/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/140908.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, September 8, 2014, Vol. 17, No. 177 Headlines A U S T R A L I A APN NEWS: Fitch Publishes 'BB-' Rating on Sr. Unsecured Debt APN NEWS: S&P Assigns 'BB' Issuer Credit Rating; Outlook Stable APN NEWS: Moody's Assigns (P)Ba2 Corporate Family Rating EQUITITRUST LTD: Founder Fined For Failing to Assist Liquidator EQUMEN PTY: Enters Administration; First Meeting Set Sept. 11 MAMERS INVESTMENTS: Cor Cordis Appointed as Administrators NATURAL FUEL: Fined For Failing to Lodge Financials TLC PRINT: Placed Into Administration C H I N A ANTON OILFIELD: Fitch Revises Outlook to Neg. & Affirms 'BB' IDR ANTON OILFIELD: Weak 1H 2014 Results No Impact on Moody's Ba2 CFR INTIME RETAIL: Fitch Affirms 'BB' Issuer Default Ratings YANZHOU COAL: Moody's Downgrades Corporate Family Rating to Ba2 YUZHOU PROPERTIES: Moody's Ups Sr. Unsecured Debt Rating to B1 I N D I A ANANT RICE: ICRA Assigns 'B+' Rating to INR2.50cr Cash Credit C.L. GULHATI: CRISIL Reaffirms B- Rating on INR250MM Cash Credit CHOWDHRY RUBBER: CRISIL Reaffirms INR125M Cash Credit B+ Rating COUNT N: CRISIL Reaffirms 'B+' Rating on INR86.7MM Bank Loan HONDA MOTOR: India Slaps 14 Carmakers with $420MM Antitrust Fine JAPAN METAL: CRISIL Cuts Rating on INR140MM LT Bank Loan to 'B+' K. C. FERRO: ICRA Reaffirms B Rating on INR23cr Fund Based Loan KAYTX INDUSTRIES: CRISIL Puts 'B+' Rating on INR300MM Cash Credit KURSEONG CARRIERS: ICRA Reassigns B Rating to INR15cr Book Debts KUSHAL BAGH: ICRA Reaffirms D Rating on INR4.70cr Fund Based Loan LAXMI STEELS: ICRA Suspends 'B' Rating on INR7cr Fund Based Loan MANDOVI MINERALS: CRISIL Reaffirms D Rating on INR81.9M Term Loan MANGLAM MILK: CRISIL Assigns 'B+' Rating to INR180MM Term Loan MANISHRI REFRACTORIES: ICRA Rates INR18.6cr Cash Credit at 'B' MINAXI TEXTILES: ICRA Reaffirms INR15.5cr Cash Credit 'B+' Rating NEXUS ELECTRO: CRISIL Cuts Rating on INR305MM Bank Loan to 'C' ONE AUTO: CRISIL Reaffirms 'B+' Rating on INR104MM Fund Facility PARAMOUNT WHEELS: ICRA Reaffirms B Rating on INR12cr Capital Loan PONTIAC MERCHANTS: CRISIL Reaffirms D Rating on INR113M Term Loan PREMIER SOLAR: CRISIL Reaffirms B Rating on INR63.5MM Cash Credit RADNIK AUTO: ICRA Reaffirms 'B+' Rating on INR1.61cr Term Loans RATANPUR COLD: CRISIL Reaffirms B Rating on INR35MM Cash Credit RK STEEL: CRISIL Upgrades Rating on INR150MM Cash Credit to 'B' SANJAY KRAFT: ICRA Suspends 'B+' Rating on INR8cr Bank Loan SAP INDUSTRIES: ICRA Reaffirms INR2.5cr Cash Credit's 'B+' Rating SARASH INT'L: ICRA Assigns D Rating to INR7.40cr Fund Based Loan SARLA HANDICRAFTS: CRISIL Ups Rating on INR15MM Bank Loan to B SHREE RAGHUVANSHI: ICRA Reaffirms B+ Rating on INR25r Cash Credit SHREE SHANKAR: CRISIL Reaffirms 'D' Rating on INR270MM Term Loan SOCIETY FOR RESEARCH: CRISIL Ups Rating on INR65M Term Loan to B- SRI LAKSHMI: CRISIL Lowers Rating on INR44MM Term Loan to 'D' STATE BANK: Fitch Affirms 'B' Rating on USD400MM Bonds SWACHHA BEVERAGES: CRISIL Reaffirms B+ Rating on INR35M Term Loan TANWAR INDUSTRIES: CRISIL Cuts Rating on INR30M Cash Credit to B+ V.V. RAMASAMY: ICRA Puts 'B' Rating on INR1cr LT Fund Based Loan VITAL HEALTHCARE: CRISIL Reaffirms B+ Rating on INR113M Bank Loan YASIN IMPEX: CRISIL Upgrades Rating on INR25MM Cash Credit to B+ I N D O N E S I A PROFESIONAL TELEKOMUNIKASI: Moody's Affirms 'Ba2' CFR TOWER BERSAMA: Moody's Affirms Ba2 CFR; Outlook Revised to Neg. J A P A N GK MLOX3: Fitch Affirms 'CCsf' Rating on JPY1.78BB Class D Notes N E W Z E A L A N D PORTO BELLO: Enters Into Voluntary Liquidation - - - - - ================= A U S T R A L I A ================= APN NEWS: Fitch Publishes 'BB-' Rating on Sr. Unsecured Debt ------------------------------------------------------------ Fitch Ratings has published APN News & Media Limited's (APN) Long- Term Foreign-Currency Issuer Default Rating (IDR) and senior unsecured debt class rating at 'BB-'. The Outlook is Stable. Fitch has also published the expected 'BB-(EXP)' rating on the proposed senior unsecured guaranteed US dollar notes to be issued by its wholly owned subsidiary, Biffin Pty Limited, and unconditionally and irrevocably guaranteed by APN and its key operating subsidiaries. The final rating on the notes is contingent upon the receipt of final documents conforming to information already received. The notes are rated in line with APN's senior unsecured rating of 'BB- ' as they will represent direct, unconditional, unsecured and unsubordinated obligations of the company. The proceeds from the proposed senior unsecured notes will be used to repay outstanding indebtedness. KEY RATING DRIVERS Leading Positions; Unique Assets: The ratings reflect APN's strong brands in radio and publishing in Australia and New Zealand and its ability to consistently deliver high quality content, which should enable the company to maintain its market positions. The ratings also reflect APN's unique asset combination and its ability to offer cross-platform advertising over its publishing, radio, outdoor and digital assets. The higher earnings and cash flow visibility from its radio networks help mitigate the structurally weaker publishing businesses. Notes not Notched Down: Prior-ranking secured debt - facilities A of the syndicated bank loans - will remain a significant part of the company's funding structure in the medium term. However, Fitch has not notched the notes down below the IDR as our conservative forecasts indicate that the ratio of prior-ranking secured debt/EBITDA will remain below the guideline threshold of 2.0x-2.5x set out in Fitch's criteria "Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers". Resilient Radio Networks: Fitch believes that APN's radio business should remain less vulnerable to the growing popularity of alternative media platforms, such as the internet, and should continue be resilient. Advertising revenue for commercial radio broadcasters is less subject to fluctuations in global and national advertising budgets. Instead, local advertising sales dominate radio advertising revenue. In addition, APN's rebranding and talent recruitment should continue to help gain audience and revenue market shares. Structural Challenges in Publishing: The rating reflects the on- going structural challenges confronting APN's publishing business. Despite APN's strong positions in the New Zealand national newspaper market and the Australian regional newspaper market, Fitch expects APN's publishing business to remain under pressure due to the on-going migration of advertising expenditure to digital platforms and the associated media fragmentation. Steady Cash Generation: APN's key businesses are cash generative and their capex requirements are low. Fitch expects that APN's pre-dividend free cash flow (FCF) margins will increase to about 10% in the next three years. The group structure has improved with the acquisition of partners' stakes in Australia Radio Network and The Radio Network, which has eliminated the cash flow leakage from the group to these partners. Potential Impact of NZ IPO: In the event that an IPO of the New Zealand business were to go ahead, the resulting market concentration would be likely to constrain the rating at 'BB-' even if the proceeds were used to pay down debt. High Leverage: At end-June 2014, APN had gross debt of AUD504m. Fitch forecasts funds flow from operations (FFO)-adjusted net leverage to decline from 5.1x in 2013, but nevertheless to remain above 3.0x for at least the next two to three years. Further deleveraging will depend largely on the ability of the radio business to offset declining revenues in the publishing business, the successful implementation of a paywall strategy and the company's decisions about use of FCF. RATING SENSITIVITIES Negative: Future developments that may individually or collectively lead to a negative rating action include: -- significant deterioration in the operating profile amid on- going competitive pressures, changing media consumption patterns and evolving technology platforms -- large debt-funded acquisition indicating a significant increase in APN's risk tolerance -- sustained negative FCF margins -- sustained FFO-adjusted net leverage above 4.0x Positive: Future developments that may individually or collectively lead to a positive rating action include: -- successful transition to digital platforms for its publishing businesses -- material diversification of cash generation from the publishing business -- sustained FFO-adjusted net leverage below 3.0x APN NEWS: S&P Assigns 'BB' Issuer Credit Rating; Outlook Stable --------------------------------------------------------------- Standard & Poor's Ratings Services said that it had assigned its 'BB' issuer credit rating on Australia-based media company APN News & Media Ltd. (APN). The outlook on the rating is stable. At the same time, S&P has rated APN's senior secured bank facilities 'BB+' with a recovery rating of '2', and proposed senior unsecured notes 'B+' with a recovery rating of '6', issued by APN's related entities. The 'BB' issuer credit rating on Australian and New Zealand media company APN reflects S&P's view of the company's "significant" financial risk profile and "fair" business risk profile. "Our business risk assessment reflects our view that APN's portfolio of media assets provides it with a meaningful level of diversification away from the structurally declining newspaper industry," said Standard & Poor's credit analyst Minh Hoang. Over the past 12 months, APN has undertaken a number of transactions to rebalance its portfolio of media assets. In Feb. 2014, APN acquired the remaining 50% interest of its Australian and New Zealand radio assets, following the divestment of its outdoor advertising business APN Outdoor and e-commerce business brands Exclusive. Supporting this transaction was a A$132 million equity raising. Mr. Hoang added: "We view this refocused strategy, which emphasizes the company's core media and digital businesses, as broadly positive for creditors. The restructure has also provided the company with greater management control over its radio assets and cash flow diversification away from newspaper publishing." On Sept. 1, 2014, APN announced that it was considering strategic options for its New Zealand assets, including an initial public offering (IPO) and listing on the New Zealand Stock Exchange. S&P considers that the potential IPO would lead to a reduction in APN's scale, scope, and diversification; however, an improved financial strength derived from the proceeds of such a transaction would likely offset the impact at the current rating level. The ultimate rating impact is contingent upon the final transaction structure--if it occurs--as well as the group's financial policies and future growth strategy following the transaction. S&P also notes that the ratings on the bond could be further affected by the final structure of any transaction. The stable outlook reflects S&P's view that APN's business diversity, particularly its significant position in radio broadcasting, will provide sufficient buffer to offset the continued structural decline in newspaper publishing. This should enable the company to maintain its FFO-to-debt of greater than 20%. The stable outlook does not incorporate any event risk associated with any potential transaction activity, including those that may be prompted by changes to Australia's media ownership laws. Downward rating pressure could occur if APN's market position deteriorates materially such that the company's diversification does not provide it with sufficient buffer against structural weaknesses in any of its key media businesses. Downward rating pressure could also occur if weaker operating performance or debt- funded acquisitions caused a material worsening in the group's financial risk profile, including FFO-to-debt of less than 20%. Negative rating pressure could also arise if a potential IPO of the New Zealand businesses causes a reduction in APN's business scale and diversity without an offsetting improvement in the group's financial risk profile. In addition, further sizable debt-funded acquisitions or an overall increase in the group's financial risk appetite could also pressure the rating. Upward rating movement is unlikely in the near term based on the group's current business mix and financial risk profile. S&P may consider raising the rating if APN adopts a more conservative financial risk appetite and manages its exposure to the continued decline in newspaper publishing prudently and effectively. APN NEWS: Moody's Assigns (P)Ba2 Corporate Family Rating -------------------------------------------------------- Moody's Investors Service has assigned a first-time provisional Corporate Family Rating (CFR) of (P)Ba2 to APN News & Media Limited (APN), a media company based in Australia. At the same time, Moody's has also assigned a provisional (P)Ba3 senior unsecured rating to the proposed US$250 million of senior unsecured notes issued by Biffin Pty Limited (Issuer), a wholly owned and guaranteed subsidiary of APN. This is the first time that Moody's has assigned ratings to APN. The outlook on the ratings is negative. The assignment of a definitive CFR and Senior Unsecured ratings are subject to review of final documentation, and successful close of the transaction. The proceeds of the transaction will be used to refinance existing debt. Ratings Rationale "APN's (P)Ba2 corporate family rating reflects its diversified mix of media assets as well as the strong market positions that the company holds within these markets" says Saranga Ranasinghe, a Moody's Analyst. "The rating also reflects APN's national scale in both Australia and New Zealand, which provides it with better ability to withstand and absorb operating conditions, which are highly competitive", Ranasinghe adds. "At the same time, the rating considers APN's high exposure to newspaper print advertising revenue, which is challenged by changing consumer media usage away from print" says Ranasinghe, adding "However, Moody's recognize The New Zealand Herald's strong market position, as well as APN's ability to strengthen profit margin in the New Zealand print business". APN operates in a fast moving industry, and its rating reflects the company's appetite for aquisitions, albeit these have been made in a manner that did not materially compromise its financial profile. APN's strategy to increase its presence and market share in radio provides rating support. The company has the #1 ranked FM radio network across Australia by audience share. The (P)Ba2 rating additionally considers APN's moderate financial leverage and its ability to generate free cash flow, reflecting its solid margins and prudent capital structure. Debt/EBITDA for FY13 was 4.0x, and Moody's expect the ratio to improve to 3.2x in FY15. The negative outlook reflects the company's recent announcement that it is considering spinning off its New Zealand assets. The New Zealand assets generate about 44% of group EBITDA, and such transaction, if it proceeds, would raise uncertainty regarding APN's future capital structure, business profile, and leverage metrics, as well as reduce revenue mix and geographic diversity. The (P)Ba3 senior unsecured rating is one notch lower than the CFR reflecting the legal subordination as the notes will rank junior to APN's senior secured revolver. The rating outlook could revert to stable if the company decides to retain its current business profile, or if capital from any potential transaction is used to pay down debt and/or reinvested in core assets while maintaining overall quality of earnings, and financial leverage (adjusted Debt/EBITDA) below 3.75x. The ratings could be downgraded if adjusted Debt/EBITDA ratios are sustained above 3.75x which could be due to asset sale, operating weakness, acquisitions or shareholder-friendly initiatives. An upgrade is unlikely over the forecast period due to the high exposure to the challenging print industry and uncertainty around business and financial profiles. The company would have to demonstrate reduced exposure to print advertising as well as revenue and margin stability in the print segment of the company. Ratings could be upgraded if the company operates in a financially prudent manner consistent with a higher rating, including maintaining debt -to-EBITDA ratio below 2.5x on a consistent basis. APN is one of Australia's leading diversified media groups. Pro forma the acquisition of total ownership in the radio assets, APN's earnings for FY13 is diversified across print (44%), radio (42%), outdoor (11%) and digital (3%). EQUITITRUST LTD: Founder Fined For Failing to Assist Liquidator --------------------------------------------------------------- The founder and former director of Equititrust Limited, Mark McIvor, has been convicted and fined AUD10,000 after failing to assist the liquidator appointed to his three companies. Mr. McIvor, of the Gold Coast, was found guilty in the Brisbane Magistrates Court on Aug. 22, 2014, following six charges laid by ASIC for failing to provide a Report as to Affairs (RATA) and deliver books and records to the liquidators of Chevron Capital Pty Ltd, MHSM Holdings Pty Ltd and SM Capital Pty Ltd within 14 days of the winding up order for each company. Commissioner Greg Tanzer said, "Mr McIvor's conviction was one of 143 criminal actions taken by ASIC over the past six months against directors of proprietary limited companies who had breached their obligations under the Corporations Act 2001. "If a company fails and goes into liquidation, the directors are required to provide assistance to the appointed liquidator so that creditors can be paid and any misconduct can be identified." The Commonwealth Director of Public Prosecutions prosecuted the matter. Mark McIvor was the director of Equititrust Limited -- the responsible entity of two managed investment schemes which were wound up in 2011 and 2012, owing approximately AUD200 million to 1,600 investors. EQUMEN PTY: Enters Administration; First Meeting Set Sept. 11 ------------------------------------------------------------- Kirsten Robb at SmartCompany reports that a premium Australian underwear brand stocked in department stores including David Jones and Saks Fifth Avenue in the US has entered administration, following the sudden death of its founder. Equmen Pty Ltd, which sells high-performance men's compression clothing, entered administration on August 29 after founder Gavin Jones passed away in July, SmartCompany discloses. David Levi -- dlevi@leviconsulting.com.au -- of Levi Consulting was appointed administrator. Mr. Levi indicated to SmartCompany Equmen had incurred startup trading losses of around AUD3 million. "In my experience, it is common that startups incur losses and that has been the position in relation to the company," the report quotes Mr. Levi as saying. Equmen had a team of four employees and was based in a rented premise in Sydney. On its website, Equmen lists four Australian retailers as stockists including David Jones, as well as high-profile international stockists including Saks 5th Avenue in the US, Selfridges in the UK and Brown Thomas in Ireland. The company did not engage directly in design or manufacturing of it products and housed its stock in third party warehouses, Mr. Levi, as cited by SmartCompany, said. Mr. Jones, who died at his farm in Goulburn on July 12 this year, founded the company in 2007, the report notes. According to the report, Mr. Levi confirmed Mr. Jones was primarily responsible for arranging funding for the company and said Mr. Jones' unexpected death had interrupted the business. While he would not indicate who the creditors were, Mr. Levi said he expects they will be paid 100 cents to the dollar, SmartCompany relays. The first meeting of creditors will take place in Sydney on September 11, the report discloses. Several other companies owned by Mr. Jones have also entered administration after his death, including Gavin Jones Communications, Vibe Australia and Deadly TV, the report adds. MAMERS INVESTMENTS: Cor Cordis Appointed as Administrators ---------------------------------------------------------- Robert Kite -- rkite@corcordis.com.au -- & Mark Hutchins -- mhutchins@corcordis.com.au -- of Cor Cordis were appointed as administrators of Mamers Investments Pty Limited on September 2, 2014. A first meeting of the creditors of the Company will be held at Level 6, 55 Clarence Street, in Sydney, on 12 Sept. 12, 2014, at 11:00 a.m. NATURAL FUEL: Fined For Failing to Lodge Financials --------------------------------------------------- Natural Fuel Ltd has been fined and convicted for failing to lodge financial reports with the Australian Securities and Investments Commission (ASIC). Natural Fuel Ltd, based in Western Australia, was fined AUD16,500 after pleading guilty in Perth Magistrates Court on Aug. 15, 2014 to 11 ASIC charges for failing to: * lodge half-year reports with either ASIC or the ASX between 2009 and 2012 * lodge annual reports with either ASIC or the ASX between 2010 and 2012, and * hold annual general meetings between 2009 and 2012. Commissioner Greg Tanzer said, "Any company with a legal obligation to lodge financial reports and hold annual general meetings should obey the law. "These reports and meetings are not only crucial to the integrity of our market, but also used by investors, employees and creditors to help them make informed decisions. "Over the last 12 months, ASIC has prosecuted eight companies for 68 offences with outcomes ranging from good behaviour bonds to fines of up to AUD25,000," Mr. Tanzer said. The Commonwealth Director of Public Prosecutions prosecuted the matter. TLC PRINT: Placed Into Administration ------------------------------------- Robert Kite & Mark Hutchins of Cor Cordis were appointed as administrators of TLC Print Finishing Pty Limited on Sept. 2, 2014. A first meeting of the creditors of the Company will be held at Level 6, 55 Clarence Street, in Sydney, on Sept. 12, 2014, at 10:00 a.m. ========= C H I N A ========= ANTON OILFIELD: Fitch Revises Outlook to Neg. & Affirms 'BB' IDR ---------------------------------------------------------------- Fitch Ratings has revised the rating Outlook on Anton Oilfield Services Group (Anton) to Negative from Stable and affirmed the company's Long-Term Issuer Default Rating (IDR) and senior unsecured rating at 'BB'. The Negative Outlook reflects several challenges that Anton faces, including a competitive operating environment that is squeezing its margins, reduced capex by customers in China and a longer working capital cycle that is dampening net cash flow generation. While we expect the order flow to independent oilfield services providers to improve in the coming months, we believe the company will have to deal with trends of higher competition, lower margins and higher accounts receivable days that are likely to outlast the current industry downturn. KEY RATING DRIVERS Challenging Operating Environment: Anton, together with other independent oilfield services providers in China, has seen slower growth, margin compression as well as higher accounts receivable days in the first half of 2014. This is a direct result of project delays from major customers, specifically China National Petroleum Corporation (A+/Stable) and Sinopec (A+/Stable) amid the government's on-going investigations into practices of state-owned enterprises, including in the oil and gas sector. Business Prospects Expected to Improve: The state mandates for China's large national oil companies (NoCs) to increase production are still intact, and increasingly China is looking to unconventional resources to achieve these targets, including tight and shale oil and gas reserves. Fitch expects the Chinese NoCs to increase upstream capex, which should lead to higher business flows to oilfield services providers such as Anton, which are capable of providing high-end services in the unconventional energy field. This prospect is a key factor supporting Anton's current rating. Lengthier Working Capital Cycle, Lower Margins: Although business volumes for high-end oilfield services providers in China are likely to improve, Fitch believes some of the recent negative developments may persist over the long term. Changes to tender processes to award oilfield services jobs to private-sector players are aimed at improving transparency, but we believe it will also result in higher competition and pricing pressure. Fitch believes this may lead to a sustained margin contraction. In addition to weaker margins, Anton's accounts receivable days increased to 233 days in 1H14, from 150 days in 2013. As a result, net cash outflow amounted to CNY433.6m compared with a neutral position in 1H13, and cash balances fell to CNY1bn at end- 1H14 from CNY1.8bn at end-2013. Historically Anton's receivables turnover was shorter than that of its domestic peers, a factor reflected in the 'BB' ratings assigned in 2013. While Fitch expects some decline in collection days in 2H14, it believes Anton's working capital cycle is likely to remain elevated as compared with prior levels. Near-Term Liquidity Adequate: Anton's near-term liquidity is adequate - short-term debt amounted to CNY431m compared with CNY1bn of cash and undrawn credit facilities at end-1H14. Nonetheless, another CNY300m and CNY200m of bonds are due to mature in 2015 and 2016 respectively. Anton has a low maintenance capex requirement and it has great flexibility to adjust its growth capex due to the granularity of the spending. Management has cut its 2014 full-year capex guidance and made a commitment to improve cost efficiencies. Limited Rating Headroom: FFO-adjusted net leverage has deteriorated to 3.7x in 1H14 (on an annualised basis), breaching Fitch's threshold of 2.5x for negative rating action for the 'BB' rating category. The higher leverage was due to margin compression and deterioration in Anton's cash position with the increased working capital requirement. EBITDA margin dropped to 23% in 1H14 from 28% a year earlier, although it remained above the negative guideline of 20%. RATING SENSITIVITIES Negative: Future developments that may, individually or collectively, lead to a downgrade include: -- FFO-adjusted net leverage of over 2.5x (2013: 1.1x) or FFO fixed charge cover less than 5.0x (2013: 7.4x) on a sustained basis -- EBITDA margin falling below 20% (2013: 27%) on a sustained Basis -- No meaningful improvement in new order flow and revenue visibility in the next six months -- Weakening of Anton's market position within China and/or material increase in reliance on markets outside China Positive: Future developments that may, individually or collectively, lead to the Outlook being revised to Stable include: -- FFO-adjusted net leverage below 2.5x or FFO fixed charge cover above 5.0x on a sustained basis -- Maintaining profitability with EBITDA margin above 20% on a sustained basis -- Improvement in order backlog and revenue visibility ANTON OILFIELD: Weak 1H 2014 Results No Impact on Moody's Ba2 CFR ----------------------------------------------------------------- Moody's Investors Service says that Anton Oilfield Services Group's weaker financial results in 1H 2014 as against 1H 2013 have no impact on its Ba2 corporate family and senior unsecured bond ratings, or stable rating outlook. "Anton's modest year-on-year revenue growth and lower profit margins in 1H 2014 were in-line with our lowered expectations," says Chenyi Lu, a Moody's Vice President and Senior Analyst. "The weaker results were driven by delays in the commencement of projects in China, pricing pressure, as well as the higher costs required to support business growth, including new business launches in 1H 2014," adds Lu. Based on Anton's results announcement for 1H 2014, its revenue grew only 5.2% year-on-year to RMB1.11 billion from RMB1.06 billion in 1H 2013, owing to the weakness in its down-hole operations and tubular services businesses, and delays in exploration and production spending by certain oil and gas companies in China. By contrast, revenues grew 26.4% in 2013 and 59.2% in 2012. The company's adjusted EBITDA margin fell to 24.5% in 1H 2014 from 26.8% in 1H 2013, because of lower operating efficiency and pricing pressure. Consequently, its adjusted EBITDA fell 3.8% year-on-year to RMB272 million in 1H 2014 from RMB283 million in 1H 2013. Moody's expects Anton to grow its revenue by about 15% in 2014, driven by increased project launches in China in 2H 2014, continued strong growth in its overseas markets, and new service offerings. In 1H 2014, its overseas markets contributed 27.6% of total sales compared with only 20.4% in 1H 2013. Moody's also expects Anton's adjusted 2H 2014 EBITDA margin to improve from the levels seen in 1H 2014, driven by better operating efficiency and expense controls. Moody's notes that Anton's financial leverage rose slightly at end-June 2014 from levels seen at end-2013, owing to its lower earnings and slightly higher debt levels. In particular, its adjusted debt grew to RMB2.48 billion at end- June 2014 from RMB2.43 billion at end-2013. Consequently, Anton's adjusted debt/EBITDA rose to around 3.6x for the 12 months ended 30 June 2014 from 3.5x at end-2013. Moody's expects Anton's adjusted debt/EBITDA to improve to 3.0x- 3.5x over the next 12-18 months, driven by an expected improvement in earnings. This leverage ratio is within the parameters of its Ba2 rating. Anton's liquidity profile remains adequate, underpinned by its expected operating cash flows of RMB250 million over the next 12 months and cash and cash equivalents of about RMB1 billion at end- June 2014. These cash sources are sufficient to cover its short- term maturing debt of RMB431 million and the projected capital expenditure of RMB600 million over the next 12 months. The principal methodology used in this rating was Global Oilfield Services Rating Methodology published in December 2009. Anton Oilfield Services Group is a leading Chinese oil services company focusing mainly on the country's fast growing natural gas sector. The company offers integrated oil/gas field services solutions, covering various phases of field development, including down-hole operation services, well-completion technologies, drilling technologies, and tubular services. Approximately 87.6% of Anton's 2013 revenue was derived from gas field-related services. Anton was founded by its chairman, Mr. Luo Lin, in 1999, and was listed on the Hong Kong Stock Exchange in December 2007. INTIME RETAIL: Fitch Affirms 'BB' Issuer Default Ratings -------------------------------------------------------- Fitch Ratings has affirmed China-based department store operator Intime Retail (Group) Company Limited's (Intime) Long-Term Foreign and Local Currency Issuer Default Rating (IDRs) and senior unsecured rating at 'BB'. The Outlook for the IDRs are Negative. Fitch has simultaneously withdrawn the ratings as Intime has chosen to stop participating in the rating process. Accordingly, Fitch will no longer provide ratings or analytical coverage of Intime. Intime's negative outlook reflects the company's weaker credit metrics following a period of high capex. Intime's deleveraging would only materialise when capex tapers from 2015 onwards. The current weak operating environment has also increased the uncertainty for Intime's store performance, which may also potentially delay the timing of the company's deleveraging. YANZHOU COAL: Moody's Downgrades Corporate Family Rating to Ba2 --------------------------------------------------------------- Moody's Investors Service has downgraded to Ba2 from Ba1 the corporate family rating of Yanzhou Coal Mining Co and the senior unsecured debt rating of Yancoal International Resources Development Co Ltd. Moody's has also downgraded to Ba2 from Ba1 the rating on the unsecured perpetual bond issued by Yancoal International Trading Co., Ltd. and guaranteed by Yanzhou Coal Mining Co., Ltd. The ratings outlook is negative. These actions conclude the review for downgrade initiated on April 1, 2014 for Yanzhou Coal Mining Co and Yancoal International Resources Development Co Ltd, and June 30, 2014 for Yancoal International Trading Co., Ltd. Ratings Rationale "The downgrades and negative outlook reflect our expectation that Yanzhou Coal's credit metrics for the next 12 to 18 months will remain weak for the Ba rating category. The company is unlikely to deleverage, as it plans to carry out its RMB8 billion capex plan for 2014 amid a weak coal price environment," says Simon Wong, a Moody's Vice President and Senior Credit Officer/Manager. Yanzhou Coal's adjusted debt increased further to RMB66.4 billion as at 30 June 2014, including the newly issued perpetual debt of RMB1.85 billion, from RMB55.4 billion at end-2013 and RMB41.2 billion at end-2012. While the company's capex is expected to further decline in 2015, Moody's expects little improvement in its debt to EBITDA ratio as coal prices will likely stay weak. Although the company has substantial cash on hand -- RMB22 billion as of June 2014 -- its net debt to EBITDA ratio of around 5x-6x and EBIT/interest below 2x for 2014 and 2015 are weak for the Ba range. "Yanzhou Coal's Ba2 corporate family rating incorporates a one- notch uplift based on the strong likelihood of parental support from Yankuang Group (unrated) in case of financial distress," adds Wong, also the Lead Analyst for Yanzhou Coal. The expected strong support from its parent reflects Yanzhou Coal's strategic importance as the Group's flagship company, holding substantially all of the Group's mining assets. Yanzhou Coal contributes around 70% of Yankuang Group's gross profit and 69% of its total assets. Furthermore, Yanzhou Coal is a key source of recurring dividend and cash flow for Yankuang. Yanzhou Coal's standalone profile also reflects the company's (1) high-quality coal mines, with diversified mining assets in China and Australia, and good related infrastructure; (2) the competitive level of costs at its mines in Shandong; (3) long operating track record and compliance with occupational health and safety requirements; (4) favorable position in China where demand for coal remains resilient; and (5) good access to low-cost domestic funding. The rating considers the ongoing operating losses and financial risks from ongoing expansion in Australia and ongoing need to seek bank waivers in respect of certain financial covenants breach by its Australian operations. Resolving the weakness in the credit metrics of its Australian operations has been hampered by the slow pace of ramp-ups in production, due to soft demand and weak coal prices. Furthermore, the company is exposed to regulatory risks in China and Australia. Yanzhou Coal's liquidity position is strong. Its cash balance of RMB22 billion including term deposits as of end June 2014 and undrawn bank facilities more than covered its short-term debt of RMB14 billion and capital expenditure for the next 12 months of around RMB6 billion-RMB7 billion. Moody's notes that Yanzhou Coal's secured debt to total assets ratio was below 15% as at 1H 2014. Furthermore, it has substantial mining asset and operating cash flow at the holding company level, mitigating structural subordination risks. Upward rating pressure is limited given the negative rating outlook. However, its outlook could revert to stable if: (1) the company can turn around its Australian operations; (2) coal prices improve materially; or (3) the company improves its financial profile, such that net adjusted debt/EBITDA returns to below 5x and EBIT/ interest is maintained above 2x. On the other hand, downward rating pressure could emerge if Yanzhou Coal (1) fails to reduce its debt leverage; (2) fails to turn around its Australian operation; (3) experiences a material disruption in its operations due to non-compliance with mining regulations; or (4) experiences persistent negative free cash flows and its liquidity weakens. Indicators for downward rating pressure include its cash balance falling below 5% of total assets; adjusted net debt/EBITDA continuously exceeding 5.5x; or EBIT/ interest below 2x. If the Shandong provincial government's indirect ownership through the Yankuang Group drops to below 50%, this could also be negative for Yanzhou Coal's ratings. The principal methodology used in these ratings was Global Mining Industry published in August 2014. Yanzhou Coal Co Ltd was listed in Shanghai, Hong Kong and New York in 1998. It is 56.52%-owned by the Yankuang Group, a state-owned enterprise that is wholly owned by the Shandong Provincial State- Owned Assets Supervision and Administration Commission. Yanzhou Coal is one of the top coal mining groups in China. As of December 31, 2013, Yanzhou owned and operated 20 coal mines across China and Australia with abundant coal resources, including Shandong and Shanxi Provinces and the Inner Mongolia Autonomous Region in China, as well as Queensland, New South Wales and Western Australia in Australia. YUZHOU PROPERTIES: Moody's Ups Sr. Unsecured Debt Rating to B1 -------------------------------------------------------------- Moody's Investors Service has upgraded Yuzhou Properties Company Limited's senior unsecured debt rating to B1 from B2. Moody's has also affirmed the company's B1 corporate family rating. The ratings outlook is stable. Ratings Rationale "The senior unsecured rating upgrade reflects Yuzhou's track record of raising offshore funding and our expectation that it can keep priority debt, mainly comprising domestic bank borrowings, around 15%-16% of total consolidated assets in the next 12--18 months," says Lina Choi, a Moody's Vice President and Senior Analyst. Yuzhou had increased its utilization of offshore funding in the last two years, including its HSBC club loan of USD101.8 million in April 2013; its private placement to China Life Insurance Co. Ltd. (A1 stable) of HK$1.5 billion in July 2013; and its issuance of senior unsecured notes of USD300 million in September 2013 and January 2014. Subsidiary debt to total consolidated assets was 16.7% as of 30 June 2014, and Moody's expects this ratio to drop to around 15%- 16% in the next 12 to 18 months. Yuzhou's B1 corporate family rating reflects its fast-growing operating scale. It also takes into account the concentration of cash flow from projects in Xiamen and its moderate debt leverage. Partly mitigating these challenges are Yuzhou's leading market position and good quality land bank in Xiamen, which together provide a buffer against sales volatility. Its low-cost land bank, good profit margin, and the gradual diversification of its land bank outside Xiamen also help mitigate against sales volatility. In the first seven months of 2014, Yuzhou achieved contracted sales of RMB5.8 billion, a year-on-year drop of 16%. The total was also 44% of the contracted sales target of RMB13.2 billion for 2014. Moody's believes the company will improve sales momentum in 2H2014 and record contracted sales of RMB7-8 billion in 2H2014, meeting its full-year target. This assumption is supported by: (1) the consideration that the majority of its new projects will be launched in 4Q2014; (2) the relaxation of home purchase restrictions in Fujian Province and Hefei city, where most of its sales projects are located; and (3) its healthy level of available-for-sale area in 2H2014, totaling 1.5 million square meters (sqm). "Yuzhou's credit metrics for 1H2014 positions its B1 rating strongly, and offers it a buffer against the challenging environment and provides resource for expansion outside Xiamen," adds Choi, also the lead analyst. Yuzhou's gross profit margin remained high at 36.1% in 1H2014, when compared to its industry peers, as it manages margin erosion by continuing to procure land at low cost. For example, in 1H2014, its unit cost of land bank -- as a percentage of contracted ASP -- was at a relatively low 17.6%. Its above-industry-average profit margin -- combined with notable growth in revenue to RMB3.9 billion in 1H2014 -- saw interest coverage, as measured by adjusted EBITDA/ interest, increase to 3.1x in 1H2014. As a result, financial flexibility improved. Moody's expect interest coverage will remain around 2.7-3.2x over next the 12-18 months which positions it well for the current rating. Yuzhou has borrowed additional debt this year to enhance its liquidity buffer. While total borrowings had increased to RMB13.0 billion in June 2014, it is also enjoying a strong cash balance of RMB7.7 billion. This balance adequately covers its short-term maturing debt of RMB2.2 billion and committed unpaid land premium of RMB0.9 billion for the next 12 months. As a result, cash to short term debt was 3.2x at 30 June 2014, which is very strong when compared to its Ba and B rated peers. Moody's expect the company to maintain a healthy cash buffer which is important in the current challenging operating environment. Moody's also expect revenue to debt and adjusted debt/capitalization to stand at 70%-75% and 60%-65% for the next 12-18 months, positioning it well when compared with its B1 rated peers. The stable outlook reflects our expectation that Yuzhou will continue to generate sales with a stable profit margin, and that it will maintain adequate liquidity and enjoy access to onshore banks for its construction work. Moody's would consider upgrading Yuzhou's ratings if it can: (1) consistently achieve its planned sales growth with stable profit margins; (2) generate sales from a well-balanced portfolio without concentration risk; (3) achieve a stable financial profile without aggressive acquisitions; and (4) maintain its strong liquidity with broadened banking relationships. The credit metrics which could point to an upgrade are revenue to gross debt above 75%-80% and EBITDA/interest coverage above 3.0x- 3.5x on a sustained basis. The ratings could be pressured downwards if Yuzhou's financial position deteriorates, owing to: (1) a weaker-than-expected sales performance; (2) aggressive schedules for its development projects or aggressive land acquisitions; or (3) a weakened level of liquidity. The credit metrics that Moody's would consider for a rating downgrade include EBITDA/interest coverage below 2.5x, or revenue to gross debt below 65-70% on a sustained basis. The principal methodology used in this rating was Global Homebuilding Industry published in March 2009. Yuzhou Properties Company Limited is a Fujian-based developer that focuses on residential housing in Xiamen. It had a small land bank (with a legal title) of around 8.58 million square meters (sqm) in gross floor area (GFA) at end-June 2014. Of this land bank, 24% is in Xiamen, 28% in Hefei, 15% in Quanzhou, and the rest are in Bengbu, Shanghai, Tianjin, Fuzhou, Longyan and Zhangzhou. ========= I N D I A ========= ANANT RICE: ICRA Assigns 'B+' Rating to INR2.50cr Cash Credit ------------------------------------------------------------- ICRA has assigned a long term rating of [ICRA]B+ to the INR0.60 crore term loans, INR2.50 crore cash credit and INR0.40 crore letter of credit facilities of Anant Rice Industries. ICRA has also assigned a short term rating of [ICRA]A4 to the INR2.50 crore (Rs. 1.50 crore is interchangeable to the cash credit limit) non- fund based bank limit of ARI. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limit- 0.60 [ICRA]B+ assigned Term Loans Fund Based Limit- 2.50 [ICRA]B+ assigned Cash Credit Non Fund Based 0.40 [ICRA]B+ assigned Limit-Letter of Credit Non Fund Based 2.50 [ICRA]A4 assigned Limit-Bank Guarantee The assigned ratings takes in to account, the vulnerability of profitability to movement in paddy prices as the level of harvest and quality of paddy are highly dependent on agro climatic conditions, and the low entry barrier and intense competition in a highly fragmented rice milling industry, which restricts pricing flexibility. The ratings also factor in ARI's small scale of current operations; notwithstanding the healthy revenue growth witnessed over the last two fiscals, primarily supported by revenues generated from trading activity. The financial risk profile of the company is characterized by declining operating margin and depressed level of coverage indicators. The rating, however, draws comfort from the experience of the partners in the rice milling business and ARI's presence in a major paddy growing area, resulting in easy availability of paddy, which also keep inward freight costs under control. Nevertheless, the risks associated with ARI's status as a partnership firm including the risks of withdrawal of capital will remain a credit concern. Founded in 1987 as a partnership firm, ARI is engaged in milling of paddy to produce non-basmati raw and parboiled rice with an installed capacity of 19,200 tonnes per annum (TPA). Besides, the firm has two sortex machines to produce silky sortex rice with an installed capacity of 4 tonnes per hour (TPH). The milling unit of the firm is located in Arang, Chhattisgarh. Recent Results For the year ended 31st March 2014, the firm has reported an operating income of INR17.02 crore with a profit after tax (PAT) of INR0.19 crore; as compared to an operating income of INR10.36 crore with a PAT of INR0.15 crore during 2012-13. C.L. GULHATI: CRISIL Reaffirms B- Rating on INR250MM Cash Credit ---------------------------------------------------------------- CRISIL's rating on the long-term bank facilities of C.L. Gulhati & Sons Ltd (CLG) continues to reflect CLG's weak financial risk profile, marked by high gearing and weak debt protection metrics, and its exposure to supplier concentration risks. These rating weaknesses are partially offset by the company's long track record as a dealer for Tata Motors Ltd in Jammu and Kashmir (J&K). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 250 CRISIL B-/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 2 CRISIL B-/Stable (Reaffirmed) Outlook: Stable CRISIL believes that CLG will continue to benefit over the medium term from its established market position in J&K. The outlook may be revised to 'Positive' if the company reports significant and sustained improvement in its revenue and operating margin, resulting in an increase in its net cash accruals, or in case of improvement in its working capital management. Conversely, the outlook may be revised to 'Negative' if CLG reports a significant decline in its profitability or if it undertakes a substantial debt-funded capital expenditure programme, leading to deterioration in its financial risk profile. Update CLG's net sales declined by around 21 per cent year-on-year and to around INR2.3 billion in 2013-14 (refers to financial year, April 1 to March 31). The decline was because of the weak economic environment and intense competition in the automobile dealership market in the J&K region. The company's operating margin, at around 3.8 per cent in 2013-14, was higher than CRISIL's expectation due to higher margins availed by TML on account of increased competition; CLG's margin is likely to remain at around 4 per cent over the medium term on account of its low bargaining power with its principals. CLG has moderate working capital requirements, indicated by gross current assets (GCAs) of 105 days as on March 31, 2014; the GCAs were higher than in the past mainly due to rise in debtors on account low realisations from J&K Police. The GCAs consisted of inventory of 70 days and debtors of 25 days. CLG is required to maintain large inventory due to the stocking requirements for various models in the commercial and passenger segments, augmented by the requirement for accessories and spare parts for all the variants. The company funds its working capital requirements mainly through working capital bank limits, which remain almost fully utilised. CLG's financial risk profile remains weak, marked by high gearing and weak debt protection metrics. As on March 31, 2014, its total outside liabilities to tangible net worth ratio was very high at 17.3 times, and is expected to remain high in the range of 15 to 17 times over the medium term. CLG was originally set up as private limited company in 1956 by Mr. C L Gulhati and his associates; subsequently, it was reconstituted as a public limited company. Since its inception, CLG has been a dealer for the entire range of TML's commercial vehicles. It added the dealership of TML's passenger vehicles to its portfolio in 2000. The company has recently set up a new dealership for Fiat vehicles in Jammu. CHOWDHRY RUBBER: CRISIL Reaffirms INR125M Cash Credit B+ Rating --------------------------------------------------------------- CRISIL's ratings on the bank facilities of Chowdhry Rubber and Chemical Pvt Ltd continue to reflect its below-average financial risk profile marked by stretched liquidity and leveraged capital structure. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 20 CRISIL A4 (Reaffirmed) Cash Credit 125 CRISIL B+/Stable (Reaffirmed) Letter of Credit 75 CRISIL A4 (Reaffirmed) The rating also reflects its moderate scale of operations in the intensely competitive chemical trading industry along with large working capital requirements and vulnerability of its operating margin to volatility in raw material prices. These rating weaknesses are partially offset by the benefits that CRPL derives from its promoters' extensive industry experience, and financial support from them. The rating also reflects its varied customer base of diverse industries. Outlook: Stable CRISIL believes the business risk profile of CRPL will be supported by its experienced promoters and its diversified customer base. The outlook may be revised to 'Positive' if the company's financial risk profile, particularly its liquidity, improves, most likely because of sizeable accruals, considerably low working capital requirements, or infusion of substantial capital by its promoters. Conversely, the outlook may be revised to 'Negative' if CRPL's working capital management weakens further, or if it undertakes a debt-funded capital expenditure programme, leading to further deterioration in its overall financial risk profile, especially its liquidity. Update CRPL's operating performance in 2013-14 (refers to financial year, April 1 to March 31) remained stagnant, with operating income of around INR890 million, which includes consignment business revenue of around INR60 million and operating margin of around 5.2 per cent. The revenue remained stagnant in 2013-14, on account of slowdown in key end-user industries. CRPL's operations remain working capital intensive, as reflected in high gross current assets of around 210 days as on March 31, 2014, driven by stretched receivables and high inventory. The receivables as on March 31, 2014, also include receivables of consignment business to the tune of around INR130 million. CRISIL believes CRPL's business risk profile will continue to remain constrained by the moderate scale of operations with high working capital intensity over the medium term. CRPL's financial risk profile continues to be average as the dependence on debt has not abated despite the equity infusion owing to the working-capital-intensive operations which continue to result in large funding needs despite the stagnant topline. This is captured in the high total outside liabilities to tangible net worth ratio of around 2.75 times as on March 31, 2014. The debt protection metrics too are average because of the low profitability and large debt/LC (expand the acronym) dependence as reflected in interest coverage ratio of around 1.7 times for 2013- 14. The liquidity of CRPL remains stretched marked by fully utilised bank line with frequent instances of overdrawals at month-end and use of ad-hoc twice in the 12 months ended June 30, 2014. CRISIL believes that CRPL's financial risk profile will remain constrained on account of high TOLTNW and stretched liquidity over the medium term. CRPL was set up by Mr. Deepak Chaddha and family in 2008 as a private limited company, by reconstituting Chowdhry Rubber and Chemical, set up in 1972, by Late Shri V.M Chaddha. The company is engaged in trading of rubber chemicals, rubber and allied products and also acts as a consignment stockist for Aditya Birla Nuvo for Carbon Black. In 2013-14, the company has signed an exclusive distribution agreement with Indian Synthetic Rubber Ltd. (ISRL) for distribution of its products in North, North-east and East India. COUNT N: CRISIL Reaffirms 'B+' Rating on INR86.7MM Bank Loan ------------------------------------------------------------ CRISIL's rating on the long-term bank facilities of Count N Denier Yarns Pvt Ltd continues to reflect CDYPL's modest scale of operations in the intensely competitive textile trading space, and below-average financial risk profile because of large working capital requirements. These rating weaknesses are partially offset by the extensive experience of CDYPL's promoter in the textiles industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7.1 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 86.7 CRISIL B+/Stable (Reaffirmed) Term Loan 6.2 CRISIL B+/Stable (Reaffirmed) Outlook: Stable CRISIL believes that Count N Denier Yarns Pvt Ltd (CNDYPL) will continue to benefit from the extensive experience of its promoter in the textile industry over the medium term. The outlook may be revised to 'Positive' if the company increases its scale of operations significantly while maintaining its profitability. Conversely, the outlook may be revised to 'Negative' if the company's profitability comes under pressure, most likely because of intense competition in the industry, or if its working capital requirements increase significantly, leading to pressure on its financial risk profile, particularly liquidity. CDYPL was set up in 2008 by Mr. Anil Agrawal. It trades in cotton yarn and grey fabrics. The company also undertakes jobwork for doubling of yarn. CNDYPL procures cotton yarn and grey fabric from manufacturers and traders based in Bhiwandi and Kalbadevi in Mumbai. HONDA MOTOR: India Slaps 14 Carmakers with $420MM Antitrust Fine ---------------------------------------------------------------- Siddharth Philip, writing for Bloomberg News, reported that India's antitrust regulator fined 14 carmakers, including the local units of Honda Motor Co. and General Motors Co., a combined 25.4 billion rupees (US$420 million) for stifling competition in the market for spare parts as the industry faces similar scrutiny in China. According to the report, citing a Competition Commission of India order, the fines were equivalent to 2 percent of the carmakers' three-year average revenue in India. JAPAN METAL: CRISIL Cuts Rating on INR140MM LT Bank Loan to 'B+' ---------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Japan Metal Building System Pvt Ltd to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 30 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Letter Of Guarantee 80 CRISIL A4 (Downgraded from 'CRISIL A4+') Letter of Credit 60 CRISIL A4 (Downgraded from 'CRISIL A4+') Proposed Long Term 140 CRISIL B+/Stable (Downgraded Bank Loan Facility from 'CRISIL BB-/Stable') The rating downgrade reflects the deterioration in JMBS's business risk profile, marked by a significant decline in its revenue and profitability. In 2013-14 (refers to financial year, April 1 to March 31), JMBS recorded revenue of around INR160 million, 44 per cent lower than in 2012-13. The decline was because of weak order flows during the year, driven by a slowdown in capital expenditure (capex) programmes undertaken by its major customers in the automobile segment. With the revenue declining but fixed costs remaining high, the company incurred an operating loss in 2013-14. JMBS is expected to record a moderate growth of 18 to 20 per cent in its revenue over the medium term, driven by the expected marginal improvement in order flows. Its operating profitability is also expected to improve over this period. The ratings reflect JMBS's large working capital requirements and small scale of operations in the intensely competitive roofing solutions industry. These rating weaknesses are partially offset by the extensive industry experience of the company's promoters, and its above-average financial risk profile, marked by healthy capital structure. Outlook: Stable CRISIL believes that JMBS will continue to benefit over the medium term from the extensive experience of its promoters in the roofing solutions business. The outlook may be revised to 'Positive' if the company reports a significant improvement in its operating revenue and profitability, resulting in a substantial increase in its cash accruals, while it maintains its capital structure. Conversely, the outlook may be revised to 'Negative' in case of a considerable decline in JMBS's revenue or profitability, or if it undertakes a large debt-funded capex programme, resulting in significant deterioration in its financial risk profile. Incorporated in 1996 and based in Bengaluru, JMBS is an Indo- Japanese joint venture that manufactures metal roofing, cladding, decking sheets, and pre-fabricated metal building systems. JMBS reported, on a provisional basis, a net loss of INR1.4 million on net sales of INR160 million for 2013-14; it had reported a profit after tax of INR1.36 million on net sales of INR276 million for 2012-13. K. C. FERRO: ICRA Reaffirms B Rating on INR23cr Fund Based Loan --------------------------------------------------------------- ICRA has reaffirmed a long term rating of [ICRA]B to INR12.50 crore term loans (previously INR15.00 crore) and INR12.00 crore cash credit (previously INR8.00 crore) facilities of K. C. Ferro & Rerolling Mills Private Limited. ICRA has also assigned a long term rating of [ICRA]B and a short term rating and [ICRA]A4 to INR0.70 crore unallocated limits of KCFRM. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term fund 23.00 [ICRA]B; Reaffirmed based facility Unallocated limits 0.70 [ICRA]B/[ICRA]A4; Assigned The rating retention takes into account the limited operational track record of K. C. Ferro & Rerolling Mills Private Limited (KCFRM) as manifested in its adverse financial risk profile as reflected in the negative profitability, highly leveraged capital structure and weak coverage indicators leading to a tight liquidity position. The ratings are further constrained by the susceptibility to volatility in raw material prices, increasing competitive pressures, as well as a weak real estate sector. The assigned ratings however favourably factor in the strong experience of the promoters in the steel industry and the operational synergy achieved through its group companies in terms of raw material sourcing and business development since they cater to similar industry. ICRA also takes note of the locational advantages for the company by virtue of its proximity to several real estate projects and stabilization of operations backed by branded products with ISI marks. K. C. Ferro & Rerolling Mills Private Limited was established in 2008 to manufacture TMT bars. The plant and machinery were fully installed in FY13 and the company commenced manufacturing in January 2013. The promoters of the company have a fair amount of experience in the steel industry. Mr. Pawan Agarwal who is the chairman and managing director of the company has experience of almost two decades in the steel industry while other directors, namely Mr. Neeraj Agarwal and Mr. Mohender Garg have experience of ~five years in the steel industry. Recent updates As per FY14 Audited report shared by company, the company has achieved an operating profit of ~INR2.45 crore against a turnover of ~INR146.90 crore. The company has achieved a turnover of ~INR59.00 crore till July 2014. KAYTX INDUSTRIES: CRISIL Puts 'B+' Rating on INR300MM Cash Credit ----------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the bank facilities of Kaytx Industries Pvt Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 300 CRISIL B+/Stable Letter of Credit 150 CRISIL A4 The ratings reflect KIPL's below average financial risk profile, marked by high gearing and weak debt protection metrics, large working capital requirements, its exposure to intense competition in the highly competitive steel long-products industry, and its susceptibility to volatility in raw material prices. These rating weaknesses are partially offset by the extensive industry experience of the company's promoters, its strong clientele with stakes in reputed projects, and its integrated manufacturing facility, with a presence in rolling, fabrication, and galvanisation of steel structures. Outlook: Stable CRISIL believes that KIPL will continue to benefit over the medium term from its promoters' extensive industry experience and its established relationships with customers and suppliers. The outlook may be revised to 'Positive' if there is significant and sustained improvement in the company's revenues and profitability, while it improves its capital structure and working capital cycle. Conversely, the outlook may be revised to 'Negative' if KIPL's financial risk profile deteriorates, most likely because of a sharp decline in its profitability or revenues, or deterioration in its working capital cycle. KIPL, based in Mandi Gobindgarh (Punjab), is engaged in trading, manufacturing, fabrication, and galvanisation of steel structures. Its product profile includes angles, channels, joints, and H- beams, which find application in railway electrification, hydroelectric power projects, power transmission, construction, bridges, and other works. The current management includes Mr. Parshotam Aggarwal, Mr. Salil Aggarwal, and Mr. Namit Aggarwal. KIPL has an integrated plant with the capability of rolling, fabrication, and galvanisation. KIPL reported a profit after tax (PAT) of INR4.2 million on net sales of INR1901.7 million for 2012-13 (refers to financial year, April 1 to March 31), as against a PAT of INR2.9 million on net sales of INR1515.1 million for 2011-12. KURSEONG CARRIERS: ICRA Reassigns B Rating to INR15cr Book Debts ---------------------------------------------------------------- ICRA has re-affirmed the long term rating of [ICRA]B assigned to the INR15.00 crore fund based bank facilities (enhanced from INR0.95 crore, earlier; INR0.05 crore of the earlier unallocated limits have been reassigned as fund based limits) of Kurseong Carriers Private Limited. ICRA has also re-affirmed the short term rating of [ICRA]A4 assigned to the INR7.00 crore (reduced from INR7.05 crore, earlier) non-fund based bank facility of KCPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based Limit-Cash Enhanced/reassigned [ICRA]B Credit/SOD Book Debts from INR1.00cr to re-affirmed/ INR15.00cr reassigned Non Fund Based Limit- 7.00 [ICRA]A4 Letter of Guarantee reaffirmed The reaffirmation of ratings take into account KCPL's weak financial profile characterized by decline in net profit and cash accruals at an absolute level despite healthy growth in the company's top-line witnessed during 2013-14 over the last fiscal. ICRA notes that the gearing level of the company has witnessed a steep deterioration in 2013-14 over the previous year, which along with low profit margins has kept the coverage indicators at depressed level. The ratings also factor in the highly fragmented logistics business, leading to stiff competition from peers and tender based contract awarding system by WBECSCL, which keeps margins under check and is also likely to keep top-line volatile going forward. The operations of KCPL are primarily restricted to the state of West Bengal, leading to geographical concentration risks. The ratings, however, derives comfort from the experience of the promoters in the transportation business and the company's low working capital intensive nature of current operations. Incorporated in 1998, KCPL is primarily engaged in the transportation and logistics business that includes services like, road transportation of goods, warehousing, clearing and forwarding (C&F). The company primarily operates in the state of West Bengal and operates through its three offices located in Kolkata, Siliguri and Kurseong. The company has also been engaged in trading of food grains. KCPL is a licensed agent for supplying ration to twenty three tea gardens in the districts of Darjeeling and Jalpaiguri of West Bengal. In 2013-14, the company also supplied sugar and gram to West Bengal Essential Commodities Supply Corporation Limited. KUSHAL BAGH: ICRA Reaffirms D Rating on INR4.70cr Fund Based Loan ----------------------------------------------------------------- ICRA has reaffirmed the rating for the INR7.00 crore fund based and non fund based limits of Kushal Bagh Marble Pvt Ltd at [ICRA]D. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based limits 4.70 [ICRA]D (Reaffirmed) Term loans 1.49 [ICRA]D (Reaffirmed) Non fund based limits 0.68 [ICRA]D (Reaffirmed) Unallocated 0.13 [ICRA]D (Reaffirmed) The rating reaffirmation continues to take into account the delays in repayments by KMPL for its debt obligations. The ratings are constrained by decline in operating profitability of the company given the impact of rupee depreciation on imported raw material as well as the fact that the margin is dependent on the quality of raw material being received and processed by the company; and modest net profitability margins owing to high interest costs. This apart, the rating also factors in the high competitive intensity of business on account of the competition faced by other players in the marble processing industry as well as substitute products like vitrified tiles. Neverthless ICRA has noted that despite the competition, the company has been able to ramp up its sales volumes of the company owing to high demand of the imported marbles. Further, there has been a significant reduction in working capital intensity from 73% in FY13 to 42% in FY14 owing to drop in inventory days. Going forward the company's ability to timely service its debt obligations, improve its profitability while managing its working capital cycle will be key rating sensitivities. Recent Results As per the audited figures shared by the company, in FY14 the company earned an operating income of INR31.4 crore and OPBDIT of INR1.6 crore translating into an operating margin of 5.0%. The company's net profit in FY14 stood at INR0.1 crore leading to a net margin of 0.3%. As on 31st March, 2014 the company has a net worth of INR11.0 crore and debt equity ratio of 0.67 times. Established in the year 1985 in Rajasthan, Kushalbagh Marbles Private Limited (KMPL) is engaged in the procurement and processing of natural stone. The company started its stone processing operations in 1994 and supplies natural stones like marble stone, sandstone, limestone, and granite stone including slates, cobble stone, pebble stone and mosaics along with variety of kitchen countertops, construction stones and other building stones. The company belongs to the Banswara based Agrawal group which has interest in stone mining, processing and IT services. LAXMI STEELS: ICRA Suspends 'B' Rating on INR7cr Fund Based Loan ---------------------------------------------------------------- ICRA has suspended [ICRA]B rating assigned to the INR7 Crores fund based facilities of Laxmi Steels. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. MANDOVI MINERALS: CRISIL Reaffirms D Rating on INR81.9M Term Loan ----------------------------------------------------------------- CRISIL's ratings on back facilities of Mandovi Minerals Pvt Ltd continue to reflect instances of delay by Mandovi Minerals in servicing its term debt; the delays have been caused by the company's weak liquidity. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL D (Reaffirmed) Long Term Loan 81.9 CRISIL D (Reaffirmed) Proposed Long Term Bank Loan Facility 68.1 CRISIL D (Reaffirmed) Mandovi Minerals has working-capital-intensive operations resulting in weak liquidity, below-average financial risk profile, marked by small net worth, aggressive gearing, and inadequate debt protection metrics, susceptibility to intense competition in the fragmented industrial sands market, and to adverse regulatory changes. These weaknesses are, however, partially offset by the extensive experience of the promoters in the industry and the fund support extended by the promoters and the associate company. Mandovi Minerals was promoted in 2004 by Mr. Shivaji Mendon and Mrs. Rama Mendon. It manufactures washed and dry silica sand. For 2012-13 (refers to financial year, April 1 to March 31), Mandovi Mineral reported net loss of INR13.6 million on revenue of INR93.6 million as against net loss of INR9.2 million on revenue of INR55.8 million for 2011-12. MANGLAM MILK: CRISIL Assigns 'B+' Rating to INR180MM Term Loan -------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' ratings to the bank facilities of Manglam Milk India Private Limited. The ratings reflect company's nascent stage of operation in a highly fragmented industry. These rating weaknesses are partially offset by company's promoter's extensive industry experience and average financial risk profile. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 90 CRISIL B+/Stable Term Loan 180 CRISIL B+/Stable Outlook: Stable CRISIL believes that MMIPL will maintain its business risk profile backed by its promoters' extensive industry experience. The outlook may be revised to 'Positive' in case the company generates higher than expected sales along with healthy profitability. Conversely, the outlook may be revised to 'Negative' in case if more than estimated working capital requirement and/or lower than expected sales lead to deterioration in financial risk profile. MMIPL is a Delhi based company started in 2012 and is into processing and manufacturing of milk products. The company has set up its processing unit in Allahabad and has started the commercial operations from March 2014 onwards. MANISHRI REFRACTORIES: ICRA Rates INR18.6cr Cash Credit at 'B' -------------------------------------------------------------- ICRA has assigned a long term rating of [ICRA]B to the INR18.60 crore cash credit facility and INR11.40 crore term loans of Manishri Refractories & Ceramics Private Limited. ICRA has also assigned a short term rating of [ICRA]A4 to the INR3.00 crore short term fund based facility and INR19.00 crore short term non fund based facility of MRCPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit Facility 18.6 [ICRA]B assigned Term Loan 11.4 [ICRA]B assigned Short term fund based facilities 3.0 [ICRA]A4 assigned Short term non-fund based facilities 19.0 [ICRA]A4 assigned The ratings factor in the small scale of current operations of the company in the highly competitive industry characterized by the presence of a number of organized and unorganized players, and the financial profile as reflected by low net margins, weak business returns and the moderate gearing, notwithstanding the marginal improvement in the same in recent years. The ratings also take into account the ongoing weakness in the steel industry, which accounts for majority of the company's sales, thereby exposing it to the cyclicality of the industry. The ratings are also constrained by the risk arising from the exposure of the company to volatility in input costs, which could keep profit margins under check going forward. However, the ratings are favourably impacted by the established track record of the company in the refractory business with promoter experience of more than four decades. The ratings also take into account the repeat orders from its reputed customers which indicates the adequate quality of the company's technical competence. Incorporated in 1972 as a sole proprietorship firm, Manishri Refractories & Ceramics Pvt. Ltd. is engaged in the manufacturing of refractories like basic bricks, alumina refractories, fireclay refractories and monolithics. The manufacturing facility is located at Cuttack with an annual capacity of 24,000MT. In FY11, a new facility with an annual capacity of 12,000MT was added near Cuttack; commercial production on which began from April 2012. Recent Results In 2013-14, as per provisional results, MRCPL registered a profit after tax of INR1.73 crore on the back of OI of INR82.28 crore. In 2012-13, the company registered a profit after tax of INR1.71 crore on the back of OI of INR82.39 crore. MINAXI TEXTILES: ICRA Reaffirms INR15.5cr Cash Credit 'B+' Rating ----------------------------------------------------------------- ICRA has reaffirmed the [ICRA]B+ rating to the INR15.50 crore (enhanced from INR11.50 crore) cash credit facility and INR10.47 crore (enhanced from INR2.81 crore) term loan facility of Minaxi Textiles Limited. ICRA has also reaffirmed the [ICRA]A4 rating to the INR0.90 crore (enhanced from INR0.55 crore) non-fund based limits of MTL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Term Loan 10.47 [ICRA]B+ reaffirmed Cash Credit 15.50 [ICRA]B+ reaffirmed Letter of Credit 0.30 [ICRA]A4 reaffirmed Bank Guarantee 0.60 [ICRA]A4 reaffirmed The assigned ratings are constrained by MTL's weak financial profile characterised by low profit margins, and stretched capital structure on account of recent debt funded capex. The ratings also consider the vulnerability of its profitability to adverse fluctuations in raw material prices and its presence in a highly fragmented and competitive industry leading to pressure on margins. The ratings are further constrained by working capital intensive nature of MTL's operations leading to high limit utilizations. The assigned ratings, however, positively consider the established track record of the company along with extensive experience of the promoters in the textile sector and favourable location of the company in the textile manufacturing & processing hub giving it easy access to a large customer base. The rating also takes into account the strong growth in operating income growth of the company (~41% CAGR) in the past 4 years, backed by increased production capacity and rising capacity utilization levels. Minaxi Textiles Limited was established in 1995. It is engaged in weaving of cotton yarn to produce grey cloth. The business is primarily managed by Mr. Bharat Patel, Mr. Dinesh Patel, Mr. Kirit Patel and Mr. Nirmal Patel. The manufacturing facility of the company is located at Chhatral (Gujarat) with an installed capacity to manufacture 60.00 lakh meters of grey cloth per annum. Recent Results During FY 2014, the company reported a profit after tax of INR1.20 crore on an operating income of INR52.68 crore. NEXUS ELECTRO: CRISIL Cuts Rating on INR305MM Bank Loan to 'C' -------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Nexus Electro Steel Ltd to 'CRISIL C' from 'CRISIL B-/Stable' while reaffirming the short-term rating at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 15 CRISIL A4 (Reaffirmed) Cash Credit 250 CRISIL C (Downgraded from 'CRISIL B-/Stable') Letter of Credit 180 CRISIL C (Downgraded from 'CRISIL B-/Stable') Proposed Long Term 305 CRISIL C (Downgraded from Bank Loan Facility 'CRISIL B-/Stable') Working Capital 250 CRISIL C (Downgraded from Term Loan 'CRISIL B-/Stable') The rating downgrade reflects weakening in NESL's liquidity, with cash accruals that are inadequate to service its maturing term debt. The company reported cash losses in 2013-14 due to decline in operating profitability. Though the margins are expected to marginally improve over the medium term, the cash accruals are expected to be inadequate for meeting the repayments. Consequently, the company will depend on timely funding support of the promoters to service its debt. NESL's financial risk profile is weak, marked by high gearing, below-average debt protection metrics, and working-capital- intensive operations. These rating weaknesses are partially offset by the promoter's experience in the electrical laminations industry. Incorporated in 1998, NESL manufactures cut, winding, core and coil assembly laminations that are used in distribution and power transformers, and generators. ONE AUTO: CRISIL Reaffirms 'B+' Rating on INR104MM Fund Facility ---------------------------------------------------------------- CRISIL's rating on the bank facility of One Auto Pvt Ltd continues to reflect OAPL's modest scale of operations in the intensely competitive automobile dealership business and its large working capital requirements. These rating weaknesses are partially offset by the benefits that OAPL derives from its association with Maruti Suzuki India Ltd (MSIL; rated 'CRISIL AAA/Stable/CRISIL A1+'). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Drop Line Overdraft 20 CRISIL B+/Stable (Reaffirmed) Facility Proposed Long Term Bank Loan Facility 56 CRISIL B+/Stable (Reaffirmed) Inventory Funding Facility 104 CRISIL B+/Stable (Reaffirmed) Outlook: Stable CRISIL believes that OAPL will continue to benefit over the medium term from its association with MSIL. The outlook may be revised to 'Positive' if OAPL registers significant increase in revenue and profitability or improves its working capital management, thereby improving its liquidity. Conversely, the outlook may be revised to 'Negative' if OAPL's financial risk profile weakens, most likely because of low cash accruals, or if the company undertakes any large debt-funded capital expenditure programme. Incorporated in 2011 and promoted by Mr. Soham Misra and Mr. Sourav Misra, OAPL is as an authorised dealer for sales and service of MSIL's cars. PARAMOUNT WHEELS: ICRA Reaffirms B Rating on INR12cr Capital Loan ----------------------------------------------------------------- ICRA has reaffirmed the [ICRA]B rating for the INR12.00 crore fund-based working capital facilities of Paramount Wheels Private Limited. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term, fund-based 12.00 [ICRA]B reaffirmed working capital facilities (Sanctioned plus proposed) The rating reaffirmation continues to take into account PWPL's position as an authorised dealer of Maruti Suzuki India Limited (MSIL), which is the market leader in the Indian passenger car segment and potential demand upside arising from relatively large catchment area for its outlet at present. The ratings, however, remain constrained by PWPL's weak financial profile indicated by high gearing and stretched coverage indicators, thin margins prevalent in the dealership business with business being susceptible to slowdown in the passenger car market. The ratings are further constrained by competition from established and new MSIL dealers in Mumbai as well as from other OEM dealers. PWPL provisionally reported a profit before tax (PBT) of INR0.25 crore on an operating income of INR80.03 crore in FY14, as against a PBT of INR0.69 crore on an operating income of INR73.43 crore in FY13. PONTIAC MERCHANTS: CRISIL Reaffirms D Rating on INR113M Term Loan ----------------------------------------------------------------- CRISIL's rating on the long-term bank facilities of Pontiac Merchants Pvt Ltd continues to reflect instances of overdrawn limits in PMPL's cash credit account for more than 30 consecutive days. The account has been overdrawn because of the company's weak liquidity, driven by large operating losses on account of the significant decline in timber prices. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 50 CRISIL D (Reaffirmed) Proposed Long Term Bank Loan Facility 67 CRISIL D (Reaffirmed) Working Capital 113 CRISIL D (Reaffirmed) Term Loan PMPL has a below-average financial risk profile, marked by weak liquidity, a small net worth, and low interest coverage ratio. Moreover, the company has working-capital-intensive operations. However, it benefits from its promoters' extensive experience in the timber trading and sawing business. Incorporated in 1997, PMPL trades in timber, primarily hard wood. The company's operations are managed by Mr. Purshottam Patel and his son Mr. Ankit Patel. PREMIER SOLAR: CRISIL Reaffirms B Rating on INR63.5MM Cash Credit ----------------------------------------------------------------- CRISIL's ratings on the bank facilities of Premier Solar Systems Pvt Ltd continue to reflect PSSPL's large working capital requirements and its exposure to price volatility and intense competition in the solar photo-voltaic (PV) industry. These rating weaknesses are partially offset by extensive experience of the company's promoters in the solar energy segment, and the strong growth prospects for solar PV module industry. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 90 CRISIL A4 (Reaffirmed) Cash Credit 63.5 CRISIL B/Stable (Reaffirmed) Letter of Credit 120.0 CRISIL A4 (Reaffirmed) Proposed Long Term Bank Loan Facility 1.5 CRISIL B/Stable (Reaffirmed) Outlook: Stable CRISIL believes that PSSPL will continue to benefit over the medium term from its promoters' extensive industry experience and its established relations with customers. The outlook may be revised to 'Positive' if the company achieves a substantial and sustained increase in its revenues, while maintaining its profitability margins, or there is a sustained improvement in its working capital management. Conversely, the outlook may be revised to 'Negative' in case of a steep decline in PSSPL's profitability margins, or significant deterioration in its capital structure caused most likely because of a large debt-funded capital expenditure or a stretch in its working capital cycle. Set up in 1995 in Hyderabad (Andhra Pradesh), PSSPL manufactures solar PV panels. The company also undertakes engineering, procurement and construction contracts for setting up solar energy systems. The company also operates a 2 megawatt solar power plant in Jharkhand. RADNIK AUTO: ICRA Reaffirms 'B+' Rating on INR1.61cr Term Loans --------------------------------------------------------------- ICRA has reaffirmed a long-term rating of [ICRA]B+ for INR1.61 crore, long-term, fund based bank facilities of Radnik Auto Exports and assigned a long-term rating of [ICRA]B+ for INR0.05 crore unallocated bank facilities. ICRA has also reaffirmed a short term rating of [ICRA]A4 for the INR8.00 crore (enhanced from INR5.86 crore) short term fund based bank facilities of the firm. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Term Loans 1.61 [ICRA]B+ re-affirmed Fund Based Limits 8.00 [ICRA]A4 re-affirmed Unallocated 0.05 [ICRA]B+ assigned The ratings re-affirmation continues to factor in the long experience of RAE's partners in the garment export business. The ratings also factor in favourably the diversification in business profile of the firm through addition of products such as bags, rain-coats, jackets, etc to its already existing Autosock business. The same has also helped the firm reduce its customer concentration risk with RAE's clientele now consisting of Decathlon, Reebok, Adidas, Indian Army, CRPF, etc. The ratings continue to be constrained by the firm's limited scale of operation and exposure to currency and raw material price fluctuations. The rating is further constrained by the weak financial profile of the firm marked by constrained cash flows and weak debt coverage indicators. The firm's profitability has declined with decline in contribution of Autosock tyre covers business to the overall revenues. The firm's ability to increase its scale of operations, while improving profitability, would remain the key rating sensitivity going forward. RAE is a partnership firm and was formed in 2007 by members of the Kapur family. The firm is engaged in manufacture and sales of Autosock (snow tyre covers) and bags (back-packs/shoulder bags). Autosock is 100% export oriented product while the bags manufactured by RAE are for both export as well as local sale directly to brands such as Decathlon, Reebok, and Adidas. Till 2013-14 RAE operated from two manufacturing units in NSEZ, Noida with one dedicated to Autosock production and the other dedicated for production of bags. As of FY15, the firm has added another production facility in Greater Noida for manufacturing of bags. Recent Results As per provisional financial statements, RAE recorded an operating income of INR26.7 crore in 2013-14. RATANPUR COLD: CRISIL Reaffirms B Rating on INR35MM Cash Credit --------------------------------------------------------------- CRISIL ratings on the bank facilities of Ratanpur Cold Storage Pvt Ltd continue to reflect Ratanpur's small scale of operations and weak financial risk profile. The ratings also factor in the company's susceptibility to regulatory changes and to intense competition in the cold storage industry in West Bengal. These rating weaknesses are partially offset by the extensive industry experience and established regional presence of Ratanpur's promoters. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 1.8 CRISIL A4 (Reaffirmed) Cash Credit 35 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 8 CRISIL B/Stable (Reaffirmed) Working Capital 12 CRISIL B/Stable (Reaffirmed) Term Loan Outlook: Stable CRISIL believes that Ratanpur will continue to benefit over the medium term from its promoters' extensive experience in the cold storage business. The outlook may be revised to 'Positive' in case of efficient management of financing to farmers, and significant increase in scale of operations and profitability. Conversely, the outlook may be revised to 'Negative' in case of pressure on the company's liquidity on account of delays in repayment by farmers, low cash accruals, or debt-funded capital expenditure. Update Ratanpur reported operating revenue of INR21 million for 2013-14 (refers to financial year, April 1 to March 31), up from INR19.8 million in 2012-13 on account of higher rental income received from farmers and better capacity utilization. The operating margin improved to 15.5 per cent in 2013-14 from 9.5 per cent in 2012-13. As part of a government initiative, Ratanpur takes loan from banks and extends loans to farmers; as on March 31 2014, it had loan outstanding of INR35.2 million. Ratanpur's below-average financial risk profile is marked by small net worth, high gearing, and modest debt protection metrics. The net worth was INR12.7 million as on March 31, 2014. The company provides financial assistance to farmers by borrowing from banks, which led to high gearing of 3.61 times as on March 31, 2014. The company's interest coverage and net cash accruals to total debt ratios were 2.34 times and 6.0 per cent, respectively, for 2013- 14. Incorporated in 1987, Ratanpur provides cold storage facilities to potato farmers and traders. Its cold storage facility is in Singur (West Bengal). The company is promoted by Mr. Valji Patel. RK STEEL: CRISIL Upgrades Rating on INR150MM Cash Credit to 'B' --------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of RK Steel Industries to 'CRISIL B/Stable' from 'CRISIL B-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 150 CRISIL B/Stable (Upgraded from 'CRISIL B-/Stable') The rating upgrade reflects the improvement in RKSI's financial risk profile, marked by an improvement in its net worth and decline in total outside liabilities to tangible net worth (TOLTNW) ratio on the back of capital infusion of INR8.8 million by the proprietor and profit accretion of INR1.3 million in 2013- 14 (refers to financial year, April 1 to March 31). The firm's net worth is estimated to improve to INR21 million in March 2014 from INR11 million in March 2013; its TOLTNW ratio has moderated to 3.3 times as in March 2014 as against 6.64 times in March 2013. The upgrade also factors in healthy growth in RKSI's business with revenue of INR541 million in 2013-14 against INR313 million in 2012-13 and further expected increase in 2014-15. The incremental working capital requirements are expected to be met with enhanced working capital bank lines and capital infusion by partners. However, CRISIL believes that RKSI's TOLTNW ratio will remain high at 3 to 4 times over the medium term on account of high reliance on bank debt to meet working capital requirements. RKSI's cash accruals are low but the same will be sufficient to repay small vehicle loans. The rating reflects RKSI's weak financial risk profile, marked by small net worth, high TOLTNW ratio, and weak debt protection metrics, and marginal scale of operations in the intensely competitive steel industry. These rating weaknesses are partially offset by the benefits that RKSI derives from its proprietor's extensive business experience. Outlook: Stable CRISIL believes that RKSI will continue to benefit over the medium term from its proprietor's extensive experience in the trading business. The outlook may be revised to 'Positive' in case of a significant improvement in the firm's scale of operations and liquidity, driven by better-than-expected cash accruals and efficient working capital management, resulting in improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if RKSI's liquidity weakens significantly, its working capital cycle lengthens, or if its revenue and profitability come under pressure. RKSI, set up in 1990, is promoted by Mr. Satpaul. It is currently managed by Mr. Rakesh Kumar. RKSI trades in iron and steel bars, flats, plates, and sheets. The firm is based in Ludhiana (Punjab). RKSI reported a profit before tax (PBT) of INR13.9 million on net sales of INR541.7 million for 2013-14, as against a PBT of INR16.1 million on net sales of INR313.7 million for 2012-13. SANJAY KRAFT: ICRA Suspends 'B+' Rating on INR8cr Bank Loan ----------------------------------------------------------- ICRA has suspended [ICRA]B+ rating assigned to INR8.00 crore bank facilities of Sanjay Kraft Paper Private Limited. The suspension follows ICRA's inability to carry out a rating surveillance in the absence of the requisite information from the company. SAP INDUSTRIES: ICRA Reaffirms INR2.5cr Cash Credit's 'B+' Rating ----------------------------------------------------------------- ICRA has reaffirmed the long term rating of [ICRA]B+ to the INR0.34 crore term loan facilities, INR2.50 crore fund based facilities of SAP Industries. ICRA has also reaffirmed the short- term rating of [ICRA]A4 to the INR0.50 crore stand by line of credit, and INR4.50 crore non-fund based bank facilities of the firm. For the proposed facility of INR2.16 crore, the rating of either [ICRA]B+ or [ICRA]A4 shall apply based on the nature of instrument. ICRA had suspended the ratings assigned to the bank limits of SAPI due to lack of cooperation. Subsequently, the client has shared the requisite information; hence the suspension has been revoked. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term: Term 0.34 [ICRA]B+ reaffirmed; loan facilities suspension revoked Long Term: Fund 2.50 [ICRA]B+ reaffirmed; based facilities- suspension revoked Cash Credit Short Term: Fund 0.50 [ICRA]A4 reaffirmed; based facilities- suspension revoked Stand by Line of Credit Short Term: Fund Nil [ICRA]A4 reaffirmed; based facilities- suspension revoked SME Credit Short Term: Non- 4.50 [ICRA]A4 reaffirmed; Fund based facilities- suspension revoked Bank Guarantee Short Term: Non- Nil [ICRA]A4 reaffirmed; Fund based facilities suspension revoked Letter of Credit Long Term/Short 2.16 [ICRA]B+/[ICRA]A4 reaffirmed; Term: Unallocated suspension revoked The re-affirmation of ratings consider the steady operational and financial performance of the company during the recent past characterized by its consistent volume and revenue growth and stable margins, supported by the steady growth in order book from its major customer, significant experience of the promoter in the electrical industry and the long term favourable demand outlook for the electrical equipments from the domestic power sector. The ratings however remain constrained by the stretched financial profile, owing to the working capital intensive nature of operations as a result of its stretched receivables position, leading to moderately high capital structure and strained liquidity position with increasing reliance on external debt. The rating also considers the entity's limited scale of operations and intense competition in the industry, which is expected to limit revenue growth and margins going forward. While the risk of high customer concentration persists, steady growth in order book witnessed during the recent past coupled with reduced price risks on the back of escalation clauses built into the contract provides some comfort. Going forward, the ability of the Company to sustain revenue growth and margins amidst the competition and improve its working capital cycle/liquidity position would remain key rating sensitivities. SAP Industries was established in the year 2001 as a partnership concern with Mr. A Shanmugavelayuthan and his friend Mr. G.V. Parthasarathy. The firm is primarily involved in the manufacturing of electrical transformers and also manufactures Isolators and does fabrication work on a minor scale. The firm supplies transformers, both distribution and power transformers, largely to Tamil Nadu Electricity Board. The manufacturing unit is located at SIDCO Industrial Estate, Thirumudivakkam (Chennai). SARASH INT'L: ICRA Assigns D Rating to INR7.40cr Fund Based Loan ---------------------------------------------------------------- ICRA has assigned a long-term rating of [ICRA]D to the INR1.60 crore term loan facility and the INR2.00 crore fund based facility, and a short term rating of [ICRA]D to the INR7.40 crore fund based facilities of Sarash International. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term loan facility 1.60 [ICRA]D assigned Long-term fund based facility 2.00 [ICRA]D assigned Short-term fund based facilities 7.40 [ICRA]D assigned The assigned ratings consider delays observed in debt servicing, owing to tight liquidity position. The company's financial profile is characterised by stretched working capital intensity and aggressive capital structure/coverage metrics; and high volatility in revenues and profits, with net losses being witnessed in 2011- 12 and 2012-13. The ratings also consider the high competition in the business, which limits its pricing flexibility; the inherent risks in the sea food industry, like susceptibility to disease outbreak and adverse climatic conditions; and the susceptibility of its accruals to fluctuations in foreign exchange rates, in the absence of a hedging policy, and changes in Government policies. While the promoter has experience of over two decades in the seafood exports business, favourable demand exists for seafood products in overseas markets. Sarash International is primarily engaged in trading of onion and jellyfish. The entity sources jellyfish and onions from Tamil Nadu, Kerala, Karnataka, Maharashtra and Andhra Pradesh, and it serves customers in China, Vietnam, Indonesia and Myanmar. Till 2011-12, the entity was also engaged in coal trading business. The entity was promoted in 1995 by Mr. R Ravindran, who is the sole proprietor. Recent Results Sarash International reported a net profit of INR0.9 crore on an operating income of INR20.2 crore during 2013-14 (according to unaudited results), against a net loss of INR1.6 crore on an operating income of INR4.2 crore during 2012-13. SARLA HANDICRAFTS: CRISIL Ups Rating on INR15MM Bank Loan to B -------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Sarla Handicrafts Pvt Ltd to 'CRISIL B/Stable' from 'CRISIL B- /Stable', and has reaffirmed its rating on the company's short- term bank facilities at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bill Discounting 30 CRISIL A4 (Reaffirmed) Packing Credit 55 CRISIL A4 (Reaffirmed) Proposed Long Term 15 CRISIL B/Stable (Upgraded Bank Loan Facility from 'CRISIL B-/Stable') Term Loan 10 CRISIL B/Stable (Upgraded from 'CRISIL B-/Stable') The rating upgrade reflects sustained improvement in SHPL's working capital cycle, with healthy utilisation of the company's enhanced capacity supported by its established relationship with its customers, who are diversified across geographies, and its long-standing industry presence. The rating upgrade also reflects CRISIL's belief that SHPL will register steady improvement in its cash accruals on the back of expected healthy revenue growth and sustenance of profitability , along with expected low capital expenditure, resulting in improvement in its liquidity and consequently in its financial risk profile. The ratings continue to reflect SHPL's small scale of operations in a fragmented industry resulting in low profitability, constrained financial flexibility due to small net worth, and susceptibility to volatility in raw material prices. These rating weaknesses are partially offset by the company's steady revenue growth backed by its healthy relationship with its customers, who are diversified across geographies, and its promoters' extensive experience in the floor coverings industry. Outlook: Stable CRISIL believes that SHPL will continue to benefit over the medium term from its promoters' extensive industry experience and its established relationship with its customers. The outlook may be revised to 'Positive' if the company achieves higher-than-expected cash accruals or if it receives external support in the form of equity infusion from its promoters, leading to improvement in its financial profile. Conversely, the outlook may be revised to 'Negative' if SHPL's liquidity deteriorates due to aggressive debt-funded capital expenditure or stretch in working capital cycle. SHPL was set up in 1989 as a private limited company; it is promoted by Mr. Kamal Agarwal and his brother, Mr. Anil Agarwal. The company manufactures and exports floor coverings, mainly cotton rugs, bath mats and carpets, at its facilities in Panipat (Haryana). SHREE RAGHUVANSHI: ICRA Reaffirms B+ Rating on INR25r Cash Credit ----------------------------------------------------------------- ICRA has reaffirmed the long term rating at [ICRA]B+ to the INR1.50 crore term loan and INR25.00 crore cash credit facility of Shree Raghuvanshi Fibers Pvt Ltd. ICRA has also reaffirmed the short term rating at [ICRA]A4 to INR0.35 crore fund based facilities of SRFPL. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 25.00 [ICRA]B+; Reaffirmed Term Loan 1.50 [ICRA]B+; Reaffirmed DAUE 0.35 [ICRA]A4; Reaffirmed The ratings continue to be constrained by SRFPL's weak financial profile as reflected by low profitability indicators, stretched capital structure and weak debt coverage indicators. The ratings also consider the low profit margin on account of limited value addition and highly competitive and fragmented industry structure due to low entry barriers. The ratings are further constrained by vulnerability of profitability to raw material prices, which are subject to seasonality and crop harvest and regulatory risks with regard to minimum support price (MSP) of raw cotton and export of cotton bales. The ratings, however, positively consider the long experience of the promoters in the cotton ginning and pressing business and favorable location of the company which gives it easy access to raw cotton. Further, its presence in crushing also provides additional revenues as well as diversification. Incorporated in 2007, Shree Raghuvanshi Fibers Pvt Ltd. is engaged in ginning of raw cotton to produce cotton seeds and cotton bales. The business is promoted and managed by Mr. Bhavesh Shelani, Mr. Gopal Shelani and Mr. Harshad Shelani. The factory is located at Gondal, Rajkot (Gujarat). The company is equipped with 40 ginning machines and has an annual installed capacity of processing 215 MTPD of raw cotton. Moreover from April 2011, SRFPL has also diversified into seed crushing to manufacture cotton seed oil and oil cakes with an intake capacity of 95 MTPD of cotton seeds. Recent Results During FY14 (unaudited provisional financials), the company reported an operating income of INR254.57 crore and profit after tax (PAT) of INR0.80 crore as against operating income of INR173.62 crore and profit after tax (PAT) of INR0.20 crore in FY13. SHREE SHANKAR: CRISIL Reaffirms 'D' Rating on INR270MM Term Loan ---------------------------------------------------------------- CRISIL's rating on the bank facilities of Shree Shankar Saw Mill Pvt Ltd continues to reflect instances of SSSPL's cash credit account being overdrawn for more than 30 consecutive days. The account has been overdrawn because of the company's weak liquidity stemming from large operating losses driven by significant decline in timber prices. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 60 CRISIL D (Reaffirmed) Proposed Long Term Bank Loan Facility 30 CRISIL D (Reaffirmed) Working Capital Term Loan 270 CRISIL D (Reaffirmed) SSSPL has a below-average financial risk profile marked by weak liquidity, modest net worth, and low interest coverage ratio, and has large working capital requirements. The company, however, benefits from its promoters' extensive experience in the timber trading and sawing business. SSSMPL was set up as a partnership firm, Shankar Saw Mill, in 1954 and was reconstituted as a private limited company in 2002. SSSMPL is engaged in timber trading and sawing with a capacity of 1500 cubic feet per day. Its operations are managed by Mr. Purshottam Patel and Mr. Ankit Patel. SOCIETY FOR RESEARCH: CRISIL Ups Rating on INR65M Term Loan to B- ----------------------------------------------------------------- CRISIL has upgraded its ratings on the long-term bank facilities of Society for Research & Technical Studies (SRTS) to 'CRISIL B- /Stable' from 'CRISIL D'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Overdraft Facility 8 CRISIL B-/Stable (Upgraded from 'CRISIL D') Term Loan 65 CRISIL B-/Stable (Upgraded from 'CRISIL D') The rating upgrade reflects timely servicing of debt obligations by SRTS, supported by improvement in its liquidity, backed by receipt of fees from government during 2014-15 (refers to financial year, April 1 to March 31). SRTS has also prepaid its debt obligations till December 2014. The rating also factors in CRISIL's belief that SRTS' cash accruals will remain adequate to service its maturing debt obligations over the medium term. The rating reflects SRTS' modest scale of operations, and susceptibility to intense competition in the education sector and to adverse regulatory changes. These rating weaknesses are partially offset by SRTS' moderate financial risk profile, marked by moderate gearing and debt protection metrics and the healthy demand prospects for the education sector. Outlook: Stable CRISIL believes that SRTS will continue to benefit over the medium term from the healthy demand prospects for the education sector. The outlook may be revised to 'Positive' if SRTS scales-up its operations, backed by increased occupancy level, resulting in improvement in cash accruals. Conversely, the outlook may be revised to 'Negative' in case of deterioration in the trust's financial risk profile, most-likely because of lower-than-expected cash accruals, or significant delays in receipts from government, or any larger-than-expected debt-funded capital expenditure programme, leading to pressure on its liquidity. SRTS was set up in 2008 by the Arora and Gupta families of Saharanpur (Uttar Pradesh). SRTS provides education through its institution namely 'Millennium Institute of Technology' in Saharanpur. SRI LAKSHMI: CRISIL Lowers Rating on INR44MM Term Loan to 'D' ------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Sri Lakshmi Srinivasa Agri Processing Pvt Ltd to 'CRISIL D' from 'CRISIL B-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 30 CRISIL D (Downgraded from 'CRISIL B-/Stable') Proposed Long Term 11 CRISIL D (Downgraded Bank Loan Facility from 'CRISIL B-/Stable') Term Loan 44 CRISIL D (Downgraded from 'CRISIL B-/Stable') The rating downgrade reflects instances of delay by SLSAPL in servicing its term loan obligations; the delays have been caused by the company's weak liquidity arising out of past losses and the company's working-capital-intensive operations. The ratings also reflect SLSAPL's modest financial risk profile, marked by high gearing, and modest debt protection metrics, and susceptibility to adverse regulatory changes. These rating weaknesses are partially offset by the extensive entrepreneurial experience of SLSAPL's management and locational advantage. SLSAPL engaged in cotton ginning is currently managed by the second set of promoters. The unit initially started operations in December 2011, however, was making losses. The current management took over the unit in June 2012 and restarted the operations in October 2012. The unit is managed by Mr.A.Jagannadha Rao. The unit is located in Jaggayapet and has a capacity of 180 bales per day. STATE BANK: Fitch Affirms 'B' Rating on USD400MM Bonds ------------------------------------------------------ Fitch Ratings has affirmed the ratings on nine Indian banks. The Long-Term Issuer Default Ratings (IDR) on State Bank of India (SBI), Bank of Baroda, Bank of Baroda New Zealand (BOB NZ), Punjab National Bank, Canara Bank, IDBI Bank, ICICI Bank and Axis Bank have been affirmed at 'BBB-' while Indian Bank has been affirmed at 'BB+'. The Outlook on the IDRs is Stable. The Indian banking sector faces a challenging economic environment; although the new government's clear electoral mandate gives it the ability to pursue far-reaching economic reforms. Uncertainties and risks remain regarding implementation of key policies necessary to achieve the government's growth and fiscal deficit targets. Fitch has increased its real GDP growth forecast for the financial year ending March 2016 (FY16) to 6.5% from 6.0% and projects real GDP growth to pick up to 5.5% in FY15 from 4.7% in FY14. Asset quality at state-owned banks remains under pressure, while certain large banks' non-performing loans (NPLs) and restructured loans have grown at a slower pace in the recent two quarters. Early signs of deleveraging in the corporate sector are encouraging. However, a recent court ruling that the government's allocations of coal assets in 1993-2009 were illegal has cast a shadow on asset quality. However, the impact of the ruling may be less onerous than expected if productive assets are allowed to continue operating without disruption. Fitch expects the pressure on asset quality at the rated banks to persist for another couple of quarters. The banks, particularly the state-owned ones, will increasingly focus on raising capital to meet more stringent capital requirements under the Basel III regulatory framework, which will be progressively implemented in India. KEY RATING DRIVERS - IDRs, Support Rating (SR) and Support Rating Floor (SRF) The Long-Term IDRs of SBI, Bank of Baroda, Punjab National Bank, Canara Bank, IDBI Bank, and ICICI Bank are at their SRFs of 'BBB-'. The ratings are driven by their SRs of '2', which reflects Fitch's expectation that they are highly likely to receive extraordinary support from the Indian government, if needed, due to their high systemic importance and the government's majority ownership in all except ICICI Bank. Indian Bank - which is also state-owned - has an IDR and an SRF that are a notch lower than the large state-owned banks', driven by its lower SR. Indian Bank's SR of '3' reflects the moderate probability that it would receive extraordinary support from the Indian government, if needed, because of its moderate systemic importance stemming from its smaller size and more regional character. Axis Bank's IDR is driven by its VR at 'bbb-' while its SRF and SR are lower at 'BB+' and '3', respectively, mainly due to its private ownership. The Viability Ratings (VRs) of SBI, ICICI Bank, Axis Bank and Indian Bank are at the same level as their IDRs and therefore, act as drivers for their long-term ratings. BOB NZ is a fully owned subsidiary of Bank of Baroda and its IDR is driven by expectations of high support from its parent, Bank of Baroda, due to the various explicit and implicit linkages with the parent. KEY RATING DRIVERS - VRs The VRs of certain banks will continue to be under pressure, but the affirmations on their VRs factor in efforts to raise capital and the expectation that asset quality would not deteriorate materially from current levels and reach their worst during the current financial year. SBI, ICICI Bank and Axis Bank are the only ones among Fitch's rated Indian banks to have investment-grade VRs of 'bbb-', reflecting their superior stand-alone credit profiles. The drivers for the private banks' (ICICI Bank and Axis Bank) VRs are their strong capital metrics, better-than-average asset quality, good profitability, robust funding profile and better management quality. ICICI Bank has had a consistently strong capitalization track record while Axis Bank has managed its asset quality better and made notable improvements to its capitalization and retail funding. SBI, whose financial metrics are not as strong as ICICI Bank's and Axis Bank's, benefits from its large scale and status as a quasi- sovereign entity, which results in a solid funding profile and strong access to capital markets. A fresh equity injection of INR100bn (USD1.7bn) in FY14 in the bank has helped to replenish its capital buffers and raised its Fitch core capital (FCC) ratio to 10.5% in FY14 from 9.9% in FY13. The bank plans to raise another INR200bn (17% of FY14 equity) over the next two years, which should hold capital buffers steady. The stressed assets ratio improved to 8.3% in 1QFY15 from 8.4% in FY14. The VRs of Bank of Baroda, Canara Bank and Punjab National Bank are rated one notch lower at 'bb+', although Bank of Baroda's performance has been better than the other two in terms of capitalisation and exposure to stressed business sectors. Capital buffers for all three banks remain stretched, particularly at Canara Bank and Punjab National Bank, which was a key factor in the VR downgrades for all three in 2013 and 2012. Canara Bank's exposure to stressed sectors is among the highest in its peer group although its stressed asset ratio (9.5% in 1QFY15 up from 9.2% in FY14) is lower than state banks' average of 12% (FY14). The ratio continued to rise even though total loans rose by 22% in FY14. The VR affirmation reflects expectations that Canara Bank will raise additional equity. Although Punjab National Bank is more profitable than its peers, its capital buffers are thinner compared with its stressed assets stock of around 15% of total assets, the highest among the rated banks. The bulk of the stressed assets are restructured loans. Although the growth in restructured loans has slowed recently, its NPL ratio rose to 5.5% in 1QFY15 from 5.3% in FY14. Indian Bank's VR, which was also downgraded in 2013, reflects concerns about its rising stressed asset ratio (1QFY15: 11.9%), which are partly offset by its better capitalization (FCC ratio of 12.6% in FY14) and slower loan growth. IDBI Bank's VR is the lowest among the rated banks, and it is the most vulnerable to a downgrade given rapid deterioration in the stressed asset ratio to 14.1% in 1QFY15 from 9% in FY13 and 11% in FY14, and a very thin capital buffer (FCC ratio of 8% in FY14). The bank has sharply slowed loan growth to focus on asset quality issues and is simultaneously seeking to raise capital. Fitch will view efforts to strengthen its capital buffers positively because the agency expects asset quality pressures to persist into FY15. KEY RATING DRIVERS - Senior Debt, Upper Tier 2 Debt and Hybrid Tier 1 Debt The senior debt ratings of SBI, Bank of Baroda, IDBI Bank, ICICI Bank, Axis Bank and Canara Bank are at the same level as the IDRs as the debts represent unsecured and unsubordinated obligations of the banks. Legacy Upper Tier 2 bonds are rated four notches below the VR for ICICI Bank, and three notches below the VR for Bank of Baroda and Canara Bank. The notching is in accordance with Fitch's assessment of each instrument's non-performance and loss-severity risk profiles. These subordinated debts are legacy instruments that are not Basel III-compliant. SBI's legacy perpetual Tier 1 bonds are rated five notches below its VR in accordance with Fitch's assessment of the instrument's non-performance and relative loss-severity risk profile. This legacy hybrid debt is not Basel III-compliant. RATING SENSITIVITIES - IDR and Senior Debt The VRs on Bank of Baroda, Punjab National Bank, Canara Bank, IDBI Bank and Indian Bank are lower than their SRFs and their IDRs may be downgraded if factors underpinning the SRFs weaken. For SBI and ICICI Bank, where the VRs and SRFs are at the same level, their IDRs would only be downgraded if both the SRFs and the VR were to be downgraded. A downgrade of India's sovereign rating (BBB-/Stable) will trigger a downgrade of all the banks' IDRs, which are currently at the same level as the sovereign. Likewise, a change in the sovereign's outlook will also lead to a revision of the outlooks on banks' IDRs. Axis Bank's IDR is solely driven by its VR and a downgrade to its VR, while unlikely in the near- term, will lead to a downgrade to its IDR. Any changes in the banks' IDRs would result in equivalent changes in their senior debt ratings. RATING SENSITIVITIES - VR, Upper Tier 2 Debt and Hybrid Tier 1 Debt The 'bbb-' VRs of the private banks, ICICI Bank and Axis Bank, are sensitive to any major change in the operating environment and unexpected asset quality deterioration. However, the VRs will be stable as long as the banks maintain adequate capital buffers. Axis Bank's VR would move down if the sovereign is downgraded. The VR of ICICI Bank may move up in tandem with an upgrade and would move down in line with a downgrade of the sovereign rating. SBI's VR is sensitive to unexpected deterioration in capitalization and/or asset quality. Fitch views the recent capital injection in the bank positively as profitability will take time to recover. Periodic and adequate capital injections will be important in supporting the VR. The VR of SBI will be also sensitive to downward movement in the sovereign rating or outlook. The VRs of Bank of Baroda, Canara Bank, Punjab National Bank and Indian Bank are sensitive to rising pressures on capitalization and asset quality, though Bank of Baroda's VR enjoys some support at the current level due to better capital metrics than peers and signs of improvement in asset quality. The VRs of Canara Bank and Indian Bank factor in capital increases, the absence of which could undermine capital buffers if asset quality continues to weaken sharply. Punjab National Bank's VR has very limited tolerance and any material deterioration from current levels of its asset quality, if not matched by adequate capital reinforcement, will likely lead to its VR being reassessed. Capital management is most critical for IDBI Bank's VR in light of continuing pressure on asset quality and earnings. Downward pressure on the VR could emerge if the pronounced deterioration in stressed assets continues without adequate additions to capital and/or the bank's funding mix tilts towards more volatile bulk deposits and certificates of deposit (CDs). The Upper Tier 2 and hybrid Tier 1 debt are all notched down from the VRs and will be sensitive to any change in the VRs. RATING SENSITIVITIES - SRs and SRFs The SRs and SRFs are determined by the agency's assessment of the government's propensity and ability to support a bank determined by its relative size and systemic importance. A change in the government's ability to provide extraordinary support due to a change in the sovereign ratings would affect the SRs and SRFs. The SRs and SRFs will also be impacted by any change in the government's willingness to extend timely support. The rating actions are as follows: SBI: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at F3' -- Viability Rating affirmed at 'bbb-' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- USD5bn MTN programme affirmed at 'BBB-' -- USD3.25bn senior unsecured notes affirmed at 'BBB-' -- USD400m perpetual tier 1 bonds affirmed at 'B' Punjab National Bank: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at 'F3' -- Viability Rating affirmed at 'bb+' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' Bank of Baroda: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at 'F3' -- Viability Rating affirmed at 'bb+' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- USD 3bn MTN Programme 'BBB-' -- USD500m senior notes under MTN programme affirmed at 'BBB-' -- USD350m senior notes under MTN programme affirmed at 'BBB-' -- USD 1bn senior unsecured notes under the MTN programme affirmed at 'BBB-' -- USD300m upper tier 2 notes under MTN programme affirmed at 'B+' BOBNZ: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Support Rating affirmed at '2' Canara Bank: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at 'F3' -- Viability Rating affirmed at 'bb+' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- USD2bn MTN programme affirmed at 'BBB-' -- USD350m of senior notes under MTN programme affirmed at 'BBB-' -- USD500m of senior notes under MTN programme affirmed at 'BBB-' -- USD250m upper tier 2 notes under MTN programme affirmed at 'B+' IDBI Bank: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at 'F3' -- Viability Rating affirmed at 'bb' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- USD5bn medium-term note programme affirmed at 'BBB-' -- SGD250m senior unsecured notes affirmed at 'BBB-' -- CNY650m senior unsecured notes affirmed at 'BBB-' -- CHF110m senior unsecured notes affirmed at 'BBB-' -- USD1.35bn senior unsecured notes affirmed at 'BBB-' -- USD300m senior unsecured notes affirmed at 'BBB-' Indian Bank -- Long-Term IDR affirmed at 'BB+'; Outlook Stable -- Short-Term IDR affirmed at 'B' -- Viability Rating affirmed at 'bb+' -- Support Rating affirmed at '3' -- Support Rating Floor affirmed at 'BB+' ICICI Bank: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at 'F3' -- Viability Rating affirmed at 'bbb-' -- Support Rating affirmed at '2' -- Support Rating Floor affirmed at 'BBB-' -- USD3.25bn senior notes affirmed at 'BBB-' -- USD1.5bn upper tier 2 bonds affirmed at 'B+' Axis Bank: -- Long-Term IDR affirmed at 'BBB-'; Outlook Stable -- Short-Term IDR affirmed at 'F3' -- Viability Rating affirmed at 'bbb-' -- Support Rating affirmed at '3' -- Support Rating Floor affirmed at 'BB+' -- EUR3bn MTN programme affirmed at 'BBB-' -- USD1.6bn senior unsecured notes affirmed at 'BBB-' SWACHHA BEVERAGES: CRISIL Reaffirms B+ Rating on INR35M Term Loan ----------------------------------------------------------------- CRISIL's ratings on the bank facilities of Swachha Beverages Pvt Ltd continue to reflect its working-capital-intensive operations and exposure to risks related to the offtake of the company's packaged water, in the competitive bottled-water segment. These rating weaknesses are partially offset by the strong professional background along with the expected technical, branding, and promotional support from Eureka Forbes Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 2 CRISIL A4 (Reaffirmed) Cash Credit 20 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 7 CRISIL B+/Stable (Reaffirmed) Term Loan 35 CRISIL B+/Stable (Reaffirmed) Outlook: Stable CRISIL believes that SBPL's financial risk profile will be constrained over the medium term, because of its nascent stage of operations, and exposure to intense competition from established players in the market. The outlook may be revised to 'Positive' if SBPL significantly scales up its operations, and efficiently manages its working capital requirements. Conversely, the outlook may be revised to 'Negative' if the company's liquidity weakens because of modest cash accruals vis-a-vis large debt obligations, or a stretched working capital cycle. SBPL was incorporated in Kolkata in January 2011. The company processes and sells packaged drinking water, marketed in collaboration with EFL under the Aqua Sure brand. TANWAR INDUSTRIES: CRISIL Cuts Rating on INR30M Cash Credit to B+ ----------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Tanwar Industries to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL BB- /Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 30 CRISIL A4 (Downgraded from 'CRISIL A4+') Cash Credit 30 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') The downgrade in ratings reflects CRISIL's belief that TI's financial risk profile will remain weak over the medium term, on account of the firm's large debt-funded capital expenditure (capex) plan. TI plans to implement a capex programme of around INR70.0 million, which is to be funded through term loans of INR49.0 million. As a result of the same, its gearing is expected to increase to over 2.5 times over the near term, as compared to 1.24 times as on March 31, 2014. Further, the firm's revenue declined in 2013-14 (refers to financial year, April 1 to March 31), which also impacts its financial risk profile. While the firm has a strong customer profile, CRISIL believes that the ramp up in revenue after the capex will remain a key rating sensitivity factor. The ratings continue to reflect TI's modest scale of operations in a competitive industry leading to low profitability. This rating weakness is partially offset by the extensive industry experience of TI's partners and the firm's decade-long association with Mahindra and Mahindra Ltd (rated 'CRISIL AA+/Stable/CRISIL A1+'). Outlook: Stable CRISIL believes that TI will continue to benefit from its promoters' extensive industry experience over the medium term. The outlook may be revised to 'Positive' if the firm improves its financial risk profile, with increase in scale of operations and profitability, resulting in sizeable cash accruals. Conversely, the outlook may be revised to 'Negative' if TI's liquidity deteriorates, with substantial working capital requirements or significantly low cash accruals or delays in project completion. TI, a partnership firm, was set up in 1998. It is managed by Mr. Mohammed Tahir and Mr. Arvind K Lunia. It manufactures diesel generator sets. The firm operates in Rajasthan. For 2013-14, TI's profit after tax (PAT) is estimated at INR3.8 million on net sales of INR182.3 million, against a PAT of INR2.7 million on net sales of INR220.9 million for 2012-13. V.V. RAMASAMY: ICRA Puts 'B' Rating on INR1cr LT Fund Based Loan ---------------------------------------------------------------- ICRA has assigned a long term rating of [ICRA]B for the INR1.00 crore long-term fund based facilities of V.V. Ramasamy Chettiar & Co. ICRA has also assigned a short term rating of [ICRA]A4 for the INR9.00 crore short-term fund based and INR7.00 sub limits of the Firm. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term- Fund based 1.00 [ICRA]B; Assigned Short Term- Fund based 9.00 [ICRA]A4; Assigned Short Term (sub-limit) (7.00) [ICRA]A4; Assigned The assigned rating takes comfort from the rich experience of the promoters in the industry and the Firm's established sourcing and distribution network which enables the Firm to source regular orders from regional as well as few overseas customers. The Firm's product portfolio is also fairly diversified with limited inventory on its books, de-risking the business from heavy dependence on any single commodity. These strengths are, however, offset by the Firm's weak financial profile marked by small scale of operations, modest coverage metrics and stretched capital structure. The Firm's business profile is also modest characterised by limited pricing flexibility and intense competition in a heavily fragmented industry. Absence of any contractual obligations to source/supply commodities with the counterparties, while mitigating price risks, also exposes revenues to risk of order quantity variance or even cancellations. ICRA also takes into account the regulatory risks inherent in the industry, on account of close control exercised by governmental authorities over the supply and pricing of agro-commodities. V.V. Ramasamy Chettiar & Co is a partnership Firm managed by Mr. R. Subramanian and his son, Mr. S. Srinivasan. The Firm is located in Dindigul, an agricultural marketing centre in Tamil Nadu (TN). The Firm has been in operation for nearly four decades and is fairly renowned in the region for dealing with a variety of agricultural commodities such as groundnut seeds, sesame seeds, rice-paddy, and other food grains such as yellow maize (macca), chillies, Neem and other spices. The promoters have also been running an exclusive dealership for Suzuki Motorcycles India Private Limited, through a separate private limited entity, for the past four years. VITAL HEALTHCARE: CRISIL Reaffirms B+ Rating on INR113M Bank Loan ----------------------------------------------------------------- CRISIL's ratings on the bank facilities of Vital Healthcare Pvt Ltd (Santacruz) continue to reflect its modest scale of, and working-capital-intensive, operations and exposure to risks inherent in the highly competitive pharmaceutical formulations industry. These rating weaknesses are partially offset by the extensive experience of VHPL's promoters in the pharmaceutical industry and established customer relationships. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 150 CRISIL A4 (Reaffirmed) Bill Negotiation 20 CRISIL A4 (Reaffirmed) Buyers Finance 20 CRISIL A4 (Reaffirmed) Cash Credit 100 CRISIL B+/Stable (Reaffirmed) Letter of Credit 100 CRISIL A4 (Reaffirmed) Long Term Loan 37 CRISIL B+/Stable (Reaffirmed) Term Loan 30 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 113 CRISIL B+/Stable (Reaffirmed) Working Capital Demand Loan 30 CRISIL B+/Stable Outlook: Stable CRISIL believes that VHPL will maintain its stable business risk profile over the medium term, backed by the extensive experience of its promoters in the pharmaceutical industry and their established customer relationships. The outlook may be revised to 'Positive' if the company is able to exhibit significant and sustainable increase in its revenue and margins while maintaining its capital structure and improving its working capital cycle. Conversely, the outlook may be revised to 'Negative' if it undertakes significant debt-funded capital expenditure or if the cash accruals decrease significantly resulting in deterioration in VHPL's financial risk profile. Update VHPL's operating revenue increased to around INR332.5 million in 2013-14 (refers to financial year, April 1 to March 31) as against INR291 million in 2012-13 on account of higher orders received in 2013-14, which were supported by automation of existing faculties leading to improvement in capacity utilisation. Operating margin of the company improved to 12.3 per cent in 2013-14 from 11.46 per cent in 2012-13. VHPL's operations remain working capital intensive as reflected in its gross current assets of 370 days as on March 31, 2014, largely on account of receivables of 178 days as on March 31, 2014, which are high on account of stretch in payments from government organisations. Furthermore, based on the dispatch schedule of the customers, the company maintained inventory of 99 to 114 days over the three years ended March 31, 2014. Liquidity of the company is supported by stretching its creditors; creditor days of the company have remained in the range of 224 to 242 days over the three years ended March 31, 2014. VHPL's financial risk profile is moderate, marked by gearing of 1.43 times as on March 31, 2014, which has shown an improvement over 1.89 times as on March 31, 2013. The company has healthy debt protection metrics as reflected in the interest coverage and net cash accruals to total debt ratios of 2.8 times and 20 per cent, respectively, in 2013-14. The company, in 2013-14, generated accruals of around INR20.5 million against which it did not have major debt repayment obligations. Liquidity of VHPL though is constrained on account of its working-capital-intensive operations leading to high utilisation of bank lines of 96 per cent in the 8 months ended June 30, 2014. Incorporated in 1992, VHPL manufactures and markets pharmaceutical formulations and healthcare products. The company, which commenced operations in 1997, has its manufacturing facilities at Nashik (Maharashtra). YASIN IMPEX: CRISIL Upgrades Rating on INR25MM Cash Credit to B+ ---------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Yasin Impex India Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL B- /Stable' and has reaffirmed its rating on the company's short-term facilities at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 25 CRISIL B+/Stable (Upgraded from 'CRISIL B-/Stable') Letter of Credit 200 CRISIL A4 (Reaffirmed) The rating upgrade reflects improvement in YIIPL's business risk profile, marked by a substantial increase in its scale of operations while maintaining its moderate profitability margins. The company's operating income increased to INR1.60 billion in 2013-14 (refers to financial year, April 1 to March 31) from INR495 million in 2012-13 led by increased order inflow from existing clients and steady acquisition of new customers, driven by the strong demand for non-coking coal in the domestic market. CRISIL believes that YIIPL's operating income will increase to INR1.8 billion to INR2 billion over the medium term, supported by healthy orders from customers. The company's operating margin, which declined to 1.5 per cent in 2013-14 (from 1.7 per cent in 2012-13) primarily on account of foreign exchange (forex) losses, is expected in the range of 1.4 to 1.8 per cent over the medium term. Significant ramp-up in operations led to the better-than- expected liquidity, marked by increased cash accruals (to INR12.1 million in 2013-14 from INR2.3 million in 2012-13), high cash and bank balances (Rs.52.2 million as on March 31, 2014), and absence of term debt or debt-funded capital expenditure (capex) plan. The ratings continue to reflect YIIPL's large working capital requirements, exposure to intense competition in the coal trading segment, and the susceptibility of its operating margin to volatility in forex rates. The ratings also factor in YIIPL's below-average financial risk profile marked by high total outside liabilities to tangible net worth ratio. These rating weaknesses are partially offset by the benefits that YIIPL derives from healthy demand for non-coking coal in the domestic market and its promoters' extensive industry experience. Outlook: Stable CRISIL believes that YIIPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the company significantly scales up operations while improving its working capital management and profitability, resulting in improvement in its financial risk profile. Conversely, the outlook may be revised to 'Negative' if regulatory changes disrupt supplies from Indonesia, or in case of unexpected slowdown in demand for imported coal, or decline in operating margin, adversely impacting YIIPL's liquidity. YIIPL, set up in 2008, trades in non-coking coal. Its day-to-day operations are managed by its general manager, Mr. Mohammed Rafeek. YIIPL provisionally reported a profit after tax (PAT) of INR11 million on net sales of INR1.6 billion for 2013-14, against a PAT of INR1.6 million on net sales of INR495 million for 2010-11. ================= I N D O N E S I A ================= PROFESIONAL TELEKOMUNIKASI: Moody's Affirms 'Ba2' CFR ----------------------------------------------------- Moody's Investors Service has affirmed the Ba2 corporate family rating for PT Profesional Telekomunikasi Indonesia. The outlook on the rating is stable. Ratings Rationale "Protelindo's improved business scale and credit profile positions it strongly in the Ba2 rating category. The company's gross leverage (based on last twelve months EBITDA) improved to 3.2x for LTM June 2014 from 4.4x as of December 2012. However, leverage will likely remain within the rating range of 3.5x-4.5x during the next 12-36 months as the company takes on additional debt to acquire telecommunications towers coming up for sale," says Nidhi Dhruv, a Moody's Assistant Vice President and Analyst. Nonetheless, leverage has reduced on a relative basis, on account of earnings growth as Protelindo has expanded its portfolio of telecom towers and crucially, improved its tenancy ratio through collocations. Given the nature of the tower business and propensity of tower companies to lever up, Moody's expect Protelindo to maintain its debt near current levels and to pay out excess free cash flows as shareholder returns, rather than to reduce debt. The company had gross debt of IDR9.53 trillion as of June 2014. "Protelindo's Ba2 rating now has flexibility to accommodate additional debt of IDR10-11 trillion ($0.9-1.0 billion) to acquire up to 6,500 towers in 2014/2015, and still keep adjusted debt-to- EBITDA below 4.5x and interest coverage (as measured by funds from operations (FFO) + interest)/interest) above 2.5x over the next two to three years. These ratios are Moody's triggers for a ratings downgrade," adds Dhruv, who is also Moody's Lead Analyst for Protelindo. However, substantially debt funded acquisitions of more than 7,500 towers over the next two years, or an acquisition price beyond Moody's paramenters could weaken its credit metrics beyond Moody's tolerance for the rating. Moody's could therefore be likely to consider a negative rating action, although realistically Moody's don't expect the company to take on this much additional debt. Protelindo's share of revenue generated from the largest mobile operators in Indonesia -- Telekomunikasi Indonesia (Baa1 stable), Telekomunikasi Selular (Baa1 stable), Indosat Tbk (Ba1 stable) and XL Axiata Tbk (Ba1 stable) -- together the 'Big 4' has increased to about 45% as of June 2014, from 35% in December 2012. "Going forward, the share from the largest telecom operartors should rise as these operators continue to invest in their networks and the ramp-up rate suggests that majority of the new builds and collocation agreements are now being signed with the Big 4", adds Dhruv. Moody's also considers that Protelindo's high customer concentration and exposure to PT Hutchison 3 Indonesia ("H3I", unrated) may limit upward rating direction, but does not present a material near-term negative risk, especially given the long-term nature of the contracts. The rating continues to benefit from Protelindo's strong market position as one of the two leading independent tower companies in Indonesia founded on a business model which has a high degree of revenue transparency and predictability. At the same time, the rating reflects the relatively limited history of tenancy renewals in Indonesia, and the limited scale of the business. Concerns also exist regarding emerging market risk and particularly any changes to the regulatory and political environment in Indonesia as well as potential for the dynamics of the tower industry to change as large telecommunications operators strategically review options for their sizeable tower portfolios. The outlook on the ratings is stable on the expectation that Protelindo's financials will remain strong as it continues to expand and deleverage and that the regulatory environment remains relatively benign. In the absence of further material acquisitions, Protelindo will continue to grow organically through new builds and collocations as well as make small 'business as usual' acquisitions, which will keep leverage within a 2.5-3.5x range over the next 12-24 months. Leverage of below 3.0-3.5x on a consistent basis would lead to upward rating pressure. However, in Moody's opinion, this is unlikely in the near-term as Moody's expect Protelindo to maintain a strong acquisition appetite. Over the medium term, the rating may experience upward pressure should Protelindo improve its fundamental credit profile; in particular, Moody's would like to see adjusted debt/EBITDA fall and remain below 3.0-3.5x on a consistent basis and for interest cover, as measured by (FFO + interest)/interest, to rise above 4.0x. Downward pressure is unlikely but could arise should competition intensify, such that Protelindo cannot meet its business plan. Such pressures would be evidenced by adjusted debt/EBITDA rising above 4.5x and (FFO + interest)/interest falling below 2.5x. In addition, Moody's expectation is for Protelindo's tenancy mix to improve with greater revenue contribution coming from the Big 4 operators. Changes contrary to this expectation would be viewed negatively. The principal methodology used in this rating was the Global Communications Infrastructure Rating Methodology published in June 2011. Founded in 2003, Protelindo is one of two leading independent tower companies in Indonesia with 10,799 telecommunication sites serving 19,991 tenants as of 30 June 2014. It essentially leases space on its communications towers to cellular telecommunications operators on long-term contracts. Protelindo is wholly owned by Sarana Menara Nusantara ("SMN"), which is listed on the Indonesian Stock Exchange. Currently, 32.7% of SMN is owned by the Hartono family, and Protelindo's management, sponsors and advisors hold a significant stake in the company. TOWER BERSAMA: Moody's Affirms Ba2 CFR; Outlook Revised to Neg. --------------------------------------------------------------- Moody's Investors Service has changed the rating outlook for Tower Bersama Infrastructure Tbk (TBI) and TBG Global Pte. Ltd. to negative from stable. Concurrently, Moody's affirmed TBI's Ba2 corporate family rating (CFR) and the Ba3 ratings on the US$300 million senior unsecured notes of TBG Global Pte. Ltd., a wholly-owned subsidiary of TBI. The notes are unconditionally and irrevocably guaranteed by TBI. Ratings Rationale "The negative outlook reflects our expectation that in the absence of significant recapitalization, or a substantial uptick in EBITDA, TBI's adjusted gross leverage will remain above 4.0x-4.5x (based on a last twelve months historic EBITDA), through at least first half of 2016, which is higher than Moody's expect for the Ba2 rating level," says Nidhi Dhruv, a Moody's Assistant Vice President and Analyst. TBI's leverage surged to 6.3x following its largely debt-funded acquisition of 2,500 towers in 2012 from Indosat Tbk (P.T.) (Ba1 stable), and deleveraging has been slower than Moody's expected mainly due to lower collocation tenancy growth. Acquisitions have been central to TBI's growth strategy and Moody's expect the company to remain acquisitive over the next 2-3 years as the leading Indonesian telcos sell their tower assets. "Additional acquisitions would make TBI the largest independent tower operator in Indonesia by a significant margin -- but a substantially debt-funded acquisition would further strain the company's credit profile and, as a result, lead to a ratings downgrade," adds Dhruv, also Moody's Lead Analyst for TBI. The senior unsecured notes are rated one-notch lower than the CFR, reflecting legal and structural subordination of bond holders at the holding company level. Tower Bersama Group has approximately 70% secured debt in its debt structure, and the ratio of secured debt to total assets is also high at around 50%. "Although these priority debt ratios have been running higher than Moody's tolerance levels, it is our expectation that TBI's management will bring the ratio of secured debt/total assets within the range of 30-35% within the next 12 months, failing which there could be potential for widening the gap between the CFR and senior unsecured bond rating," adds Dhruv. TBI's CFR of Ba2 remains supported by its position as one of the two leading independent telecommunications tower companies in Indonesia founded on a business model which has a high degree of revenue transparency and predictability. In addition, TBI maintains a high quality cash flow stream given it's tenant base substantially comprises Indonesia's largest telecommunications operators, with Telekomunikasi Indonesia (P.T.) (Baa1 stable), Telekomunikasi Selular (P.T.) (Baa1 stable), XL Axiata Tbk (P.T.) (Ba1 stable) and Indosat collectively accounting for 82% of total revenue for 1H 2014. Given the negative outlook, a rating upgrade is unlikely in the near term. However, the outlook could return to stable if TBI improves its fundamental credit profile; in particular Moody's would like to see adjusted debt/EBITDA fall below 4.5x, interest cover as measured by (FFO + interest)/interest increase to a minimum of 2.0-3.0x and RCF/debt to rise above 10-15% on a consistent basis. Further downward pressure on the CFR could arise should competition intensify such that TBI cannot meet its business plan objectives. Such pressures would be evidenced in adjusted debt/EBITDA staying above 4.5x, (FFO + interest)/interest falling below 2.0x, and RCF/debt remaining below 10% on a consistent basis. Moody's will monitor these credit metrics closely and would consider downgrading the rating if a deleveraging trend is not evident within the next 6-9 months. In addition, Moody's would be concerned should the proportion of revenues contributed by its key customer group -- comprising Telkom Indonesia, Telkomsel, Indosat and XL Axiata -- fall below 50-55%. It is Moody's expectation that the company will bring down the ratio of secured debt/total assets in the range of 30-35% within the next 12 months, and for the ratio to continue declining thereafter. Any developments contrary to this expectation could lead to a downgrade of the senior unsecured bond rating by one- notch. TBI is the holding company of the TBG, one of the two leading independent tower operators in Indonesia, with 11,266 telecommunication sites serving 18,028 tenants as of June 2014. It leases space on its telecommunications towers to cellular telecommunications operators on long-term contracts. ========= J A P A N ========= GK MLOX3: Fitch Affirms 'CCsf' Rating on JPY1.78BB Class D Notes ---------------------------------------------------------------- Fitch Ratings has affirmed GK MLOX3's class C and D notes due June 2015. The transaction is a Japanese multi-borrower type CMBS securitisation. The rating actions are as follows: JPY1.13 billion* class C notes affirmed at 'BBsf''; Outlook Stable JPY1.78 billion* class D notes affirmed at 'CCsf''; Recovery Estimate 45% *as of 3 September 2014 Key Rating Drivers The affirmation of the class C notes reflects further principal repayment of the underlying loan and Fitch's view that full redemption of the notes is likely. Since the previous rating action in September 2013, two of six properties backing the remaining defaulted loan have been sold at higher values than Fitch had expected. This contributed to further repayment of the class C notes. Fitch believes the remaining properties will be sold by the legal final maturity and expects the associated sale proceeds to be sufficient to repay the class C notes in full. Fitch has revised downwards its property valuation for one out of the four remaining collateral properties, reflecting the collateral property's recent weaker-than-expected cash flow performance. However, this has been offset by the repayment so far. The affirmation of the class D notes reflects Fitch's view that principal loss remains probable for this class. Rating Sensitivities A significant further delay in workout activities, which could push back the full redemption of the class C notes closer to their legal final maturity, may result in negative rating action on the notes. The rating of the class D notes is sensitive to the sales values of the remaining properties as well as any delay in the disposition of remaining properties, with negative rating action likely as legal final maturity approaches. Fitch assigned ratings to this transaction in September 2007. The transaction was initially a securitisation of five loans backed by 25 property trust beneficiary interests. It is currently backed by one defaulted loan, which is in turn backed by four properties. ==================== N E W Z E A L A N D ==================== PORTO BELLO: Enters Into Voluntary Liquidation ---------------------------------------------- Cliff Sanderson at dissolve.com.au reports that Porto Bello Bar and Grill has entered voluntary liquidation. The restaurant's 7 employees have been laid off, the report says. Garry Whimp -- gwhimp@blr.co.nz -- of Rodgers Reidy was appointed as liquidator of the company, according to dissolve.com.au. Mr. Whimp noted that the business owed NZ$80,000 to the Inland Revenue Department and NZ$30,000 to trade creditors, the report relates. It has been said that before liquidation there had been possible buyers in queque, the report says. For the first liquidator's report, values of the chattles and building were being obtained by the liquidator, dissolve.com.au adds. ********* 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. *** End of Transmission ***