/raid1/www/Hosts/bankrupt/TCRAP_Public/140804.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, August 4, 2014, Vol. 17, No. 152
Headlines
A U S T R A L I A
BRODIES MEALMAKERS: Placed in Administration
NATIONAL ABS 2012-1M: Fitch Affirms 'Bsf' Rating on Class F Notes
PNPS PACKAGING: Purchased Out of Administration
C H I N A
CHINA OIL: S&P Affirms 'BB+' LT Corp. Credit Rating; Outlook Neg.
GREENLAND HONG KONG: Moody's Assigns Ba1 Rating to USD2BB Notes
HCP GLOBAL: S&P Assigns 'B' LT CCR; Outlook Stable
JINGRUI HOLDINGS: Fitch Confirms 'B(EXP)' Rating on USD Sr. Bond
MODERN LAND: Fitch Assigns 'B' Final Rating to USD125MM Notes
WEST CHINA: Fitch Affirms 'BB-' LT IDR; Outlook Negative
I N D I A
AL-SAMI FOOD: CRISIL Reaffirms 'D' Rating on INR80MM Loans
AMMA AGRO: CRISIL Suspends 'B' Rating on INR86MM Loans
ASHTAVINAYAK STEEL: CRISIL Suspends 'D' Rating on INR135MM Loans
ASSOCIATE HIGH: ICRA Suspends 'D' Rating on INR83cr Loans
BALA SUNDRI: ICRA Assigns 'B' Rating to INR8cr Loans
BHAVANA ISPAT: ICRA Suspends 'D' Rating on INR12cr Loan
CHENNAI KRAFT: CRISIL Suspends 'D' Rating on INR150MM Loans
DIAMOND FOOTCARE: CRISIL Suspends 'D' Rating on INR550MM Loans
GREENKO GROUP: Fitch Puts Final B Rating on Unit's USD550MM Notes
HMM INFRA: ICRA Suspends 'B' Rating on INR14cr Bank Loan
INDIAN CONSTRUCTION: ICRA Reaffirms 'B' Rating on INR2.50cr Loan
INDIAN TRANSFORMERS: CRISIL Suspends B+ Rating on INR40MM Loan
INDUS MEGA: CRISIL Reaffirms 'B+' Rating on INR603.8MM Loans
JEEVAN SAAR: ICRA Downgrades Rating on INR19cr Loan to 'D'
K.K. STEEL: ICRA Suspends 'D' Rating on INR9cr Loan
MAA MANASHA: CRISIL Reaffirms 'D' Rating on INR520MM Loans
MADURAI TUTICORIN: ICRA Reaffirms 'D' Rating on INR598cr Loan
MAHAVEER PARBOILED: ICRA Reaffirms B+ Rating on INR9cr Loans
NAVKIRAN TECHNO: ICRA Assigns 'B+' Rating to INR10cr Loans
NAVNIT CARS: CRISIL Suspends 'B-' Rating on INR165MM Loans
NOVELTY POWER: CRISIL Suspends 'D' Rating on INR95MM Loans
PAVAN COLD: ICRA Suspends 'D' Rating on INR5.63cr Term Loan
PEC ELECTRICALS: CRISIL Suspends 'D' Rating on INR280MM Loans
POSITIVE FLEXO: CRISIL Assigns 'D' Rating to INR75MM Loans
POWER TECH: ICRA Downgrades Rating on INR6.5cr Loan to 'D'
REFLEXIONS NARAYANI: ICRA Reaffirms B+ Rating on INR33cr Loans
SANMAAN RICE: CRISIL Reaffirms 'B' Rating on INR140MM Loans
SEVEN SEAS: CRISIL Suspends 'B' Rating on INR52.5MM Loans
SFS GLOBAL: ICRA Assigns 'B+' Rating to INR17cr Bank Loan
SHASHWAT CABLES: ICRA Suspends 'B-' Rating on INR4cr Loan
SHRI SAI: CRISIL Assigns 'B+' Rating to INR25MM Cash Credit
SREE VENKATESWARA: ICRA Assigns 'B+' Rating to INR1.9cr Loan
SRI AYYAPPA: ICRA Reaffirms 'B+' Rating on INR15cr Loan
SRI LAKSHMI: ICRA Assigns 'B+' Rating to INR17cr Loan
SRI VENKATESWARA: ICRA Revises Rating on INR9cr Loan to 'B+'
STEEL AUTHORITY: S&P Cuts CCR to 'BB+', Then Withdraws Rating
T K INTERNATIONAL: CRISIL Suspends 'D' Rating on INR127MM Loans
UTTARAYAN STEEL: ICRA Suspends 'B' Rating on INR7cr Bank Loan
I N D O N E S I A
GAJAH TUNGGAL: Moody's Says 1H2014 Results in Line With 'B2' CFR
J A P A N
SKYMARK AIRLINES: At Risk of Going Out of Business
M A L A Y S I A
MALAYSIA AIRLINES: Union Expects to be Consulted on Restructuring
N E W Z E A L A N D
BRIDGECORP LTD: Rod Petricevic Denied Parole
S O U T H K O R E A
HYUNDAI GROUP: Sale of Securities Unit Delayed
T A I W A N
CTBC BANK: Fitch Affirms Support Rating Floor at 'BB+'
- - - - -
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A U S T R A L I A
=================
BRODIES MEALMAKERS: Placed in Administration
--------------------------------------------
Cliff Sanderson at Dissolve.com.au reports that Brodies Mealmakers
Pty Ltd and related company Brodies Enterprises have been placed
into administration with undisclosed debts. McLeod and Partners'
Jonathan Paul McLeod has been appointed as liquidator of the
companies on July 29, 2014, the report says.
Grant Thornton's Michael McCann -- michael.mccann@au.gt.com -- and
Graham Killer -- graham.killer@au.gt.com -- were appointed as
receivers and managers of the companies.
A meeting with creditors is scheduled on Aug. 8, 2014.
NATIONAL ABS 2012-1M: Fitch Affirms 'Bsf' Rating on Class F Notes
-----------------------------------------------------------------
Fitch Ratings has affirmed six classes of National ABS Trust 2012-
1M. The transaction is a securitisation backed by automotive and
equipment lease receivables originated by Medfin Australia Pty
Limited (Medfin), a wholly-owned subsidiary of National Australia
Bank Limited (NAB; AA-/Stable/F1+).
The rating actions are listed below:
AUD97.0m Class A-2 notes affirmed at 'AAAsf'; Outlook Stable
AUD3.7m Class B notes affirmed at 'AAsf'; Outlook Stable
AUD2.8m Class C notes affirmed at 'Asf'; Outlook Stable
AUD1.9m Class D notes affirmed at 'BBBsf'; Outlook Stable
AUD1.1m Class E notes affirmed at 'BBsf'; Outlook Stable
AUD0.9m Class F notes affirmed at 'Bsf'; Outlook Stable
KEY RATING DRIVERS
The affirmation reflects Fitch's view that the available credit
enhancement and excess spread is able to support the current
rating, the stable credit quality and performances of the pool,
and Fitch's expectations of Australia's economic conditions.
The transaction has been amortizing pro-rata of all rated notes
since Sept. 2013.
The performance of the National ABS transaction is well within
Fitch's expectations. At June 30, 2014, 30+ days delinquencies
were 0.31%.
As of end-June 2014, cumulative gross losses amounted to AUD1.7m,
0.4% of the initial collateral balance, compared to the initial
base-case gross loss estimate of 1.3%. Net losses experienced
were 0.18% of the initial collateral balance. To date, excess
spread has been more than sufficient to cover for losses
experienced in the transaction.
RATING SENSITIVITIES
In Fitch's rating sensitivity analysis, the likelihood of a
downgrade of the note classes is currently remote, based on the
transaction's strong performance to date.
A comparison of the transaction's representations, warranties and
enforcement mechanisms (RW&Es) to those of typical RW&Es for this
asset class is available by accessing the reports and/or links
given under Related Research below.
PNPS PACKAGING: Purchased Out of Administration
-----------------------------------------------
Cliff Sanderson at Dissolve.com.au reports that PNPS Packaging and
Print Finishing has been purchased out of administration by
Packaging Processors. The Silverwater-based company is set to move
PNPS Packaging and Print Finishing's facility into its own, the
report says.
PNPS entered administration early in July, the report notes.
=========
C H I N A
=========
CHINA OIL: S&P Affirms 'BB+' LT Corp. Credit Rating; Outlook Neg.
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'BB+'
long-term corporate credit rating on China Oil and Gas Group Ltd.
(COGG). The outlook is negative. At the same time, S&P revised
its long-term Greater China regional scale ratings on the company
and the notes to 'cnBBB' from 'cnBBB+' to move it in line with the
outlook. S&P also affirmed the long-term 'BB+' issue rating on
COGG's outstanding senior unsecured notes. S&P then removed all
the ratings from CreditWatch, where they were placed with negative
implications on June 23, 2014.
"We affirmed the ratings because we believe that the regulated
city-gas business in China still primarily drives COGG's credit
profile," said Standard & Poor's credit analyst Johnson Ng.
"However, the negative outlook reflects our view that the company
has deviated from its strategic focus on developing this segment
following the recently completed acquisition of Canada-based oil
company Baccalieu Energy Inc."
S&P regards the acquisition as opportunistic. S&P don't think the
newly acquired asset will provide much synergy to COGG's
downstream business in China in the next two years at least.
Risks surround management's ability to smoothly integrate the
Canadian acquisition without any interruption to operations, given
the company's lack of experience in the oil and gas upstream
industry. It is also unclear whether COGG can manage the
potential cash flow volatility through its stable city-gas
business.
In S&P's base case, the EBITDA contribution from the upstream oil
and gas business only accounts for about 10% of COGG's total
EBITDA in 2014. S&P believes the company is likely to maintain
its monopoly in city-gas projects in its service areas, and
increase its business operations in China. Exclusive concession
rights ranging from 20-30 years protect COGG's monopolistic
position. For these reasons, S&P continues to assess the
company's business risk profile as "fair."
COGG's entry into the upstream oil and gas sector could increase
cash flow volatility because of fluctuations in oil and gas
prices. However, Baccalieu is a producing asset that COGG
acquired with cash on hand. S&P believes the company can maintain
its "intermediate" financial risk profile if it is disciplined
about its capital expenditure on expansion and acquisitions.
"The negative outlook reflects the risks surrounding COGG's
strategy, management's ability to manage the transition and
integration of the acquired business, and its ability to manage
potential cash flow volatility in the upstream business," said
Mr. Ng.
S&P could downgrade COGG if its investment in the non-piped gas
business becomes more aggressive than it expected, which may
heighten its business and financial risks. A ratio of FFO to debt
below 25% would indicate a deteriorating credit profile. S&P
could also downgrade the company if its business partner Kunlun
Energy Company Ltd. develops city-gas business on its own, such
that the business prospects of the joint-venture company
deteriorates.
S&P could revise the outlook to stable if COGG demonstrates its
ability to well manage the acquisition of Baccalieu Energy and
takes a measured approach in capital expenditure and new
investments while it improves and maintains a ratio of FFO to debt
above 30%.
GREENLAND HONG KONG: Moody's Assigns Ba1 Rating to USD2BB Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 rating to the USD
notes issued by Greenland Hong Kong Holdings Limited (Ba1 stable).
The rating outlook is stable.
The notes were issued under Greenland Hong Kong Holdings Limited's
USD2 billion medium-term note program (MTN, (P)Ba1).
The proceeds will be used for general corporate purposes, the
development of domestic projects and repayment of existing
indebtedness.
The MTN is supported by a Deed of Equity Interest Purchase
Undertaking and a Keepwell Deed between Greenland Holding Group
Company Limited (Baa3 stable), Greenland HK and the bond trustee.
Ratings Rationale
"The new issue will provide Greenland HK with funding to develop
its business and will improve its debt maturity profile," says
Franco Leung, a Moody's Vice President and Senior Analyst.
"We expect its key credit metrics to weaken in 2014 before
improving in 2015," adds Leung, also the Lead Analyst for
Greenland Holding and Greenland HK.
Moody's believes the company will have increasing funding needs to
support its rapid expansion plans. Greenland HK's debt leverage --
as measured by adjusted debt/capitalization -- will likely rise
above 60% in 2014 from about 57% at end-2013.
While Greenland HK's new issue and rapid expansion plans will
weaken its standalone credit metrics, the subordination risk will
decline as the company increases the portion of offshore unsecured
debt to total debt.
Greenland HK reported contracted sales of about RMB5.9 billion for
the first six months of 2014, compared with about RMB3.5 billion
for the full-year of 2013. Moody's believes it is on track to meet
its full-year sales target of about RMB12 billion in 2014.
Moody's expects its revenue recognition in 2015 to increase
substantially. This will support its key financial metrics, such
as adjusted EBITDA/interest returning to around 1.5x in 2015 from
below 1.0x in 2014.
The Ba1 rating of the notes and the (P)Ba1 rating of the MTN
program incorporate Moody's assessment of Greenland HK's
standalone credit strengths, and a three-notch rating uplift
reflecting expected financial support from Greenland Holding.
Its standalone credit profile incorporates its current small --
but well-located -- land bank, and Moody's expectation that it
will grow in size through organic expansion and asset acquisitions
from its parent. It also takes into consideration its improved
credit metrics, equity base and access to funding following the
acquisition by Greenland Holding.
The three-notch uplift reflects Moody's expectation that Greenland
Holding will extend strong support to Greenland HK, given (1) it
is around 60%-owned by Greenland Holding; (2) that it is a primary
platform for the group to raise funds from the offshore banks and
capital markets for investment in property projects in China; (3)
Greenland Holding's track record of providing financial support to
Greenland HK in the form of equity injections; and (4) the
expectation that the economic importance of Greenland HK to the
group will grow over the next few years.
The stable rating outlook reflects Moody's expectation that
Greenland HK will obtain full operating and financial support from
Greenland Holding, and that it will execute its business plan to
grow its assets and contracted sales.
Upward rating pressure on Greenland HK could emerge if the company
(1) successfully implements its business plan; (2) improves its
scale and diversity; and (3) improves its credit profile, such
that adjusted debt/capitalization falls below 55%-60% and
EBITDA/interest rises above 3x on a consistent basis.
In addition to the considerations above, Moody's would only
upgrade the company's rating if the parent's rating is upgraded.
On the other hand, Greenland HK's ratings could come under
downward pressure if the company (1) fails to generate operating
cash flow to maintain its liquidity buffer; and (2) materially
accelerates development, and executes an aggressive land
acquisition plan, such that debt leverage increases with adjusted
debt/capitalization exceeding 65% and/or EBITDA/interest below
1.5x-2.0x on a sustained basis.
Any evidence of any reduction in ownership or weakening in support
from Greenland Holding, or a deterioration in Greenland Holding's
own credit profile, could also be negative for the ratings.
The principal methodology used in this rating was the Global
Homebuilding Industry published in March 2009.
Greenland Hong Kong Holdings Limited is a 60%-owned subsidiary of
Greenland Holding Group Company Limited and was the second-largest
property developer by contracted sales in China in 2013. It is
principally engaged in the development of large-scale, high-end
residential communities, city center integrated projects, and
travel & leisure projects that target the middle-to-high-end
customer segment. At end-December 2013, the company held a land
bank of 9.3 million sqm located in key cities in the Yangtze River
Delta and Pan-Pearl River Delta.
HCP GLOBAL: S&P Assigns 'B' LT CCR; Outlook Stable
--------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'B' long-
term corporate credit rating to China-based packaging company HCP
Global Ltd. The outlook is stable. At the same time, S&P
assigned its 'cnBB-' long-term Greater China regional scale rating
to HCP.
In addition, S&P assigned its 'B' issue rating to the company's
proposed first-lien seven-year US$230 million senior secured term
loan and five-year US$50 million revolving credit facility. S&P
also assigned its 'CCC+' issue rating to the company's proposed
eight-year US$100 million senior secured second-lien term loan.
S&P also assigned its 'cnBB-' long-term Greater China regional
scale ratings to the proposed first-lien term loan and revolving
credit facility, and S&P's 'cnB' long-term Greater China regional
scale ratings to the proposed second-lien term loan. The company
will use the net proceeds, along with cash, to fund a dividend to
its private equity owner (TPG Capital), to repay existing term
loan debt, and to pay for transaction fees and expenses.
"The rating on HCP reflects our opinion of the company's small
scale, its exposure to volatility in raw material costs, and the
market's fragmentation. However, HCP has a good position in a
niche market and a somewhat diverse customer base. The company
also has strong profitability and good geographic diversity in
terms of income," said Standard & Poor's credit analyst Joe Poon.
HCP's small operating size relative to global peers will continue
to constrain its competitiveness. Despite being no. 2 globally,
the company accounted for just 2.7% of the total market in 2013.
Nevertheless, S&P expects HCP to maintain its niche market
position in color cosmetics and skincare packaging. The company
has built a reputation for quality products, high service
standards, and competitive pricing over its 50 years of operating
history. HCP has long-term working relationships with a number of
major global brands, and its products have high specification
requirements for each customer. S&P believes the company's
business model and established customer relationship are an entry
barrier to newcomers and protect its steady income stream. These
factors support S&P's assessment of a "fair" business risk
profile.
In S&P's view, HCP's long-standing relationships with a
diversified base of customers will continue to provide stable
earnings and cash flow. The company has an even split of revenue
generation from Asia-Pacific, Europe, and North America.
Customers include many major names in cosmetics, and the top 5
represented less than 30% of HCP's revenue in 2013.
HCP should be able to withstand the volatility in raw material
prices because it has the flexibility to pass through raw material
cost increases to its customers within a six- to 12-month lag.
HCP's low-cost production base in China should further help to
keep EBITDA margins strong over the next few years.
HCP's ownership by a financial sponsor contributes to S&P's
assessment of a "highly leveraged" financial risk profile. The
company proposes to refinance and recapitalize dividends, which
will significantly increase its leverage. Based on S&P's scenario
forecasts, the ratio of total debt to EBITDA will be above 5x and
the ratio of funds from operations (FFO) to total debt below 12%
the next 12 months, after S&P takes into consideration the
proposed loans. These ratios fall into S&P's "highly leveraged"
financial risk profile category. However, S&P expects HCP's cash
flow to remain stable and that it will gradually deleverage over
the next two to three years, barring any other recapitalization
transactions. S&P's management and governance assessment of HCP
is "fair."
"The stable outlook reflects our view that HCP will maintain
stable cash generation and above-average margins over the next 12
months despite volatility in raw material costs. We expect
leverage to remain above 5x over the same period," said Mr. Poon.
Ratings upside is limited over the next 12 months because S&P
expects the company to remain highly leveraged and its business
scale to be modest. S&P could raise the rating if the company can
sustain a ratio of debt to EBITDA well below 5.0x, the current
shareholding structure remains in place, and its financial sponsor
shows clear commitment to manage its leverage at below 5x.
Downward pressure on the ratings could come from tighter liquidity
than S&P anticipated or a significant deterioration in the group's
profitability. This could result from the loss of major contracts
or the company's inability to pass on rising costs to customers.
Returns to shareholders or further leveraging activities
substantially beyond our expectation could also trigger a negative
rating action.
JINGRUI HOLDINGS: Fitch Confirms 'B(EXP)' Rating on USD Sr. Bond
----------------------------------------------------------------
Fitch Ratings has confirmed the 'B(EXP)' expected rating that it
assigned to China-based residential property developer Jingrui
Holdings Limited's (Jingrui; B/Stable) proposed US dollar senior
unsecured bond. This expected rating was originally assigned in
May 2014 when Jingrui first proposed the bond issue. Jingrui has
relaunched the bond after it earlier decided not to proceed with
the issue.
The notes are rated at the same level as Jingrui'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.
Key Rating Drivers
Challenging Sales Target: Fitch expects Jingrui's sales in 2014 to
increase from 2013's, although it will be challenging for the
company to reach its 2014 sales target of CNY12.8 billion. Jingrui
achieved contracted sales of CNY3.0 billion in 1H14, representing
a year-on-year increase of 30%. The company's contracted sales in
1H14 was 23% of its full-year target, less than the 28% achieved
in 2013.
High Leverage among Peers: Jingrui's leverage is a key constraint
on its ratings. "We expect Jingrui's leverage, measured by net
debt over adjusted inventory, to increase to nearly 55% at end-
June 2014 from 44% at end-2013," Fitch said. The company's
expenditure on land acquisitions of about CNY3 billion in 1H14 was
high relative to its contracted sales of CNY3 billion, which
contributed to the higher leverage. In comparison, most of the
other residential developers rated 'B' or 'B+' had leverage of
below 40%. As Jingrui is expanding, Fitch believes that its
leverage will rise in 2014 but is likely to remain below 60%
(above which negative rating action may be considered), unless it
acquires land aggressively in 2H14.
Fast Churn-Out Lowers Margins: Jingrui adopted the fast churn-out
model in 2013 by starting construction and launching project
presales three months and six months after land acquisitions
respectively. For example, it launched the presales of a Hangzhou
project in December 2013, 148 days after it purchased the land.
This model helped Jingrui increase sales by a strong 76% to CNY8.3
billion in 2013. However, the fast churn-out model reduces profit
margins, as developers benefit less from property price
appreciation and have to sell at competitive prices to ensure high
sell-through rates. Fitch expects Jingrui's gross profit margin to
remain low at 20%-25% in the next two to three years.
Low Market Penetration: Jingrui currently has between one and
three projects that mostly have less than CNY1bn in annual
contracted sales in each of the 15 cities in Jiangsu and Zhejiang
provinces where it has operations. Fitch believes that Jingrui
could enjoy economies of scale and higher profit margins if it
concentrates on building its market presence and brand name in a
few of these cities.
Heavy Cash Outlay: Jingrui has a small landbank of 5.5 million
square metres. As such, Fitch expects Jingrui to spend significant
amounts on land acquisitions and project construction in order to
support its target of strong sales growth over the next few years.
Jingrui relies heavily on cash flow from contracted sales and
banks' construction loans to finance its operations. The ambitious
expansion plan may increase the risk of liquidity crunch in times
of property market slowdown or liquidity tightening. Jingrui will
consider developing projects with JV partners to lower its capital
outlay.
Sufficient Liquidity to Repay Debt: At end-2013, Jingrui had cash
of CNY3.4 billion and undrawn credit facilities of CNY565 million,
which should be sufficient to cover short-term debt maturing in
2014 of CNY3 billion.
Rating Sensitivities
Positive: Future developments that may collectively lead to
positive rating actions include:
-- Net debt/adjusted inventory sustained below 40%
(end-2013: 44.2%); and
-- EBITDA margin sustained above 18% (2013: 12%); and
-- Maintaining its current strategy of fast churn-out model, such
that contracted sales/total debt is sustained at over 1.3x
(2013: 1.1x).
Negative: Factors that may, individually or collectively, lead to
negative rating action include:
-- Net debt/ adjusted inventory sustained above 60%
-- EBITDA margin sustained below 15%
-- Contracted sales/total debt sustained below 1.0x.
MODERN LAND: Fitch Assigns 'B' Final Rating to USD125MM Notes
-------------------------------------------------------------
Fitch Ratings has assigned China-based property developer Modern
Land (China) Co., Limited's (Modern Land; B/Stable) USD125 million
12.75% notes due 2019 a final rating of 'B' and Recovery Rating of
'RR4'.
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 24 July
2014.
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. Modern
Land plans to use the proceeds for refinancing of existing
borrowings as well as general corporate purposes.
Key Rating Drivers
Land Acquisition Raises Leverage: Fitch expects Modern Land's net
debt to adjusted inventory to rise to over 35% by mid-2014,
reversing from a net cash position at end-2013, and the company's
contracted sales/gross debt to decline to around 1.3x from 2.0x
over the same period. This is due to an estimated CNY3bn of
payments for land acquisitions in 1H14 to expand the company's
scale. However, Fitch expects a larger number of sales launches
and lower land premium payments in 2H14 to improve Modern Land's
credit metrics from 2H14.
Limited Scale: Modern Land's limited scale in terms of land bank,
contracted sales and geographical coverage leaves the company
susceptible to greater volatility in earnings. Modern Land's
contracted sales of CNY2.29 billion for 1H14 (2013: CNY4.4bn) and
its current land bank of about 2.8 million sqm (excluding presold
properties) as at the end-2013 are commensurate with homebuilders
rated in the 'B' category (those rated 'B+', 'B' or 'B-').
Product Mix May Dilute Margin: Modern Land has been generating
strong EBITDA margin of 25%-33% over the past three years (2013:
29%), 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 sales 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-
2013: CNY2,699/sqm versus recent land acquisition costs of
CNY1,800-CNY7,388/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 and Changsha, 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.
Rating Sensitivities
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%
WEST CHINA: Fitch Affirms 'BB-' LT IDR; Outlook Negative
--------------------------------------------------------
Fitch Ratings has affirmed West China Cement Limited's (WCC) Long-
Term Issuer Default Rating (IDR) at 'BB-'. The Outlook remains
Negative. WCC's senior unsecured rating has meanwhile been
affirmed at 'BB-' with a Recovery Rating of 'RR4'.
The Negative Outlook reflects WCC's sluggish average sales price
(ASP) in the past year, and its potential refinancing needs for
USD400m (CNY2.47bn) of notes due Jan. 2016 and CNY800m of notes
due March 2016.
KEY RATING DRIVERS
2013 Performance in Line: Although WCC's 2013 average sales price
(ASP) dropped slightly to CNY228/ton from CNY238/ton in 2012, this
was offset by an increase in cement sales volume to 17.6m tonnes
from 14.3m tonnes in 2012. As a result, total EBITDA for 2013 was
marginally higher at CNY1.2bn compared with CNY1.1bn in 2012.
Financial leverage, measured by FFO adjusted net leverage, was
3.0x at end-2013. Fitch expects the leverage ratio to decrease in
2014 due to the company's steady cash flow generation and
reduction in capex.
Refinancing May Be Needed: WCC has USD400m of senior notes due
January 2016 and CNY800m of onshore medium-term notes (MTN) due
March 2016 that remain outstanding. The company had unrestricted
cash of CNY506.6m at end-2013, in addition to available bank
facilities of CNY570m. Although Fitch estimates WCC could
generate over CNY3bn of EBITDA in 2014-15 and scale back its
capacity expansion and dividend payout, the company may still need
to refinance part of its debt before maturity.
Liquidity Not a Concern: At end-2013, WCC had short-term
borrowings of CNY822m. Fitch does not see liquidity as a concern
for WCC, not only because of its cash and available bank
facilities at hand, but also because its fixed assets could be
used as collateral for further borrowing.
RATING SENSITIVITIES
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Free cash flow (after acquisitions) turns negative
-- FFO adjusted net leverage rising above 3.0x on a sustained
basis
-- Losing its dominant market position in southern Shaanxi
province
-- Failure to secure refinancing for the 2016 debt repayment
Positive: Future developments that may, individually or
collectively, leads to positive rating action include:
-- Securing refinancing and steadily generating cash to meet
the 2016 debt repayment
=========
I N D I A
=========
AL-SAMI FOOD: CRISIL Reaffirms 'D' Rating on INR80MM Loans
----------------------------------------------------------
CRISIL's ratings on the bank facilities of Al-Sami Food Exports
Pvt Ltd continue to reflect instances of delay by AFEPL in
servicing its debt, because of weak liquidity. The company's weak
liquidity is driven by short-term cash flow mismatches, resulting
from delayed payments by customers. Besides, AFEPL extensively
utilises its bank lines, and depends on working capital limits to
fund its increasing working capital requirements, driven by low
cash accruals from operations.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL D (Reaffirmed)
Export Packing Credit 56.6 CRISIL D (Reaffirmed)
Term Loan 13.4 CRISIL D (Reaffirmed)
AFEPL also has a below-average financial risk profile, marked by a
small net worth and high gearing; along with a modest scale of
operations; and is susceptible to risks related to volatile raw
material prices. The company, however, benefits from its
promoters' extensive industry experience and their established
relationships with key customers.
AFEPL was founded by Mr. Abdul Salam and his wife, Mrs. Azimunnesa
Begum, in 2009, and commenced operations in 2011. The company
exports processed beef.
AMMA AGRO: CRISIL Suspends 'B' Rating on INR86MM Loans
------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of Amma
Agro Farms.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 25 CRISIL B/Stable Suspended
Long Term Loan 61 CRISIL B/Stable Suspended
The suspension of ratings is on account of non-cooperation by AAF
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, AAF is yet to
provide adequate information to enable CRISIL to assess AAF's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
Incorporated in 2008, AAF is engaged in the poultry business. AAF
is promoted by Mr. R.D. Subramanyam Reddy and his family.
ASHTAVINAYAK STEEL: CRISIL Suspends 'D' Rating on INR135MM Loans
----------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Ashtavinayak Steel Pvt Ltd (ASPL; part of the Goel group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 110 CRISIL D Suspended
Letter of Credit 25 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by ASPL
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, ASPL is yet to
provide adequate information to enable CRISIL to assess ASPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
CRISIL has consolidated the financial and business risk profiles
of ASPL and Jai Jyotawali Steel Pvt Ltd (JJSPL), together referred
to as the Goel group, on account of operational linkages and
financial fungibility between them. ASPL makes its entire sales to
JJSPL. Besides being a part of the value chain, the promoters
belong to the same family and both companies have extended
corporate guarantees for each other's facilities.
Part of the Goelgroup, ASPL was incorporated in 2002 by Mr.
AshishGoel. It manufacturesmild steel (MS) ingots from MS scrap.
ASPL's sales are made to JJSPL, which is managed and owned by Mr.
Girish Goel, brother of Mr. AshishGoel. JJSPL, incorporated in
1992, manufactures thermo-mechanically-treated bars.
ASSOCIATE HIGH: ICRA Suspends 'D' Rating on INR83cr Loans
---------------------------------------------------------
ICRA has suspended the long-term rating of [ICRA]D assigned to the
INR63.00 crore term loans and the short-term rating of [ICRA]D
assigned to the INR20.00 crore short-term, fund based and non-fund
based working capital facilities of Associate High Pressure
Technologies Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 63.00 [ICRA]D Suspended
Short-term, Fund 20.00 [ICRA]D Suspended
based and Non-Fund
based limits
The suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
BALA SUNDRI: ICRA Assigns 'B' Rating to INR8cr Loans
----------------------------------------------------
ICRA has assigned [ICRA]B rating to INR8.00 crore bank lines of
Bala Sundri Rice Mills.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based facilities 1.50 [ICRA]B assigned
Proposed Limits 6.50 [ICRA]B assigned
The assigned rating factors in risks inherent in partnership firm
including the risk of withdrawal of capital by the partners; high
intensity of competition in the rice milling business in which the
firm operates and agro climactic risks, which can affect the
availability of paddy in adverse weather conditions. The rating is
also constrained by the fact that the firm is setting up its own
milling unit of 6tph (tons per hour) which is funded majorly by
debt; this is expected to lead to weaken the capital structure.
Further the financial risk profile of the firm is weak marked by
small scale of operations which limit the scope for economies of
scale. Low profitability & accruals have resulted in weak debt
coverage indicators. The rating is also constrained by working
capital intensive nature of business owing to the need to maintain
significant levels of inventory, which has resulted in limited
cash flow generation and consequently stretched liquidity. The
rating however, favorably takes into account long standing
experience of promoters in the industry, proximity of the mill to
major rice growing areas which results in easy availability of
paddy.
With the impending capital expenditure, the profitability and
capital structure of the firm are expected to witness pressure.
However, the ability of the firm to stabilize its operations
coupled with healthy demand should result in gradual improvement
in the return indicators. These would remain the key drivers for
the ratings of the firm.
Bala Sundri Rice Mills (BSRM) is a partnership firm, incorporated
in 2009 by Mr. Shyamlal and his family members. BSRM is engaged in
the milling of basmati and non basmati rice. The milling unit is
currently on a lease basis which is located in Karnal (Haryana).
The milling capacity of the firm is 3 tph and sortex machinery
with a similar capacity.
The firm is currently in the process of setting up its own plant
with a capacity of 6tph. The total cost of the project is
estimated at INR5.85 crore which will be funded in a debt: equity
ratio of 3:2.
Recent Results
During the financial year 2013-14, the firm reported a profit
after tax (PAT) of INR0.01 crore on an Operating income of INR9.02
crore as against PAT of INR0.05 crore on an operating income of
INR7.36 crore in 2012-13.
BHAVANA ISPAT: ICRA Suspends 'D' Rating on INR12cr Loan
-------------------------------------------------------
ICRA has suspended the [ICRA]D rating assigned to the long term
fund based cash credit facility and short term non-fund based
letter of credit facility aggregating to INR12.00 Crore of Bhavana
Ispat Private Limited. The suspension follows ICRA's inability to
carry out a rating surveillance in the absence of the requisite
information from the company.
Incorporated in 2000 by the promoter Mr. Ganesh Patel, Bhavana
Ispat Private Limited is engaged in the business of processing of
steel coils and sheets. The company is based out of Mumbai with a
steel processing and warehousing facility in Navi Mumbai.
CHENNAI KRAFT: CRISIL Suspends 'D' Rating on INR150MM Loans
-----------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of Chennai
Kraft Paper Industries.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 40 CRISIL D Suspended
Letter of Credit 17.5 CRISIL D Suspended
Proposed Long Term
Bank Loan Facility 2.5 CRISIL D Suspended
Term Loan 90 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by CKPI
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, CKPI is yet to
provide adequate information to enable CRISIL to assess CKPI's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
Established in 2010, CKPI is a partnership firm based in Chennai
(Tamil Nadu). The firm started its commercial production in
September 2010. It manufactures kraft paper, which is extensively
used to make corrugated boxed used in the packaging industry. The
firm's day-to-day operations are managed by Mr. Siddique Ahmed.
DIAMOND FOOTCARE: CRISIL Suspends 'D' Rating on INR550MM Loans
--------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of Diamond
Footcare Udyog Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 20 CRISIL D Suspended
Cash Credit 250 CRISIL D Suspended
Letter of Credit 110 CRISIL D Suspended
Term Loan 170 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by
DFUPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, DFUPL is yet to
provide adequate information to enable CRISIL to assess DFUPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
DFUPL (formerly, Diamond Toys Company Pvt Ltd) was incorporated in
1978 by Mr. O P Gupta, who is the company's chairman. DFUPL
manufactures non-leather based footwear comprising hawai chappals,
polyvinyl chloride footwear, and ethyl vinyl acetate footwear,
which includes sports shoes, floaters, school shoes, bathroom
slippers, and canvas shoes. The plant of the company is located at
Mayapuri, New Delhi.
GREENKO GROUP: Fitch Puts Final B Rating on Unit's USD550MM Notes
-----------------------------------------------------------------
Fitch Ratings has assigned Greenko Dutch B.V.'s (GBV) USD550m 8%
senior notes due 2019 a final rating of 'B'. The notes are
guaranteed by Greenko Group PLC (Greenko). The final rating
follows the receipt of documents conforming to information already
received, and is in line with the expected rating assigned on July
14, 2014.
GBV is a subsidiary of Greenko, which is involved in hydro and
wind power generation in India. Greenko will use the proceeds from
the notes to refinance existing debt at operating entities within
a restricted group of companies that is defined in the indenture
to the note issue. The operating entities will issue Indian rupee-
denominated bonds to GBV as part of the debt refinancing.
Key Rating Drivers
Ratings Linked to Restricted Group Assets: Fitch's rating on the
notes reflects the credit strengths and weaknesses of the debt
structure and assets of the restricted group of companies. The
restricted group is constrained by covenants to limit its cash
outflows and any additional debt incurrence that would benefit the
senior note holders at GBV. The notes will benefit from a first
charge via the rupee-denominated bonds on all assets (excluding
accounts receivables) and cash flows of the operating entities in
the restricted group. The rating on the notes also reflect the
absence of other prior ranking debt in the restricted group, aside
from a stand-by working capital debt facility of USD30m secured
exclusively against accounts receivables.
Diversified Operations: The assets of the restricted group are
diversified across various hydro and wind assets. The assets are
also geographically diversified within India. Greenko is one of
the country's largest clean energy producers. The company expects
the capacity of the restricted group of companies to increase from
165MW at end-2013 to 619MW by end-July 2014, comprising 235MW of
hydro power (including 70MW from Lanco Budhil Hydro, which was
acquired in June 2014) and 384MW of wind power.
Reasonable Revenue Visibility: The issue rating benefits from the
long-term power purchase agreements (PPAs) for all its wind and
most of its hydro assets. Although the long-term PPAs provide
protection from price risk, the restricted group of companies is
exposed to volume risk because production depends on wind and
hydro patterns. In addition, although the company has conducted
detailed wind studies for its assets, the wind power plants have a
limited power generation history, with the majority of the
restricted group's wind assets having been commissioned in the
last 12 months.
Weak Customer Profiles: The weak credit profile of the restricted
group's customers is a rating constraint. State-owned utilities in
Himachal Pradesh and Andhra Pradesh have weak credit profiles,
while those in Karnataka and Maharashtra are relatively stronger.
Greenko to some extent benefits from its diversified customer base
where no single customer accounts for more than 20% of its
capacity. Greenko has also demonstrated it can terminate PPAs in
the event of delay in payments, which may give it the ability to
switch customers.
High But Improving Leverage: The restricted group had gross
leverage (Total adjusted debt/ operating EBITDA) of about 10x in
the financial year ended 31 March 2014 (FY14) because of Greenko's
rapid growth. However, Fitch expects the financial profile to
improve, supported by improved earnings with most of the
restricted group's wind assets becoming operational in FY14 and
1HFY15. The agency expects gross leverage to improve to around 5x
by FY16, supported by increased EBITDA as assets come on-line. The
restricted group's cash flow from operations is expected to
strengthen, although free cash flows are likely to remain negative
in the medium term given its capex plan. The company's capex is
fully funded up to FY15, while it plans to finance capex beyond
that only by cash accruals within the restricted group - these
assets too will be part of the restricted group. However, the
company has flexibility to defer the capex.
Refinancing and Forex Risks: The resultant debt structure and
accumulation of little cash at the restricted group after funding
growth exposes the US dollar notes to refinancing risks. However,
the restricted group has flexibility in the capex given its
granular nature and the wind assets will be more mature by the
time the US dollar senior notes mature. GBV faces forex risks
because most of the restricted group's earnings are in rupees but
the notes are denominated in US dollars. GBV plans to mitigate the
risk by fully hedging the interest payments and hedging at least
half of the principal outstanding.
Greenko Guarantee: The guarantee allows Greenko to extend support
to the unrestricted group in the event of a stress. However, Fitch
expects the credit profile of unrestricted group to be weaker than
that of the restricted group; hence, the expected rating on the US
dollar notes is not enhanced by this guarantee.
Rating Sensitivities
Positive: Future developments that may, individually or
collectively, lead to positive rating action include:
-- Greater share of revenue from stabilised assets (at least 60%
assets that have been in operation for at least two years) and
-- the restricted group of companies sustaining EBITDA interest
cover of over 2.5x and total adj debt/ operating EBITDA of 4x
or below
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Weak operations resulting in the restricted group sustaining
total adj debt/ operating EBITDA of 5x or above and EBITDA
interest cover of below 1.5x on a sustained basis.
-- Sustained negative free cash flow at the restricted group
HMM INFRA: ICRA Suspends 'B' Rating on INR14cr Bank Loan
--------------------------------------------------------
ICRA has suspended the [ICRA]B and [ICRA]A4 ratings assigned to
the INR14.0 crore bank lines of HMM Infra Limited. The suspension
follows ICRA's inability to carry out a rating surveillance in the
absence of the requisite information from the company.
INDIAN CONSTRUCTION: ICRA Reaffirms 'B' Rating on INR2.50cr Loan
----------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B to the INR2.50
crore cash credit facility of Indian Construction Co. ICRA has
also reaffirmed the short term rating of [ICRA]A4 to the INR3.25
crore non fund based bank guarantee facility of ICC.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limit 2.50 [ICRA]B reaffirmed
Bank Guarantee 3.25 [ICRA]A4 reaffirmed
The reaffirmation of ratings continues to factor in the firm's
relatively small size of operations, though it has reported robust
growth of 50% in OI during FY 14 on account of higher amount of
orders secured and executed during FY 14; and weak financial risk
profile as evident from declining operating margins along with
high dependence on working capital borrowings leading to strained
debt protection indicators. The ratings are further constrained by
the highly competitive industry structure resulting in pressure on
margins. Moreover, the margins remain vulnerable to adverse
fluctuation in raw material prices; though the risk is partly
mitigated by subletting of contracts to third parties. While
assigning the ratings, ICRA has also noted the risks of capital
withdrawals inherent in partnership firms.
The assigned ratings, however, continue to favourably consider the
long experience of the promoters in government tendered civil
construction sector; established track record of ICC's operations
with status of "AA" class contractor from government of Gujarat;
and relatively lower counter party credit risk given its exposure
only to state government bodies. ICRA also notes the moderate
order book position of the firm providing revenue visibility in
near to medium term.
Indian Construction Co. was established in 1968 to undertake the
construction of business dams, canals roads, and other
construction works in the state of Gujarat. ICC is registered as
"AA" class contractor in construction segment with the Government
of Gujarat.
Recent Results
For the year ended 31st March 2014 (unaudited provisional
figures), firm has reported an operating income of INR13.29 crore
with a profit after tax (PAT) of INR0.09 crore.
INDIAN TRANSFORMERS: CRISIL Suspends B+ Rating on INR40MM Loan
--------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Indian Transformers & Electricals (ITE; part of the Patni group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 25 CRISIL A4 Suspended
Cash Credit 40 CRISIL B+/Stable Suspended
Letter of Credit 25 CRISIL A4 Suspended
The suspension of ratings is on account of non-cooperation by ITE
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, ITE is yet to
provide adequate information to enable CRISIL to assess ITE's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
CRISIL has combined the business and financial profiles of ITE and
Patsar Transformers and Electrical and Pvt ltd (PTE), together
referred as the Patni group. This is because both companies are in
the same line of business and under common management.
ITE and PTE manufacture transformers for state electricity boards
(SEBs) and for private players in the industry. Promoted by Mr.
Ashok Patni and his brothers, the companies have a combined
capacity to manufacture around 9000 transformers per year. The
companies cater mainly to the distribution transformers in the
range of 10 kilovolt amperes to 10 megavolt amperes. However, they
also manufacture power transformers on selective basis. PTE's
customer base comprises largely SEBs, whereas ITE caters to both
SEBs and private players.
INDUS MEGA: CRISIL Reaffirms 'B+' Rating on INR603.8MM Loans
------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Indus Mega
Food Park Pvt Ltd (Indus) continues to reflect the company's
exposure to offtake related risks associated with its ongoing
project, and its exposure to intense competition in the cold
storage industry. These rating weaknesses are partially offset by
the extensive experience of Indus' promoters in the food
processing industry, and the favourable central government
policies towards mega food park projects.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Performance 90 CRISIL B+/Stable (Reaffirmed)
Guarantee
Long Term Loan 513.8 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that Indus will continue to benefit from its
promoters' extensive experience in the food processing industry.
The outlook may be revised to 'Positive' if the company achieves
higher-than-expected adequate occupancy levels in its project,
resulting in sizeable cash accruals. Conversely, the outlook may
be revised to 'Negative' if there are delays by the company in
tying up with potential customers thereby adversely affecting its
debt-servicing capability.
Indus, incorporated in 2010, is a special purpose vehicle (SPV)
formed to set up an integrated mega food park under the Ministry
of Food Processing Industry's Mega Food Parks scheme in Madhya
Pradesh. The SPV is promoted by three entities - Ananda
Enterprises, Vasistha Holdings, and ARGM Agro Foods. The food park
is expected to fully commence operations by October 2014.
JEEVAN SAAR: ICRA Downgrades Rating on INR19cr Loan to 'D'
----------------------------------------------------------
ICRA has downgraded the long-term rating assigned to the INR19.00
crore fund based bank facilities of Jeevan Saar Educational
Society to [ICRA]D from [ICRA]C+.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 19.00 [ICRA]D downgraded
The rating downgrade takes into account the delays in servicing of
interest obligations by the society on account of its stretched
liquidity position owing to the initial gestation period of the
school (which commenced operations in AY2012-13), stretched
capital structure of the society and the resultant cash losses.
While there has been an improvement in the enrolments in the
current academic year (AY2014-15) to 360 students from 64 students
in the previous academic year, the liquidity position of the
society continues to remain weak given the high operating and
interest costs, resulting in continued dependence on funding
support from the member group for servicing of the debt
obligations.
Although ICRA takes note of the operational and management
expertise available to the society by virtue of its association
with Child Education Society (which owns the Bal Bharati Brand);
the strengths are largely offset by the concerns mentioned above.
In ICRA's view, timely receipt of the funding support from the
member group will remain critical for debt servicing in the near
term and hence would be a key rating driver. This apart, the
ability of the society to attract and improve fresh enrolments; as
well as scale and funding mix of future capital expenditure, if
any, will be critical drivers of society's credit profile in the
long term and would be the key rating sensitivities.
Jeevan Saar Educational Society manages Bal Bharati Public School
in Bhiwadi, Rajasthan. The school became operational in the
academic session AY2012-13 and at present caters to 360 students
till VII standard. The school proposes to apply for CBSE
affiliation in FY2015 as well as commence admissions for Standard
VIII from AY 2015-16 onwards.
Recent Results
The society reported an operating loss of INR1.60 crore and a cash
loss of INR1.88 crore (excluding capitalized interest of INR2.76
crore) on revenue receipts of INR0.22 crore in FY2013. As per
provisional estimates, the society has reported INR0.62 crore of
revenue receipts for FY2014.
K.K. STEEL: ICRA Suspends 'D' Rating on INR9cr Loan
---------------------------------------------------
ICRA has suspended the '[ICRA]D' rating assigned to the long term
fund based cash credit facility and untied limits aggregating to
INR9.00 Crore of K.K. Steel. The suspension follows ICRA's
inability to carry out a rating surveillance in the absence of the
requisite information from the company.
Established in the year 1996, K.K. Steel is a proprietorship
concern promoted by Mr. Ganesh Patel, engaged in the business of
trading flat steel products and is based out of Mumbai.
MAA MANASHA: CRISIL Reaffirms 'D' Rating on INR520MM Loans
----------------------------------------------------------
CRISIL's rating on the long-term bank loan facilities of
Maa Manasha Devi Alloys Pvt Ltd continues to reflect instances of
delay by MMDAPL in servicing its term loan; the delays have been
caused by the company's weak liquidity.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 21 CRISIL D (Reaffirmed)
Proposed Long Term
Bank Loan Facility 465.5 CRISIL D (Reaffirmed)
Term Loan 33.5 CRISIL D (Reaffirmed)
Moreover, MMDAPL has a marginal market share in the highly
fragmented steel industry and is susceptible to volatility in
revenue. However, MMDAPL benefits from its promoters' extensive
industry experience and its established relationship with its
customers and suppliers.
MMDAPL was set up the Apat family of Odisha and was constituted as
a private limited company in 2009. MMDAPL has an ingot
manufacturing unit and an iron crushing unit at Koira (Odisha).
Currently, the company is being managed by Mr. Bhimsen Apat, Mr.
Naba Apat (brother of Mr. Bhimsen Apat), and Mr. Jitendra Kumar
Apat (son of Mr. Bhimsen Apat).
MADURAI TUTICORIN: ICRA Reaffirms 'D' Rating on INR598cr Loan
-------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the INR598
crore term loan of Madurai Tuticorin Expressways Limited at
[ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 598.00 [ICRA]D Reaffirmed
The rating reaffirmation takes into account continued delays in
repayment of debt obligations, as MTEL's toll collections have
been significantly below expectations on account of weak traffic
flow even though the toll road is a key feeder route for Tuticorin
port. Although the company had gone for debt restructuring in Dec,
2012, the continued under performance of traffic has constrained
the liquidity of MTEL. Going forward, ramp up in traffic volumes
thereby increase in toll collections and timely debt servicing
will be the key rating sensitivities.
MTEL is a special purpose vehicle (SPV) promoted by Madhucon
Projects Limited, Madhucon Granites Ltd and SREI Infrastructure
Finance. MTEL has been formed to improve and widen a 128.15 km
stretch on National Highway (NH) - 45B on BOT basis. The stretch
extends between Km 138/800 and 264/500, connecting the cities of
Madurai & Tuticorin in the State of Tamil Nadu. The project has
been awarded by National Highway Authority of India (NHAI) on
Build-Operate-Toll (BOT) basis, with a concession period of 20
years starting July 2006.The scheduled Commercial Operations Date
(COD) of the project was January 2010; however, after a delay of
more than 16 months, tolling has started in July 2011. The project
road is a key arterial route connecting Tuticorin to Madurai and
the rest of India. The only other highway that connects Tuticorin
is NH-7A, which goes towards Tirunelveli, & southern Tamil Nadu.
MAHAVEER PARBOILED: ICRA Reaffirms B+ Rating on INR9cr Loans
------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ assigned to
INR6.35 crore (revised from INR5.75 crore) fund based limits and
INR2.65 crore (revised from INR3.25 crore) unallocated limits of
Mahaveer Parboiled Rice Industries Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 6.35 [ICRA]B+ reaffirmed
Unallocated limits 2.65 [ICRA]B+ reaffirmed
The rating reaffirmation takes into consideration the company's
small scale of operations in the rice milling industry; and weak
financial profile characterized by thin profitability & weak
coverage indicators in FY2014. The rating is also constrained by
intensely competitive nature of rice milling industry restricting
operating margins and agro climatic risks, which can affect the
availability of the paddy in adverse weather conditions. However,
the rating favourably takes into account MPRIPL's experienced
management; easy availability of paddy as the company is located
in major paddy growing region and favourable demand prospects of
the industry with India being one of the largest producer and
consumer of rice in the world.
Going forward, the company's ability to improve its profitability
and effective management of its working capital are key rating
sensitivities from credit perspective.
Incorporated in 2011, Mahaveer Parboiled Rice Industries Private
Limited is promoted by Mr. Manchukonda Rama Murthy. The company is
engaged in milling of paddy to produce raw and boiled rice. The
rice milling unit is located in Nalgonda District of Andhra
Pradesh and the production capacity is 6 tonnes per hour. The
promoters are well experienced in rice milling business and the
unit is run under the direct supervision & control of the
promoters.
Recent Results
The company reported loss of INR-0.06 crore on an operating income
of INR26.99 crore during FY2014 (provisional and unaudited) as
against loss of INR-0.09 crore on an operating income of INR17.62
crore during FY2013.
NAVKIRAN TECHNO: ICRA Assigns 'B+' Rating to INR10cr Loans
----------------------------------------------------------
ICRA has assigned an [ICRA]B+ rating to the INR8.40 crore long
term fund based limits and INR1.60 crore unallocated limits of
Navkiran Techno Feeds.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 8.40 [ICRA]B+ assigned
Unallocated Limits 1.60 [ICRA]B+ assigned
The assigned rating is constrained on account of the small scale
of operations of the firm in the highly fragmented aqua feed
industry with intense competition from other established payers;
NTF's off take remains exposed to the inherent risks in the
aquaculture industry like susceptibility to diseases, climate
change risks and exposure to volatility in the key raw materials.
The rating also factors in the limitations of a partnership firm
as compared to a private limited company limiting its ability to
raise funds and risk of capital withdrawal by partners.
The rating, however, positively factors in the vast experience of
NTF's promoters in the aqua feed industry with operational support
from group concern, M/s UNO Feeds; proximity of the manufacturing
location to the major aqua culture belt of Andhra Pradesh. ICRA
also notes the favourable growth in shrimp culturing in India over
the past 2-3 years aiding in higher demand for shrimp feed.
Going forward ability of the firm to ramp up its scale of
operations while managing its working capital requirements would
be the key rating sensitivities.
Navkiran Techno Feeds was established as a partnership firm in
April 2012 by Mr. Narasimha Rao. The firm is engaged in the
manufacturing of shrimp and fish feeds with an installed capacity
of 1200 MTs per month, located at Bhimavaram in Andhra Pradesh.
The firm commenced operations in January 2014. NTF belongs to the
UNO Feeds group which is predominantly into manufacturing of
extruded floating fish feeds in India since the year 2008 with an
installed capacity of 9000 MTs per month.
Recent results
As per the provisional FY14 financials, the firm reported an
operating profit of INR1.81 crore on an operating income of
INR6.37 crore.
NAVNIT CARS: CRISIL Suspends 'B-' Rating on INR165MM Loans
----------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of Navnit
Cars Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 15 CRISIL A4 Suspended
Cash Credit 45 CRISIL B-/Stable Suspended
Proposed Long Term
Bank Loan Facility 59.4 CRISIL B-/Stable Suspended
Term Loan 60.6 CRISIL B-/Stable Suspended
The suspension of ratings is on account of non-cooperation by NCPL
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, NCPL is yet to
provide adequate information to enable CRISIL to assess NCPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
NCPL was set up in 2004 by Mr. Bharat Sheth. It is an authorised
dealer of Skoda in the Vidarbha region (Maharashtra). The company
also deals in Skoda spare parts and car accessories and provides
car servicing facilities. NCPL has a showroom at Nagpur.
NOVELTY POWER: CRISIL Suspends 'D' Rating on INR95MM Loans
----------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of Novelty
Power & Infratec Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 58 CRISIL D Suspended
Letter of Credit 30 CRISIL D Suspended
Long Term Loan 7 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by NPIL
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, NPIL is yet to
provide adequate information to enable CRISIL to assess NPIL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
Incorporated in 2005, NPIL (formerly Novelty Galvanizer Pvt Ltd)
is promoted by Mr. Shakir Nurie and his sons, Mr. Owais Nurie and
Mr. Shoaib Nurie. The company undertakes fabrication of
transmission line towers, communication towers, railway OHE
(overhead equipment) structures, switchyard structures up to 400
KV, and other general fabrication. The company also undertakes
hot-dip galvanising on a job-work basis.
PAVAN COLD: ICRA Suspends 'D' Rating on INR5.63cr Term Loan
-----------------------------------------------------------
ICRA has suspended the [ICRA]D rating assigned to the INR5.63
crore long term fund based facilities of Pavan Cold Storage. The
suspension follows ICRAs inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
Pavan Cold Storage started commercial operations from Feb 2010.
The firm is located at Deesa, Gujarat; it is engaged in the
business of providing cold storage facility for potatoes. The firm
traded in potatoes till FY 2011 and the cold storage was
operational from February 2011. The company has a total capacity
to stock 1,50,000 bags of potato of 50 kg each. PCS has received
capital subsidy of INR1.20 crore from National Horticulture Board
for setting up cold storage and receives interest subsidy of 6%
from Gujarat Agro Industries Corporation.
PEC ELECTRICALS: CRISIL Suspends 'D' Rating on INR280MM Loans
-------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
PEC Electricals Pvt Ltd (PEC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 140 CRISIL D Suspended
Letter of credit &
Bank Guarantee 140 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by PEC
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, PEC is yet to
provide adequate information to enable CRISIL to assess PEC's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
PEC was set up in 1986 in Hyderabad (Andhra Pradesh) by its
current promoter Mr. Bapi Raju, a technocrat who holds a master's
degree in technology from Indian Institute of Technology-Kharagpur
(West Bengal). The company is a manufacturer and supplier of
electrical equipment. PEC's product portfolio includes switch
gears (panel boards, and relay and other panels) and automation
systems (including current drives, lift controllers,
instrumentation systems, building, and other automation systems).
PEC also executes turnkey projects, and has successfully completed
the setup of switchyards up to 220 kilovolts (KV), overhead lines
up to 132 KV, illumination projects, and other power distribution
system projects.
POSITIVE FLEXO: CRISIL Assigns 'D' Rating to INR75MM Loans
----------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
facilities of Positive Flexo Pack Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL D
Term Loan 45 CRISIL D
The rating reflects instances of delay by PFPL in payment of
principal on its term loan. The delays were on account of the
company's weak liquidity, which is attributable to the nascent
stage of its operations and inadequacy of accruals.
PFPL is also exposed to risks related to stabilisation of its
operations and offtake for its products. However, the company
benefits from its promoters' extensive entrepreneurial experience.
PFPL, incorporated in July 2011, is promoted by the Hyderabad
(Andhra Pradesh)-based Agarwal family. It is engaged in the
printing and lamination business and also manufactures plastic
films. Mr. Pranay Agarwal and his uncle Mr. Surender Kumar Agarwal
look after the company's day-to-day business operations. PFPL's
registered office is in Hyderabad.
POWER TECH: ICRA Downgrades Rating on INR6.5cr Loan to 'D'
----------------------------------------------------------
ICRA has revised the long term rating assigned to the INR6.50
crore fund based limits of Power Tech to [ICRA]D from [ICRA]B-.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 6.50 [ICRA]D (revised from
[ICRA]B-)
The rating revision factors in irregularities in debt servicing by
Power Tech. As a result of substantial drop in the operating
income during FY 14 on account of weak order book, a portion of
cash credit limits were converted to working capital demand loan
by the lenders. There have been instances of delays in meeting the
repayment obligations of these loans which commenced from October
2013. As on 9th July 2014, instalment for the month of June 2014
was still unpaid.
Going forward, timely debt servicing by PT for at least three
months will be the key rating sensitive factor.
PT was initially setup as a proprietorship firm in the year 1999
by Mrs. L Suryakantham. The proprietorship was reconstituted as a
partnership firm in 2010 with the admission of Mr. Srinivasa Rao
as a partner. Since its inception, PT has been executing rate
contracts for piping works for the Ministry of Defence, Government
of India. Power Tech is a sister concern of the "Ultra" group of
companies which have interests in supply of valves and execution
of civil and electrical works for the Indian Navy under Ultra
Dimensions Private Limited (rated [ICRA]B). The group also
undertakes pipe fabrication works, annual contracts for ship
maintenance for the Navy etc.
REFLEXIONS NARAYANI: ICRA Reaffirms B+ Rating on INR33cr Loans
--------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B+ assigned to
the INR33.00 crore fund based bank facilities of Reflexions
Narayani Impex Private Limited. ICRA has also reaffirmed the short
term rating of [ICRA] A4 to INR4.00 crore short term fund based
bank limits of RNIPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 18.6 [ICRA] B+ reaffirmed
Overdraft Facility 14.4 [ICRA] B+ reaffirmed
Packaging Credit 2.0 [ICRA] A4 reaffirmed
Foreign Bill Purchase 2.0 [ICRA] A4 reaffirmed
Rating Rationale
The rating reaffirmation takes into account RNIPL's continued
reliance on a single client for majority of its sales. ICRA notes
that reduced business with this client in FY14 resulted in decline
in capacity utilization during the year. The company also remains
exposed to exchange rate fluctuations due to high reliance on
exports, albeit partially mitigated to an extent by the import of
key raw materials. The ratings however, draw comfort from the
experience of the company of more than two decades in the leather
industry, presence of reputed clientele in the leather goods
segment and the high net profitability recorded by it in the last
few years, supported by healthy lease rentals from reputed tenants
for the commercial space developed by it. While gearing remains at
a low level, debt coverage indicators continue to remain
depressed. Going forward the ability of the company to scale up
its leather operations and improve its profitability, while
continuing to collect adequate rentals from its commercial
property in a timely manner shall remain key rating sensitivities.
RNIPL, promoted by Mr. Satyabrata Mukherjee was incorporated in
1994 and is engaged in the manufacture and exports of leather
products like wallets/ purses, bags, passport holders, luggage
ware etc for both men and women. The manufacturing facility of the
company is located in Kasba Industrial Estate in Kolkata with an
installed capacity of around 8 lakh pieces per annum. The company
is a 100% export oriented unit. Apart from the leather business,
the company also forayed into the real estate business, by
developing a commercial property in the name of 'Rene Tower' in
Kolkata.
Recent Results
RNIPL registered a profit before tax of INR12.44 crore
(provisional) on the back of an operating income of INR27.34 crore
during FY14 as against a profit after tax of INR6.05 crore on an
operating income of INR27.41 crore in FY13.
SANMAAN RICE: CRISIL Reaffirms 'B' Rating on INR140MM Loans
-----------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Sanmaan Rice
Mills (SRM) continues to reflect SRM's weak financial risk
profile, marked by a small net worth, high gearing, and weak debt
protection metrics, and its large working capital requirements.
The rating also factors in the firm's small scale of operations
and its susceptibility to volatility in raw material prices, to
regulatory changes, and to erratic monsoons. These rating
weaknesses are partially offset by the extensive experience of
SRM's partners, and healthy growth prospects for the rice
processing industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 120 CRISIL B/Stable (Reaffirmed)
Term Loan 20 CRISIL B/Stabl (Reaffirmed)
Outlook: Stable
CRISIL believes that SRM will continue to derive benefit from its
promoters extensive experience. The outlook may be revised to
'Positive' if the firm significantly scales up its operations and
improves its profitability, leading to higher-than-expected cash
accruals, or if its capital structure improves significantly, most
likely because of infusion of capital. Conversely, the outlook may
be revised to 'Negative' if there is significant deterioration in
SRM's capital structure because of substantial debt-funded capital
expenditure or pressure on its profitability.
Update
SRM reported a healthy 41 per cent year-on-year growth in its
revenue in 2013-14 (refers to financial year, April 1 to
March 31) due to increase in the average realisation against sales
of basmati rice; this also increased its operating profitability
to 8.62 per cent in 2013-14 from 7.7 per cent in 2012-13. The firm
has enhanced its processing capacity, which was been funded
through a term debt of Rs.19 million. CRISIL believes that SRM's
operating income will grow at a moderate rate of 15 to 20 per cent
in 2014-15 supported by its enhanced capacities.
SRM's financial risk profile remains weak, marked by high gearing
of 7.35 times as on March 31, 2014, an increase from 5.54 times as
on March 31, 2013, owing to the term debt and incremental working
capital requirements. The firm's debt protection metrics are weak,
with interest coverage and net cash accruals to total debt ratio
at 1.37 times and 0.03 times respectively for 2013-14. CRISIL
believes that though SRM's financial risk profile will improve
marginally over the medium term supported by no debt-funded capex
plans, it will remain weak owing to large working capital
requirements and moderate profitability.
SRM's liquidity continues to be stretched, marked by fully
utilised bank limits. The firm availed ad-hoc facilities of Rs. 30
million March 2014 which has to be regularized by July, 2014. The
company availed another OD against stock of Rs. 45 million in
March 2014 for six months up to September 2014.However, the firm's
liquidity is supported by unsecured loans1 of Rs.56.7 million from
promoters and family as on March 31, 2014. CRISIL believes that
SRM's liquidity will remain stretched over the medium term owing
to large incremental working capital requirements.
Set up in 1998 in Muktasar (Punjab), SRM mainly processes basmati
rice, which it sells in the domestic market (under its registered
brand, Sanmaan) and the export market.
CRISIL has treated unsecured loans as neither debt nor equity as
these loans will be retained in the business over the medium term.
SEVEN SEAS: CRISIL Suspends 'B' Rating on INR52.5MM Loans
---------------------------------------------------------
CRISIL has suspended its rating on the bank facilities of Seven
Seas Paints Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL B/Stable Suspended
Term Loan 22.5 CRISIL B/Stable Suspended
The suspension of ratings is on account of non-cooperation by
SSPPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, SSPPL is yet to
provide adequate information to enable CRISIL to assess SSPPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'
SSPPL was set up in 2011 by Mr. Gagan Aggarwal and Mr. Kunal
Aggarwal via the acquisition of Gurumehar Garments Pvt Ltd (which
was incorporated in 2007 but was not operational). SSPPL has set
up an industrial paints unit and a primer manufacturing unit at
Greater Noida (Uttar Pradesh), with capacity of 1800 kilolitres
per annum each. The company commenced operations on April 27,
2012. SSPPL also plans to install machines to manufacture resins
in house.
SFS GLOBAL: ICRA Assigns 'B+' Rating to INR17cr Bank Loan
---------------------------------------------------------
ICRA has assigned long term rating of [ICRA]B+ to INR17.0 crore
bank facilities of SFS Global Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 17.0 [ICRA]B+
The assigned rating derives strength from an experienced promoter
group engaged in diversified businesses and the company's long-
term agreement with Tata Global Beverages Limited, which provides
stability of operations and revenues. The rating is, however,
constrained by a weak financial profile resulting from debt-funded
capex and also the dependence on timely infusion of promoters
funds for meeting the debt repayments in light of insufficient
rentals. While assessing the credit profile, ICRA also notes the
sole dependence of SFS on TGBL for its revenues. Any violation of
terms of contract by the company may result in the termination of
the same. The continuation of the company's contract with TGBL and
ability to timely service debt obligations will be key rating
sensitivities.
Recent Results
The company recorded an operating income of INR2.2 crore, with a
operating profit before depreciation, interest and tax (OPBDITA)
of INR1.9 crore and a net loss of INR0.9 crore in FY13. As per
provisional figures, the company reported revenues of around
INR3.0 crore in FY14.
SFS Global Limited was incorporated in 1995 by the RBS group by
promoters Mr. J.K Saboo, Mr. Ramprakash Saboo, Mr. Ramesh Saboo
and Mr. Rajesh Saboo. The company was engaged in blending and
trading of tea. In 2012 the company entered into agreements with
Tata Global Beverages Limited to provide on lease, its facility at
Sampla, Haryana along with various other ancillary services
related with it. The company provides services of receiving the
raw material at its warehouse, blending of various varieties of
tea, packaging, storing, management, and releasing the same from
the warehouse as and when demanded by the company.
RBS group was promoted by Mr. Ram Ballabh Saboo and later taken
over by his sons Mr. Jugal Kishore Saboo, Mr. Ram Prakash Saboo,
Mr. Ramesh Kumar Saboo and Mr. Rajesh Kumar Saboo. The group has
various companies engaged in varied business operations, with the
flagship companies of the group being Phoenix Udyog Private
Limited (engaged in manufacturing of sheet metal components and
cooking stoves and assembling of geysers, washing machines and
heat convectors), Assam Bearing Private Limited (engaged in
distributorship of SKF bearings) and Needle Eye Plastic Industries
Private Limited (engaged in manufacturing of plastic moulded
products). The group has its presence in Kolkata, Assam, Delhi,
Mumbai, Guwahati, Kala-Amb(HP), Ahmednagar, Bazpur (UK) and
Coimbatore.
SHASHWAT CABLES: ICRA Suspends 'B-' Rating on INR4cr Loan
---------------------------------------------------------
ICRA has suspended the long-term rating of [ICRA]B- assigned to
INR4.00 crore fund based limits and the short rating of [ICRA]A4
assigned to INR2.00 crore non-fund based limits of Shashwat Cables
Private Limited. The suspension follows ICRA's inability to carry
out a rating surveillance in the absence of the requisite
information from the company.
Shashwat Cables was incorporated in the year 2005 and engaged in
the manufacturing of low-tension cables (Aerial Bunched Cables),
which are used in the distribution of power and has its
manufacturing plant located at Dehradun (Uttarakhand). The company
is an approved vendor for the Power Grid Corporation of India
Limited and supplies its products to various established SEB's
(State Electricity Board) such as Madhya Pradesh Vidyut Vitran
Company, Indian Railways, Uttarakhand Power Corporation Ltd, Uttar
Pradesh Power Corporation Limited and others.
SHRI SAI: CRISIL Assigns 'B+' Rating to INR25MM Cash Credit
-----------------------------------------------------------
CRISIL has assigned 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of Shri Sai Marketing and Trading Company.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 50 CRISIL A4
Cash Credit 25 CRISIL B+/Stable
The ratings reflect SSMTC's exposure to high customer
concentration risk, susceptibility of operating margin to raw
material price variations, and large working capital requirements.
These rating weaknesses are partially offset by the firm's above-
average financial risk profile, supported by adequate net worth,
and the proprietor's extensive experience.
Outlook: Stable
CRISIL believes that SSMTC will continue to benefit over the
medium term from the extensive industry experience of its
proprietor and its moderate capital structure. The outlook may be
revised to 'Positive' in case of sustainable improvement in the
firm's revenue or operating profitability while managing its
working capital requirements prudently.. Conversely, the outlook
may be revised to 'Negative' if its revenue and operating margin
decline, or its working capital cycle is stretched, leading to
deterioration in its financial risk profile.
Set up in 2005 by Mr. Sunil Devkinandan Zawar, SSMTC is a Jalgaon
(Maharashtra)-based proprietorship firm providing multiple
services for government authorities. Currently, the firm caters to
primary and secondary schools in five major districts of
Maharashtra'Jalgaon, Thane, Raigad, Ratnagiri, and
Sindhudurg'under the Mid-dayMal Program. The firm has a contract
with the Maharashtra Cooperative and Consumer and Marketing
Federation (undertaking of the Government of Maharashtra) for this
purpose.
The firm has also entered into a contract with Rajasthan State
Transport Corporation for carriage of parcels, courier, and allied
services through state-run buses.
SREE VENKATESWARA: ICRA Assigns 'B+' Rating to INR1.9cr Loan
------------------------------------------------------------
ICRA has assigned long term rating of [ICRA]B+ to INR1.90 crore
fund based limits of Sree Venkateswara Motors (India) Pvt. Ltd.
ICRA has also assigned short term rating of [ICRA]A4 to INR7.50
crore short term fund based limits and INR1.60 crore unallocated
limits of SVMPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limits 1.90 [ICRA]B+ assigned
Inventory Funding 7.50 [ICRA]A4 assigned
Limits
Unallocated Limits 1.60 [ICRA]B+/[ICRA]A4 assigned
The assigned ratings factor in the long track record of the
management in the car dealership business; and established
position of the company as dealer of TML (Tata Motors Limited)
passenger vehicles in the Nizamabad and Adilabad districts of
Telangana State. The assigned ratings are however constrained by
dip in revenues in FY2014 owing to overall decline in sales of
passenger vehicles coupled with high competition from other OEM's
(Original Equipment Manufacturers); limited pricing flexibility as
margins on vehicles, spares, service and accessories are all
controlled by TML resulting in modest profitability levels; and
revenue concentration on a single OEM. The ratings are also
constrained by leveraged capital structure and modest coverage
indicators with interest coverage ratio at 1.33 times for FY2013.
Going forward, the company's ability to increase the scale of
operations and maintaining the profitability while managing
working capital requirements will remain key rating sensitivities
from credit perspective.
Sree Venkateswara Motors (India) Pvt. Ltd was incorporated in
April 2008 by Mr. N. Mahipal Reddy, Ms. N. Jayaprada Reddy at
Nizambad. The commercial operations of the dealership began in
September 2008. SVMPL operates through four showrooms and a
dedicated center in Nizamabad and Adilabad districts, Telangana.
SVMPL is the only authorized dealer of TML in Nizamabad region.
Recent Results
The company reported an operating income of INR28.77 crore in
FY2014 as against an operating income and net profit of INR30.35
crore and INR0.07 crore respectively in FY2013.
SRI AYYAPPA: ICRA Reaffirms 'B+' Rating on INR15cr Loan
-------------------------------------------------------
ICRA has reaffirmed the [ICRA]B+ rating assigned to the INR15.00
crore fund based limits of Sri Ayyappa Rice Industries.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund 15.00 [ICRA]B+;reaffirmed
based Limits
The rating reaffirmation factors in the weak financial profile of
the firm characterised by low profitability and modest coverage
indicators. The ratings are also constrained by the highly
fragmented & competitive nature of the rice milling industry which
limits the ability of the firm to pass on the hike in input costs
to the customers. Further, the industry is highly regulated in
terms of quantitative restrictions on sale of rice in open market
on one hand and fixation of paddy procurement price on the other.
The ratings however, favourably factor in the moderate growth in
operating income by 17% on account of increase in realizations and
the presence of the mill in the rice growing region of Andhra
Pradesh which provides easy access to the raw material.
Going forward, the ability of the firm to maintain its revenue
growth and improve its profitability would be the key rating
sensitivities.
Sri Ayyappa Rice Industries is a partnership firm established in
1980 and is engaged in the milling of paddy for the production of
non-basmati rice products (raw rice & boiled rice). The milling
unit is located in East Godavari District, Andhra Pradesh with an
installed capacity of 90000 MTPA.
According to provisional FY 2013-14 results, the firm has recorded
an operating income of INR73.78 crores with an operating profit of
INR3.11 crore.
SRI LAKSHMI: ICRA Assigns 'B+' Rating to INR17cr Loan
-----------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B+ to INR17.00 crore
fund based limits of Sri Lakshmi Kantha Boiled and Raw Rice Mill.
ICRA has also assigned ratings of [ICRA]B+/[ICRA]A4 to INR3.00
crore unallocated limits of four of SLBRRM.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 17.00 [ICRA]B+ assigned
Unallocated limits 3.00 [ICRA]B+/[ICRA]A4 assigned
The assigned ratings are constrained by the firm's weak financial
profile as reflected by high gearing & weak debt coverage
indicators; intensely competitive nature of the rice industry with
presence of several small-scale players which further increases
the pressure on the operating margins and risks arising from the
partnership nature of the firm. These apart, the ratings are also
constrained by susceptibility of revenues and operating margins to
agro-climatic risks which impact the availability of the paddy in
adverse weather condition and the government policy restrictions
on the quantity of rice which can be sold in the open market. The
ratings however take comfort from the long experience of the
promoters in the rice mill business; easy availability of paddy
from proximity of plant in major paddy cultivating region of the
country and favourable demand prospects for rice with India being
the second largest producer and consumer of rice internationally.
Going forward, the firm's ability to improve its profitability and
effective management of working capital requirements are key
rating sensitivities from credit perspective.
Founded as a partnership firm in 1994, Sri Lakshmi Kantha Boiled
and Raw Rice Mill is engaged in milling of paddy to produce raw
and boiled rice. The firm is promoted by Mr. Veeera Raghava Reddy
and is located in East Godavari District of Andhra Pradesh. The
total installed capacity of the plant is 10 tons per hour.
Recent Results
The firm reported profit after tax of INR0.12 crore on an
operating income of INR38.74 crore during 7mFY2014 (provisional
and unaudited) as against profit after tax of INR0.52 crore on an
operating income of INR58.37 crore during FY2013.
SRI VENKATESWARA: ICRA Revises Rating on INR9cr Loan to 'B+'
------------------------------------------------------------
ICRA has revised the long term rating assigned to the INR9.00
crore fund based limits to [ICRA]B+ from [ICRA]B of Sri
Venkateswara Rice Mill.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund 9.00 [ICRA]B+; revised
based Limits
The revision in rating reflects the increased scale of operations
as reflected by healthy growth in OI at a CAGR of 21% during FY
12-FY 14 supported by increase in volumes by 13% and increase in
realizations by 9%. The rating continues to factor in the long-
standing experience of promoters in the industry. This coupled
with the presence of the mill in the rice growing region of Andhra
Pradesh provides easy access to the raw material. The ratings,
however, are constrained by the modest financial profile of the
firm characterised by low profitability, weak coverage indicators
& high working capital intensity. The ratings also factor in the
highly fragmented & competitive nature of the rice milling
industry which limits the ability of the firm to pass on the hike
in input costs to the customers. Further, the industry is highly
regulated by the government in terms of quantitative restrictions
on sale of rice in open market on one hand and fixation of paddy
procurement price on the other.
Going forward, the ability of the firm to maintain its revenue
growth and improve its profitability would be the key rating
sensitivities.
Sri Venkateswara Rice Mill is a partnership firm established in
1999 and is engaged in the milling of paddy for the production of
non-basmati rice products (raw rice & boiled rice). The milling
unit is located in East Godavari District, Andhra Pradesh with an
installed capacity of 52000 MTPA.
According to provisional FY 2013-14 results, the firm has recorded
an operating income of INR43.55 crores with an operating profit of
INR2.13 crore.
STEEL AUTHORITY: S&P Cuts CCR to 'BB+', Then Withdraws Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Steel Authority of India Ltd. (SAIL) to 'BB+'
from 'BBB-'. S&P then withdrew the rating at the company's
request.
At the time of the withdrawal, the negative outlook on SAIL
reflected the risk that further delays in the rollout of new
capacity could further strain the company's operating performance,
causing its business risk profile to slip below "satisfactory".
The downgrade on SAIL reflected slower-than-expected progress in
leverage reduction; in S&P's view, the company is highly unlikely
to lower its ratio of debt (adjusted for retirement benefits and
surplus cash) to EBTIDA below 3.5x by fiscal year-end 2015.
SAIL's partly debt-funded capital expenditure program has
considerably increased its leverage but the investments made have
not contributed to higher cash flows.
Over the coming 12 months, S&P believes that sizeable capacity
add-on will lead to robust volume growth. SAIL is likely to
improve its adjusted debt-to-EBITDA ratio to 4.0x-4.5x by fiscal
2015 from 5.5x in fiscal 2014. However, this is short of the 3.5x
level; above this trigger point is when S&P would consider
lowering the rating. In addition, while S&P expects gradual
improvement in SAIL's business performance beyond fiscal 2015, S&P
cannot rule out delays to the rollout of new capacity. S&P
expects financial ratios to recover only marginally after
increasing capacity. S&P therefore changed its financial risk
profile on the company to "aggressive" from "significant."
S&P assessed SAIL's liquidity as adequate, based on its external
financial flexibility and its funding availability due to its
government linkage. S&P believes SAIL will be able to roll over
its large short-term working capital lines and secure funding for
capital expenditure.
T K INTERNATIONAL: CRISIL Suspends 'D' Rating on INR127MM Loans
---------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
T K International Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL D Suspended
Buyer Credit Limit 1 CRISIL D Suspended
Cash Credit 17.5 CRISIL D Suspended
Long Term Loan 40 CRISIL D Suspended
Overdraft Facility 63.5 CRISIL D Suspended
The suspension of ratings is on account of non-cooperation by TKIL
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, TKIL is yet to
provide adequate information to enable CRISIL to assess TKIL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key credit factor in its rating process and non-sharing of
information as a first signal of possible credit distress, as
outlined in its criteria 'Information Availability Risk in Credit
Ratings'.
TKIL is in the hospitality business. The company has a four-star
resort, Toshali Sands (set up in 1985), in Puri (Odisha), a three-
star resort, Toshali Royal View (set up in 2003), in Simla
(Himachal Pradesh), and a three-star resort, The Goan Village
Beach Resort (leased property), in Goa. TKIL has a travel and
tours division, which sells customised travel packages.
UTTARAYAN STEEL: ICRA Suspends 'B' Rating on INR7cr Bank Loan
-------------------------------------------------------------
ICRA has suspended the [ICRA]B rating assigned to the INR7.0 crore
bank facilities of Uttarayan Steel Private Limited. The suspension
follows ICRA's inability to carry out a rating surveillance in the
absence of the requisite information from the company.
=================
I N D O N E S I A
=================
GAJAH TUNGGAL: Moody's Says 1H2014 Results in Line With 'B2' CFR
----------------------------------------------------------------
Moody's Investors Service said that the 1H 2014 financial results
for Gajah Tunggal Tbk (P.T.) (GT) are in line with expectations
for the B2 corporate family rating despite greater competition and
higher costs.
GT reported a 7% sales increase in 1H 2014 driven largely by
growth from export sales, which rose 30%. Export sales have been
showing signs of improvement since 1H 2013 driven by the economic
recovery in the US and Europe. The Americas, which accounts for
around half of GT's export sales, grew by over 50% year to date.
However, a decline in local sales caused by increased competition
in the replacement tire market and lower demand for bias tires due
to reduced activity in mining and commodity related sectors has
tempered top-line growth.
"Despite solid top-line growth, profitability has been negatively
impacted by higher costs, stiff competition in the Indonesian
local market and a weak rupiah," says Brian Grieser, a Moody's
Vice President and Senior Analyst.
Transportation costs rose 24% to date in 2014 because of higher
freight charges following the reduction in fuel subsidies last
June 2013 by the Indonesian Government. These higher
transportation costs are in line with Moody's expectation through
the first half of 2014 and Moody's expect the year over year
increase to moderate in the second half as the reduction in
subsidies is now annualized. A further reduction in subsidies
remains a key risk for 2015 as fuel subsidies were a key area of
focus during the 2014 Indonesian elections.
Weakness in the Rupiah, relative to the first half of 2013,
hampered the company's financial performance in the first six
months of 2014 given that GT purchases rubber, buys capital goods
and pays interest in USD while generating only around a third of
its revenue in USDs. While the Rupiah has recovered somewhat
against the USD in 2014 from its weakest points in 2013, it
remains lower than year ago levels and as such will likely weigh
on third quarter profits of GT as well.
"These headwinds will result in leverage continuing to rise in the
second half of this year. However, given GT's current leverage at
3.6x as of June 30, 2014 and its adequate liquidity profile, the
company remains well positioned in the B2 rating level," adds
Grieser.
Cash on hand as of June 20, 2014 of IDR 1 trillion is down from
IDR 2 trillion as of December 31, 2013 due mainly to GT's lower
profitability, higher capital spending, and increased bond
interest payment in 2014.
Downward rating pressure may arise if a) GT is unable to defend
its leading domestic market position, b) GT's financial profile
deteriorates due to significant pressure in its profit margins, or
c) expands its business through aggressive debt-funded
acquisitions or capital expenditures such that debt/EBITDA exceeds
5x on a sustained basis.
Upward pressure on the ratings may develop, if the company is
successful in a) diversifying its funding sources with more spread
out debt maturity schedule, b) reducing exposure to volatile
foreign exchange fluctuation and c) executing its expansion plans
while maintaining its credit metrics such that its debt/EBITDA
remains below 3.0x and EBIT/Interest is maintained at above 3.0x
on a sustained basis.
The principal methodology used in this rating was the Global
Automotive Supplier Industry published in May 2013.
The key shareholders for GT include Denham Pte Ltd., a subsidiary
of Giti Tire (not rated), a Chinese tire manufacturer, with 49.7%
stake and Compagnie Financiere Michelin (Baa1 stable), which holds
a 10% interest.
=========
J A P A N
=========
SKYMARK AIRLINES: At Risk of Going Out of Business
--------------------------------------------------
Chris Cooper at Bloomberg News reports that Skymark Airlines Inc.,
Japan's third-largest carrier, said it's at risk of going out of
business should it have to pay Airbus Group NV a penalty after the
planned purchase of six A380 superjumbos fell through.
According to Bloomberg News, Skymark slid 11 percent to JPY187,
the lowest since October 2009, at the close of trading in Tokyo on
August 1. The shares have declined 36 percent last week.
There is "material uncertainty" over whether the company will
remain a going concern as the airline may have to pay a "large
amount" as penalty, the carrier said in a statement on July 31,
Bloomberg News relays. Tokyo-based Skymark also said it's
considering halting unprofitable flights and borrowing money from
financial institutions after its net loss more than tripled to
JPY5.8 billion ($56 million) in the fiscal first quarter ended
June, Bloomberg News adds.
Bloomberg News relates that the carrier said the JPY26.5 billion
it paid to Airbus for the double-decker planes, more than the
airline's market value, may not be returned. Shares of Skymark,
whose largest shareholder is former Internet millionaire Shinichi
Nishikubo, have been plunging after Airbus terminated the order
for six A380s -- worth $2.5 billion in list prices -- last week,
sacrificing the only superjumbo customer in Japan, according to
Bloomberg News.
"Investors are concerned about Skymark," the report quotes Kazumi
Tanaka, an analyst at DZH Financial Research, as saying.
Skymark had JPY7.2 billion in cash and near-term assets and
JPY39 billion in shareholders' equity at the end of June,
according to a company statement obtained by Bloomberg News. The
company had JPY2.5 billion of short-term and long-term borrowings
and JPY16.3 billion of other long-term liabilities at the end of
March, according to data compiled by Bloomberg News.
The carrier, which kept a forecast for a net income of
JPY354 million this fiscal year, could face demands for as much as
JPY70 billion in penalties, Kyodo News reported earlier last week,
citing people familiar with the situation that it didn't name,
Bloomberg News reports.
"Compared with Skymark's net income, a penalty of up to
JPY70 billion may make it challenging for the company," Bloomberg
News quotes Hiroki Shibata, a credit analyst in Tokyo at Standard
& Poor's, as saying. "Competition with legacy carriers and new LCC
airlines is also making Skymark's position weaker."
===============
M A L A Y S I A
===============
MALAYSIA AIRLINES: Union Expects to be Consulted on Restructuring
-----------------------------------------------------------------
Jason Ng and Gaurav Raghuvanshi at The Wall Street Journal report
that the main employees' union at Malaysia Airlines says it
expects to be consulted on plans to restructure the ailing carrier
before any proposals are made, and renewed its demand for the CEO
to resign.
The Journal relates that the highly-influential union,
representing half of the nearly 20,000 employees at Malaysian
Airline System Bhd., says it hasn't been approached by the
airline's management on any plans to revive the carrier, which is
reeling from the loss of two jetliners in five months that has
left 537 people dead or presumed dead.
Securing the support of the Malaysian Airline System Employees
Union is crucial before any restructuring can occur at the
airline, which is 69.4% owned by Malaysian state investment firm
Khazanah Nasional Bhd., The Journal notes.
The union earlier scuppered a share deal with rival AirAsia Bhd,
the report says.
"We know why they want to restructure, but we have not seen the
plan so far," The Journal quotes the union's president, Alias
Aziz, as saying. "Our priority is staff welfare," said Mr. Aziz,
who leads the biggest of eight unions that represent employees at
Malaysia Airlines.
According to The Journal, Khazanah is preparing a plan to revive
the airline in consultation with the carrier's management, and as
a first step, the investment fund is considering taking the
airline private. An announcement on a possible delisting will come
as early as August, The Journal relates citing people familiar
with the investment firm's thinking.
Malaysia Airlines is expected to give Khazanah its recommendations
on how to turn itself around as soon as this week, The Journal
reports. According to the report, the union said it will have to
wait to see the restructuring proposal before making any call on
the next steps in response.
By delisting Malaysia Airlines, Khazanah could push tough
decisions without having to report every decision to the public.
Some of the decisions could involve job cuts and renegotiations of
existing contracts with suppliers, the people familiar with the
situation said, The Journal relays.
According to The Journal, some analysts note that Malaysia
Airlines is overstaffed and any restructuring efforts should
include a move to significantly downsize its workforce.
Union leaders, however, said the airline is currently facing
shortage of qualified pilots, engineers, and ground staff, the
report says.
"Show us which division or department is overstaffed and perhaps
they can be redeployed elsewhere," said Mohd Jabbarullah Abd
Kadir, executive secretary at the airline union, notes the report.
The Journal recalls that the union had long demanded the removal
of the airline's chief executive, Ahmad Jauhari Yahya, following a
failed share swap with rival budget airline AirAsia, first
announced in 2011. Malaysia Airlines didn't respond to several
requests seeking comment on the union's demands.
According to The Journal, the unions consider Mr. Ahmad Jauhari,
who was appointed as chief executive in September 2011, as an
outsider who has little experience running an airline. He has
previously worked in energy and media industries. He couldn't be
reached for comment, the report notes.
Under the deal, The Journal relates, Khazanah would have received
a 10% stake in Southeast Asia's largest budget carrier, while
AirAsia's chief, Tony Fernandes and his business partner would
have 20% of Malaysia Airlines.
However, the share swap was unraveled within a year following
stiff opposition from unions at Malaysia Airlines as they feared
job losses under the management input from Mr. Fernandes, known
for keeping unit costs low at his airline, The Journal notes. The
union lobbied directly to politicians including Prime Minister
Najib Razak, who was then facing fiercely-contested national
elections, says The Journal.
For Malaysia Airlines, The Journal says, the carrier has been
struggling financially as Asian full-service carriers face a
squeeze from aggressive budget carriers such as AirAsia on their
short-haul routes, as well as Middle Eastern operators, such as
Emirates Airline and Qatar Airways, on longer flights to Europe.
Last year, the report notes, Malaysia Airlines reported a net loss
of MYR1.17 billion ($359 million), its third consecutive year of
net losses. In the first three months this year, its net loss
widened to MYR443 million from MYR279 million a year earlier, the
report discloses.
Headquartered in Selangor, Malaysia, state-owned Malaysia Airlines
-- http://www.malaysiaairlines.com/-- engages in the business of
air transportation and the provision of related services.
====================
N E W Z E A L A N D
====================
BRIDGECORP LTD: Rod Petricevic Denied Parole
--------------------------------------------
Patrice Dougan at APNZ reports that disgraced Bridgecorp boss
Rodney Petricevic has been denied parole on the grounds he may
still pose an undue risk to the safety of the community.
APNZ notes that the former managing director is two years into a
six years and 10 months prison sentence for making false
statements, offences under the Securities Act, and using company
funds to buy a luxury boat.
APNZ relates that in a decision by the Parole Board, released on
August 1, it denied his early release on the grounds he was at
risk of reoffending given his repeated expressions of having "a
lot of knowledge in business" and that he "is driven to give
advice".
It came despite his assessment as a low risk prisoner and
assertions of remorse, the report says.
Mr. Petricevic's time in jail had been "stable and unremarkable",
and he had been assessed as being at "very low risk of
reoffending", the Parole Board said in its ruling, APNZ relays.
"Since June 2012 he has had a minimum security classification. He
has not featured in any misconduct or incident reports and is
described as compliant and no problem to staff or other
prisoners."
According to the report, Mr. Petricevic has taken up occasional
work on prison grounds and is studying for a diploma in law, with
the aim of taking up legal aid or Citizen's Advice Bureau work
when released.
APNZ says Mr. Petricevic had expressed remorse at his parole
hearing, writing in a letter: "Since my conviction and
imprisonment I have had a great deal of time to reflect on the
nature and seriousness of my offending.
"I acknowledge and take full responsibility for this offending,
which was a direct result of my inadequacy as the managing
director, and recognise the harm it has caused all investors.
"Not only have the investors been seriously affected financially
and emotionally but also their families. For this breach of trust
I am truly remorseful. This is something that I will have to live
with for the rest of my life."
However, the Parole Board said it remained "unpersuaded by
Mr. Petricevic's assertions that he is genuinely remorseful," the
report notes.
"In our view, despite Mr Petricevic's age, expressions of remorse
and contention that he has learned from his offending, we consider
that the risk of reoffending remains.
It continued: "In our view there is no evidence of any risk of Mr
Petricevic reoffending other than in relation to financial
affairs.
"While he acknowledges no intention to return to business in the
way he did prior to this offending, we cannot rule out the
possibility of him providing not only advice but also becoming
involved in the management of other people's assets which puts
those assets at risk.
"Given the scale of Mr Petricevic's offending leading to this
sentence, any further offending is likely to be of a similar kind
and be potentially serious and again involve large sums of money."
Mr. Petricevic is next eligible to be considered for parole in
February 2015, APNZ adds.
Based in New Zealand, Bridgecorp Ltd. was a property development
and finance company. The company was placed in receivership on
July 2, 2007, after failing to pay principal due to debenture
holders. John Waller and Colin McCloy, partners at
PricewaterhouseCoopers, were appointed as receivers. Bridgecorp
owes around 14,500 investors, which liquidators estimate to
approximate NZ$500 million. Bridgecorp's nine Australian
companies were also placed into voluntary administration, owing
about 100 investors about AUD24 million (NZ$27 million).
====================
S O U T H K O R E A
====================
HYUNDAI GROUP: Sale of Securities Unit Delayed
----------------------------------------------
Park Si-soo at The Korea Times reports that the sale of Hyundai
Securities, a brokerage unit of Hyundai Group, is to be delayed
due to a lack of interest from potential buyers.
The report says the group's executives reportedly asked the Korea
Development Bank (KDB), one of its biggest creditors, to
reschedule the sale on July 24, citing several unfavorable
conditions, including a lukewarm attitude of initial contenders
and lower-than-expected prices being offered.
Currently, three companies -- Orix, Jabez Partners and Pine Street
-- are carrying out due diligence on Hyundai Securities with
official bidding due in mid-August, according to the report.
"A delay is needed for the group to benefit more from the sale,"
the report quotes a source as saying.
Hyundai Group refused to confirm whether it had asked for a delay.
KDB also refused to comment, citing the sensitivity of the issue,
the report notes.
According to the report, the contenders' alleged lukewarm attitude
toward an acquisition prompted the group to slow down the deal.
Another reason may be the absence of Hyundai Motor or Hyundai
Heavy Industries among initial contenders, analysts said, the
report relates. The carmaker and the shipbuilder were spun off
from the group in 2000 and 2002, respectively.
They added the industry-wide slump has pushed the brokerage's
estimated price to be lower-than-expected, the report states.
It's uncertain whether KDB will accept the group's request because
rescheduling would risk breaking the ongoing due diligence,
according to the Korea Times. The report says KDB officers
suspect that the group wants to withdraw the deal because it has
already secured substantial money to survive by selling non-core
assets.
Last month, the group signed an agreement to sell its logistics
arm to a consortium led by Orix Corp. for KRW600 billion
($582 million) as part of group restructuring, the report recalls.
Earlier, the report adds, the group raised KRW2.1 trillion via
sales of its assets, including the firm's liquefied natural gas
(LNG) transportation business, and stakes in Shinhan Financial
Group, KB Financial Group, Hyundai Oilbank and other non-core
assets.
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 8, 2014, The Korea Times said Hyundai Group's plan to
sell its core assets to secure cash is raising concerns due to
uncertainties in the sales process and economic situation.
According to the report, analysts said the plan may help address
the group's liquidity shortage to some extent, but may create
other problems by making key businesses unstable. The Korea Times
said such concerns were raised after Hyundai announced in December
that it would secure over KRW3.3 trillion by selling all three of
its financial units -- Hyundai Securities, Hyundai Savings Bank
and Hyundai Asset Management -- in a bid to avoid a liquidity
crisis and lower its high debt ratio.
Hyundai, once South Korea's largest conglomerate, has shrunk to
become a minor player since the Asian financial crisis of 1997
prompted the spin-off of key auto and shipbuilding units.
===========
T A I W A N
===========
CTBC BANK: Fitch Affirms Support Rating Floor at 'BB+'
------------------------------------------------------
Fitch Ratings has maintained the Rating Watch Negative (RWN) on
most of the ratings on Taiwan-based CTBC Financial Holding Co.,
Ltd. (CTBC Holding) and its subsidiaries, including CTBC Bank Co.,
Ltd. (CTBC Bank), CTBC Life Insurance Co., Ltd. (CTBC Life) and
CTBC Securities Co., Ltd. (CTBC Securities).
Fitch expects to resolve the Rating Watch before end-October 2014
when Fitch receives greater clarity on CTBC Bank's consolidated
financials after the completion of the Tokyo Star Bank acquisition
in June 2014. The two banks follow different financial reporting
standards - Tokyo Star Bank follows Japanese GAAP, while CTBC Bank
uses IFRS.
Key Rating Drivers - IDRs, VR, IFS Rating, National Ratings And
Debt Ratings
The RWN continues to reflect Fitch's view that CTBC Bank's core
capitalisation will probably weaken following the Tokyo Star Bank
acquisition. The Japanese bank's assets represent 25% of CTBC
Bank's consolidated assets on a pro forma basis. Meanwhile, Tokyo
Star Bank's low recurring earnings and the execution risk in
integrating the cross-border acquisition will likely hurt the
quality of CTBC Bank's consolidated earnings.
CTBC Bank's Issuer Default Ratings (IDRs), Viability Rating (VR)
and National Ratings, the anchor ratings for companies in the CTBC
group, have to date reflected its strong and stable domestic
banking franchise and high quality of earnings, risk management
and liquidity. They also factor in its low capitalisation compared
with peers in the Asia-Pacific rated in the 'A' category.
CTBC Holding's ratings are aligned with those of CTBC Bank, based
on the high level of integration between the two and the modest
leverage and good standalone liquidity at the parent. The ratings
of CTBC Securities are aligned with CTBC Holding's, reflecting its
status as a core subsidiary of the group, the obligatory support
from the holding parent under Taiwan's Financial Holding Company
Act and the inseparability of its risk profile from that of the
group.
CTBC Life's Insurer Financial Strength (IFS) ratings take into
account the high possibility of capital/liquidity support from
CTBC Holding if needed. CTBC Holding's determination to penetrate
the life insurance market underpins its strong willingness to
provide financial support to its life insurance operations.
The ratings on the debt of CTBC Holding and CTBC Bank are also
maintained on RWN because they are notched from the companies'
Long-Term IDRs and National Long-Term Ratings.
Rating Sensitivities - IDRs, VR, IFS Rating, National Ratings And
Debt Ratings
Fitch will likely take negative rating actions, albeit limited to
one-notch downgrades, on the group's IDRs, VRs, IFS Ratings and
National Ratings if the consolidated financials confirm Fitch's
view of a weakening credit profile. Any other acquisitions that
lead to a meaningful deterioration in the CTBC group's
consolidated earnings and asset quality as well as capital buffer
will further pressure the group's ratings.
Any rating action on CTBC Holding and CTBC Bank will trigger a
similar move on their debt ratings.
Rating Drivers And Sensitivities - Support Rating And Support
Rating Floor
CTBC Bank's Support Rating (SR) and Support Rating Floor (SRF) are
affirmed at '3' and 'BB+', respectively, reflecting the bank's
moderate systemic importance and moderate probability of state
support, if needed. The SR and SRF are sensitive to any change in
assumptions around the propensity or ability of the Taiwan
government to provide timely support to the bank. This would most
likely be manifested in a change to Taiwan's sovereign rating
(A+/Stable).
The list of rating actions is as follows:
CTBC Financial Holding Co., Ltd.:
- Long-Term IDR of 'A' maintained on RWN
- Short-Term IDR of 'F1' maintained on RWN
- National Long-Term Rating of 'AA+(twn)' maintained on RWN
- National Short-Term Rating of 'F1+(twn)' maintained on RWN
- Viability Rating of 'a' maintained on RWN
- Subordinated debt rating of 'A+(twn)' maintained on RWN
CTBC Bank Co., Ltd.:
- Long-Term Foreign Currency IDR of 'A' maintained on RWN
- Short-Term Foreign Currency IDR of 'F1' maintained on RWN
- National Long-Term Rating of 'AA+(twn)' maintained on RWN
- National Short-Term Rating of 'F1+(twn)' maintained on RWN
- Viability Rating of 'a' maintained on RWN
- Support Rating affirmed at '3'
- Support Rating Floor affirmed at 'BB+'
- Senior unsecured bonds' National Long-Term Rating of 'AA+(twn)'
maintained on RWN
- Subordinated bonds' Long-Term Rating of 'A-' and National Long-
Term Rating of 'AA(twn)' maintained on RWN
- Perpetual cumulative New Taiwan dollar subordinated bonds' Long-
Term Rating of 'BBB' and National Long-Term Rating of 'A+(twn)'
maintained on RWN
- Perpetual cumulative US dollar subordinated bonds' Long-Term
Rating of 'BBB' maintained on RWN
- Perpetual non-cumulative New Taiwan dollar subordinated bonds'
(Basel III additional tier 1 capital) National Long-Term Rating of
'A(twn)' maintained on RWN
- Subordinated bonds' (Basel III tier 2 capital) National Long-
Term Rating of 'AA-(twn)' maintained on RWN
CTBC Life Insurance Co., Ltd.:
- Insurer Financial Strength (IFS) Rating of 'A' maintained on RWN
- National IFS Rating of 'AA+(twn)' maintained on RWN
CTBC Securities Co., Ltd.:
- Long-Term IDR of 'A' maintained on RWN
- Short-Term IDR of 'F1' maintained on RWN
- National Long-Term Rating of 'AA+(twn)' maintained on RWN
- National Short-Term Rating of 'F1+(twn)' maintained on RWN
*********
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
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
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