/raid1/www/Hosts/bankrupt/TCRAP_Public/160504.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
Wednesday, May 4, 2016, Vol. 19, No. 87
Headlines
A U S T R A L I A
DINA TAILORING: First Creditors' Meeting Set For May 11
MISSION NEW ENERGY: Ends Q1 with AUD1.68 Million in Cash
MOMENTUM ALLIANCE: First Creditors' Meeting Set For May 12
PERPETUAL DOMAIN: First Creditors' Meeting Set For May 11
QUICKFLIX LTD: Business and Assets Up For Sale
RESIMAC TRIOMPHE 2016-1: S&P Rates Class D RMBS 'BB+p (sf)'
VIP ELECTRICAL: Placed Into Liquidation
C H I N A
CHINA GINSENG: MSPC Replaces Cowan Gunteski as Accountants
I N D I A
AAKASH AGROTECH: CRISIL Reaffirms B+ Rating on INR140MM Cash Loan
BUTTA CONVENTION: ICRA Suspends 'D' Rating on INR15cr Loan
C.P. EXPORTS: CRISIL Reaffirms B+ Rating on INR180MM Cash Loan
CHAMPION GROUP: CRISIL Suspends 'B' Rating on INR70MM Cash Loan
CHANDAN TEXTILES: ICRA Assigns 'B' Rating to INR3.0cr Cash Loan
CHANDITALA BLUE: ICRA Assigns 'C' Rating to INR0.20cr Loan
DARSHAN COTTON: ICRA Suspends 'B' Rating on INR10cr Loan
DAWER SONS: CRISIL Assigns 'B+' Rating to INR50MM Cash Loan
HARMAN RICE: CRISIL Reaffirms B+ Rating on INR116MM Cash Loan
INLAND MARINE: CRISIL Suspends B+ Rating on INR50MM Loan
LUXMI RICE: ICRA Suspends 'B' Rating on INR10cr LT Loan
M.P. AGRO: CRISIL Suspends B+ Rating on INR50MM Cash Loan
MATHURA FIBRES: ICRA Suspends B+ Rating on INR12cr Loan
MOS METRO: CRISIL Suspends 'D' Rating on INR340MM LT Loan
NAGABHUSHANAM & CO: ICRA Suspends B+ Rating on INR20cr Loan
NEWLINE AUTOTRACK: CRISIL Suspends 'D' Rating on INR145MM Loan
NTS DAIRY: CRISIL Cuts Rating on INR70MM Term Loan to 'D'
PARIKH INVESTMENT: CRISIL Cuts Rating on INR200MM Loan to 'D'
POSITIVE CHIP: CRISIL Suspends 'B' Rating on INR49MM Term Loan
PRIYADARSHI MOTORS: CRISIL Suspends D Rating on INR380MM Loan
PROSEED FOUNDATION: ICRA Revises Rating on INR10cr Loan to B+
PURNA GLOBAL: CRISIL Suspends 'D' Rating on INR144.6MM Loan
QUICK FOODS: ICRA Suspends B+ Rating on INR8.0cr Cash Loan
R.N. RICE: ICRA Suspends B- Rating on INR11.0cr LT Loan
RED CHILLIES: CRISIL Suspends 'D' Rating on INR260MM Loan
REEP INDUSTRIES: CRISIL Ups Rating on INR40MM Cash Loan to B+
ROYAL WOOD: ICRA Suspends B+ Rating on INR3.0cr Cash Loan
SAFE-TRONICS AUTOMATION: ICRA Reaffirms B+ Rating on INR4cr Loan
SAI INDIA: ICRA Assigns 'B' Rating to INR4.75cr Cash Loan
SENTHIL TIMBER: CRISIL Assigns B+ Rating to INR15MM Cash Loan
SHREE BHAVANI: ICRA Assigns 'B' Rating to INR5.0cr Cash Loan
SHREE DATTA: CRISIL Reaffirms B+ Rating on INR80MM Cash Loan
SHRI TRUST 2016: Fitch Rates Series A1 & A2 PTCs 'BBB-sf'
SKYHIGH HOSPITALITY: CRISIL Reaffirms B- Rating on INR100MM Loan
SOLAPUR BIO-ENERGY: ICRA Reaffirms D Rating on INR27.63cr Loan
SUNDAR TIMBER: ICRA Assigns 'B' Rating to INR1.0cr Cash Loan
TATA MOTOR: Fitch Affirms 'BB' FC Issuer Default Rating
TEJASWI JEWELLERS: ICRA Suspends D Rating on INR28.2cr Loan
TEJASWI MOTORS: ICRA Suspends B+ Rating on INR35cr Loan
TRIVANDRUM APOLLO: CRISIL Reaffirms 'B' Rating on INR150MM Loan
TULSIAN COAL: CRISIL Assigns B+ Rating to INR70MM Cash Loan
I N D O N E S I A
BANK DANAMON: Fitch Affirms 'BB+' LT IDR; Outlook Stable
J A P A N
MITSUBISHI: Mulls Compensation For Parts Makers Hit By Suspension
TAKATA CORP: To Book Extra JPY20BB Loss Over Air Bag Recalls
TOYO CORP: S&P Revises Outlook to Pos. & Affirms 'BB+' CCR
M O N G O L I A
MONGOLIA: S&P Affirms 'B' Sovereign Credit Rating; Outlook Stable
P A P U A N E W G U I N E A
PAPUA NEW GUINEA: S&P Affirms 'B+' LT Rating; Outlook Negative
S O U T H K O R E A
HANJIN HEAVY: To Receive Additional KRW120 Billion Aid
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A U S T R A L I A
=================
DINA TAILORING: First Creditors' Meeting Set For May 11
-------------------------------------------------------
Michael James Billingsley and Neil Robert Cussen of Deloitte
Touche Tohmatsu were appointed as administrators of Dina
Tailoring Co Pty Ltd on May 2, 2016.
A first meeting of the creditors of the Company will be held at
Eclipse Tower, Level 19, 60 Station Street, in Parramatta, on
May 11, 2016, at 12:00 p.m.
MISSION NEW ENERGY: Ends Q1 with AUD1.68 Million in Cash
--------------------------------------------------------
Mission New Energy Limited filed with the Securities and Exchange
Commission its quarterly report (for entities admitted on the
basis of commitments) for the period ended March 31, 2016.
At the beginning of the quarter, the Company had AUD1.89 million
in cash. The Company reported a net decrease in cash of
AUD200,000. As as result, the Company had AUD1.68 million in
cash at March 31, 2016.
For the current quarter, the Company spent AUD205,000 for wages.
A full-text copy of the Quarterly Report is available for free
at:
http://goo.gl/IHaKPT
About Mission NewEnergy
Based in Subiaco, Western Australia, Mission NewEnergy Limited is
a producer of biodiesel that integrates sustainable biodiesel
feedstock cultivation, biodiesel production and wholesale
biodiesel distribution focused on the government mandated markets
of the United States and Europe.
The Company is not operating its biodiesel refining segment. The
refineries are being held in care and maintenance either awaiting
a return to positive operating conditions or the sale of assets.
The Company has materially diminished its Jatropha contract
farming operation and the company is now focused on divesting the
remaining Indian assets. The Company intends to cease all Indian
operations.
Mission NewEnergy reported profit of $28.4 million on $7.27
million of total revenue for the year ended June 30, 2015,
compared to a loss of $1.09 million on $9.68 million of total
revenue for the year ended June 30, 2014.
As of Dec. 31, 2015, Mission New Energy had $7.20 million in
total assets, $1.60 million in total liabilities and $5.60
million in total equity.
"Although we incurred an operating profit for the year ended
June 30, 2015 of A$28.3 million (2014: A$1.1 million loss), we
have a history of net losses and there is a substantial doubt
about our ability to continue as a going concern," the Company
stated in its annual report for the year ended June 30, 2015.
MOMENTUM ALLIANCE: First Creditors' Meeting Set For May 12
----------------------------------------------------------
Steven Gladman & David Ross of Hall Chadwick Chartered
Accountants were appointed as administrators of Momentum Alliance
Pty Ltd as Trustee for the Belladonna Unit Trust on May 2, 2016.
A first meeting of the creditors of the Company will be held at
Hall Chadwick Chartered Accountants, Level 10, 575 Bourke Street,
in Melbourne, on May 12, 2016, at 10:30 a.m.
PERPETUAL DOMAIN: First Creditors' Meeting Set For May 11
---------------------------------------------------------
Michael James Billingsley and Neil Robert Cussen of Deloitte
Touche Tohmatsu were appointed as administrators of Perpetual
Domain on April 29, 2016.
A first meeting of the creditors of the Company will be held at
Eclipse Tower, Level 19, 60 Station Street, in Parramatta, on
May 11, 2016, at 11:00 a.m.
QUICKFLIX LTD: Business and Assets Up For Sale
----------------------------------------------
Broede Carmody at SmartCompany reports that Quickflix Ltd's
external managers are calling for expressions of interest after
the ASX-listed company collapsed into voluntary administration
last week.
Expressions of interest in the 10-year-old streaming business and
its assets close on May 6, SmartCompany relates citing an
advertisement in the Australian Financial Review on May 2.
SmartCompany relates that in the ad, administrators Ferrier
Hodgson have touted Quickflix's partnerships with major local and
international content providers.
Quickflix recorded around AUD3 million in revenue for the quarter
ending March 2016, according to the ad, and has a database of
80,000 active customers across Australia and New Zealand,
SmartCompany discloses.
According to the report, the administrators said Quickflix also
has a "digital marketing database" of more than 900,000 people,
which includes behaviour and preference information that could be
used for big data analysis.
In addition to Quickflix's digital streaming services, the
administrators are also seeking expressions of interest in the
company's DVD and Blu-Ray subscription rental business, which
includes a library of 40,000 titles housed in a distribution
centre in Western Sydney, SmartCompany discloses.
SmartCompany notes that Quickflix collapsed into voluntary
administration after it was unable to raise new capital and reach
an agreement with major shareholder and rival streaming service
Stan.
The business is continuing to trade throughout the voluntary
administration process, the report says.
Quickflix Limited is an ASX listed company, headquartered in
Perth, Western Australia. The Company's principal activities
involve the provision of an online movie subscription service and
a DVD & Blu-ray delivery service.
Dermott McVeigh, Wayne Rushton and Morgan Kelly of Ferrier
Hodgson were appointed joint and several Voluntary Administrators
of Quickflix Limited on April 26, 2016.
RESIMAC TRIOMPHE 2016-1: S&P Rates Class D RMBS 'BB+p (sf)'
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to six
classes of prime residential mortgage-backed securities (RMBS)
issued by Perpetual Trustee Co. Ltd. as trustee for RESIMAC
Triomphe Trust - RESIMAC Premier Series 2016-1. RESIMAC Premier
Series 2016-1 is a securitization of prime residential mortgages
originated by RESIMAC Ltd. (RESIMAC).
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including that this is a closed portfolio, which
means no further loans will be assigned to the trust after
the closing date.
-- S&P's view that the credit support is sufficient to
withstand the stresses it applies. This credit support
comprises lenders' mortgage insurance on 32.4% of the loans
in the portfolio, which provides cover for 100% of the face
value of the insured loans, accrued interest, and
reasonable costs of enforcement, as well as note
subordination for the rated notes.
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity
facility equal to 1.0% of the outstanding balance of the
notes, and principal draws, are sufficient under S&P's
stress assumptions to ensure timely payment of interest.
The exceptions are the class D notes, for which the rating
does not address the likelihood of payment of the class D
note interest, and the class C notes, for which the rating
does not address the likelihood of payment of the residual
class C interest.
-- The extraordinary expense reserve of A$250,000, funded by
RESIMAC before closing, available to meet extraordinary
expenses. The reserve will be topped up via excess spread
if drawn.
-- The benefit of a cross-currency swap to hedge the mismatch
between the Australian dollar receipts from the underlying
assets and the U.S. dollar payments on the class A1 notes.
-- The management of interest-rate risk. Interest-rate risk
between any fixed-rate mortgage loans and the floating-rate
obligations on the notes are appropriately hedged via
interest rate swaps to be provided by an appropriately
rated interest-rate swap provider.
A copy of Standard & Poor's complete report for RESIMAC Triomphe
Trust - RESIMAC Premier Series 2016-1 can be found on
RatingsDirect, Standard & Poor's Web-based credit analysis
system, at:
http://www.globalcreditportal.com
The issuer has informed Standard & Poor's (Australia) Pty Ltd.
that the issuer will be publically disclosing all relevant
information about the structured finance instruments that are
subject to this rating report.
RATINGS ASSIGNED
Class Rating Amount (mil.)
A1* AAA (sf) US$265.0
A2 AAA (sf) A$501.1
AB AAA (sf) A$40.2
B AA (sf) A$27.12
C A (sf) A$11.22
D BB+p (sf) A$9.35
E NR A$5.61
* The exchange rate applicable to the class A1 notes is US$0.7785
per Australian dollar. The "p" rating signifies that S&P's
rating only addresses the payment of principal; the rating does
not address the likelihood of timely interest payments. NR--Not
rated.
VIP ELECTRICAL: Placed Into Liquidation
---------------------------------------
Cliff Sanderson at Dissolve.com.au reports that VIP Electrical
Pty Ltd has been placed into liquidation. Peter James Lanthois
and Christopher Robert Powell of DuncanPowell were appointed
liquidators of the company on May 2, 2016, the report discloses.
Dissolve.com.au says the Adelaide electrical contracting firm has
axed 45 jobs.
According to the report, the administrators said VIP Electrical
faced cash flow issues even with a reported AUD3 million on their
order book.
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C H I N A
=========
CHINA GINSENG: MSPC Replaces Cowan Gunteski as Accountants
----------------------------------------------------------
China Ginseng Holdings, Inc. was informed by its independent
registered public accounting firm, Cowan, Gunteski & Co., P.A.,
that it has transferred its SEC practice to MSPC. As a result of
the transfer and upon notice by Cowan to the Company on April 26,
2016, Cowan in effect has resigned as the Company's independent
registered public accounting firm and MSPC became the Company's
independent registered public accounting firm. The engagement of
MSPC as the Company's independent registered public accounting
firm was ratified and approved by the Board of Directors of the
Company on April 27, 2016.
From Feb. 28, 2013, when Cowan was engaged, and subsequently
through April 26, 2016, there were no disagreements between the
Company and Cowan on any matter of accounting principals or
practices, financial statement disclosure, or auditing scope or
procedures, which disagreements, if not resolved to the
satisfaction of Cowan would have caused Cowan to make reference
to the subject matter of the disagreements in connection with its
reports.
During the Company's two most recent fiscal years ended June 30,
2016 and 2015 and through April 26, 2016, the Company did not
consult with MSPC.
About China Ginseng
Changchun City, China-based China Ginseng Holdings, Inc.,
conducts business through its four wholly-owned subsidiaries
located in China. The Company has been granted 20-year land use
rights to 3,705 acres of lands by the Chinese government for
ginseng planting and it controls, through lease, approximately
750 acres of grape vineyards. However, recent harvests of grapes
showed poor quality for wine production which indicates that the
vineyards are no longer suitable for planting grapes for wine
production. Therefore, the Company has decided not to renew its
lease for the vineyards with the Chinese government upon
expiration in 2013 and, going forward, it intends to purchase
grapes from the open market in order to produce grape juice and
wine.
China Ginseng reported a net loss of $3.90 million on $272,600 of
revenue for the year ended June 30, 2015, compared with a net
loss of $4.76 million on $2.61 million of revenue for the year
ended June 30, 2014.
As of Dec. 31, 2015, China Ginseng had $8.49 million in total
assets, $19.93 million and a total stockholders' deficit of
$11.97 million.
Cowan, Gunteski & Co., P.A., in Tinton Falls, NJ, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2015, citing that the Company had net
losses of $3.90 million and $4.76 million for the years ended
June 30, 2015 and 2014, respectively, an accumulated deficit of
$18.1 million at June 30, 2015 and a working capital deficit of
$16.5 million at June 30, 2015, and there are existing uncertain
conditions the Company faces relative to its ability to obtain
working capital and operate successfully. These conditions raise
substantial doubt about its ability to continue as a going
concern.
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I N D I A
=========
AAKASH AGROTECH: CRISIL Reaffirms B+ Rating on INR140MM Cash Loan
-----------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Aakash
Agrotech Private Limited continues to reflect AAPL's below-
average financial risk profile because of a modest networth and
high gearing, susceptibility to intense competition in the rice
milling industry, and volatility in raw material prices. These
rating weaknesses are partially offset by the extensive
experience of promoters in the rice milling industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 140 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term 6.2 CRISIL B+/Stable (Reaffirmed)
Bank Loan Facility
Term Loan 133.8 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes AAPL's business risk profile will continue to be
supported by the extensive industry experience of promoters. The
outlook may be revised to 'Positive' in case of a significant
improvement in capital structure and scale of operations, while
sustaining its operating margin. Conversely, the outlook may be
revised to 'Negative' if capital structure and liquidity weaken
due to a stretch in its working capital cycle or any large, debt-
funded capital expenditure.
Update
Operating income is estimated to have moderately declined by
around 5.0 percent in 2015-16 (refers to financial year, April 1
to March 31) compared with the previous year, because of a
decline in basmati rice realisations and weak overseas demand,
especially from Dubai. The sales volumes are expected to be
supported by the experience of the promoters for over 20 years in
the basmati rice industry and their longstanding relationships
with customers. Operating margin is estimated at 3.5 percent
during 2015-16 and is expected to remain in a similar range over
the medium term due to its highly fragmented nature of the
industry. Because of its high dependency on bank borrowings on
account of low profitability, its financial risk profile will
remain below average, with high total outside liabilities to
tangible networth in range of 3.5-4 times over the medium term.
Rice industry is a highly fragmented and competitive with the
presence of many small, medium-sized, and large players. AAPL has
a modest scale of operations, and considering the competitive and
fragmented nature of the industry, the scale of operations is
expected to remain modest over the medium term. However, cash
accrual is estimated at INR18.9 million, adequate to service debt
of INR12.4 million maturing in 2016-17. Utilisation of bank line
is, therefore, high'averaging 94 percent over the 12 months
through February 2016. Absence of large capital expenditure plans
will support liquidity.
Incorporated in 2013, AAPL is promoted by Mr. Anil Kumar Goel and
his brothers Mr. Anand Kumar Goel and Mr. Mukesh Goel. The
company mills and processes basmati rice. It has a processing
unit located at Narela, Punjab, with a total milling and sorting
capacity of 12 tonne per hour.
BUTTA CONVENTION: ICRA Suspends 'D' Rating on INR15cr Loan
----------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]D assigned to
the INR15.00 crore fund based facilities of Butta Convention
Services Private Limited. The suspension follows ICRA's inability
to carry out a rating surveillance in the absence of the
requisite information from the company.
Butta Convention Services Private Limited (BCSPL) was
incorporated on 16th May 2012 with the objective of carrying on
business of constructing and operating convention, conference and
seminar centers and other places of exhibition. The Company is
promoted by Mr. Butta S Neelakanta and his wife Mrs. Butta Renuka
and is part of the BUTTA group of companies based out of Andhra
Pradesh. The group has presence in hospitality, education,
branded retail and automobile space in Hyderabad.
C.P. EXPORTS: CRISIL Reaffirms B+ Rating on INR180MM Cash Loan
--------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of C.P. Exports
(CPE) continues to reflect its below-average financial risk
profile because of high gearing and small networth, and exposure
to intense competition in the coffee beans trading business.
These rating weaknesses are partially offset by the extensive
experience of promoters in the agricultural products trading
business.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50 CRISIL B+/Stable (Reaffirmed)
Cash Credit/
Overdraft facility 180 CRISIL B+/Stable (Reaffirmed)
CRISIL has treated unsecured loans of INR60 million extended to
CPE by its promoters as on March 31, 2015, as neither debt nor
equity. The management has indicated that these loans will remain
in the business over the medium term.
Outlook: Stable
CRISIL believes CPE will continue to benefit over the medium term
from the promoters' extensive industry experience. The outlook
may be revised to 'Positive' if sustained improvement in scale of
operations and profitability strengthens the financial risk
profile. Conversely, the outlook may be revised to 'Negative' if
any stretch in the working capital cycle or low cash accrual
leads to deterioration in the financial risk profile.
CPE, set up in 1994, processes and trades in coffee beans. The
firm is promoted by Mr. C Eswaran and Mr. C Shunmugapriya, and
their families.
CHAMPION GROUP: CRISIL Suspends 'B' Rating on INR70MM Cash Loan
---------------------------------------------------------------
CRISIL has suspended its rating on the bank facilities of
Champion Group of Company (Champion).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 70 CRISIL B/Stable
Working Capital
Demand Loan 30 CRISIL B/Stable
The suspension of rating is on account of non-cooperation by
Champion with CRISIL's efforts to undertake a review of the
ratings outstanding. Despite repeated requests by CRISIL,
Champion is yet to provide adequate information to enable CRISIL
to assess Champion's ability to service its debt. The suspension
reflects CRISIL's inability to maintain a valid rating in the
absence of adequate information. CRISIL considers information
availability risk as a key factor in its rating process as
outlined in its criteria 'Information Availability - a key risk
factor in credit ratings'
Formed in 1994, Champion mines sand in Bihar. Apart from this,
the firm also provides transportation and telecommunications
tower installation services. Its day-to-day operations are
managed by Mr. Amit Kumar Singh.
CHANDAN TEXTILES: ICRA Assigns 'B' Rating to INR3.0cr Cash Loan
---------------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B to INR3.00 crore
cash credit facility and INR3.30 crore term loan facility of
Chandan Textiles.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash
Credit 3.00 [ICRA]B assigned
Fund Based-Term
Loan 3.30 [ICRA]B assigned
The rating is constrained by modest scale of operations,
leveraged capital structure, high working capital intensity of
operations and weak debt protection metrics of the firm. ICRA
notes the vulnerability of the firm's profitability margins to
adverse fluctuations in raw material prices and vulnerability of
cash flows to seasonality inherent in the textile industry. The
rating also takes into consideration the intense competition from
organized and unorganized players, leading to low bargaining
power with customers and pressure on the profitability levels of
the firm. Besides, the rating also takes into account the risks
inherent in the proprietorship nature of the firm, inter alia,
the limited ability to raise capital and risk of capital
withdrawal.
The assigned rating, however, derives comfort from long standing
experience of the firm's promoter in textile industry. The rating
also take into account established relationships with its
customers which translates into repeat business lending stability
to volumes and established association with suppliers ensuring
timely supply of raw materials. The rating also benefits from the
firm's proximity to raw material suppliers which helps the firm
to reduce its raw material transportation cost.
Chandan Textiles is a proprietorship firm established in the year
2002 by Mr. Chandan Malhotra. The firm is engaged in the business
of manufacturing and trading of pure silk fabrics like chiffon,
georgette and crape. The concern generates ~70% of the revenue
from the state of Karnataka, followed by 20% from Kolkata and the
rest from other states.
Recent results
The firm reported a profit after tax (PAT) of INR0.04 crore on an
operating income of INR19.68 crore in 2014-15 as against a PAT of
INR0.18 crore on an operating income of INR23.49 crore in 2013-
14.
CHANDITALA BLUE: ICRA Assigns 'C' Rating to INR0.20cr Loan
----------------------------------------------------------
ICRA has assigned a long-term rating of ICRA]C to the INR0.20
crore cash credit limits of Chanditala Blue Print.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 0.20 [ICRA]C Assigned
The assigned rating takes into account the trading nature of the
business and a highly fragmented nature of the industry
characterised by intense competition, both of which result in
thin operating and net profitability. The rating takes into
consideration CBP's unfavourable financial risk profile
characterised by small scale of operations and weak business
return indicators. ICRA notes its status as a partnership firm
that makes it vulnerable to the risks of capital withdrawal. The
rating also takes note of the working capital debt availed in the
current fiscal that would unfavourably impact the capital
structure and debt coverage indicators, going forward; and the
high client concentration risk, with a significant share of
revenues being attributable to group/related entities.
ICRA takes cognizance of the experience of the partners in the
medicine trading business and the firm's established relations
with key customers.
Going forward, the ability of the firm to scale up its operations
and improve its profitability, while managing its debt profile
would be key rating sensitivities.
Incorporated in 2014, CBP is engaged in wholesale trading of
medicines. The partners have an experience of around two decades
in this line of business with its medical shop in Sonarpur, West
Bengal.
Recent Results
CBP reported a net profit of INR0.14 lakh in FY2015 on an
operating income of INR0.62 crore, as compared to a net profit of
INR0.09 lakh on an operating income of INR0.49 crore during
FY2014.
DARSHAN COTTON: ICRA Suspends 'B' Rating on INR10cr Loan
--------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]B assigned to
INR10.00 crore fund based facilities of Darshan Cotton
Industries. The suspension follows ICRA's inability to carry out
a rating surveillance in the absence of the requisite information
from the company.
Darshan Cotton Industries (DCI) was established in November, 2011
with 24 gins located in Bhainsa, Adilabad District, Andhra
Pradesh. The firm has 12 gins during December 2013 to reach its
current capacity of 36 gins for producing 500 quintal of cotton
lint per day. The plant is operational for 6 months in a year
(November to April). The firm is promoted by Mr. Digamber Rao who
has more than 50 years of experience in cotton ginning business,
looks after finance and marketing activities of the firm. Mr.
Ramesh Kumar, commerce graduate involved in managing the day to
day activities of the firm.
DAWER SONS: CRISIL Assigns 'B+' Rating to INR50MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank loan facilities of Dawer Sons Private Limited (DSPL).
The rating reflects the company's modest scale, and working
capital-intensive nature, of operations in the highly fragmented
coated textile industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50 CRISIL B+/Stable
Proposed Cash
Credit Limit 30 CRISIL B+/Stable
These rating weaknesses are partially offset by its promoters'
extensive industry experience and its above-average financial
risk profile because of low gearing.
Outlook: Stable
CRISIL believes DSPL will continue to benefit over the medium
term from its promoters' extensive industry experience and
established relationship with key customers. The outlook may be
revised to 'Positive' in case of a significant increase in scale
of operations and better profitability, leading to higher-than-
expected cash accrual. Conversely, the outlook may be revised to
'Negative' in case of a sharp decline in operating margin, or
large, debt-funded capital expenditure, leading to deterioration
in the financial risk profile.
DSPL, incorporated in 1993, manufactures coated textile products.
Its manufacturing facility is located at Mayapuri, New Delhi.
HARMAN RICE: CRISIL Reaffirms B+ Rating on INR116MM Cash Loan
-------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Harman Rice
Private Limited (HRPL) continues to reflect the company's weak
financial risk profile because of high gearing, a small networth,
and weak debt protection metrics. The rating also factors in
susceptibility to volatility in raw material prices and to
regulatory changes. These rating weaknesses are partially offset
by the extensive experience of HRPL's promoters in, and benefits
expected from the healthy growth prospects for, the basmati rice
industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 116 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 41.6 CRISIL B+/Stable (Reaffirmed)
Term Loan 2.4 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes HRPL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' in case of substantial and
sustained improvement in revenue and profitability, or
substantial increase in networth on the back of equity infusion
by the promoters. Conversely, the outlook may be revised to
'Negative' in case of significant deterioration in the financial
risk profile, most likely because of large working capital
requirement leading to considerable incremental bank borrowing,
or debt-funded capital expenditure.
Update
Net sales are estimated to have reduced to INR470-480 million in
2015-16 (refers to financial year, April 1 to March 31) from
INR582.30 million in 2014-15, mainly due to adverse market
conditions for the rice industry. In the nine months ended
December 31, 2015, net sales were around INR397.90 million.
Operating margin remained at about the 2014-15 level of 3.38
percent due to low value addition nature of the business.
Working capital requirement was moderate, with gross current
assets of 117-120 days as on March 31, 2016 (115 days as on
March 31, 2015). Payments are received from customers within 30-
35 days and marginal inventory of 70-80 days is maintained.
Gearing has improved to about 2.4 times as on March 31, 2016.
With improvement in accretion to reserves, networth was about
INR38.80 million as on this date. Debt protection metrics were
weak with net cash accrual to total debt and interest coverage
ratios at about 0.07 time and 1.75 times, respectively, for 2015-
16. CRISIL believes the financial risk profile will remain weak
over the medium term.
Liquidity is expected to improve over the medium term because of
low bank limit utilisation, which was of around 48 percent during
the 12 months through February 2016. Liquidity will also be
supported by sufficient cash accrual to meet debt obligations and
funding support from promoters, over the medium term.
HRPL was incorporated in 2007, promoted by Mr. Inderpreet Singh.
The company processes basmati rice (1121 grade) and has a rice
milling plant with capacity of 6 tonne per hour in Bhatinda,
Punjab.
INLAND MARINE: CRISIL Suspends B+ Rating on INR50MM Loan
--------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of Inland
Marine Works Pvt Ltd (IMWPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 100 CRISIL A4
Cash Credit 50 CRISIL B+/Stable
Proposed Bank
Guarantee 30 CRISIL A4
The suspension of ratings is on account of non-cooperation by
IMWPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, IMWPL is yet to
provide adequate information to enable CRISIL to assess IMWPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
IMWPL was set up in 1990 by Mr. C S Ashok and his associates, who
have more than three decades of experience in ship building and
related activities. The company, based in Port Blair (Andaman &
Nicobar Islands), is part of the Jadwet group, which has an
established presence for over 70 years in the region. IMWPL
constructs service vessels for the Indian Navy; the vessels are
used by the navy to carry personnel between war ships and docks.
LUXMI RICE: ICRA Suspends 'B' Rating on INR10cr LT Loan
-------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]B assigned to
the INR10.001 crore fund based bank facilities of Luxmi Rice
Mills.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund- Based Limits
Long Term 10.00 [ICRA]B; Suspended
The ratings were suspended due to lack of cooperation by the
client to provide any further information.
LRM was established in 1983 as a proprietorship firm by Mr.
Roshan Lal. LRM is engaged in the business of processing and
trading of rice in the domestic market. The entire raw material
requirement is met from the local mandis in Haryana as well as
commission agents in Uttar Pradesh. The firm deals in both
Basmati as well as non-Basmati rice. The firm has its
manufacturing unit at Nissing, Haryana with a milling capacity of
2 tonnes per hour of paddy.
M.P. AGRO: CRISIL Suspends B+ Rating on INR50MM Cash Loan
---------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
M.P. Agro BRK Energy Foods Limited (MPBRK).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50 CRISIL B+/Stable
Term Loan 31.2 CRISIL B+/Stable
The suspension of ratings is on account of non-cooperation by
MPBRK with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, MPBRK is yet to
provide adequate information to enable CRISIL to assess MPBRK's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
Incorporated in 1991, MPBRK is a closely held public limited
company that primarily processes wheat and manufactures wheat-
based products such as wheat flour (atta), refined wheat flour
(maida), bran, and wheat semolina (suji). Its products also
include weaning and energy foods, corn flour, and soya flour. The
company, currently managed by Mr. Rahul Kumavat, has its
manufacturing facility at Dewas (Madhya Pradesh).
MATHURA FIBRES: ICRA Suspends B+ Rating on INR12cr Loan
-------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]B+ assigned to
INR12.00 crore fund based facilities of Mathura Fibres & Cotton
Industries. The suspension follows ICRA's inability to carry out
a rating surveillance in the absence of the requisite information
from the company.
Mathura Fibres & Cotton Industries was incorporated in 2013 as a
partnership firm. It is located in Adilabad, Telangana and is
involved in the ginning & pressing of raw cotton to produce
cotton lint & seeds and also processing of cotton seeds to
produce cotton seed oil & cakes. The firm has 60 gins and two
pressing units. The firm also acquired Balaji Fibres & Cotton in
an auction which further added 22 gins and 2 presses to the
current capacity thus making a total of 88 gins & 4 presses. The
current capacity of the plant is 500 bales of lint per day.
MOS METRO: CRISIL Suspends 'D' Rating on INR340MM LT Loan
---------------------------------------------------------
CRISIL has suspended its rating on the bank facility of Mos Metro
India Private Limited (MIPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 340 CRISIL D
The suspension of ratings is on account of non-cooperation by
MIPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, MIPL is yet to
provide adequate information to enable CRISIL to assess MIPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
MIPL, based in Chennai, was established in 2011 by Mosmetrostroy
(FZE). The company is a provider of railway, metro construction,
and civil engineering services in India. It has been
subcontracted to undertake tunnelling work for the Chennai Metro
Rail Project by the OJSC Mosmetrostroy-Gammon India consortium.
NAGABHUSHANAM & CO: ICRA Suspends B+ Rating on INR20cr Loan
-----------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]B+ and short
term rating of [ICRA]A4 assigned to INR20.00 crore fund based
facilities of Nagabhushanam & Co. The suspension follows ICRA's
inability to carry out a rating surveillance in the absence of
the requisite information from the company.
Founded as a partnership firm in 2001, Nagabhushanam and Co. (NC)
is engaged in executing civil works to Roads & Buildings (R&B)
Department of Andhra Pradesh such as construction and improvement
of roads & bridges and leveling of low lying housing sites for
various Government Departments. The major contracts executed are
based out in East Godavari, Nalgonda and West Godavari districts
of Andhra Pradesh.
NEWLINE AUTOTRACK: CRISIL Suspends 'D' Rating on INR145MM Loan
--------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Newline Autotrack Private Limited (NAPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4.8 CRISIL D
Cash Credit 145.0 CRISIL D
Proposed Long Term
Bank Loan Facility 6.7 CRISIL D
Term Loan 33.5 CRISIL D
The suspension of ratings is on account of non-cooperation by
NAPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, NAPL is yet to
provide adequate information to enable CRISIL to assess NAPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
NAPL, incorporated, by Malda (West Bengal)-based Mr. Siddhartha
Gangopadhyaya and Mr. Sisir Kumar Gangopadhaya and their
families, has been an authorised dealer of TML since 2007 for
Malda, north and south Dinajpur (all in West Bengal).
NTS DAIRY: CRISIL Cuts Rating on INR70MM Term Loan to 'D'
---------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of NTS Dairy and Foods Private Limited (NTS) to 'CRISIL D' from
'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Term Loan 70 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects delay by the company in payment of its
term loan instalment and over-utilisation of its cash credit
facility for more than 30 days. The delays were mainly because of
insufficient net cash accrual to meet debt obligations.
NTS also has a small scale of operations and is exposed to risks
related to intense competition and to regulatory changes in the
milk processing industry. Also, its financial risk profile is
weak because of large debt-funded capital expenditure for its
ongoing project. However, the company benefits from the extensive
experience of its promoters in the agricultural and allied
industries, and their funding support.
Incorporated on March 15, 2013, and promoted by Mr. Nandkishor T
Sonawane, NTS currently processes and distributes milk and milk
products. It has a milk processing capacity of 20,000 litres per
day (lpd) at Bhadane in Dhule (Maharashtra). It is setting up a
new unit at the same location for an additional milk processing
capacity of 50,000 lpd and a facility to manufacture value-added
products.
PARIKH INVESTMENT: CRISIL Cuts Rating on INR200MM Loan to 'D'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility
of Parikh Investment and Development Private Limited (PIDPL) to
'CRISIL D' from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 200 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects instances of delay by PIDPL in servicing
its debt because of weak liquidity driven by poor sales in its
ongoing real estate project, Paradise Tower.
PIDPL is also exposed to risks related to demand and funding of
its project, geographic concentration in operations, leveraged
capital structure, and fragmentation and cyclicality in the real
estate sector. However, it benefits from the industry experience
of its promoters.
PIDPL was founded as a private limited company in 1988 by the
Mumbai-based Parikh group. The company develops and sells
residential and commercial real estate projects, primarily at
Malad in Mumbai and at Virar in Thane, Maharashtra. PIDPL's
ongoing residential real estate project, Paradise Tower, is in
Virar and has 166 flats.
POSITIVE CHIP: CRISIL Suspends 'B' Rating on INR49MM Term Loan
--------------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Positive Chip Board India Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL B/Stable
Foreign Exchange
Forward 1.5 CRISIL A4
Proposed Long Term
Bank Loan Facility 29.5 CRISIL B/Stable
Term Loan 49.0 CRISIL B/Stable
The suspension of ratings is on account of non-cooperation by
PCPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, PCPL is yet to
provide adequate information to enable CRISIL to assess PCPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
Incorporated in 2007, PCPL is setting up a facility to
manufacture pre-laminated particle boards, used to design
furniture. The unit could commence operations from April 2015.
PRIYADARSHI MOTORS: CRISIL Suspends D Rating on INR380MM Loan
-------------------------------------------------------------
CRISIL has suspended its rating on the bank facilities of
Priyadarshi Motors Private Limited (PMPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 380 CRISIL D
Standby Line of Credit 30 CRISIL D
The suspension of rating is on account of non-cooperation by PMPL
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, PMPL is yet to
provide adequate information to enable CRISIL to assess PMPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
PMPL was set up in June 2007 by Mr. Nikhil Priyadarshi. It
commenced operations in November 2008 with an M&M dealership in
Patna (Bihar).
PROSEED FOUNDATION: ICRA Revises Rating on INR10cr Loan to B+
-------------------------------------------------------------
ICRA has revised its long term rating on the INR10.00 crore fund
based bank facilities of Proseed Foundation (PSF) to [ICRA]B+
from [ICRA]BB(Stable).
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Bank
facilities 10.00 [ICRA]B+; Revised
The rating revision takes into account the closure of its
engineering and management institute in AY15-16 owing to weak
admissions. The society has now set up a residential school in
the same campus from AY15-16 with 37 students, expected to ramp
up going forward. The rating is further constrained by the
consequent decline in operating scale and the continued cash
losses being witnessed by the society in backdrop of high
interest outgo. ICRA also notes that society may be required to
undertake additional investments for the development of academic
as well as related infrastructure to meet the requirement of the
increased student base.
The rating however continues to take comfort from the experienced
management of the trust who have been engaged in the education
sector for more than two decades and the operational assistance
from the group company Career Point Limited, which already runs
similar kind of residential cum school campus in Kota since 2000.
Further, the society has also been receiving funding support from
its trustees to manage its cash flows.
Given the scheduled debt repayments and inadequacy of cash flows,
the extent and timeliness of promoter's funding, will be the key
determinants of the credit profile and liquidity position, and
will thus be the key rating sensitivities. This apart, the
improvement in the occupancy levels at the school campus will be
the key rating sensitivities going forward.
Incorporated in 2009, Proseed Foundation is a charitable trust
which has been promoted by the Career Point Group which has
presence in informal education (tutorial services) and formal
education (K-12 and higher education) segments. Till AY 14-15,
Proseed Foundation runs and operates Career Point Technical
Campus in Mohali (Punjab) which offers courses in engineering
(B.Tech course in 6 disciplines) and management (MBA in 3
disciplines). However, since AY15-16 there is change in scope of
operations for the trust with closing of this technical institute
and start of residential school campus. The concept was borrowed
from the group company Career Point Limited, which already runs
similar kind of residential cum school campus in Kota since 2000.
The course is divided into two parts Foundation Years (Grade 6th
to 10th) and Target Years (Grade 11th, 12th and 12th pass).
Currently there are 37 students enrolled for AY 15-16.
The trust is headed by Mr. Om Prakash Maheshwari, who is also the
executive director and CFO of Career Point Limited (Flagship
Company of the Career Point group). The day to day operations of
the college are managed by Mr. Anoop Bansal who has prior
experience of managing educational institutions in the state of
Punjab.
Recent Results
Proseed Foundation reported a net cash deficit of INR4.50 crore
on revenue receipts of INR1.90 crore in 2014-15 as against a net
cash deficit of INR3.42 crore on revenue receipts of INR2.33
crore in the previous year. For the nine months ended December
31, 2015, the trust, on a provisional basis, reported revenue
receipts of INR0.12 crore.
PURNA GLOBAL: CRISIL Suspends 'D' Rating on INR144.6MM Loan
-----------------------------------------------------------
CRISIL has suspended its ratings on the bank facility of
Purna Global Textiles Park Ltd (PGT).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 144.6 CRISIL D
The suspension of ratings is on account of non-cooperation by PGT
with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, PGT is yet to
provide adequate information to enable CRISIL to assess PGT's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
PGT, set up on December 31, 2007, is a special-purpose vehicle
for developing, implementing, operating, and managing an upcoming
textile park in Hingoli (Maharashtra). PGT was set up under SITP,
supported by the Ministry of Textiles, Government of India. PGT
is one of 10 textile parks in Maharashtra to be approved under
SITP.
QUICK FOODS: ICRA Suspends B+ Rating on INR8.0cr Cash Loan
----------------------------------------------------------
ICRA has suspended [ICRA]B+ rating assigned to the INR8.00 crore
working capital facilities & INR1.33 crore term loan facility of
Quick Foods Company. ICRA has also suspended [ICRA]A4 rating
assigned to the INR0.25 crore short term non fund based
facilities of Quick Foods Company. The suspension follows ICRA's
inability to carry out a rating surveillance in the absence of
the requisite information from the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 8.00 [ICRA]B+ suspended
Term Loan 1.33 [ICRA]B+ suspended
Import LC/BG/FSC 0.25 [ICRA]A4 suspended
Quick Foods Co. (QFC) was incorporated in the year 2009 and is
engaged in manufacturing of dehydrated and frozen products with
its manufacturing facilities located in Gomta, Gujarat. It is a
group company of Pardes Dehydration Co., engaged in dehydration
of vegetables. QFC was formed with a motive to add more value
added products under the group's banner. The firm is currently
headed by Mr. Hitendra Parekh, who has been present in food
processing industry since 1983.
R.N. RICE: ICRA Suspends B- Rating on INR11.0cr LT Loan
-------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]B- assigned to
the INR11.001 crore fund based bank facilities of R.N. Rice
Mills.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-Based Limits
Long Term 11.00 [ICRA]B-; Suspended
The ratings were suspended due to lack of cooperation by the
client to provide any further information.
RNRM is engaged in processing and trading of rice and was
established in 2003 as a proprietorship firm by Mr. Rajesh Kumar
Bansal. In 2008 the proprietorship was converted into a
partnership firm with Mr Rajesh Kumar Bansal and Mr Mange Ram as
partners in the ratio of 65:35. Both the partners are actively
engaged in the management of the firm. The milling capacity of
the plant located at Kaithal, Haryana is 6 tonnes per hour.
RED CHILLIES: CRISIL Suspends 'D' Rating on INR260MM Loan
---------------------------------------------------------
CRISIL has suspended its ratings on the bank facilities of
Red Chillies Mercantile Private Limited (RCMPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Export Packing Credit 260 CRISIL D
Letter of Credit 30 CRISIL D
Proposed Short Term
Bank Loan Facility 212.5 CRISIL D
Term Loan 100.0 CRISIL D
The suspension of ratings is on account of non-cooperation by
RCMPL with CRISIL's efforts to undertake a review of the ratings
outstanding. Despite repeated requests by CRISIL, RCMPL is yet to
provide adequate information to enable CRISIL to assess RCMPL's
ability to service its debt. The suspension reflects CRISIL's
inability to maintain a valid rating in the absence of adequate
information. CRISIL considers information availability risk as a
key factor in its rating process as outlined in its criteria
'Information Availability - a key risk factor in credit ratings'
Incorporated in 2010, RCMPL manufactures ready-made garments for
men, women, and children. Its daily operations are managed by Mr.
Ashish Karnani, Mr. Aakarsh Dalmia, and Mr. Ashish Soni.
RCI, a wholly owned subsidiary of RCMPL, was incorporated in
2011-12. RCI operates as RCMPL's marketing office in New York,
USA.
REEP INDUSTRIES: CRISIL Ups Rating on INR40MM Cash Loan to B+
-------------------------------------------------------------
CRISIL has upgraded its ratings on the bank loan facilities of
Reep Industries Private Limited (RIPL) to 'CRISIL
B+/Stable/CRISIL A4' from 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 20 CRISIL A4 (Upgraded from
'CRISIL D')
Bill Purchase 40 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit 40 CRISIL B+/Stable (Upgraded
from 'CRISIL D')
Foreign Bill 9 CRISIL A4 (Upgraded from
Discounting 'CRISIL D')
Letter of Credit 20 CRISIL A4 (Upgraded from
'CRISIL D')
Long Term Loan 20 CRISIL B+/Stable (Upgraded
from 'CRISIL D')
Packing Credit 9 CRISIL A4 (Upgraded from
'CRISIL D')
Proposed Long Term 43.8 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
The upgrade reflects RIPL's timely servicing of term debt because
of increased cash accrual. Cash accrual is expected at INR37-40
million per annum over the medium term, driven by improved
operating performance. RIPL's liquidity is also supported by
need-based funds from its promoter, reflected in unsecured loan
of INR14.3 million as on March 31, 2015.
The ratings reflect RIPL's modest scale of operations in the
intensely competitive electrical products industry, and
susceptibility of its margins to volatility in raw material
prices. These weaknesses are partially offset by its promoter's
extensive industry experience.
Outlook: Stable
CRISIL believes RIPL will continue to benefit over the medium
term from its promoter's extensive industry experience. The
outlook may be revised to 'Positive' if revenue increases
significantly and profitability improves, leading to higher cash
accrual. Conversely, the outlook may be revised to 'Negative' in
case of lower-than-expected revenue, or stretch in liquidity due
to increase in working capital requirement or any unexpected
large debt-funded capital expenditure.
RIPL, incorporated in 1996, manufactures bus ducts, control
panels, cubicles, and copper flexibles used in transmission of
power.
ROYAL WOOD: ICRA Suspends B+ Rating on INR3.0cr Cash Loan
---------------------------------------------------------
ICRA has suspended [ICRA]B+ rating assigned to the INR3.00 crore
working capital facilities & [ICRA]A4 rating assigned to the
INR8.00 crore, short term non fund based facilities of Royal Wood
Private Limited. The suspension follows ICRA's inability to carry
out a rating surveillance in the absence of the requisite
information from the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash
Credit 3.00 [ICRA]B+ suspended
Non Fund Based-
LC/BG 8.00 [ICRA]A4 suspended
Royal Wood Private Limited was incorporated in 2008 as a private
limited company and is engaged in the trading of timber and
manufacturing of plywood (thickness ranging from 3.0 to 25.0 mm),
veneer etc. The company's manufacturing facility is located at
Gandhidham in Kutch District (Gujarat), near Kandla port. The
company is promoted by Mr.Naresh Garg, Mr.Kewal Garg and other
family members.
SAFE-TRONICS AUTOMATION: ICRA Reaffirms B+ Rating on INR4cr Loan
----------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B+ to the
INR4.0 crore cash credit facility of Safe-Tronics Automation
Private Limited (SAPL). ICRA has reaffirmed the short term rating
of [ICRA]A4 to the INR9.0 crore non-fund based facility and to
the INR5.0 crore buyer credit facility which is a sublimit of non
fund based facility of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits
Cash Credit 4.0 [ICRA]B+ reaffirmed
Non Fund based
limits - Bank
Guarantee/Letter
of Credit 9.0 [ICRA]A4 reaffirmed
Buyer's Credit
Sub Limit (5.0) [ICRA]A4 reaffirmed
Unallocated limits 1.0 [ICRA]B+/[ICRA]A4
reaffirmed
ICRA has also reaffirmed the long term rating of [ICRA]B+ and the
short term rating of [ICRA]A4 to the INR1.0 crore unallocated
limits of the company.
The ratings reaffirmation take into account the long experience
of SAPL's promoters in the execution of turnkey projects for
installation of fire & gas (F&G) detection equipments mainly for
oil & gas industry. The ratings also factor in the exclusive
supply arrangement with Detector Electronics Corporation, USA
which has a leading position in F&G detection system domain.
The ratings, however, remain constrained by the company's modest
scale of operations, which coupled with the tender-based contract
awarding system leads to intense competition among peers and
keeps profitability of all the players, including SAPL under
check. Moreover, the absence of a price escalation clause in the
majority of the contracts exposes the company to variation in raw
material and labour costs. Despite healthy growth in FY2015, the
sale velocity in FY2016 has remained low in the backdrop of an
inconsistent order book position arising out sluggish pace of
capital investments in oil & gas sector. The ratings also factor
in the susceptibility of company's margins to exchange rate
fluctuations, given its significant dependence on imports.
ICRA expects SAPL's growth in operating income to remain muted in
FY2016 given the sluggish pace of investments in oil and gas
sector, which is likely to result in reduction in volumes of
tenders floated by the companies in oil and gas industry. This
will further exert pricing pressures in competitive bidding
process which may result into subdued profitability in near term.
However, in the medium term, ICRA expects the company to add new
products to its existing product portfolio with its recent
collaboration with GE, USA for the exclusive dealership for
supply of Oil on Water monitoring and detection equipments in
India. However, the healthy establishment of its new product in
the competitive domestic market remains to be seen. The company's
ability to ramp up the scale of operation backed by a healthy
order book position, establishment of the new product in the
domestic market and to sustain its profitability in the backdrop
of competitive bidding process will be the key rating
sensitivities.
Safe-Tronics Automation Private Limited (SAPL), incorporated in
2007, is engaged in providing turnkey solutions for fire & gas
(F&G) detection systems mainly for oil & gas industry. SAPL is an
exclusive representative for products of Detector Electronics
Corporation (DEC), part of United Technologies Corporation, USA
and Norriseal (part of Dover Corporation, USA). SAPL also has
supply arrangements with entities like Rockwell Automation for
supply of control systems to be used with Fire & Gas detector
equipments and with MEDC (UK) for supply of hooters, alarms,
beacons, etc.
SAPL undertakes fresh installations work as well as repair and
expansion work for existing installations. The company provides
design, implementation, installation and commissioning, technical
support and post sales service and warranty for DEC products. The
clientele for the company mainly includes large refineries and
petrochemical plants. The majority of orders are tender-based and
order execution usually takes 4 to 8 months.
Recent Results:
SAPL reported a profit of INR0.6 crore on an operating income of
INR21.6 crore for the year ending March 31, 2015 (audited) and
profit before tax of INR0.2 crore on an operating income of
INR11.1 crore as on November 30, 2015 (provisional statement).
SAI INDIA: ICRA Assigns 'B' Rating to INR4.75cr Cash Loan
---------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B to INR6.58 crore
fund based limits of Sai India Limited. ICRA has also assigned a
short-term rating of [ICRA]A4 to its INR1.35 crore non-fund based
limits. ICRA has also assigned ratings of [ICRA]B/A4 to INR0.17
crore unallocated limits of SIL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash
Credit 4.75 [ICRA]B; assigned
Fund Based-Term
Loan 0.65 [ICRA]B; assigned
Fund Based-
Corporate Loan 1.08 [ICRA]B; assigned
Non Fund Based 1.35 [ICRA] A4; assigned
Unallocated 0.17 [ICRA]B/A4; assigned
The assigned ratings take into account the experience of the
promoters with long track record in the manufacturing of
hydraulic radial piston motors, support from its parent and group
companies in terms of technology, and the stable demand outlook
for the key user industries like real estate, mining etc. The
ratings also factor in the improvement in financial profile as
reflected by increase in turnover and margins (supported by
increase in capacity utilization in FY15) along with comfortable
gearing level. The ratings also consider the long-standing
relationship of the company with its renowned client base and low
competition in radial piston motor manufacturing segment thus
reducing the competitive intensity, notwithstanding the risk
faced by the company from substitute products.
The ratings are, however, constrained by the moderate scale of
operations of the company restricting operational and financial
flexibilities to an extent, and the high working capital
intensity on account of high receivables and high inventory
holding period despite the high creditor levels. The ratings take
into account the vulnerability of profitability to fluctuations
in raw material prices, partially mitigated by procurement of raw
materials against firm orders, and high fixed costs which
includes machine maintenance, power and fuel and other
manufacturing expenses which led to net losses for the company in
FY14 and FY15. The ratings are also constrained by low capacity
utilization and high customer concentration of group companies
and parent company of 57.61% in FY15 which resulted in stretched
receivable cycle.
Sai India Limited was incorporated in the year 1989 with the
objective of marketing various hydraulic products SAI s.p.a
Italy. After obtaining Foreign Collaboration Agreement, the
company started commercial production in 1992. FIN.OL.IM, Italy
became the holding Company of Sai India Limited in 2003 by way of
purchasing SAI s.p.a's stake. Sai s.p.a continues as Licenser for
Sai India Limited to manufacture and sell the products under the
Brand Name of "SAI".
The products manufactured by the company are basically hydraulic
motors along with the associated drives incorporating gearbox and
brakes for a variety of industrial and mobile applications. The
present production capacity is about 12000 units. The Company has
two manufacturing units, one at Whitefield, Bangalore and the
other one at Shimoga, Karnataka.
Recent Results
The company reported an operating income of INR15.00 crore and a
net loss of INR0.81 crore during FY2015, as compared to an
operating income of INR11.54 crore and a net loss of INR2.51
crore during FY2014. As per provisional financials for 9MFY2016
ending December 31, 2015, the company reported a loss of INR1.05
crore on an operating income of INR12.20 crore.
SENTHIL TIMBER: CRISIL Assigns B+ Rating to INR15MM Cash Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Senthil Timber Traders (STT).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 15 CRISIL B+/Stable
Letter of Credit 85 CRISIL A4
The ratings reflect the firm's modest scale of operations in the
highly fragmented timber industry, large working capital
requirement, and average financial risk profile because of a
modest net worth. These rating weaknesses are partially offset by
the extensive experience of its partners in the timber trading
business.
Outlook: Stable
CRISIL believes STT will continue to benefit over the medium term
from the extensive industry experience of its partners. The
outlook may be revised to 'Positive' in case of higher-than-
expected growth in revenue or margins, supported by efficient
working capital management, leading to improvement in cash
accrual and in the financial risk profile. Conversely, the
outlook may be revised to 'Negative' in case of a significant
decline in revenue or profitability, or a stretched working
capital cycle, leading to deterioration in the financial risk
profile.
STT was set up in 1976 as a partnership firm by Mr. A K S
Madhavan and his brothers. The firm, based in Tenkasi, Tamil
Nadu, trades in timber.
SHREE BHAVANI: ICRA Assigns 'B' Rating to INR5.0cr Cash Loan
------------------------------------------------------------
ICRA has assigned the long-term rating of [ICRA]B to the INR5.00
crore cash credit facility and INR1.00 crore term loan facility
of Shree Bhavani Rice Mill.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 5.00 [ICRA]B assigned
Term loan 1.00 [ICRA]B assigned
The assigned rating is constrained by weak financial profile of
the firm as characterized by low profitability due to the
inherently low value addition in the business, highly leveraged
capital structure and weak coverage indicators. The rating is
also constrained by high working capital intensity leading to
stretched liquidity position as reflected by high utilization of
working capital limits. The rating also factors in the
vulnerability of profitability to movements of paddy prices and
susceptibility of operations to seasonality and variation in crop
harvest as well as regulatory risks. ICRA also notes that SBRM is
a partnership firm and any significant withdrawals from the
capital account would affect its net worth and thereby its
capital structure.
The assigned ratings, however, favorably consider the long
standing experience of promoters in the rice milling and trading
business and the strategic location of the plant which provides
easy access to raw material.
Established in 1975, Shree Bhavani Rice Mill (SBRM) is promoted
by Patel family and is engaged in the milling of par boiled rice
as well as paddy and wheat trading. The firm processes three
varieties of rice namely IR-8, Parimal and Gujarat-17. The
promoters have been engaged in the rice milling business for
about three decades. The firm operates from its processing unit
located at Bavla in the Ahmedabad district of Gujarat with an
installed input capacity of ~100 MT per day.
Recent Results
The firm has reported an operating income of INR21.93 crore and
profit after tax of INR0.06 crore for FY15 as against an
operating income of INR11.79 crore and profit after tax of
INR0.06 crore in FY14.
SHREE DATTA: CRISIL Reaffirms B+ Rating on INR80MM Cash Loan
------------------------------------------------------------
CRISIL's rating on the long-term bank facility of Shree Datta
Fertilizers and Chemical Private Limited (SDFCPL) continues to
reflect the company's modest scale of operations, large working
capital requirement, and susceptibility to the level of
agricultural activity in and around Vidarbha.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 80 CRISIL B+/Stable (Reaffirmed)
The rating also factors in weak debt protection metrics and
exposure to risks related to regulatory changes affecting raw
material procurement. These rating weaknesses are partially
offset by the extensive experience of the company's promoter in
the fertiliser and chemical industry and benefits expected from
the healthy demand for granular fertilisers.
Outlook: Stable
CRISIL believes SDFCPL will continue to benefit over the medium
term from its promoter's extensive industry experience and the
healthy demand for granular fertilisers. The outlook may be
revised to 'Positive' in case of a significant increase in
revenue and net cash accrual, while capital structure and debt
protection metrics improve. Conversely, the outlook may be
revised to 'Negative' in case of a decline in scale of
operations, a stretched working capital cycle, or contraction of
considerable debt.
SDFCPL was set up by Mr. Ashok Ratanlal Soni in 1999. It
manufactures nitrogen, phosphorous, and potassium (NPK)
granulated mixed fertilisers. The company sells these primarily
through a network of dealers in and around Vidarbha.
SHRI TRUST 2016: Fitch Rates Series A1 & A2 PTCs 'BBB-sf'
---------------------------------------------------------
Fitch Ratings has assigned final ratings to Shri Trust K 2016's
pass through certificates (PTCs). The issuance consists of notes
backed by commercial-vehicle and tractor loans originated by
Sundaram Finance Ltd (SFL). The ratings are:
INR4.724 bil. Series A1 PTCs due March 2018: 'BBB-sf'; Outlook
Stable
INR1.276 bil. Series A2 PTCs due August 2020: 'BBB-sf'; Outlook
Stable
The split in notes from the expected rating issued on Jan. 28,
2016, addresses the difference between Series A1 and A2. The
ratings address timely payment of interest and principal in
accordance with the payout schedules in the transaction
documents. The scheduled payouts will be net of distribution
taxes on the income distributed by the trust to the PTC holders.
KEY RATING DRIVERS
The ratings and outlooks reflect adequate external credit
enhancement (CE) and SFL's origination practices, servicing
experience and expertise in collection and recovery of
commercial-vehicle loans in India. The transaction is supported
by sound legal and financial structures.
For this transaction, the CE comprises a first-loss credit
facility, which is in the form of fixed-deposits with Axis Bank
Ltd. (BBB-/Stable/F3) in the name of the originator with a lien
marked in favour of the trustee.
The CE is deemed sufficient to cover the commingling risks of the
servicer and liquidity for the timely payment of the PTCs. As of
March 2016, Shri Trust K 2016 had current CE of 10.78% of the
outstanding pool balance.
Fitch affirmed India's Long-Term Foreign- and Local-Currency
Issuer Default Ratings at 'BBB-' in December 2015. Fitch expects
India's real GDP growth to pick up to 7.7% in the financial year
ending 31 March 2016 (FY16) and 7.9% in FY17.
Fitch has factored this macroeconomic outlook into its analysis
and its base-case default-rate assumptions. The default rate,
default timing, prepayment rate, recovery rate and time to
recovery, together with the portfolio's weighted-average yield,
were stressed in Fitch's Global Consumer ABS cash flow model to
assess the sufficiency of cash flow for timely payment at the
current rating level.
No interest-rate or foreign-currency risks exist in the
transaction, since both the assets and the PTCs are fixed-rate
and denominated in rupees.
The transaction comprises a seasoned portfolio, with loans from
16 Indian states. The collateral pool was assigned to the trust
at par, and as of Dec. 31, 2015, it had an aggregate outstanding
principal balance of INR6.0 bil. and consisted of 10,120 loans to
9,656 obligors. The collateral pool had a weighted average (WA)
original loan-to-value ratio of 78.1%, a WA seasoning of 10.6
months and a WA yield of 13.2%. As of the cut-off date, loans in
the securitized pool were mostly current, with no loans more than
60 days past due. Fitch gave some credit to WA seasoning of 10.6
months of the underlying loans.
RATING SENSITIVITIES
Based on Fitch's sensitivity analysis, Fitch may consider
downgrading the note ratings in Shri Trust K 2016 to 'BBsf' if
the base-case default rate increases by 30%, or 'BB+sf" if the
base-case recovery rate declines by 30%. The sensitivity
analysis assumes CE and other factors remain constant.
The note ratings may be upgraded if the rating of the credit
collateral bank holding the first-loss credit facility deposits
is upgraded to above 'BBB-' and the portfolio performance remains
sound, with adequate CE that can withstand stress at above a
'BBB-sf' rating scenario.
At closing, SFL assigned commercial-vehicle and tractor loans to
Shri Trust K 2016, which in turn issued the PTCs. The PTC
proceeds were used to fund the purchase of the underlying loans
in each transaction.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation
to this rating action.
SKYHIGH HOSPITALITY: CRISIL Reaffirms B- Rating on INR100MM Loan
----------------------------------------------------------------
CRISIL's rating on the bank loan facility of Skyhigh Hospitality
Private Limited (SHPL) continue to reflect SHPL's muted operating
profitability on account of low occupancy level, and weak
financial risk profile with weak debt protection measures. These
rating weaknesses are mitigated by the favourable location of the
company's hotel.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 100 CRISIL B-/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes SHPL's credit risk profile will remain sensitive
to the timely infusion of funds by its promoters to service its
debt, given its low cash accrual and early stage of operations.
The outlook may be revised to 'Positive' if higher-than-expected
average room rent and occupancy rates in early stage of
operations, results in adequate cash accrual and improved
financial risk profile. Conversely, the outlook may be revised to
'Negative' in case of any delay in funding support from the
promoters to meet its term debt obligations.
Update
SHPL had revenue of INR38-38.5 million during 2015-16 (refers to
financial year, April 1 to March 31) as against INR32.40 million
in 2014-15. Growth in revenue was mainly due to stabilisation of
operation at the hotel and from its corporate customer due to its
strategic location in Gurgaon. Till February 2016, SHPL had
revenue of INR34.80 million. With heavy asset business model, low
occupancy levels and intense competition from other hotels in the
region, cash accrual is likely to remain subdued over the medium
term.
Financial risk profile will remain below-average over the medium
term, because of negative and small networth and weak debt
protection metrics (interest cover of 0.12 time for 2015-16),
despite a scope of slight improvement.
Liquidity too should remain weak because of insufficient cash
accrual to meet debt obligation; however, with need-based fund
support from the promoters, the company is likely to meet its
debt obligation on time.
SHPL was set up in 2008 by Gurgaon-based Mr. Ramesh Khurana and
his friend, Mr. S N Virmani. The company runs a boutique hotel
'Treehouse Queens Pearl' in Gurgaon.
SOLAPUR BIO-ENERGY: ICRA Reaffirms D Rating on INR27.63cr Loan
--------------------------------------------------------------
ICRA has re-affirmed the long-term rating of [ICRA]D for the term
loans and fund-based limits aggregating to INR29.63 crore1 of
Solapur Bio-Energy Systems Private Limited. ICRA has also
reaffirmed the short-term rating of [ICRA]D to the non-fund-based
limits aggregating to INR1.20 crore of SBES.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term: Term
Loans 27.63 [ICRA]D re-affirmed
Long-term Fund-
based Limits 2.00 [ICRA]D re-affirmed
Short-term Non-
fund-based limits 1.20 [ICRA]D re-affirmed
The reaffirmation of rating continues to reflect the irregularity
in debt servicing by the company on account of the significant
delays in project commissioning and also in the sale of power
that has led to cash flow mismatches. While the company
commissioned 3 MW capacity by January 2013, it is yet to achieve
optimum plant utilisation levels. Further, the sizeable cost
over-run has impacted the project metrics, and the company is
seeking an increase in the tariff rates. The rating also takes
into account the overall modest size of operations with plant
capacity at 4 MW and the lack of past experience of its parent
company viz. Organic Recycling Systems Private Limited, in
setting up of power plants based on Municipal Solid Waste (MSW)
as fuel. ICRA notes that in view of the unconventional fuel-based
power plant being setup by the company, its ability to achieve
the envisaged operating parameters would be critical for overall
profitability and debt coverage, going forward.
ICRA, however, positively notes the low execution risks, given
that 3 MW capacity has been already operational; the low fuel
supply risks for the company with the requisite MSW supply
guaranteed by SMC (Solapur Municipal Corporation); the low demand
risk with long-term Power Purchase Agreement (PPA) in-place with
MSEDCL; and the additional revenues likely to be generated from
sale of compost/bio-fertilizers (by-product) as well as the
technology tie-up with Waste Works of Ireland.
Solapur Bio-Energy Systems Private Limited (SBESPL), promoted by
Organic Recycling Systems Private Limited (ORSPL), is a Special
Purpose Vehicle (SPV) set up to convert Municipal Solid Waste
(MSW) into energy and compost. The company has set up a plant in
Solapur (Maharashtra) and commissioned 3 MW capacity by January
2013 with balance 1 MW capacity expected to be commissioned by Q2
FY2017. The company has entered into a long-term Power Purchase
Agreement (PPA) with Maharashtra State Electricity Distribution
Company Limited (MSEDCL) for sale of power at a tariff of
INR4.88/unit for 2.83 MW capacity and has also signed an in-
principle PPA with MSEDCL for the balance 1 MW capacity. The
operations of the plant are based on Bio-Methanation Process,
based on anaerobic digestion, designed by the company in
collaboration with Waste Works of Ireland.
Recent Results
For FY 2015, the company reported loss of INR6.41 crore on an
operating income of INR4.82 crore. For FY 2014, the company
reported loss of INR3.05 crore on an operating income of INR4.03
crore.
SUNDAR TIMBER: ICRA Assigns 'B' Rating to INR1.0cr Cash Loan
------------------------------------------------------------
ICRA has assigned the long-term rating of [ICRA]B to the INR1.00
crore cash credit facility of Sundar Timber Products. ICRA has
also assigned the short term rating of [ICRA]A4 to the INR7.00
crore letter of credit cum buyers credit facility of STP.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 1.00 [ICRA]B assigned
Letter of Credit
cum Buyers Credit 7.00 [ICRA]A4 assigned
The assigned ratings are constrained by the firm's relatively
modest scale of operations coupled with revenue de-growth
witnessed in FY 2015. Further, the ratings also take into account
the moderate financial risk profile of the firm as characterized
by relatively modest profitability, highly leveraged capital
structure and moderate debt coverage indicators. The ratings also
factor in the exposure of firm's profitability to volatility in
timber prices; exchange rate fluctuations as majority of timber
is being imported and the highly competitive business environment
owing to low entry barriers and limited value-addition in the
business as well as the susceptibility of timber availability to
export regulations in the key supplying markets. ICRA also notes
that STP is a proprietorship firm and any significant withdrawals
from the capital account could affect its net worth and thereby
its capital structure.
The assigned ratings, however, draw comfort from the established
track record of the promoter in the business of timber trading
and processing business and the locational advantage arising from
the presence of the facility in close proximity to Kandla port.
Established in the year 1977 in Kolkata, Sundar Timber Products
(STP) is promoted and managed by Mr Mahabir Prasad Agarwal. The
proprietor of the firm has more than 35 years of experience in
timber business. The firm is engaged in processing and trading of
timber as well as in manufacturing of wooden pallets, cable drums
and battens at its facilities located in Gandhidham (Gujarat) and
Kolkata (West Bengal). Trading operations are carried out at
Gandhidham unit whereas manufacturing operations are carried out
at Kolkata unit.
Recent Results
For the year ended March 31, 2015, STP reported an operating
income of INR16.95 crore and profit after tax of INR0.15 crore as
against an operating income of INR25.46 crore and profit after
tax of INR0.14 crore for the year ended March 31, 2014. During
the eleven months of operations in FY2016 (provisional
financials), STP reported an operating income of INR22.56 crore
and profit before depreciation of INR0.47 crore.
TATA MOTOR: Fitch Affirms 'BB' FC Issuer Default Rating
-------------------------------------------------------
Fitch Ratings has affirmed India-headquartered Tata Motor
Limited's (TML) Long-Term Foreign-Currency Issuer Default Rating
(IDR) at 'BB'. The Outlook is Stable.
The rating reflects TML's small size in relation to global auto
majors and its profitable wholly owned subsidiary, Jaguar Land
Rover (JLR, BB-/Positive), which accounted for 75% of TML's
consolidated revenue and 90% of EBITDA in the financial year
ended 31 March 2015 (FY15).
The affirmation is due to the sustained stable financial
performance of JLR and TML's automobile business and TML's market
leadership in the Indian commercial vehicle market. The IDR
benefits from a one-notch uplift because TML is strategically
important to the holding company Tata Sons Limited (TSOL). TSOL
and other Tata group companies hold an aggregate 33% stake in
TML.
KEY RATING DRIVERS
JLR's Stable Credit Profile: JLR's 9MFY16 revenue declined by
2.7% yoy to GBP15.61bn and EBITDA margin shrank to 14.4% from
19.4% a year earlier, mainly because vehicle sales in China fell
25%. China's share of vehicles sold fell to 19% in 9MFY16 from
27% a year ago. However, JLR's launches of the Jaguar XE model in
the US followed by the global launches of F-pace sports utility
vehicle and Evoque convertible in 2016 are likely to translate
into volume, revenue and EBITDA growth from calendar year 2016.
Fitch estimates that JLR's net debt / EBITDAR is likely to remain
low at under 0.5x till end-FY19 despite the sizeable capex
pipeline.
New Product Launches: In India, TML launched the Tiago hatchback
in early 2016 and will be launching three new cars in 2016 - the
Kite 5 compact sedan, the Nexon utility vehicle and the Hexa
sports utility vehicle. These product launches, along with the
continued growth in TML's commercial-vehicle sales in India, will
drive volume and revenue growth as well as better realisations
per vehicle. TML's commercial-vehicle sales in India will
increase due to robust economic growth and replacement demand.
Stable Financial Metrics: TML's sales volume and revenue growth
will start picking up from FY17 due to the new launches.
Consolidated EBITDA margin is likely to decline, although to a
still adequate 13%, from FY17 from 15% in FY15 due to the
extension of price discounts. Fitch expects TML to generate
consolidated operating cash flows of about INR300bn a year (FY14:
INR306bn, FY15: INR296bn) till end-FY19.
TML's projected operating cash flows will meet around 70%-75% of
annual capex and dividends in FY16-FY19. TML's consolidated net
leverage (net adjusted debt / operating EBITDAR) as of 31 March
2015 was 0.70x. If the debt and EBITDAR from TML's financing arm
- Tata Motors Finance Limited - is deducted from the consolidated
debt and EBITDAR, the net leverage of the automobile business was
just 0.4x. Fitch expects TML's consolidated net leverage to
remain well under 2.0x, the level at which Fitch would consider
negative rating action.
Strategic Importance to TSOL: TML's rating continues to benefit
from a one-notch uplift due to Fitch's expectation of potential
support from the Tata group, should it be needed. Fitch believes
support from the Tata group would be forthcoming when necessary,
because TML is of strategic importance to the group. Any
weakening of linkages between the group and TML, or the group's
inability to provide support is likely to affect the ratings
negatively.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for TML include:
-- Volume growth and better realisations will result in a
gradual pick-up in revenue growth
-- EBITDA margin will decline slightly and stabilise at 13%
(FY15: 15%) from FY17 onwards
-- Capex intensity, which is the ratio of capital expenditure to
revenue, will range from 13% to 14% a year till end-FY19
-- Annual dividend payments of INR7.0bn for FY16-FY19
RATING SENSITIVITIES
Negative: Future developments that may collectively or
individually lead to negative rating actions include:
-- A weakening of linkages between the Tata Group and TML
-- Consolidated financial leverage (excluding TML's auto
financing subsidiary Tata Motors Finance Limited) exceeding
2.0x on a sustained basis due to reduced sales or
profitability (at TML, JLR or both), or due to higher-than-
expected debt levels
Positive: Future developments that may collectively or
individually result in positive rating actions include:
-- Improvement in TML's (standalone) credit profile together
with JLR's increased geographic and product diversification
while maintaining strong profitability
TEJASWI JEWELLERS: ICRA Suspends D Rating on INR28.2cr Loan
-----------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]D assigned to
the INR28.20 crore fund based facilities and INR11.80 crore
unallocated limits of Tejaswi Jewellers Private Limited. The
suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
Tejaswi Jewellers Private Limited (TJPL) was incorporated in the
year 1997 to engage in the business of branded retail in
Hyderabad. TJPL acts as a franchisee of Tanishq, Titan Eye+ and
Swarovski crystals. Apart from these, the company also engages in
retail of watches of reputed international brands (Tag Heuer,
Rado and Omega to name a few) through its showroom - Time in
Style. TJPL operates through six showrooms in the Hyderabad
market (3 Tanishq showrooms, 2 Titan Eye+ showrooms and 1 Time in
Style showroom). The Company is promoted by Mr. Butta S
Neelakanta and his wife Mrs. Butta Renuka and is part of the
BUTTA group of companies based out of Andhra Pradesh. The group
has presence in the Hospitality, Education, Branded Retail and
Automobile space in Hyderabad.
TEJASWI MOTORS: ICRA Suspends B+ Rating on INR35cr Loan
-------------------------------------------------------
ICRA has suspended the long term rating of [ICRA]B+ assigned to
the INR35.00 crore fund based facilities of Tejaswi Motors
Private Limited. The suspension follows ICRA's inability to carry
out a rating surveillance in the absence of the requisite
information from the company.
Tejaswi Motors Private Limited (TMPL) was incorporated in the
year 2005 and commenced its operations in March 2010. It is
engaged in the automobile dealership of TATA Motors passenger
cars in Hyderabad. It is part of Butta Group which is based in
Hyderabad and has its presence in diverse business segments. The
company is managed by Mr. Butta Neelakanta and his family.
TRIVANDRUM APOLLO: CRISIL Reaffirms 'B' Rating on INR150MM Loan
---------------------------------------------------------------
CRISIL's rating on the long-term bank facility of Trivandrum
Apollo Towers Private Limited (TATPL) continues to reflect
TATPL's exposure to risks related to implementation and
stabilisation of its hotel and shopping mall project in
Thiruvananthapuram. This weakness is mitigated by the promoter's
extensive experience in the real estate development industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 150 CRISIL B/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes TATPL will benefit over the medium term from the
promoter's extensive industry experience. The outlook may be
revised to 'Positive' if the upcoming hotel has considerably high
occupancy level, leading to large cash accrual. Conversely, the
outlook may be revised to 'Negative' in case of delays in
stabilising operations of the hotel and shopping complex results
in low revenue or cash flows, or if a substantially large debt-
funded capital expenditure programme is undertaken.
TATPL, based in Manjeri (Kerala), was incorporated in 2006 and is
setting up a four-star hotel and shopping complex, in
Thiruvananthapuram. The managing director, Mr. O M Abdul Rasheed,
manages its operations.
TULSIAN COAL: CRISIL Assigns B+ Rating to INR70MM Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-
term bank facility of Tulsian Coal Syndicate (TCS).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 70 CRISIL B+/Stable
The rating reflects TCS`s below-average financial risk profile
because of modest networth, high leverage and weak debt
protection measures. Rating also factors in its large working
capital requirement, geographical and customer concentration in
revenue and susceptibility of operating margin to price
fluctuations due to commoditised nature of business. These rating
weaknesses are mitigated by the extensive experience of promoters
in the coal trading industry and by an established clientele.
Outlook: Stable
CRISIL believes TCS will continue to benefit from its promoter's
extensive industry experience. The outlook may be revised to
'Positive' if significant capital infusion improves capital
structure and liquidity or if working capital cycle improves
substantially. Conversely, the outlook may be revised to
'Negative' in case of stretched working capital cycle or
deterioration in profitability leading to pressure on financial
risk profile.
Setup in 1992, TCS undertakes trading of coal. TCS is managed by
Mr. Subhash Chand Tulsian and has its registered office at
Chandauli (Uttar Pradesh). The firm supplies coal to
manufacturers of cement, sugar, sponge iron and brick in
Chandauli.
=================
I N D O N E S I A
=================
BANK DANAMON: Fitch Affirms 'BB+' LT IDR; Outlook Stable
--------------------------------------------------------
Fitch Ratings Indonesia has affirmed the ratings of Indonesia-
based PT Bank Central Asia Tbk (BCA), PT Bank Danamon Indonesia,
Tbk (Danamon) and PT Bank Pan Indonesia Tbk (Panin). The rating
Outlooks are Stable.
'AAA(idn)' Long-Term National Ratings denote the highest ratings
assigned by Fitch on its national rating scale for that country.
This rating is assigned to issuers or obligations with the lowest
expectation of default risk relative to all other issuers or
obligations in the same country.
'AA(idn)' Long-Term National Ratings denote expectations of very
low default risk relative to other issuers or obligations in the
same country. The default risk inherently differs only slightly
from that of the country's highest rated issuers or obligations.
'F1(idn)' Short-Term National Ratings indicate the strongest
capacity for timely payment of financial commitments relative to
other issuers or obligations in the same country. Under the
agency's National Rating scale, this rating is assigned to the
lowest default risk relative to others in the same country.
Where the liquidity profile is particularly strong, a "+" is
added to the assigned rating.
KEY RATING DRIVERS
IDRs, VIABILITY RATINGS AND NATIONAL RATINGS
BCA's IDRs, Viability Rating (VR) and National Ratings reflect
Fitch's view that its strong credit fundamentals will continue to
be underpinned by its business model, which focuses on low-risk
transactional banking. The fundamentals will remain comparable
with higher rated peers' in emerging markets. However, the
credit profile is constrained by BCA's operating environment,
where the developing financial market is more susceptible to
systemic liquidity and funding risk than in developed markets.
BCA has demonstrated resilient and strong performance during
2015's challenging operating conditions, with improved
profitability and sound asset quality. It benefited from high
interest rates thanks to its large low-cost current and savings
deposits (CASA) base. BCA's Tier-1 capital ratio remains sound at
18.1% at end-2015, supported by strong internal capital
generation.
Danamon's IDRs, VR and National Ratings reflect its relatively
weaker funding profile and internal capital generation,
counterbalanced by a strong capital profile (Tier-1 capital ratio
at 18.8% at end-2015). The rating also considers its weakened
asset quality due to exposure to commodity-related industries.
Nonetheless, downside risk shows signs of moderation in Fitch's
view. Funding and liquidity weaknesses are highlighted by the
bank's reliance on high-cost non-CASA deposits and above-peer
loan-to-deposit ratios.
Panin's IDRs and VR reflect its modest and weaker earnings
compared with higher-rated Indonesian banks, counterbalanced by
improved capital and satisfactory asset quality. Panin's core
capital is strong, with a Tier-1 ratio of 17.5% at end-2015.
Despite a weaker operating environment, the bank's profitability
was moderately resilient in 2015 thanks to manageable asset
quality with low credit costs.
SUPPORT RATINGS AND SUPPORT RATING FLOORS
The Support Ratings and Support Rating Floors of BCA, Danamon and
Panin reflect Fitch's view of a moderate probability of
extraordinary state support being made available, if needed.
Fitch believes these three banks are systemically important to
Indonesia as BCA, Danamon and Panin are the third, sixth and
seventh largest banks in Indonesia by assets, respectively.
RATING SENSITIVITIES
IDRs, VIABILITY RATINGS AND NATIONAL RATINGS
BCA's ratings are sensitive to significant changes in its
business model that may result in greater appetite for risk or
sharp deterioration of the operating environment, which would be
indicated by a lower sovereign rating. Improvements in the
operating environment, perhaps stemming from, but not limited to,
an upgrade of the sovereign rating, may result in rating upside
for the bank.
Danamon's ratings are sensitive to its funding and liquidity
profile. Rating upside for Danamon may result from material
improvement in its franchise, leading to improved funding and
liquidity metrics while maintaining sound asset quality and
profitability.
For Panin, rapid loan expansion, which could negatively affect
its capital and funding position in a difficult economy, may
result in a downgrade to the bank's VR. However, as Panin's 'BB'
IDR is at the same level as its Support Rating Floor, the IDR
will not be affected by a downgrade of the bank's VR unless
considerations underpinning its 'BB' SRF also weaken. Sustained
improvements in its ability to generate capital and profitability
would be positive for its VR.
SUPPORT RATINGS and SUPPORT RATING FLOORS
A change in Fitch's view of the government's ability and
willingness to provide extraordinary support would affect these
banks' Support Ratings and Support Rating Floors. Recent
approval of the Financial System Crisis Prevention and Mitigation
Law by the Indonesian parliament does not materially change the
likelihood of government support for systemically important
banks. However, Fitch will review the potential impact on Support
Ratings and Support Rating Floors as further key details on the
law become available.
FULL LIST OF RATING ACTIONS
BCA:
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Viability Rating affirmed at 'bbb-'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB+'
Danamon:
Long-Term IDR affirmed at 'BB+'; Outlook Stable
Short-Term IDR affirmed at 'B'
National Long-Term Rating affirmed at 'AA+(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Viability Rating affirmed at 'bb+'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB'
Panin:
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'
=========
J A P A N
=========
MITSUBISHI: Mulls Compensation For Parts Makers Hit By Suspension
-----------------------------------------------------------------
The Japan Times reports that Mitsubishi Motors Corp. is mulling
support measures, including compensation, for parts makers hit by
the minicar plant suspension caused by the automaker's fuel
economy scandal, sources familiar with the matter said May 2.
The report says Mitsubishi Motors halted production at its
Mizushima plant in Okayama Prefecture after its prolonged effort
to manipulate data to boost the fuel economy of four minicar
models came to light on April 20.
According to The Japan Times, the support steps are under
consideration amid concerns that the suspension will be
prolonged, damaging suppliers to the plant.
The Japan Times relates that Mitsubishi Motors is expected to get
a better idea of the difficult situation facing its parts
suppliers, mainly in Okayama, by listening to the needs of each
company, and work out details to help them, the sources said.
MMC has been trying to identify who is responsible for the data
manipulation, which has affected at least 625,000 minivehicles
produced since June 2013, including those supplied to Nissan
Motor Co., the report notes.
It is estimated it will take at least three months to reveal the
full extent of the scandal, which has sent MMC shares plummeting
as uncertainty grows about the scandal-plagued company's outlook
and questions are raised about its compliance, according to the
report.
Mitsubishi Motors also plans to compensate Nissan and users of
the four minicar models, the sources said, The Japan Times
relays.
According to The Japan Times, the automaker is in talks with its
labor union on what to do regarding the wages of around 1,300
workers at the Mizushima plant who have been told to stay home.
The report relates that MMC said its setting of higher fuel
efficiency targets may have put pressure on its employees. But
President Tetsuro Aikawa said last week that neither he nor the
board members were involved.
The Land, Infrastructure, Transport and Tourism Ministry has
begun collecting fuel consumption data on the four models in
question and is expected to announce the results in June, the
report says.
The ministry is also seeking a more detailed explanation from the
company about the scandal by May 11, adds The Japan Times.
About Mitsubishi Motors
Japan-based Mitsubishi Motors Corporation (TYO:7211) --
http://www.mitsubishi-motors.com/index.html-- manufactures
automobile. The Company, along with its subsidiaries and
associated companies, is engaged in the development, production,
purchase, sale, import and export of general and small-sized
passenger vehicles, mini-vehicles, sport utility vehicles (SUVs),
vans, trucks and automobile parts, as well as industrial
machines. It is also engaged in the checking and maintenance of
new vehicles, as well as the provision of automobile sales
financing and leasing services.
As reported in the Troubled Company Reporter-Asia Pacific on
April 29, 2016, The Japan Times said Mitsubishi abstained from
releasing a forecast for fiscal 2016 on on April 27 as a scandal
involving falsified fuel efficiency figures threatened to be a
road wreck for the automaker.
On April 26, 2016, Standard & Poor's Ratings Services said that
it has placed its 'BB+' long-term corporate credit rating on
Japan-based automaker Mitsubishi Motors Corp. on CreditWatch with
negative implications following the company's announcement that
fuel-consumption test data for four of its mini-vehicle models
was deliberately falsified. This testing fraud is highly likely
to depress unit sales, and damage to business performance and the
company's financial profile over the next year or two may exceed
tolerances for the current rating, in S&P's view.
On April 20, 2016, Mitsubishi Motors announced confirmation of
the deliberate falsification of data for fuel-consumption testing
on four models of its mini-vehicles that sold 625,000 units in
total. Because the focus of the company's automotive lineup is
mini-vehicles and sports utility vehicles (SUVs), the success or
failure of any one model has a significant impact on earnings.
It remains difficult to immediately estimate the impact of the
fraudulent testing on vehicle unit sales in Japan and abroad.
However, given that Mitsubishi Motors' original equipment
manufacturing (OEM) partner Nissan Motor revealed the
falsification and that Mitsubishi Motors has admitted to two
recall coverups in the past, S&P thinks the fraud is likely to
lead to a decline in unit sales. In addition, this incident may
hurt the company's business results significantly over the mid-
to long-term if it reduces Mitsubishi Motors' OEM supplies to
other automakers or weakens its brand recognition in Southeast
Asian markets, which contributes to companywide sales and
profits. Meanwhile, the company has relatively ample cash and
deposits at hand, which will absorb the financial impact of the
incident to some extent if the fraud affects only mini-vehicles
in Japan.
TAKATA CORP: To Book Extra JPY20BB Loss Over Air Bag Recalls
------------------------------------------------------------
The Japan Times reports that Takata Corp. said on May 2 it will
book an additional special loss of around JPY20 billion ($188
million) for the year ended March due to costs related to the
global recall of its potentially lethal air bag inflators.
According to the report, automakers are recalling 60 million cars
because inflators made by the Japanese supplier could explode
with excessive force, spraying shrapnel at drivers and
passengers.
Of the special loss for fiscal 2015, Takata will book JPY16.6
billion in additional warranty costs for products made in the
United States, as well as JPY3.5 billion to settle lawsuits over
product liability abroad, the report relays.
The number of cars recalled is expected to top 100 million as
U.S. regulators look to expand the models needing coverage, and
this will increase the financial burden on Takata, sources close
to the matter said earlier, The Japan Times relates.
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 24, 2014, 24/7 Wall St. said Takata Corporation faces huge
fines, and almost certainly lawsuits (which have already begun),
over its defective airbags. The report related that some experts
believe that the Japanese company was not forthcoming about the
technical failure that caused several serious accidents and
deaths. If Takata goes bankrupt, which could certainly happen,
claims against the company would be in limbo, 24/7 Wall St. said.
Takata Corporation (TYO:7312) develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts. The Company
has subsidiaries located in Japan, the United States, Brazil,
Germany, Thailand, Philippines, Romania, Singapore, Korea, China
and other countries.
TOYO CORP: S&P Revises Outlook to Pos. & Affirms 'BB+' CCR
----------------------------------------------------------
Standard & Poor's Ratings Services said it has revised the
outlook on its long-term corporate credit rating on machinery and
tools trading company Toyo Corp. to positive from stable. At the
same time, S&P has affirmed its 'BB+' long-term corporate credit
rating on the company.
The outlook revision reflects S&P's view that Toyo's
profitability and cash flow ratios are likely to improve steadily
over the next 18 to 24 months, reflecting S&P's observation of
improving stability in the company's business performance. The
rating affirmation incorporates S&P's expectation that
profitability and cash flow measures will improve slowly.
Toyo has long-standing favorable business relationships, mainly
with auto-parts makers affiliated with Toyota Motor Corp.,
including Aisin Seiki Co. Ltd., as a trading company specialized
in auto-related machinery and tools. The company maintains a
solid business franchise in machinery and tools markets. S&P
views the company's stable market share and competitiveness, as
well as its responsive supply and service system established in
Japan and abroad, as key to its ability to maintain strong
relationships with its customers.
Conversely, Toyo's profitability is susceptible to the
performance and plans of businesses belonging to Toyota Motor
group companies. Nevertheless, the company maintained solid
performance in recent years. This is attributable to higher
sales of tools, which are less susceptible to changes in the
business environment than machinery, and the fact they gain a
larger share in the entire sales mix. Supporting stable earnings
forecasts are Standard & Poor's expectations of solid production
at auto-parts makers affiliated with Toyota Motor group companies
over the next two years. In addition, cost reduction efforts
have raised operating efficiency, leading to improved and less
volatile profitability. S&P believes this also supports the
stability of Toyo's earnings forecasts. Meanwhile, the company's
profitability level is slightly weak globally and at the lower
end of the average assessment S&P sets for distribution service
sector companies that deal with products including automotive
products. Considering all these factors, S&P maintains a fair
assessment of the company's business risk profile.
Cash flow measures for Toyo have been improving, backed by solid
performance in recent years. However, the company's operating
cash flow is susceptible to the business performance of its main
customers in the automobile industry and to tax payments, which
S&P regards as a financial risk for Toyo. Accordingly, S&P
lowers its cash flow/leverage assessment one notch. Given these
factors, S&P continues to assess the company's financial risk
profile as intermediate. Considering the company's relatively
conservative financial policy, S&P believes its capital
expenditures and shareholder returns are unlikely to increase
materially.
S&P maintains its strong assessment of Toyo's liquidity. The
company has ample cash on hand and adheres to a policy to
maintain it. Toyo has solid relationships with major lenders,
mainly regional financial institutions.
The positive outlook reflects the likelihood of an upgrade if S&P
see a stronger possibility of the company's profitability and
cash flow generation improving on a sustainable basis. This
would be the case if cash flow measures continue to improve and
S&P sees a stronger likelihood of cash on hand exceeding debt on
a sustainable basis. Specifically, S&P will consider an upgrade
if it believes the company is able to maintain debt to EBITDA at
2.0x or lower.
Conversely, S&P will consider revising the outlook downward to
stable if the company's profitability and cash flow generation
turn weaker than S&P's current assumptions and it thinks
improvement in cash flow measures is less likely. This would be
the case if debt to EBITDA is more likely to exceed 3.0x, in
S&P's
view.
===============
M O N G O L I A
===============
MONGOLIA: S&P Affirms 'B' Sovereign Credit Rating; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' long-term and
'B' short-term sovereign credit ratings on Mongolia. The outlook
is stable.
RATIONALE
The ratings on Mongolia reflect S&P's assessment of the country's
weak economic prospects, public finances, and balance of
payments. S&P also observes that developing institutional
effectiveness and predictability hamper policy responses.
After Mongolia's five years of growth that is among the highest
of all rated sovereigns, S&P expects the country to slow to a
projected 2.6% this year, and S&P projects growth to average
about 4% through 2019. S&P expects per capita growth to rise by
only 1% in 2016. S& assess Mongolia's economic performance to be
similar to that of other countries with US$4,100 per capita GDP.
This lower growth stems partly from the ancillary effects of
weaker terms of trade, capital outflows associated with risk
aversion in emerging markets, and partly from the country's mixed
mining policies, which had discouraged foreign direct investment.
These mining policies are beginning to turn more supportive. Two
large projects are underway. The first is the Oyu Tolgio gold
and copper mine, located in the South Gobi region of Mongolia.
The US$5.4 billion mine will be one of the world's largest new
copper-gold mines. It is owned by the government of Mongolia and
Turquoise Hill Resources and operated by Rio Tinto. The second
project is Tavan Tolgio and has been proposed by the Mongolia
government to be a US$4 billion coal mine located in the same
region and operated by the Mongolian Mining Corp., China Shenhua
Energy Co. Ltd., and Sumitomo Corp. Although these two projects
could transform the Mongolian economy, S&P's ratings reflect the
risks associated with these projects while they are being
developed.
The first risk pertains to Mongolia's external position, which
continues to weaken. S&P projects the country's current account
deficit will return to double digits as a percentage of GDP for
the forecast horizon (2016-2019) because the import content of
the two big mining projects is high. As a result of historical
and projected current account deficits, Mongolia's external debt
net of public and financial sector external assets will rise to
126% of current account receipts (CARs) this year, from 11% in
2010, and S&P forecasts it to remain above 100% until 2017.
S&P also expects the broader measure of net external liabilities
to CARs to deteriorate to above 430% this year, from 45% in 2010.
Similarly, S&P projects gross external financing needs to CARs
plus usable reserves to rise to 168% this year, from 104% in
2010, and S&P estimates the ratio to remain above 130% through
2018. Central bank reserves net of swaps with domestic banks
amounted to US$1.3 billion as of December 2015 (or two months of
current account payments), including a substantial drawing from a
Chinese renminbi (RMB) 15 billion (US$2.3 billion) swap line
provided by the People's Bank of China (PBOC).
Although the risks to the external position are partly attenuated
by a floating currency regime, the togrog is not an actively
traded currency and the central bank occasionally intervenes in
the market to reduce volatility. Half of government debt and a
third of banking system loans are in foreign currency, suggesting
balance sheet vulnerabilities.
Another deteriorating risk factor relates to Mongolia's public
finances. On Nov. 13, 2015, the Mongolian parliament approved
the 2016 budget, which provides for further public sector jobs,
wage cuts, and a reduction in the number of ministries. Despite
these measures, S&P expects net general government debt (which
captures onlending and foreign exchange effects but excludes the
PBOC swap drawings) will rise by 7.3% of GDP to 56.8% this year.
Downside risks to this outlook include weaker growth and
attendant revenue underperformance. Volatile commodity prices
present both upside and downside risks. Pressing infrastructure
needs are also a source of expenditure pressure.
Standard & Poor's considers the Development Bank of Mongolia as
part of the general government, given its quasi-fiscal activity.
S&P views the rest of the financial and public enterprise sectors
as posing limited contingent liabilities to the government, as
S&P's criteria define the term, largely due to the small size of
Mongolia's financial sector.
Mongolia's banks remain exposed to vulnerabilities associated
with its undeveloped, primarily commodity-based, low-income
economy. Rapid credit growth in recent years and cooling property
prices add further risks. S&P also observes weaknesses in its
regulatory framework, transparency, and disclosures. S&P's Bank
Industry Credit Risk Assessment for Mongolia is '10' (with '1'
being the highest assessment and '10' being the lowest).
The country has been ruled by the minority Democratic Party
government following the breakup of Mongolia's grand coalition in
August 2015. Parliamentary elections are to be held in June
2016. Despite its minority status, the government passed its 2016
budget in November 2015. Mongolia's governance and policy
effectiveness remains weak, in S&P's view, and a past record in
policy shifts continues to weigh on the environment for growing
business confidence and foreign investment.
OUTLOOK
The stable outlook balances the country's low-income resource-
driven economy, emerging policy environment and fiscal
performance, high external risk, and limited monetary flexibility
with the prospect that large mining projects could quickly
reverse Mongolia's sovereign credit profile during the next 12
months.
Upward pressure could build on the rating if the development of
the Oyu Tolgio and Tavan Tolgio mines accelerates economic growth
and improves fiscal and external performances more than S&P
currently expects. Downward pressure could emerge on the ratings
if Mongolia's external liquidity weakens markedly.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee agreed that the external and fiscal settings had
deteriorated. All other key rating factors were unchanged.
The chair ensured every voting member was given the opportunity
to articulate his/her opinion. The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision. The views and the decision of the rating committee are
summarized in the above rationale and outlook. The weighting of
all rating factors is described in the methodology used in this
rating action.
==============================
P A P U A N E W G U I N E A
==============================
PAPUA NEW GUINEA: S&P Affirms 'B+' LT Rating; Outlook Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its foreign and local
currency long-term rating on Papua New Guinea (PNG) at 'B+', and
the respective short-term rating at 'B'. The outlook on the
long-term rating remains negative. The Transfer and
Convertibility (T&C) assessment remains 'BB'.
RATIONALE
The sovereign ratings on PNG reflect structural constraints
inherent in a lower middle-income economy dependent on extractive
industries and served by weak institutions. In addition, the
economy faces external and fiscal imbalances linked to the recent
completion of a US$19 billion (118% of 2014 GDP) liquefied
natural gas (LNG) project. With the LNG project now operational,
S&P expects it to contribute to both export receipts and
government revenues, enabling the unwinding of PNG's related
imbalances in the next few years. But risks have risen that
these external and fiscal imbalances may be very slow to unwind,
mainly due to the current weakness in global energy prices,
underpinning S&P's negative rating outlook on PNG.
Papua New Guinea faces pressing development needs. It had a per
capita GDP of US$2,100 in 2015 and is ranked 158 out of 188
countries on the United Nations Development Programme's Human
Development Index. Moreover, the prevalence of urban crime in
the country deters investment in S&P's view, while governmental
institutions are a weakness. In addition, economic data
inconsistency is another credit weakness. While there have been
some recent improvements, there remain gaps and lags in economic
and external data as well as a lack of transparency in public-
sector fiscal affairs.
PNG's economy has been undergoing a transformation in recent
years, with the construction and, since 2014, operation of a new
LNG plant, operated by ExxonMobil PNG Ltd., a subsidiary of
ExxonMobil Corp. Economic growth is set to slow sharply this
year, after being boosted in recent years by the LNG plant's
construction, then a surge in government spending and, most
recently, the LNG plant's ramp up to full production. S&P
expects growth to be about 3% in 2016, down from about 9% in
2015, due to a combination of lower commodity prices and
associated cost-cutting in the resources sector; drought
conditions hurting agricultural production and leading to the
temporary shutdown of Ok Tedi (a large copper and gold mine); and
sharp cuts in government spending.
The medium-term economic outlook hinges on whether further large
foreign-financed projects, such as the touted additional LNG
projects, go ahead. Despite the weakness in global energy
prices, the Papua LNG project and expansion of the existing
ExxonMobil project still appear to have the support of their
proponents, although final investment decisions are still some
way off. Should these projects proceed, they would boost growth
sharply relative to S&P's current forecasts, probably from 2018.
In the meantime, the government is dealing with a collapse in
resources-related revenues, with global energy prices plunging
just as the ExxonMobil LNG project came online. Fiscal
imbalances had already grown significantly, with the government
running large fiscal deficits to address development priorities
and to support economic growth until LNG production reached full
capacity. Importantly, the current rating assumes that these
fiscal imbalances would narrow quickly after LNG revenues started
to flow to the government from 2015.
The government has responded forcefully to the collapse in
revenues. Total revenues in 2015 were more than 20% below what
the government projected in its 2015 budget, but the government
managed to cut spending by 17% relative to its budget, and by 7%
compared to the previous year. The result was that the budget
deficit still narrowed significantly, from 7.2% of GDP in 2014 to
5.6% of GDP in 2015.
"We expect the government to achieve further fiscal consolidation
in 2016, with a deficit of 4.6% of GDP, with further falls in its
deficit in following years, such that debt broadly stabilizes as
a share of GDP. On our measure, net general government debt is
about 30% of GDP. Should the government fail to continue to
restrain spending adequately, or should growth in the nominal
economy come under even further downward pressure, net general
government debt could rise materially above this level. However,
prospects for continuing political stability in the near term
will continue to provide PNG with a supportive environment to
address fiscal pressures. Prime Minister Peter O'Neill's
People's National Congress Party and his coalition partners
currently control a strong majority in the parliament. Prospects
for stability beyond the 2017 election are less clear," S&P said.
PNG's interest burden is elevated, with its average interest rate
rising over the past couple of years as it stretches the domestic
market's ability and willingness to finance widening fiscal
deficits. (Banks already hold a large share of their assets in
government debt.) The government previously announced that it
plans to issue an international sovereign bond, which would
lessen its reliance on short-term domestic borrowing. It would,
though, further expose the government's debt stock to exchange
rate risk, which S&P already views as material.
A sovereign bond may also alleviate the current shortage of
foreign currency in PNG, as might a possible U.S.-dollar loan to
PNG's commercial banks currently being considered by the
International Finance Corp. The current shortage of U.S. dollars
within PNG is symptomatic of a currency that is above the market-
clearing exchange rate, while the International Monetary Fund
(IMF) assesses PNG's exchange rate to be a crawl-like
arrangement. Although the PNG kina has depreciated substantially
against the U.S. dollar over the past few years (notwithstanding
a sharp spike in early 2014 when the central bank's trading band
policy was put in place), dollar shortages remain, and the
currency also remains high against those of major trading
partners.
A shortage of foreign currency available for debt repayment may
be contributing to a slower wind down of PNG's high level of
external debt than S&P had previously expected, although lower
resource-sector profitability is likely the major factor.
External debt has ballooned in recent years, with very large
current account deficits -- financed by a combination of external
debt and foreign direct investment -- that averaged more than 30%
of GDP between 2010 and 2013 during the LNG project's
construction phase. PNG's net external liabilities had risen to
nearly 480% of current account receipts in 2013 from 45% of
current account receipts in 2008. S&P estimates that this ratio
began to decline in 2014 with the commencement of LNG production,
and expect it to steadily decline over future years, although the
pace of decline will be tempered by weak global commodity prices.
On that front, S&P anticipates that the long-term volatility in
PNG's terms of trade will ease a little, after the tumbles in
prices over the past decade, providing a little more stability to
PNG's external profile. On the other hand, potential future LNG
projects would lead to further external imbalances arising during
their construction phases.
Further weighing on the rating is our view of the Bank of PNG's
weak monetary policy flexibility. This weakness mainly reflects
the very limited transmission of monetary policy settings to the
interest rates faced by borrowers - largely because of the high
level of liquidity in the banking system, which remains on an
upward trajectory.
PNG's banking system stability benefits from limited competition
and a high reliance on deposit funding, which is supported by
high levels of liquidity. It also has an external net asset
position and limited linkages to global markets. That said,
hampering system stability are the country's low income levels
and credit risk concentrations that weigh on credit risks. Legal
infrastructure and judicial system delays also pose challenges to
enforcing creditor rights. S&P's Banking Industry Credit Risk
Assessment for PNG is '9' (with '1' being the highest assessment
and '10' being the lowest).
OUTLOOK
The negative outlook reflects S&P's view of a one-in-three chance
that it may lower the rating within the next 12 months. This is
due to the possibility that the government is unable to constrain
its debt levels, and that large fiscal and external imbalances
are slow to unwind in an environment of weaker export revenues
and modest medium-term economic growth.
The outlook could revert to stable if S&P become more confident
that the government will successfully narrow fiscal deficits
further and stabilize its debt level (relative to GDP), and that
it remains likely that PNG's external position will improve
significantly over the next few years, supported by solid
economic growth and export receipts.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the
methodology applicable. At the onset of the committee, the chair
confirmed that the information provided to the Rating Committee
by the primary analyst had been distributed in a timely manner
and was sufficient for Committee members to make an informed
decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee agreed that the external profile had improved but
that the monetary profile had deteriorated. All other key rating
factors were unchanged.
The chair ensured every voting member was given the opportunity
to articulate his/her opinion. The chair or designee reviewed
the draft report to ensure consistency with the Committee
decision. The views and the decision of the rating committee are
summarized in the above rationale and outlook. The weighting of
all rating factors is described in the methodology used in this
rating action.
RATINGS LIST
Ratings Affirmed
Papua New Guinea (Independent State of)
Sovereign Credit Rating B+/Negative/B
Transfer & Convertibility Assessment
Local Currency BB
====================
S O U T H K O R E A
====================
HANJIN HEAVY: To Receive Additional KRW120 Billion Aid
------------------------------------------------------
Yonhap News Agency reports that creditors of Hanjin Heavy
Industries & Construction Co. will inject an additional
KRW120 billion (US$154 million) into the cash-strapped
shipbuilder already under a creditor-led restructuring program,
main creditor Korea Development Bank (KDB) said May 3.
Yonhap relates that a KDB spokesman said the creditors, led by
the state-run KDB, have already funneled KRW130 billion into
Hanjin Heavy since January when the mid-size shipyard asked its
creditors to lead its restructuring.
"But the Busan-based shipbuilder has had difficulty in making a
turnaround due to lack of new orders and delayed sale of non-core
assets," he said, Yonhap relays.
The spokesman said that as Hanjin Heavy has few remaining order
backlogs for commercial ships such as container carriers and
drill ships by the end of 2017, creditors will have it focus on
building special-purpose ships such as patrol boats in coming
years, according to Yonhap.
Hanjin is one of the country's mid-size shipbuilders that have
come under a creditor-led restructuring plans in recent years
since the 2008 financial crisis. Others include STX Offshore &
Shipbuilding Co., SPP Shipbuilding Co. and Dae Sun Shipbuilding &
Engineering Co.
Hanjin Heavy's net losses narrowed a bit last year to
KRW261 billion from KRW299 billion a year earlier, the report
discloses.
Korea-based HHIC established a shipyard in Subic, west of Manila,
and delivered its first vessel from the yard in July 2008. It
uses the Philippine yard to build big ships while its facility in
Korea focuses on smaller vessels.
*********
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 2016. 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 202-362-8552.
*** End of Transmission ***