in the improvement in its debt
servicing track record. The ratings, however, continue to be
constrained by the small scale of operations, weak coverage
indicators, working capital intensive nature of operations and
fortunes linked to the automobile industry which is cyclical in
nature. The ratings also take cognizance of losses during FY13
(refers to the period April 1 to March 31) and moderation
registered in the overall gearing of the company.
The ratings continue to derive strength from the long experience
of the promoters and the diversified client base of the company.
Going forward, the ability of the company to improve its scale of
operations while improving its profitability margins and effective
management of its working capital requirement shall be the key
rating sensitivities.
Incorporated in 1988, G.S. Radiators Limited is a closely held
public limited company promoted by Mr Ranjodh Singh. Mr Ranjodh
Singh, has an experience of more than two decades in the
automobile industry. He looks after the overall affairs of the
company. He is supported by Ms Rajinder Kaur (wife of Mr Ranjodh
Singh) who has an experience of more than a decade in the
automobile industry. The company is engaged in the manufacturing
of copper-brass radiators for the automotive Original Equipment
Manufacturers (OEMs). The manufacturing unit of the company is
located at Ludhiana (Punjab) and has an installed capacity for
processing one lakh pieces per annum (LPA). The main raw materials
of the company are brass and copper which are mainly procured
domestically. The company sells its products in both the domestic
and overseas market under the brand name of "GS RADIS EUROPE".
During FY13, GSR achieved a total operating income (TOI) of
INR31.85 crore with a net loss of INR0.38 crore. During FY14 (till
October 2013), the company has achieved a total operating income
of INR23.20 crore.
GATI MOTORS: CARE Reaffirms 'B+' Rating on INR13.57cr LT Loans
--------------------------------------------------------------
CARE reaffirms the rating assigned to the bank facilities of Gati
Motors Pvt Ltd.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 13.57 CARE B+ Reaffirmed
Facilities
Rating Rationale
The rating continues to be constrained by its modest scale of
operations coupled with weak financial risk profile marked by low
profitability margin, highly leveraged capital structure, weak
debt service coverage indicators and the stretched liquidity
position. The rating also factor in the high working capital
intensity of its operations, limited bargaining power of the
company with the principal manufacturer, increasing competition in
the automobile dealership space and the dependence on volume
momentum.
The rating, however, draws strength from the longstanding
experience of the promoter in the automobile dealership business
and it's positioning as a sole authorised dealer for LCV/ICV of
TATA Motors for Birbhum and Burdwan district of West Bengal.
Ability of the company to grow its scale of operations with
simultaneous improvement in the capital structure and efficient
management of the working capital will be the key rating
sensitivities.
Gati Motors Pvt Ltd was incorporated in September, 2007 by Late Mr
Ajit Kumar Banerjee and his son Mr Partha Priya Banerjee belonging
to Durgapur, West Bengal. The company is an authorised dealer for
Light & Intermediate Commercial Vehicles (LCV/ICV) of TATA Motors
Limited for Birbhum and Burdwan district of West Bengal. The
company started its commercial operations in April, 2008. It
offers LCV/ICVs of TML (e.g. Magic, Ace, 207DI, Winger, TATA 407,
TATA 709, TATA 1109, etc) through its two showroom equipped with
3-S facilities (sales, service and spare-parts) at Durgapur and
Burdwan city along with six selling outlets in the adjoining areas
to cover the designated area.
During FY13 (refers to the period April 1 to March 31), GMPL had
reported a total operating income of INR72.1 crore (Rs. 53.8 crore
in FY12) and PAT of INR0.3 crore (Rs.0.2 crore in FY12).
Furthermore, as per the provisional M9FY14, the management has
maintained to have achieved a turnover of INR48.50 crore.
HEATH VIEW: CRISIL Reaffirms 'B-' Rating on INR150MM Term Loan
--------------------------------------------------------------
CRISIL's ratings on bank facilities of Heath View Holiday Resorts
Ltd continues to reflect HVHRL's exposure to risks relating to
competition from other hotels in and around Mahabaleshwar
(Maharashtra) and to cyclicality in the hotel industry. The rating
also factors in the company's weak financial risk profile, marked
by high gearing. These rating weaknesses are partially offset by
HVHRL's good market position in the region, as indicated from its
healthy occupancy levels, and the demonstrated financial support
from its promoters.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL A4 (Reaffirmed)
Rupee Term Loan 150 CRISIL B-/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that HVHRL's cash accruals will increase over the
medium term supported by the stabilisation of its operations. The
outlook may be revised to 'Positive' if HVHRL generates
substantial cash accruals, most likely due to higher-than-expected
occupancy levels or an increase in average room rent. Conversely,
the outlook may be revised to 'Negative' if the company's cash
accruals are lower than expected, or if it undertakes a large
debt-funded capital expenditure programme.
Update
For 2012-13 (refers to financial year, April 1 to March 31), HVHRL
achieved revenues of INR146.1 million, a healthy year-on-year
growth of 47 per cent. The revenue increase was mainly driven by
increased occupancy and increase in revenues from banquets. The
company's operating margin also improved to 32.8 per cent in 2012-
13 from 22.2 per cent in 2011-12. HVHRL's margin is likely to
improve further over the medium term with the expected increase in
its scale of operations; as the company is in the hotel industry,
which has a high proportion of fixed costs.
HVHRL continues to have a weak financial risk profile, marked by a
small net worth of INR13.4 million and high gearing of 16.9 times,
as on March 31, 2013. The gearing increased significantly from the
previous year mainly due to conversion of share application money
of INR96.0 million into unsecured loans (treated as neither debt
nor equity by CRISIL) in 2012-13 and negative accretion to
reserves due to losses during the year. HVHRL's financial risk
profile is expected to remain weak over the medium term due to low
accretion to reserves.
HVHRL's liquidity is constrained, with its cash accruals expected
to be insufficient to meet its term debt repayments. However, the
promoters have regularly supported the company by timely infusion
of funds and are expected to continue to do the same over the
medium term.
HVHRL incurred a net loss of INR9.6 million on net sales of
INR146.1 million in 2012-13, as against a net loss of INR24.0
million on net sales of INR99.5 million in 2011-12.
HVHRL was established in 1993 by Mr. A Y Patel. It was acquired by
its current promoters, Mr. Ramchand Ludhani, Mr. Lachman Ludhani,
and Mr. Yusuf Lakdawala. The company runs and owns Evershine, a
keys resort in Mahabaleshwar.
JAGAT AGRO: CRISIL Assigns 'B' Ratings to INR100MM Loans
--------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the bank
facilities of Jagat Agro (Guj).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 1.6 CRISIL B/Stable
Cash Credit 54.5 CRISIL B/Stable
Proposed Long Term
Bank Loan Facility 43.9 CRISIL B/Stable
The rating reflects the firm's weak financial risk profile, marked
by marked by average gearing and weak debt protection metrics, the
susceptibility of JA's operating margin to volatility in raw
material prices, and the firm's small scale of operations in the
intensely competitive agricultural commodities industry. These
rating weaknesses are partially offset by the extensive experience
of JA's promoter in the agricultural commodities industry leading
to established relationship with customers and suppliers.
Outlook: Stable
CRISIL believes that JA will benefit over the medium term from its
promoter's experience in the agricultural commodities industry.
However, the outlook may be revised to 'Positive' if the firm
improves its profitability and scale of operations, leading to
higher than expected cash accruals, and consequently, improved
capital structure. Conversely, the outlook may be revised to
'Negative' in case of lower-than-expected accruals or
deterioration in working capital management, resulting in weaker-
than-expected financial risk profile.
Set up in 2000, JA is a proprietorship firm promoted by Mr. Chetan
Maheshwari, based in Ahmedabad (Gujarat). The firm is mainly
engaged in processing rice; it processes wheat in small quantity.
The firm's manufacturing facility in Ahmedabad has processing
capacity of about 100 tonnes per day.
KAMAL CONSTRUCTION: ICRA Suspends 'B/A4' Rating on INR6.6cr Loan
----------------------------------------------------------------
ICRA has suspended '[ICRA]B/[ICRA]A4' rating assigned to the
INR6.6 crore bank facilities of Kamal Construction Company. The
suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
MACHHI RAM: CRISIL Reaffirms 'B' Rating on INR200MM Loans
---------------------------------------------------------
CRISIL's rating on the long-term bank facility of Machhi Ram
Kishan Chand Sidana continues to reflect MRKCS's weak financial
risk profile, marked by its high gearing; and weak debt protection
metrics, driven by its large working capital requirements. The
rating also factors in geographic concentration in the firm's
revenue profile, and its susceptibility to volatility in raw
material prices. These rating weaknesses are partially offset by
the extensive experience of MRKCS's promoters in the rice
industry, and benefits expected from the healthy growth prospects
for the rice industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 200 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that MRKCS will continue to benefit over the
medium term from the promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the firm registers a
substantial and sustained improvement in its revenues and
operating margin, or a sizeable improvement in its capital
structure on the back of the promoters' capital infusion.
Conversely, the outlook may be revised to 'Negative' if MRKCS
reports significant deterioration in its liquidity driven by
larger-than-expected working capital requirements.
Update
MRKCS recorded a year-on-year increase of around 11 per cent in
its revenue, to around INR491.6 million in 2012-13 (refers to
financial year, April 1 to March 31). The firm's revenue growth
was driven by healthy domestic and export demand for rice. MRKCS's
low-value-additive operations resulted in low operating
profitability between 5.5 and 6.5 per cent. The firm could sustain
its stable operating profitability over the medium term.
MRKCS has moderate working capital requirements, with gross
current assets (GCAs) estimated at 240 days as on March 31, 2013;
the firm has maintained similar GCAs in the past, constituting
inventory of around 200 days. Consequently, MRKCS's bank limit
utilisation was around 99 per cent on average during the 12 months
through November 2013.
MRKCS's net worth remained small at around INR19.3 million as on
March 31, 2013, thereby limiting its financial flexibility to meet
any exigency. The firm contracted substantial debt to fund its
working capital requirements, which along with its small net
worth, resulted in high gearing of around 15.20 times as on
March 31, 2013, and weak debt protection metrics.
MRKCS was established in Jalalabad (Punjab) in 1983 as partnership
firm. The firm is promoted and managed by Mr. Surinder Kumar and
Mr. Vimal Kumar.MRKCS mills and processes basmati rice. The firm
sells basmati rice to wholesalers and distributors in India and in
export markets.
MIRACLE DEVELOPERS: CRISIL Rates INR60MM Term Loan at 'B+'
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of Miracle Developers.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 60 CRISIL B+/Stable
The rating reflects Miracle's susceptibility to risks related to
implementation and funding of its ongoing project and to
cyclicality in the real estate industry in India. These rating
weaknesses are partially offset by the extensive experience of the
firm's partners in the real estate industry and the favourable
location of its project.
Outlook: Stable
CRISIL believes that Miracle will continue to benefit over the
medium term from its partners' extensive experience in the real
estate industry in Pune (Maharashtra). The outlook may be revised
to 'Positive' in case of better-than-expected bookings of units
and receipt of customer advances, leading to higher-than-expected
cash inflows. Conversely, the outlook may be revised to 'Negative'
in case of a time or cost overrun in Miracle's project, or slower-
than-expected ramp up in customer bookings, leading to lower-than-
anticipated cash inflows and deterioration in the firm's financial
risk profile, particularly its liquidity.
Miracle, established in 2009 by Mr. Rahul Gawade and his brother
Mr. Amit Gawade, is engaged in development of residential property
at Wakad in Pune. The firm is currently developing Miracle Mark, a
project of about 100,000 square feet (in two phases).
PURPLE ADVERTISING: ICRA Reaffirms 'D' Rating on INR24cr Loans
--------------------------------------------------------------
ICRA has reaffirmed the rating of '[ICRA]D' assigned earlier to
the INR24 crore term loans of Purple Advertising Services Private
Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 24 [ICRA]D reaffirmed
The rating reaffirmation primarily takes into account PASPL's
continued delays in timely servicing of debt obligations, with the
company's capital structure remaining aggressive on account of the
high level of debt availed to fund its studio and movie town
project, although ICRA notes that equity infusions from the
promoters and investment from a private equity fund have improved
the capital structure to some extent over the past two years. The
rating also takes note of the exposure of the company to client
concentration risks, as over 80% of the revenues are currently
generated by the top five clients alone, although the reputed
profile of clients mitigates the risks to some extent, and the
high upfront investments required by the business that results in
a long payback period. The company has a weak financial profile at
present, characterized by low revenue generation and subdued
profitability, although the same is primarily attributable to the
initial stage of operations.
The rating, however, also takes into consideration PASPL's
expected competitive advantage going forward, with its studios and
movie town being designed to provide several high quality
facilities under one roof, and its association with reputed
designers that lends support to its market position. In ICRA's
opinion, the ability of the company to service its debt
obligations in a timely manner and maintain its competitive
position, especially in light of the additional studios being
established in West Bengal, would remain a key rating sensitivity
going forward.
Incorporated in July, 2008, PASPL has been promoted by Mr.
Pritimoy Chakraborty, promoter of the Kolkata based Finesse group.
PASPL has set up four shooting studios and a movie town in South
24 Parganas, West Bengal, at a cost of INR75 crore, funded by
INR20 crore of promoter funds, INR18 crore of private equity
investment and INR37 crore of term loans.
Recent Results
During 2012-13, PASPL registered a profit after tax (PAT) of
INR0.04 crore on an operating income (OI) of INR3.88 crore as
against a PAT and OI of INR0.29 crore and INR3.87 crore
respectively during 2011-12.
RAHUL FERROMET: ICRA Assigns 'B+' Ratings to INR11cr Loans
----------------------------------------------------------
ICRA has assigned a rating of '[ICRA]B+' to the INR11.00 crore
long-term fund based facilities of Rahul Ferromet & Engg Pvt. Ltd.
ICRA has also assigned a short-term rating of '[ICRA]A4' to the
INR8.35 crore non fund based facilities of RFEPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund Based- 6.00 [ICRA]B+ assigned
Cash credit
Long Term Fund Based- 5.00 [ICRA]B+ assigned
Term Loan
Short Term Non Fund 8.35 [ICRA]A4 assigned
Based
The assigned ratings are constrained by the company's weak
financial profile characterized by the relatively modest scale of
operations, low net margins for the last three years (FY11 to
FY13) inherent in trading companies, adverse capital structure and
weak coverage indicators. Further, ICRA takes into account the
limited value addition and high competitive intensity in the
trading business resulting in low profitability which further
remains vulnerable to volatility in steel prices. Further, the
profitability also remains significantly exposed to foreign
exchange rate fluctuation with major portion of raw material
procurement met through direct / indirect imports and in the
absence of any formal hedging policy. The ratings also consider
risks associated with timely completion of new project being setup
by the company without any cost overruns and stabilization of
operations at the proposed plant as per expected operating
parameters.
The ratings, however, factor in the longstanding experience of the
promoters in stainless steel pipe manufacturing and steel trading
industry and established relationships of promoters with suppliers
and customers. The ratings also favourably take into account the
company's entry into electro-polishing of seamless and welded
stainless steel tubes and pipes at the new plant being set up
which is expected to improve the company's revenue and
profitability. ICRA also notes the stable demand outlook for
company's proposed products driven by growth in domestic chemical,
dairy, pharmaceuticals and food and beverage sectors.
Rahul Ferromet & Engg Pvt Ltd incorporated in 2003, is managed by
Mr. Babulal T Shah, Mr. Vimal B Shah and Mr. Abhishek Shah. RFEPL
is currently engaged in the trading of stainless steel pipes,
tubes and coils for industrial applications in industries like
pharmaceuticals, chemicals, fertilizers, cement, paper & pulp,
water purifiers, heat exchangers, condensers, sugar,
petrochemicals & oil and gas refineries. The company markets its
products - to bulk dealers and green field projects in India as
well as in foreign markets. The company is currently setting up a
plant in Jhagadia, Ankleshwar for electropolishing of specialty
seamless and welded stainless steel tubes and pipes required in
high end applications such as food and pharmaceuticals industry.
The plant has an installed capacity of 75 MTPM (metric tons per
month) and is expected to become operational by the beginning of
January 2014.
Recent Results
In FY 2013, RFEPL reported an operating income of INR29.60 crore
and profit after tax of INR0.20 crore as against an operating
income of INR24.29 crore and profit after tax of INR0.12 crore in
FY 2012.
RAMA KRISHNA: CRISIL Reaffirms 'B+' Ratings on INR101.5MM Loans
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Rama Krishna Rice Mill
continuous to reflect RKRM's higher operating efficiency marked by
significant improvement in working capital cycle and firm's
comfortable liquidity position, marked by enhancement in working
capital limits, adequate cash accruals from operations and funding
support it receives from its partners, supporting its overall
financial flexibility.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 100 CRISIL B+/Stable (Reaffirmed)
Foreign Letter
of Credit 8.5 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 0.5 CRISIL B+/Stable (Reaffirmed)
Term Loan 1.0 CRISIL B+/Stable (Reaffirmed)
The ratings also reflect RKRM's weak financial risk profile, due
to its modest scale of operations in the highly fragmented and
competitive rice milling industry and susceptibility of the firm's
operating margin to adverse government regulations and erratic
rainfall. These rating weaknesses are partially offset by RKRM's
promoters' experience in the rice industry, and the benefits that
the firm is expected to derive from the healthy growth prospects
for the basmati rice industry.
Outlook: Stable
CRISIL believes that RKRM will maintain its credit risk profile
over the medium term backed by its promoters' extensive industry
experience. The outlook may be revised to 'Positive' if the firm
continues to increase its scale of operations while maintaining
its operating margin and manages its working capital efficiently
leading to improvement in financial risk profile. Conversely, the
outlook may be revised to 'Negative 'in case the firm registers
lower-than-expected profitability or contracts higher-than-
expected debt to fund any of its future capex plans or to meet its
increasing working capital requirements.
RKRM was established as a partnership firm in 2004 by Mr. Munish
Kumar, Mr. Suresh Kumar, Mr. Rajesh Kumar and Mr. Ashok Kumar. In
2012-13 Mr. Murari Lal replaced Mr. Rajesh Kumar as new partner in
the firm. The firm is engaged in milling and sorting of basmati
rice. The company's manufacturing unit in Panipat (Haryana) has a
milling capacity of 6 tonnes per hour (tph) and a sorting capacity
of 6 tph.
RBA FERRO: ICRA Reaffirms 'B' Rating on INR3cr Loan
---------------------------------------------------
ICRA has re-affirmed the '[ICRA]B' rating assigned to the INR3.00
crore cash credit facility of RBA Ferro Industries Private
Limited. ICRA has also re-affirmed the '[ICRA]A4' rating assigned
to the INR28.00 crore fund based and INR7.00 crore non-fund based
bank facilities of RFIPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limit 3.00 [ICRA]B reaffirmed
Cash Credit
Fund Based Limits 28.00 [ICRA]A4 reaffirmed
Non-Fund Based Limits
Bank Guarantee & Letter
of Credit 7.00 [ICRA]A4 reaffirmed
The re-affirmation of ratings take into account the company's weak
financial profile, characterised by a low net margin, an
aggressive capital structure, weak debt protection metrics and a
highly working capital intensive nature of operations, which
adversely impacts its liquidity position. The ratings also factor
in the vulnerability of the company's cash flows and profitability
to the inherent volatility in the raw material and finished goods
prices. RFIPL also remains exposed to the risks arising out of
fluctuations in the foreign exchange rate as a major portion of
its revenue is generated from export sales; however, hedging
strategy followed by the company mitigates such risks to an
extent. The ratings, however, derives comfort from the
longstanding experience of the promoters in the trading and
manufacturing of steel castings, and the company's integrated
nature of operations with its group entities who act as exclusive
suppliers and job worker for RFIPL, thus strengthening its
operating profile.
Incorporated in 1986, RFIPL is engaged in the trading and
manufacturing of grey iron (CI) and ductile iron (DI) castings.
The company started commercial production of steel castings in
2006-07 with a capacity of 6,720 tons per annum (TPA). An
additional facility, equipped with sophisticated machineries, was
commissioned by the company in October 2011, with a capacity of
11,520 TPA. The manufacturing facility of the company is located
at Domjur in the Howrah district of West Bengal.
Recent Results
The company reported a net profit of INR0.72 crore on an operating
income of INR94.61 crore in 2012-13; as compared to a net profit
of INR0.89 crore on an operating income of INR90.05 crore during
2011-12.
RHL PROFILES: ICRA Suspends 'B+' Rating on INR19.5cr Loans
----------------------------------------------------------
ICRA has suspended '[ICRA]B+' rating assigned to the INR19.50
crores fund based facilities and [ICRA]A4 rating assigned to
INR8.00 Crores non fund based facilities of RHL Profiles Limited.
The suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
According to its suspension policy, ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
SAHELI METALS: ICRA Revises Rating on INR7cr Loan to 'B'
--------------------------------------------------------
ICRA has revised downward the long term rating assigned to the
INR7.00 crore cash credit facility of Saheli Metals Pvt. Ltd. from
'[ICRA]B+' to '[ICRA]B'. ICRA has reaffirmed the short term
rating of '[ICRA]A4' assigned to the INR0.5 crore standby letter
of credit facility and the INR0.2 crore of bank guarantee of SMPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 7.00 Revised downward to
[ICRA]B
Standby Letter
of Credit 0.50 [ICRA]A4 reaffirmed
Bank Guarantee 0.20 [ICRA]A4 reaffirmed
The revision in long term rating take into account SMPL's
consistent overutilization of the working capital limits, leading
to a high working capital intensity and the stretched debt
protection metrics. The rating continues to remain constrained by
the weak financial profile, the small scale of current operations
and the thin profit margins of the company due to the highly
fragmented and low value added nature of the metal scrap trading
business. The ratings also take into account the vulnerability of
the margins to the volatility in the price of ferrous and non
ferrous scrap, accentuated further by high inventory levels. The
ratings however derive comfort from the long experience of the
director in the metal scrap trading business and the significant
growth in turnover in FY13.
Incorporated as a proprietorship entity, SMPL was converted into a
private limited company in April -2008. SMPL is engaged in the
business of trading in ferrous and non ferrous scrap. SMPL's
primary market is Kolkata, West Bengal. The company sources scrap
through both e-auctions as well as from the local market. Mr.
Samir Hait, the Director of SMPL, has more than 20 years of
experience in this in the iron and steel industry.
Recent Results
SMPL reported a net profit of INR0.40 crore in FY13 on the back of
an operating income of INR65.61 crore, as against a net profit of
INR0.27 crore on an operating income of INR45.27 crore during
FY12.
SANSKAR BHARTI: ICRA Assigns 'B' Rating to INR8cr Term Loans
------------------------------------------------------------
ICRA has assigned '[ICRA]B' rating to the INR8.0 crore bank
facilities of Sanskar Bharti Foundation.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loans 8.0 [ICRA]B (Assigned)
The rating favourably factors in the experience of SBF's
management in the education sector, competitive advantage arising
out of affiliation of its school with Delhi Public School society
and adequate infrastructure facilities. The rating is however
constrained by SBF's modest scale of operations with revenues
generated from one school and weak financial profile characterised
by poor net profitability, negative networth and weak debt
coverage indicators. High interest costs owing to large debt
funded capital expenditure towards school set up have led to
continued net losses for SBF till FY13. Funding of these losses
through interest bearing unsecured loans has resulted led to high
leverage (Debt/OPBDITA of 6.9 times as on Mar 31st 2013). While
assigning the rating, ICRA has taken note of the steps being taken
by the current management in order to improve SBF's operational
profile and also increase the enrolments, which is expected to
support SBF's financial profile going forward. Going forward,
SBF's ability to achieve the planned revenue growth, improve
profitability and debt coverage metrics will be amongst the key
rating sensitivity factors.
Sanskar Bharti Foundation operates the Delhi Public School (DPS)
in Ambala which started operations in 2008. SBF has been
incorporated by Mr. K K Gupta, Mr. A K Gupta and Mr. Vijay Goel
who have experience in operating a reputed playschool franchisee
in New Delhi.
Recent results
In FY13 SBF reported an operating income of INR3.17 crore with an
OPBDIT of INR1.73 crore and net loss of INR0.59 crore. As of Mar
31st 2013, the society had a total debt of INR11.8 crore mainly
comprising of term loans and interest bearing unsecured loans. The
networth stood at negative INR1.8 crore.
As per the provisional figures shared by the society, for the six
months ended Sep 30th 2013, SBF generated a profit of INR0.05
crore on an operating income of INR2.04 crore. As on Sep 30th
2013, SBF had a debt of INR12.15 crore on a negative networth of
INR1.8 crore.
SAUMYA DSM: ICRA Suspends 'D' Rating on INR98.65cr Term Loans
-------------------------------------------------------------
ICRA has suspended '[ICRA]D' rating assigned to the INR98.65 crore
term loans of Saumya DSM Infratech Limited. The suspension follows
ICRA's inability to carry out a rating surveillance in the absence
of the requisite information from the company.
According to its suspension policy, ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
SERVALAKSHMI PAPER: CARE Cuts Ratings on INR336.01cr Loans to 'D'
-----------------------------------------------------------------
CARE revises the ratings assigned to the bank facilities of
Servalakshmi Paper Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 324.51 CARE D Revised from
Facilities CARE B-
Short-term Bank 11.50 CARE D Revised from
Facilities CARE A4
Rating Rationale
The revision in the ratings follows the delay in debt servicing by
Servalakshmi Paper Limited due to the stressed liquidity position.
Servalakshmi Paper Limited is part of the Servall Group, founded
by Mr R Ramaswamy in Coimbatore (Tamil Nadu). SPL is engaged in
the business of manufacturing Newsprint (NP) and Writing &
Printing Paper (WPP). It was initially incorporated as 'Sri Sai
Shakthi Raam Papers Private Limited' in 2005. The company was
later converted into a public limited company in April 2010 and
was renamed SPL. The Servall group has a presence in the paper
machinery manufacture, paper manufacture (newsprint and speciality
papers), project consultancy and turnkey project implementation
for paper mills through various group entities.
SPL has paper manufacturing facilities with an installed capacity
of 90,000 metric tonnes MT P.A. to manufacture Newsprint and
Writing & Printing Paper (WPP) using recycled/waste paper at
Kodaganallur village, Tirunelveli, Tamil Nadu. The company has
also installed a 15MW captive cogeneration plant at the paper
plant. The company did not have any operations till FY10 (refers
to the period April 1 to March 31) and the commercial production
was commenced in April 2010.
Presently, the company manufactures high-end papers (ranging
between 45 to 48 GSM) in newsprint and cream wove, Maplitho,
offset print and text/note book papers in the WPP segment.
The day to day activities of the company are managed by Mr R
Ramswamy, who is the Chairman and Managing Director of the
company.
During FY13, the company registered a net loss of INR45.8 crore on
a total income of INR185.5 crore, as compared to a net loss of
INR58 crore on a total income of INR56.28 crore in FY12.
Furthermore, during H1FY13, the company has registered a net loss
of INR16.5 crore on a total income of INR119 crore.
SEVEN ELEVEN: ICRA Suspends 'D' Rating on INR7.5cr Loans
--------------------------------------------------------
ICRA has suspended '[ICRA]D' rating assigned to the INR7.50 Crore
fund based bank facilities of Seven Eleven Construction Private
Limited (SECPL). The suspension follows ICRA's inability to carry
out a rating surveillance in the absence of the requisite
information from the company.
According to its suspension policy, ICRA may suspend any rating
outstanding if in its opinion there is insufficient information to
assess such rating during the surveillance exercise.
SHAZ PACKAGING: ICRA Assigns 'B' Ratings to INR9.5cr Loans
----------------------------------------------------------
The long-term rating of '[ICRA]B' has been assigned to the INR8.00
crore term loan and INR1.50 crore cash credit facility of Shaz
Packaging LLP. The short-term rating of '[ICRA]A4' has also been
assigned to the INR0.15 crore short-term non fund based facilities
of SP.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 8.00 [ICRA]B assigned
Cash Credit 1.50 [ICRA]B assigned
Credit Exposure Limit 0.15 [ICRA]A4 assigned
The assigned ratings are constrained by the execution risks
associated with the project as commissioning of manufacturing
facility is expected by March 2014; the firm's relatively small
scale of envisaged operations and the high competitive intensity
of the business with the established presence of large organized
players. The assigned ratings further take into account the
vulnerability of the firm's profitability to raw material price
fluctuations.
The ratings however favourably factor in the past experience and
network of the promoters in the packaging industry and the
favourable demand outlook for injection in-mold labeled (IML)
containers given the growth in orgainsed retail leading to
increased demand for product convenience and aesthetics.
Shaz Packaging LLP (SP), promoted by Mr. Sameer Shah and Mr.
Chirag Shah was established as a limited liability partnership
firm in September 2012. The promoters have an experience of about
two decades in the packaging industry through their association
with Shaz Enterprise, engaged in trading of kraft paper and
corrugated boxes. The firm initially proposes to manufacture
injection in-mold labeled (IML) containers in three sizes - 500
grams, 125 ml (along with its lid) and 200 grams. These containers
find application in packaging of butter, ice cream, cheese spread,
curd and other food products.
SHREE HARI: CRISIL Reaffirms 'B' Ratings on INR265MM Loans
----------------------------------------------------------
CRISIL's ratings on the bank facilities of Shree Hari Spintex Ltd
continue to reflect SHSL's weak financial risk profile, marked by
a weak capital structure and average debt protection metrics. The
ratings also factor in SHSL's small scale of operations. These
rating weaknesses are partially offset by the benefits that the
company derives from the stable demand for cotton yarn.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 7.5 CRISIL A4 (Reaffirmed)
Cash Credit 115 CRISIL B/Stable (Reaffirmed)
Rupee Term Loan 150 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that SHSL will continue to benefit over the medium
term from the buoyant demand from its end-user industry. The
outlook may be revised to 'Positive' if SHSL scales up its
operations significantly, while improving its profitability and
capital structure. Conversely, the outlook may be revised to
'Negative' if the company undertakes a larger-than-expected debt-
funded capital expenditure programme, thereby further weakening
its financial risk profile, or if its profitability declines, most
likely because of pricing pressure driven by rising cotton prices.
SHSL, promoted by Mr. Rakesh Kumar, began operations in 2007-08
(refers to financial year, April 1 to March 31), with 2008-09
being its first full year of commercial production. The company
manufactures cotton yarn (between 16 and 34 counts) at its
facility in Bhatinda (Punjab).
For 2012-13, SHSL reported a profit after tax (PAT) of INR4.6
million on net sales of INR717.3 million, against a PAT of INR0.4
million on net sales of INR568.1 million for 2011-12.
SHREE SACHIDANAND: CRISIL Upgrades Rating on INR120MM Loans to B-
-----------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Shree
Sachidanand Industries Pvt Ltd to 'CRISIL B-/Stable' from 'CRISIL
D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 38 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Term Loan 82 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The rating upgrade reflects timely servicing of debt by SSIPL in
the past three quarters, driven by improvement in its liquidity.
The company reduced its working capital cycle; its gross current
assets reduced to 147 days as on March 31, 2013 from 160 days a
year back. This has helped the company manage its liquidity
better. The company's revenues have grown at 15 per cent year-on-
year to INR198.5 million in 2012-13 (refers to financial year,
April 1 to March 31) due to moderate order flow from customers.
SSIPL is expected to book revenue of over INR230 million in 2013-
14; hence, is likely to generate sufficient accruals to meet its
debt obligations of INR23.5 million maturing in 2013-14. CRISIL
believes that SSIPL will service its debt on schedule over the
medium term, supported by increase in revenue and moderate
profitability. However, the liquidity is expected to remain
stretched with high bank line utilisation on account of large
working capital requirement.
The ratings continue to reflect SSIPL's below-average financial
risk profile, marked by small net worth and high gearing, small
scale of operations, and exposure to intense competition in the
dyeing and printing industry. These rating weaknesses are
partially offset by the experience of SSIPL's promoters in the
textile industry through group entities.
Outlook: Stable
CRISIL believes that SSIPL will continue to benefit from its
promoters' experience in the textile dyeing and printing industry.
The outlook may be revised to 'Positive' if the company's
financial risk profile improves significantly, backed by higher-
than-expected accruals or equity infusion, leading to improvement
in its capital structure. Conversely, the outlook may be revised
to 'Negative' if there is decline in profitability, leading to
reduced accruals or there is a stretch in its working capital
cycle, leading to weak liquidity.
SSIPL was set up by the Jajoo family of Surat (Gujarat) in 2009.
The company undertakes fabric dyeing and printing on job-work
basis.
SSIPL reported a profit after tax of INR5.4 million on net sales
of INR198.5 million for 2012-13 against a net profit of INR3.0
million on net sales of INR173.8 million in 2011-12.
SIDDHANATH SUGAR: CARE Rates INR110.58cr LT Loans at 'B+'
---------------------------------------------------------
CARE assigns 'CARE B+' rating to the bank facilities of Siddhanath
Sugar Mills Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 110.58 CARE B+ Assigned
Facilities
(Fund Based)
Rating Rationale
The rating assigned to the bank facilities of Siddhanath Sugar
Mills Limited is constrained by the limited experience of the
promoters in the sugar industry, project execution risk associated
with the ongoing capacity expansion (scheduled to be operational
by October 2014), the working capital intensive nature of
operations and financial risk profile marked by highly leveraged
capital structure. The rating also factors in the cyclical and
seasonal nature of the sugar industry and associated agro-climatic
risks.
The rating, however, derives strength from the resourceful
promoters, qualified and experienced second-tier management,
partially integrated (sugar mill along-with co-generation plant)
nature of sugar operations along with the strategic location of
SSML's sugar plant.
The ability of SSML to ensure successful execution of the ongoing
capex within the estimated time and cost parameters and
procurement of the envisaged volume of sugar cane at the envisaged
prices post commercial operations of the enhanced production
facility are the key rating sensitivities.
Siddhanath Sugar Mills Limited was incorporated in April 2000 as a
private limited company to undertake sugar and sugar-related
production. In the year 2008, the company was converted in to a
public limited company (closely-held). SSML is promoted by Mr
Dilip Mane, Chairman and Managing Director (CMD) and Mr Sadhu D
Sinagare as Director of the company. SSML has a partially
integrated sugar factory with a crushing capacity of 2,500 tonnes
of cane crushed per day (TCD, operational from October 2010) and
bagasse fired co-generation unit of 12 mega-watt (operational from
December 2010) located at Village Tirhe, Solapur, Maharashtra.
Currently, SSML is enhancing its cane crushing capacity to 6,000
TCD (from 2,500 TCD) and cogeneration capacity to 26MW (from 12MW)
at a total cost of INR90 crore, funded through a debt-equity mix
of 6.40:1. The plant with an enhanced capacity is expected to be
operational by October 2014.
SRI BALAJI: ICRA Assigns 'B-' Rating to INR20cr LT Loans
--------------------------------------------------------
ICRA has assigned a long term rating of '[ICRA]B-' to INR20.00
crore fund based facilities of Sri Balaji Industries.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund 20.00 [ICRA]B- Assigned
Based Limits
The assigned rating is constrained by weak financial risk profile
characterized by low profitability, stretched coverage indicators
coupled with high gearing and sizeable inter-group advances of
INR14.30 crore (96% of total outstanding debt of SBI) for purchase
of raw material limits its financial flexibility. The rating is
also constrained by small scale of operations; commoditized nature
of product and fragmented nature of industry with high competition
from large number of players limits the ability to pass on the
hike in the input costs. Further, ICRA also considers inherent
risks associated with a proprietorship nature of the firm.
However, the rating favourably factors in established track record
of the promoter with more than three decades in cotton trading
business; proximity of spinning unit to cotton growing areas
resulting in lower transportation costs.
The ability of the firm to maintain its profitability and continue
to increase its scale of operations would remain the key rating
sensitivities.
Sri Balaji Industries (SBI) was established in 2005 as
proprietorship firm, involved in trading of kappas, lint and
cotton seed located in Guntur, Andhra Pradesh. Currently the firm
is managed by G.Venkataswara Rao.
STEEL EXCHANGE: ICRA Lowers Ratings on INR307.75cr Loans to 'B'
--------------------------------------------------------------
ICRA has revised the long-term rating outstanding on the INR92.75
crore (enhanced from INR64.55 crore) term loan facilities and the
INR215.00 crore (enhanced from INR140.00 crore) fund based
facilities of Steel Exchange India Limited to '[ICRA]B' from
'[ICRA]B+'. ICRA has reaffirmed the short-term rating of
'[ICRA]A4' outstanding on the INR261.00 crore non-fund based
facilities (enhanced from INR111.00 crore non-fund based
facilities; includes INR2.00 crore proposed fund based facilities
re-assigned as non-fund based facilities) of SEIL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loan facilities 92.75 Revised to [ICRA]B
from [ICRA]B+
Fund based facilities 215.00 Revised to [ICRA]B
from [ICRA]B+
Non-fund based 261.00 [ICRA]A4 reaffirmed
Facilities
The revision in long-term rating reflects the sharp decline in
operating margins during the current fiscal, with demand being
impacted on account of the ongoing slowdown in the steel industry.
The decline in operating margin, along with high interest costs,
has led to net losses and stretched coverage metrics during the
first half-year of current fiscal. The ratings consider the
company's tight liquidity position, on the back of large debt
repayments; and its adverse capital structure, attributed to debt-
funded capital expenditure in the past. However, the ratings also
consider the availability of power from SPL, which is expected to
insulate the Company from volatility in power availability to an
extent. While the ongoing slowdown in steel industry is expected
to have an adverse impact on the revenue growth and accruals at
least in the near term, demand outlook for steel remains
favourable in the long term on the back of expected growth in
infrastructure and construction sectors.
SEIL's promoters have long-standing experience in the steel
business and the company has a well-established sales and
distribution network. However, the fragmented and commoditised
nature of the TMT bars manufacturing industry heightens
competition and restricts pricing flexibility. Further, its
accruals remain vulnerable to volatilities in foreign exchange
rates, in the absence of a consistent hedging policy.
ICRA has considered the consolidated business and financial
profiles of SEIL and SPL, in which SEIL holds 39.2% equity stake)
for the purpose of ratings, since SPL is expected to be
amalgamated with SEIL shortly.
SEIL is primarily engaged in the manufacture of TMT bars. It has
capacities to manufacture sponge iron (2,25,000 tonnes per annum
(TPA)), billets (2,40,000 TPA), ingots (90,000 TPA) and TMT bars
(2,70,000 TPA). It also has a wire drawing unit (with capacity of
24,000 TPA) and a 11.63 MW gas-based power plant. The facilities
are located in Andhra Pradesh. Almost the entire quantum of sponge
iron and a large portion of ingots / billets manufactured are
captively consumed. SEIL is also engaged in trading in steel and
steel intermediates. The Company's sales and distribution network
are spread across the coastal regions of Andhra Pradesh.
The promoters hold 54.99% equity stake in SEIL as on Sept. 30,
2013. The equity shares of SEIL are listed on the Bombay Stock
Exchange. The management of SEIL intends to amalgamate SPL (in
which SEIL holds 39.2% equity stake) with SEIL shortly.
STEEL MAX: ICRA Reaffirms 'B+' Rating on INR9.5cr Loans
-------------------------------------------------------
ICRA has reaffirmed the long-term rating of '[ICRA]B+' outstanding
on the INR9.50 crore fund based facilities of Steel Max Rolling
Mills Limited. ICRA has also reaffirmed the short-term rating of
'[ICRA]A4' outstanding on the INR0.50 crore non-fund based
facilities of SMRML.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based facilities 9.50 [ICRA]B+ reaffirmed
Non-fund based 0.50 [ICRA]A4 reaffirmed
Facilities
ICRA has considered the consolidated business and financial
profiles of SMRML and its group entity, SteelMax Alloys Limited
("SAL"), for the purpose of ratings, on account of the integrated
nature of operations of these two entities and their common
promoter group and management.
The reaffirmation of ratings considers the experience of the
promoters in the steel industry and the favourable demand outlook
for steel products in the long term, although the steel industry
is currently passing through a weak phase. The ratings also take
into account the sharp decline in the company's operating margins
during 2012-13, which has led to net losses and stretched coverage
metrics; and the proposed debt-funded capital expenditure which is
expected to result in depressed coverage metrics over the medium
term. The ratings also consider the highly fragmented and
commoditised market for Thermo Mechanically Treated (TMT) bars
which restricts pricing flexibility; and the vulnerability of the
company's profitability to unfavorable exchange rate movement on
import of steel scrap, in the absence of a consistent hedging
policy.
Incorporated in 2004, SMRML is primarily engaged in the
manufacture of TMT bars. Its manufacturing facility is located in
Palakkad (Kerala), which has a capacity of 36,000 TPA. In December
2012, SMRML was converted from a private limited company to a
public limited company. Its group entity, SAL, operates an
induction furnace in Palakkad, with a capacity to manufacture MS
ingots of 21,000 TPA.
Recent Results
SMRML reported a net loss of INR0.6 crore on an operating income
of INR73.6 crore during 2012-13, against a net profit of INR0.3
crore on an operating income of INR74.9 crore during 2011-12.
STEELMAX ALLOYS: ICRA Reaffirms 'B+' Rating on INR4cr Loans
-----------------------------------------------------------
ICRA has reaffirmed the long-term rating of '[ICRA]B+' outstanding
on the INR4.00 crore fund based facilities of SteelMax Alloys
Limited, previously known as K.R Alloys Limited). ICRA has also
reaffirmed the short-term rating of '[ICRA]A4' outstanding on the
INR5.00 crore fund based facility and the INR6.00 crore non-fund
based facilities of SAL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based facilities 4.00 [ICRA]B+ reaffirmed
Fund based facilities 5.00 [ICRA]A4 reaffirmed
Non-fund based 6.00 [ICRA]A4 reaffirmed
Facilities
ICRA has considered the consolidated business and financial
profiles of SAL and its group entity, Steel Max Rolling Mills
Limited, for the purpose of ratings, on account of the integrated
nature of operations of these two entities and their common
promoter group and management.
The reaffirmation of ratings considers the experience of the
promoters in the steel industry and the favourable demand outlook
for steel products in the long term, although the steel industry
is currently passing through a weak phase. The ratings also take
into account the sharp decline in the company's operating margins
during 2012-13, which has led to net losses and stretched coverage
metrics; and the proposed debt-funded capital expenditure which is
expected to result in depressed coverage metrics over the medium
term. The ratings also consider the highly fragmented and
commoditised market for Thermo Mechanically Treated (TMT) bars
which restricts pricing flexibility; and the vulnerability of the
company's profitability to unfavorable exchange rate movement on
import of steel scrap, in the absence of a consistent hedging
policy.
Incorporated in 1994, SAL is primarily engaged in manufacturing
steel ingots. The manufacturing facility, located in Palakkad
(Kerala), has a capacity to manufacture 21,000 TPA of MS ingots.
During 2007-08, the promoter group of SMRML acquired equity stake
in SAL, as a part of backward integration. Its group entity,
SMRML, operates a rolling mill at Palakkad, with a capacity to
manufacture 36,000 TPA of TMT bars.
Recent Results
SAL reported a net loss of INR0.2 crore on an operating income of
INR48.0 crore during 2012-13, against a net profit of INR0.3 crore
on an operating income of INR41.5 crore during 2011-12.
SUNSHINE INDUSTRIES: ICRA Assigns 'B' Rating to INR5.25cr Loan
--------------------------------------------------------------
ICRA has assigned an '[ICRA]B' rating to the INR5.25 crore cash
credit facility of Sunshine Industries.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limit 5.25 [ICRA]B assigned
Cash Credit
The assigned rating takes into account the high working capital
intensity of operations, leading to a stretched liquidity position
and high client & geographical concentration risks with only seven
customers, situated in Kolkata, contributing 100% of the firm's
sales in 2012-13. ICRA also notes that the current profitability
of the firm is entirely dependent on the transport subsidy
receivable under North East Industrial and Investment Promotion
Policy (NEIIPP), 2007; and sustainability of the current
profitability level from 2016-17, after expiry of the transport
subsidy in 2015-16, would remain a challenge. The rating is,
further, constrained by the risk associated with the entity's
profile as a partnership firm, including the risk of capital
withdrawal by the partners, exposure to the cyclicality inherent
in the end-user steel industry, which is passing through a
difficult phase, and fluctuation in the coke prices that is likely
to keep profits and cash flows volatile. The rating, however,
favourably considers the experience of the promoters in the steel
and coke manufacturing business through group entities and the
financial support SI enjoys from group entities in the form of
interest free unsecured loan.
Incorporated in January 2010, as a partnership firm, Sunshine
Industries (SI) is engaged in the manufacturing of low ash
metallurgical (LAM) coke, hard coke and breeze coke. The
manufacturing facility is located at Papumpare, Arunachal Pradesh.
The firm commenced operations in July, 2011 with an installed
capacity of 24,290 metric tons per annum (MTPA). Currently, there
are two partners in the firm, Mr. Ratan Sharma and Mr. Harsh
Sharma.
Recent Results
The firm has reported a net profit of INR0.18 crore (provisional)
on an operating income of INR8.33 crore (provisional) during 6M
2013-14, as compared to a net profit of INR0.33 crore on an
operating income of INR19.68 crore during 2012-13.
THAR OASIS: ICRA Assigns 'B' Ratings to INR7.35cr Loans
-------------------------------------------------------
ICRA has assigned a long-term rating of '[ICRA]B' to the INR7.15
crore, fund-based bank facilities and INR0.20 crore, proposed bank
facilities of Thar Oasis Resort and Camp Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based facilities- 6.60 [ICRA]B assigned
Term Loans
Fund-based facilities-
Cash Credit 0.55 [ICRA]B assigned
Proposed bank
Facilities 0.20 [ICRA]B assigned
The assigned rating derives strength from TOR's agreement with
Areva Solar India Private Limited that provides stability and
visibility of earnings in the short-term. Although the said
agreement has a short tenure, the upcoming industrial developments
in proximity are likely to provide access to corporate/
professional travelers going forward, partially mitigating the
demand risk from the leisure segment also. Further, this would
help the company in reducing vulnerability of its earnings to
seasonality - typical of leisure travel business in Rajasthan. The
rating, however, continues to be constrained by the company's
modest scale of operations as well as single-property and single-
market concentration risk that increases the susceptibility of
company's earnings to adverse regional developments. Further, the
rating takes into consideration the company's stretched debt
coverage indicators owing to increased debt obligations (from FY14
onwards, with commencement of repayment of a INR4.68 crore term-
loan) and pressure observed on RevPars of cottages during the
current financial year owing to larger room inventory and overall
subdued demand scenario in the domestic hospitality sector.
In ICRA's view, the company's ability to improve its operating
metrics and profitability margins, and ensure timely servicing of
its liabilities will be the key rating sensitivities.
Incorporated on 6th October 2008 as Marwari Resort Private
Limited, name of the company was changed to Thar Oasis Resort and
Camp Private Limited (TOR) in June 2012. The company has set-up a
resort at NH-114 connecting Jodhpur and Jaisalmer in Rajasthan.
While the property was initially scheduled to be launched in April
2011, the construction of the resort was completed in November
2011 and it commenced commercial operations in December 2011
(Phase I). The project has been set-up in two phases. While in
the first phase, the company only launched cottages and tents; the
main objective of Phase-II expansion was to set up rooms to meet
the requirement of Areva Solar India Private Limited (Areva) with
which the company had executed an agreement to provide 34 rooms.
Recent Results
TOR reported an operating income of INR2 crore and a profit after
tax (PAT) of INR0.12 crore in FY13 as compared to an operating
income of INR0.10 crore and a net loss of INR0.07 crore in FY12.
TIRUPATI JUTE: ICRA Assigns 'B+' Ratings to INR13.52cr Loans
------------------------------------------------------------
ICRA has assigned an '[ICRA]B+' rating to the INR2.22 crore term
loans and INR11.3 crore fund based bank limits of Tirupati Jute
Industries Limited. ICRA has also assigned an '[ICRA]A4' rating to
INR6 crore non fund based bank limits of TJIL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 2.22 [ICRA]B+ assigned
Fund Based Limits 11.30 [ICRA]B+ assigned
Non-Fund Based
Limits 6.00 [ICRA]A4 assigned
The ratings take into account TJIL's moderate scale of operations
with nominal profits and cash accruals, its weak financial profile
as reflected by low profitability, high gearing levels and
depressed coverage indicators, and high working capital intensity
of the business that exerts pressure on the liquidity position of
the company. ICRA notes that TJIL's business prospects depends on
Government of India's (GoI) regulations as the Jute Packaging
Materials Act mandates compulsory packaging of foodgrains and
sugar in jute bags, which has also been diluted to some extent for
the jute year 2013-14. The ratings also take into consideration
TJIL's exposure to fluctuations in the foreign currency movement
as import of raw material remains unhedged. The ratings, however,
draw comfort from the experience of TJIL's promoters in the jute
industry, and a significant portion of sales towards Government
orders, whose pricing is based on cost plus basis, which limits
the exposure of the company to the fluctuations in the raw
material prices to a large extent. In ICRA's opinion, the ability
of TJIL to manage its working capital requirements while improving
profitability would remain a key rating sensitivity going forward.
Incorporated in 1988, the company is primarily engaged in
manufacturing of jute products namely sacking bags and hessian
cloth. The company has an installed capacity of around 15000 MTPA,
with its manufacturing facility located in Ghusuri, Howrah, West
Bengal.
Recent Results
During FY13, TJIL reported a profit after tax (PAT) of INR0.14
crore on the back of an operating income of INR59.47 crore as
against a PAT and OI of INR0.34 crore and INR60.69 crore during
FY12.
=================
I N D O N E S I A
=================
ANEKA TAMBANG: Moody's Puts Ba3 CFR on Review For Poss. Downgrade
-----------------------------------------------------------------
Moody's Investors Service has placed the Ba3 corporate family
rating of PT Aneka Tambang (Persero) Tbk on review for possible
downgrade.
RATINGS RATIONALE
The review was prompted by the implementation of the mineral
export ban in Indonesia, which came into effect on Jan. 12, 2014,
banning the export of nickel and bauxite ores, among others.
The sales of unprocessed nickel ore represented 33% of Antam's
revenue in the nine months to 30 September 2013. All of Antam's
nickel ore sales are generated through export. Antam expects the
ban will deprive it of around $300 million of revenue in 2014.
"There is a very high level of uncertainty around the full effect
of the ban, and we believe further clarifications from the
Indonesian government and Antam are needed to fully assess its net
effect on Antam's credit profile", says Brian Grieser, a Moody's
Vice President -- Senior Analyst.
Full details on the implementation of the ban are yet to emerge.
On Saturday, one day before the ban came into force, the
Indonesian government agreed last minute carve outs that are
expected to grant temporary exemptions to copper, manganese, zinc,
lead and iron concentrate exporters until 2017. The impact of the
ban could be partially mitigated by potential improvement in
Antam's ferronickel business, which we expect will not be impacted
by the ban, and the growth of its alumina business, given the
expectation for bauxite refining capacity to come online in April
2014.
Moody's review will focus on a) the full impact of the mining ban
on Antam's revenue base, cost structure and cash generation; b)
the company's capital spending plans for 2014 and 2015, c) the
mitigating impact on Antam's profitability generated by the new
chemical-grade alumina plant in Tayan; and d) the need to reassess
the Indonesian government's support incorporated in the rating,
which provides 1 notch uplift from Antam's baseline credit
assessment of b1.
"We need to better understand the rationale behind the exemptions
granted by the Indonesian government to some miners, in order to
reassess the government support reflected in the current Ba3 CFR",
adds Grieser, who is also the lead analyst for Antam.
Moody's expects to finalize its review within 30-60 days.
Established in 1968, PT Aneka Tambang (Persero) Tbk ("Antam") is
Indonesia's second-largest nickel producing company, possessing
one of the country's largest nickel and bauxite reserves. It also
owns considerable gold reserves. The company is 65%-owned by the
Indonesian government and is listed on the Indonesia and
Australian stock exchanges.
The principal methodology used in this rating was the Global
Mining Industry published in May 2009. Please see the Credit
Policy page on www.moodys.com for a copy of this methodology.
ANTAM PERSERO: S&P Puts 'B+' CCR on CreditWatch Negative
--------------------------------------------------------
Standard & Poor's Ratings Services said that it had placed its
'B+' long-term corporate credit rating and its 'axBB-' ASEAN
regional scale rating on Indonesia-based diversified mining
company PT Antam (Persero) Tbk. (ANTAM) on CreditWatch with
negative implications.
"We placed the ratings on CreditWatch because we believe ANTAM's
profitability and cash flows could reduce materially following the
Indonesian government's announcement of a ban on the exports of
unprocessed mineral ores mined in the country," said Standard &
Poor's credit analyst Xavier Jean.
On Jan. 11, 2014, the government announced the ban to stimulate
the development of a domestic processing sector, under a mining
law enacted in 2009. The implementation guidelines have not yet
been released. Mineral ores affected by the ban include nickel
and bauxite. The government could allow the exports of mineral
concentrate until 2017.
ANTAM may breach S&P's downgrade trigger of a debt-to-EBITDA ratio
of more than 5.0x if the government implements a blanket ban that
lasts the full year. S&P forecasts ANTAM's ratio of debt to EBITDA
to deteriorate to more than 10x and its EBITDA interest coverage
to decline to 1.0x-1.5x in 2014 in such a scenario. These ratios
are more consistent with a "highly leveraged" financial risk
profile, as S&P's criteria define the term.
S&P expects ANTAM's EBITDA to more than halve in 2014 if the ban
lasts for the full year because it anticipates that nickel ore
operations will account for a large proportion of the company's
overall EBITDA and cash flows. S&P estimates that the company's
quarterly EBITDA could be Indonesian rupiah (IDR) 200 billion-
IDR300 billion lower than it expected, assuming average selling
price of about US$40 per wet metric ton of nickel ore and
quarterly exports of about 2 million tons.
ANTAM's modestly profitable gold operations and incremental cash
flows from its chemical-grade alumina project in Tayan are not
likely to make up for the lower cash flows resulting from a
potential absence of nickel ore exports within the next 12 months,
in S&P's opinion. S&P also expects ANTAM's ferronickel operations
to make marginal losses, based on its price deck of US$6.75 per
pound for nickel in 2014, exacerbating the effect of a lasting
ban. Lower internal cash flows are also likely to weaken the
company's liquidity to "less-than-adequate" from "adequate," as
S&P's criteria define the terms.
S&P is still awaiting clarity on how the government will implement
the ban and the ban's likely duration.
"We will particularly consider how the likely economic
implications of the ban on unemployment, lost foreign currency
receipts, and the forthcoming parliamentary and presidential
elections could influence the government's decision-making," said
Mr. Jean. "It also remains unclear whether the current or future
government could exempt certain companies or some minerals from
the ban at a later stage and what would be the conditions for such
exceptions."
S&P aims to resolve the CreditWatch within the next three months
once it has greater clarity on the implementation guidelines and
the cash-preservation measures that ANTAM could take to mitigate
the effect of lower cash flows.
S&P will likely lower the rating if it believes the ban will
continue for more than two quarters, with little prospects for:
any exemptions; or the implementation by ANTAM of sufficient
liquidity-preservation measures. S&P could also lower the rating,
notwithstanding resumption in ore exports, if ANTAM firmly commits
to higher capital spending as a condition for resuming exports.
S&P believes downward rating pressure could ease if it sees signs
that the ban is likely to be temporary. A rating affirmation
would hinge on greater clarity on ANTAM's capital spending plans,
particularly at its ferronickel project in Halmahera, in the
context of still-subdued nickel prices.
=========
J A P A N
=========
JAPAN AIRLINES: Another Malfunction in Boeing 787 Battery
---------------------------------------------------------
Jon Ostrower and Phred Dvorak, writing for The Wall Street
Journal, said Japan Airlines Co. reported a battery malfunction on
a Boeing Co. 787 Dreamliner parked at Narita Airport in Tokyo, a
year after the advanced jetliner was grounded world-wide for
battery problems.
According to the report, JAL said white smoke was detected on Jan.
14 at around 4:15 p.m. Tokyo time by a mechanic who was checking
the cockpit before the plane was to depart for Bangkok that
evening. JAL and Boeing, the report said, were looking into the
cause of the incident. Boeing said it had notified other airlines
that operate the 787 but hadn't advised them to take any action,
the report related. Other carriers, including United Continental
Holdings Inc., the only U.S. operator of the aircraft, continued
to fly their Dreamliners, the report noted.
The Journal recalled that the Jan. 14 incident came almost a year
after the Jan. 16, 2013, grounding of the 787 fleet in response to
burning lithium-ion batteries on two 787s, one operated by JAL and
the other by ANA Holdings Inc. The Journal said the Japanese
carriers are the biggest operators of the Dreamliner.
About Japan Airlines
Japan Airlines Corporation -- http://www.jal.co.jp/-- is a
Japan-based company mainly engaged in the provision of air
transport services. The Company is active in five business
segments through its 203 subsidiaries and 83 associated companies.
JAL International Co. Ltd. is a wholly owned operating subsidiary
of Japan Airlines Corporation.
Japan Airlines Corporation, Japan Airlines International Co.,
Ltd., and JAL Capital Co., Ltd., on January 19, 2010, filed the
petitions to commenced corporate reorganization proceedings with
the Tokyo District Court. The Court appointed the Enterprise
Turnaround Initiative Corporation of Japan and Eiji Katayama,
Esq., as reorganization trustees.
Japan Airlines Corp. filed for reorganization January 19, 2010, in
the Tokyo District Court and filed a Chapter 15 petition in
New York (Bankr. S.D.N.Y. Case No. 10-10198). The Company
estimated debts at $28 billion.
LEOPARD ONE: S&P Affirms BB+ Rating to JPY0.151BB Class E Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on the
class A to E pass-through notes issued under the Leopard One
Funding Ltd. (Leopard One) transaction.
S&P bases its rating actions on its assessment of the following
factors:
-- S&P assumes that the vacancy rate will remain at 30% under
its base-case scenario.
-- After considering the earnings from the collateral assets
and borrowers' creditworthiness, for S&P's base-case
scenario, it assumes a cumulative default rate of about 12%
for the mortgage loans currently outstanding.
-- The transaction's credit enhancement levels have increased,
reflecting progress in principal redemption for the rated
notes.
A pool of apartment loans originated by Lehman Brothers Commercial
Mortgages (formerly, New Century Finance Co. Ltd.) ultimately
secures the notes issued under the Leopard One transaction. The
apartment loans were extended to finance the construction costs
and miscellaneous expenses of newly constructed apartments built
by Leopalace21 Corp.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and a
description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
RATINGS AFFIRMED
Leopard One Funding Ltd.*
JPY18.354 bil structured secured notes due 2035
Class Rating Initial issue amount
A AAA (sf) JPY16.15 bil.
B AA (sf) JPY0.55 bil.
C A (sf) JPY0.55 bil.
D BBB (sf) JPY0.55 bil.
E BB+ (sf) JPY0.151 bil.
*Apart from classes A to E, nonrated class F notes (initial issue
amount: about JPY0.403 billion) were issued under this
transaction.
* JAPAN: Corporate Bankruptcies Hit 22-Year Low in 2013
-------------------------------------------------------
Kyodo News reports that the number of business failures in Japan
last year fell 10.5 percent from the previous year to a 22-year
low of 10,855 as financial institutions flexibly accepted loan
rescheduling requests, Tokyo Shoko Research said on January 14.
Corporate bankruptcies thus declined for the fifth straight year,
said the credit research agency that covers bankruptcies with
debts of JPY10 million or more, according to the report.
Kyodo News relates that liabilities left behind by bankrupt firms
in 2013 plunged 27.4 percent to JPY2.78 trillion, the lowest in
23 years, as bankruptcies with small debts were dominant.
Nine of the 10 industrial sectors saw bankruptcies fall in the
year, the report says. Kyodo News notes that the exception was
the financial and insurance industry, where the number of
bankruptcies rose 18.9 percent to 69 for the second straight year
of increase.
In December alone, the number of corporate bankruptcies dropped
15.7 percent from a year earlier to 750, slipping below 800 for
the first time in 22 years and nine months. Liabilities decreased
35.5 percent to JPY1.34 trillion, the lowest for the month in
20 years, Kyodo News relays.
=============
M Y A N M A R
=============
MYANMAR CONSOLIDATED: Judge Throws Out Liquidation Application
--------------------------------------------------------------
Nan Tin Htwe at The Myanmar Times reports that Yangon's western
district court dismissed an application to liquidate Myanmar
Consolidated Media -- publisher of The Myanmar Times -- filed by
majority shareholder Dr. Tin Tun Oo.
The deputy district judge decided on January 7 to throw out Dr.
Tin Tun Oo's application, ruling it did not comply with the
Myanmar Companies Act, according to The Myanmar Times.
The report relates that Dr. Tin Tun Oo, who is also owner of
Swesone Media Group, applied in August to liquidate the company,
citing a long-running dispute with his partners. Dr. Tin Tun Oo
holds a 51 percent stake in MCM, a profitable company established
in 2000 by Ross Dunkley and U Myat Swe that also publishes NOW!
Magazine. Dr. Tin Tun Oo acquired the stake in MCM from U Myat
Swe in 2005.
The report notes that MCM lawyer U Aung Than Soe said the decision
of the court was in line with the law. "I didn?t know what kind
of judgment would come out when I took charge of the case but I
made strong arguments to defeat [Dr Tin Tun Oo's application]," U
Aung Than Soe said, the report notes.
Mr. Dunkley, the report relays, said he was satisfied with the
judgment but said the case had been an "enormous" distraction for
him at a time when the newspapers were facing considerable
challenges and threats in the marketplace.
While Dr. Tin Tun Oo had urged him to find a buyer for the local
partner's shares, the court action had done little to encourage
the process, Mr. Dunkley said, the report discloses.
=================
S I N G A P O R E
=================
BW GROUP: $500MM Tender Offer is Credit Positive, Moody's Says
--------------------------------------------------------------
Moody Investors Service says that BW Group Ltd's (Ba2 stable)
tender offer on its $500 million senior secured bond is credit
positive.
On January 13, BW announced a tender offer for any or all of its
outstanding bonds. The offer expires on Feb. 10, 2014.
"If all the bonds are tendered, BW's total borrowings will reduce
by $500 million. On a stand- alone basis, its debt to EBITDA,
including dividend income, for 2014 will likely decline to about
2.5x-3.5x from our previous estimate of 6.0x-7.5x," says Vikas
Halan, a Moody's Vice President and Senior Analyst.
"BW will also save $33 million on interest expenses every year,
thereby increasing its cash flows," adds Halan.
"On a consolidated basis, we expect BW's debt to EBITDA for 2014
to be around 5.5x-6.0x, if all the bonds are tendered, as against
6.0x-6.5x before the transaction."
Moody's points out that BW will continue to be assessed on the
basis of the full consolidation of: 1) BW Offshore (unrated); 2)
BW LPG (unrated); and 3) BW Gas Juju (unrated), as these entities
are seen as strategically important to the wider group.
The tender offer will be fully funded by BW Group's $800 million
of cash on hand. The substantial liquidity is the result of the
company's recent corporate actions: in November 2013, it raised
$2.1 billion through the issue of equity and debt at its operating
subsidiaries, of which $1.1 billion was used to repay holding
company debt.
The bonds also have a collateral maintenance requirement, whereby
BW must maintain a collateral pool of vessels with a market value
of at least 125% of the total outstanding amount of the bonds.
Even if the bonds are only partially tendered, BW has the option
to reduce the collateral pool of vessels to the extent the bonds
are tendered. Thus the headroom under the collateral maintenance
requirement will improve from an already comfortable level.
"Even if all the bonds are tendered and paid for, we expect BW to
be able to fund its committed capex of about $300 million over the
next couple of years with the remaining cash on hand and operating
cash flow" add Halan.
Upward pressure on BW's ratings can develop if the company's
consolidated credit metrics improve beyond Moody's expectations.
Such an improvement can come from an improvement in its profit
margins and cash flows.
Credit metrics indicating upward pressure include consolidated
debt/EBITDA declining below 5.0x and EBIT/interest increasing
above 2.0x on a sustained basis.
The ratings could come under pressure if BW Group and/or its
subsidiaries (1) experience deterioration in its profit margins;
or (2) take on additional debt-funded expansion/acquisitions.
Credit metrics that indicate downgrade pressure include
consolidated debt/EBITDA increasing beyond 6.0x-6.5x and/or
EBIT/interest falling below 1.5x--1.0x on a sustained basis.
The principal methodology used in this rating was the Global
Shipping Industry published in December 2009. Please see the
Credit Policy page on www.moodys.com for a copy of this
methodology.
BW is a diversified shipping group, with operations in four key
segments: (1) liquefied petroleum gas; (2) tankers; (3) liquefied
natural gas; and (4) floating, production, storage and offloading
vessels (FPSO).
The firm is a privately held holding company, with 93% of its
shares owned by the Sohmen family, and 7% by HSBC.
BW owns a 49.8% stake in BW Offshore Ltd, an Oslo-listed company
and the world's second largest FPSO owner and operator, and a
52.2% stake in BW LPG Limited, another Oslo-listed company and the
world's largest very large gas carrier owner and operator.
===============
X X X X X X X X
===============
* Moody's Gives Stable Outlook for North Asian Sovereigns in 2014
-----------------------------------------------------------------
Moody's Investors Service says that sovereign credit fundamentals
in North Asia -- specifically China (Aa3 stable), Japan (Aa3
stable) and Korea (Aa3 stable) -- will likely remain stable in
2014, reflecting the rating agency's expectation that global
growth prospects will improve while global risks will decline.
Moody's points out that almost three quarters (85 of 124) of
sovereigns rated by Moody's carry stable rating outlooks, compared
with fewer than two thirds at the start of last year.
"However, advanced and emerging economies are exhibiting divergent
credit trends. Advanced economies will be driven by improving
growth prospects, stabilizing debt dynamics, more resilient
banking systems and receding region-specific contagion risks,"
says Tom Byrne, a Senior Vice President and Manager for Moody's
Sovereign Risk Group.
"Emerging economies, on the other hand, will continue to face
heightened credit pressures in 2014, owing in part to the US
Federal Reserve's tapering of its expansive quantitative easing
policy," adds Byrne.
Turning to the Asia-Pacific region, Byrne says that: "for China,
the slowdown in economic growth is a reflection of structural
imbalances and the rapid increase in systemic leverage since the
global financial crisis in 2008."
Nonetheless, Moody's says China's high degree of central
government financial strength and its very strong external
payments position support stability in the sovereign's overall
credit profile.
However, Moody's points out that latent risks have arisen from the
sharp increase in property prices and the surge in shadow banking
sector credit.
Nonetheless, the Chinese authorities' efforts to manage such risks
will likely maintain systemic stability over the near term.
However, the slowdown and rebalancing of China's economy creates
the potential for shocks across emerging markets, in particular,
and in the global economy, in general. The spillover from China's
economic slowdown is already evident in those emerging economies
in the region with close trade links, and those economies,
globally, with large exposures to China's demand for commodities.
On Japan, Moody's says the first two parts of Prime Minister,
Shinzo Abe's economic program -- monetary easing and fiscal
stimulus -- have, so far, produced positive growth benefits.
However, long-term fiscal adjustment to reduce the heavy level of
government debt will depend on the success of the third part of
the program, structural reform, which is yet to be fully
articulated and implemented.
As for Korea, Moody's says that the government's fiscal
fundamentals remain strong, supporting its Aa3 rating and stable
outlook. However, the rise in public-sector corporate debt and
household debt present constraints to the sovereign rating.
Moody's concludes that overall, sovereign creditworthiness will be
more vulnerable to common global risks than to region-specific
exposures in 2014. The shared global risks include a disorderly
unwinding of monetary stimulus in the US, persistently elevated
event risks in the euro area, and uncertainty about commodity
prices.
"The interaction of these global risks with country-specific
factors will determine the credit implications," says Mr. Byrne.
Mr. Byrne was speaking at a Moody's briefing in Hong Kong, titled
Sovereign Global Outlook, and held on Jan. 14, 2014.
*********
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, and Peter A. Chapman,
Editors.
Copyright 2014. 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
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
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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 ***