/raid1/www/Hosts/bankrupt/TCRAP_Public/170213.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, February 13, 2017, Vol. 20, No. 31
Headlines
A U S T R A L I A
ALAN BIRCH: First Creditors' Meeting Slated for Feb. 20
AUSTRALIAN CAREERS: First Creditors' Meeting Set for Feb. 20
HOWARDS STORAGE: To Emerge from Voluntary Administration
KING & CHRISTIE: First Creditors' Meeting Set for Feb. 20
LIBERTY SERIES 2014-2: Moody's Hikes Rating on Cl. F Notes to B1
MESOBLAST LIMITED: Had $33.9 Million Cash as of Dec. 31
PARTKORT PTY: In Liquidation; First Meeting Set For Feb. 20
PEPPER RESIDENTIAL: S&P Raises Rating on Class F Notes to BB
TZ LIMITED: Ex-Director Gets 10 Year Jail for Dishonest Conduct
C H I N A
FUTURE LAND: S&P Assigns 'B+' Rating to Proposed Sr. Unsec. Notes
* Chongqing's Tightened Pre-Sale Rules Negative for Developers
I N D I A
AGRAWAL DISTILLERIES: ICRA Assigns B+ Rating to INR4.0cr Loan
APEX BUILDERS: CRISIL Reaffirms B+ Rating on INR12MM Term Loan
BIRESHWAR COLD: CRISIL Reaffirms B Rating on INR4.01MM Loan
DHOLADHAR DEVELOPERS: CRISIL Cuts Rating on INR8.0MM Loan to D
EMAAR MGF: ICRA Withdraws D Rating on INR600cr NCD
EVEREST HOLOVISIONS: CARE Reaffirms B+ Rating on INR5.50cr Loan
GOVINDAM PROJECTS: CARE Assigns 'B' Rating to INR10cr LT Loan
HARBANSH LAL: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating
HV CONNECTING: CRISIL Reaffirms B+ Rating on INR17.75MM Loan
IMPERIALL TECHNOFORGE: CARE Assigns 'D' Rating to INR6.60cr Loan
JANWANI FOODS: CARE Assigns B Rating to INR5cr Long Term Loan
JAY BHARAT: CARE Raises Rating on INR23.72cr Loan to BB-
KUNSTWERK MACHINERY: CRISIL Assigns 'B' Rating to INR7MM Loan
MIRAMBIKA AGRO: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
NUTAVE STONE: CRISIL Assigns 'B' Rating to INR4.96MM Term Loan
PRECISION ENGINEERING: CRISIL Cuts Rating on INR6.5MM Loan to B-
QUADRA INFRATEL: CRISIL Reaffirms B Rating on INR5MM Cash Loan
RACHANA LIFE: CRISIL Upgrades Rating on INR30MM Term Loan to BB-
REALTRACK WIRE: CRISIL Cuts Rating on INR6.83MM Corp. Loan to D
SARASWATI EDUCATIONAL: Ind-Ra Affirms BB Rating on INR208MM Loan
SHREE GURU RAGHAVENDRA: CARE Reaffirms B Rating on INR5.25cr Loan
SHRI GURU: CARE Reaffirms B+ Rating on INR20cr Long Term Loan
SHRI LAXMI: CARE Assigns B+ Rating to INR7.64cr LT Loan
SOLAR PRINT: Ind-Ra Affirms 'BB' Long-Term Issuer Rating
SOMESWARA ENTERPRISES: CRISIL Assigns B Rating to INR10MM Loan
SUPER TECH: CRISIL Upgrades Rating on INR6.5MM Loan From B+
SUPERIOR INDUSTRIES: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
TULIPS AMBBIENCE: CRISIL Cuts Rating on INR4.20MM Term Loan to D
UTTAM CHAND: CRISIL Ups Rating on INR8MM Cash Loan to B+
VENKATADRI SPINNING: CRISIL Ups Rating on INR8.82MM Loan to C
VNM JEWEL: Ind-Ra Assigns 'B' Long-Term Issuer Rating
Z V STEELS: ICRA Reaffirms B+ Rating on INR18cr Loan
ZIPPY EDIBLE: ICRA Assigns B+ Rating to INR14cr Term Loan
I N D O N E S I A
BANK DANAMON: Moody's Affirms BCA at ba1; Revises Outlook to Pos.
PERTAMINA (PERSERO): Moody's ba1 BCA Remains Unchanged
PERUSAHAAN LISTRIK: Moody's ba2 BCA Remains Unchanged
J A P A N
TAKATA CORP: Expects Third Annual Loss After U.S. Settlement
TAKATA CORP: To Plead Guilty Feb. 27 as Part of DOJ Settlement
TOSHIBA CORP: Likely Lacked Assets to Cover losses in December
TOSHIBA CORP: Receives JPY400-Billion Bid for Chip Business Stake
P H I L I P P I N E S
UNIWIDE HOLDINGS: To be Delisted Over Dissolution, PSE Breaches
S R I L A N K A
SRI LANKA: Fitch Affirms IDR at 'B+'; Revises Outlook to Stable
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A U S T R A L I A
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ALAN BIRCH: First Creditors' Meeting Slated for Feb. 20
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Alan Birch
Transport Pty Ltd will be held at Level 1, Paspalis Business
Centre, 48-50 Smith Street, in Darwin, NT, on Feb. 20, 2017, at
10:00 a.m.
Blair Pleash and Kathleen Vouris of Hall Chadwick were appointed
as administrators of Alan Birch on Feb. 9, 2017.
AUSTRALIAN CAREERS: First Creditors' Meeting Set for Feb. 20
------------------------------------------------------------
Ferrier Hodgson partners, George Georges and John Lindholm on
Feb. 8, 2017, were appointed as joint and several Voluntary
Administrators of Australian Careers Institute Pty Ltd and a
number of associated entities (the Group) pursuant to a
resolution of the Board of Directors.
The Administrators are currently undertaking an urgent
examination of the financial position of the Group and will
explore all options in relation to the Group's future. In the
interim, it is classes as usual.
The first meeting of the Company's creditors will be held on
Feb. 20, 2017, at 11:00 a.m., at Level 43, 600 Bourke Street, in
Melbourne.
The associated entities are:
- Nexus Institute Pty Ltd, trading as WYN Institute
- ACN 162 266 668 Pty Ltd
- 24 Hours Fitness Pty Ltd
- Cyberlife Pty Ltd
- Cyberfit Pty Ltd
- Cyberscene Pty Ltd
HOWARDS STORAGE: To Emerge from Voluntary Administration
--------------------------------------------------------
Eloise Keating at SmartCompany reports that Howards Storage World
will emerge from voluntary administration, with administrators
Deloitte securing a sale of the business and its franchise
network to an unnamed buyer.
SmartCompany notes that the business was placed into the hands of
external managers in late 2016, with Vaughan Strawbridge and
David Lombe from Deloitte appointed to manage the administration
of four entities in the Howards Storage World group in early
December. The business continued to trade throughout the
voluntary administration process, the report says.
At the time, the group was operating 29 company-owned retail
outlets in New South Wales, Queensland, South Australia and
Victoria, while also wholesaling goods to a network of 30
franchised Howards Storage World (HSW) stores, of which it is the
franchisor.
According to SmartCompany, Deloitte said in a statement on
Feb. 10 the company-owned stores and the franchise network have
been sold to "an experienced retailer with both international and
local retail and franchisee experience".
The identity of the buyer and the terms of the sale are
confidential, however, Deloitte said the transaction includes 46
stores. This represents 80% of the group's store network and
means 160 jobs have been retained, according to Deloitte.
"The HSW Group has been operating in a challenging market for
some time, characterised by the failure of a number of
established players in the retail sector due to ongoing pressures
from deteriorating sales and margins in a highly competitive
environment," SmartCompany quotes administrator David Lombe as
saying.
"A wide-ranging sale of business campaign was launched on our
appointment, and we have been right-sizing the business for sale
since. Achieving a sale in the current retail environment is an
outstanding result and is directly attributable to the
restructuring undertaken in the Howards business.
"In the space of two months, we have had to implement a number of
restructuring strategies to help turn the HSW Group around and
into a viable business, and able to continue to operate most of
its own company stores, and to provide support to its
franchisees."
SmartCompany relates that Mr. Lombe paid tribute to the
business's employees, suppliers, landlords and franchisees, and
said the sale "demonstrates the strength of the brand and its
niche offering".
Howards Storage World was founded in Sydney in the 1970s with a
single store called Stack and Store. The first franchised store
opened in 1998.
KING & CHRISTIE: First Creditors' Meeting Set for Feb. 20
---------------------------------------------------------
A first meeting of the creditors in the proceedings of King &
Christie Projects Pty Ltd, trading as "OMG Projects", will be
held at the CTA Business Club, Conference Room 3, Level 1, MLC
Centre, 19 Martin Place, in Sydney, NSW, on Feb. 20, 2017, at
3:00 p.m.
Gavin Moss and Trent McMillen of Chifley Advisory Pty Ltd were
appointed as administrators of King & Christie on Feb. 8, 2017.
LIBERTY SERIES 2014-2: Moody's Hikes Rating on Cl. F Notes to B1
----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on 13 classes
of notes issued by three Liberty Series RMBS.
The affected ratings are:
Issuer: Liberty Series 2014-2 Trust
-- Class B Notes, Upgraded to Aaa (sf); previously on Jul 14,
2016 Upgraded to Aa1 (sf)
-- Class C Notes, Upgraded to Aa2 (sf); previously on Jul 14,
2016 Upgraded to A1 (sf)
-- Class D Notes, Upgraded to A3 (sf); previously on Aug 26,
2015 Affirmed Baa2 (sf)
-- Class E, Notes Upgraded to Baa3 (sf); previously on Jul 14,
2016 Upgraded to Ba1 (sf)
-- Class F Notes, Upgraded to Ba2 (sf); previously on Jul 14,
2016 Upgraded to B1 (sf)
Issuer: Liberty Series 2015-1 Trust
-- Class B Notes, Upgraded to Aaa (sf); previously on Jul 14,
2016 Upgraded to Aa1 (sf)
-- Class C Notes, Upgraded to Aa3 (sf); previously on Aug 26,
2015 Affirmed A2 (sf)
-- Class D Notes, Upgraded to A3 (sf); previously on Aug 26,
2015 Affirmed Baa2 (sf)
-- Class E Notes, Upgraded to Baa3 (sf); previously on Apr 28,
2015 Definitive Rating Assigned Ba2 (sf)
-- Class F Notes, Upgraded to Ba3 (sf); previously on Aug 26,
2015 Affirmed B2 (sf)
Issuer: Liberty Series 2016-1 Trust
-- Class B Notes, Upgraded to Aa1 (sf); previously on Mar 16,
2016 Definitive Rating Assigned Aa2 (sf)
-- Class C Notes, Upgraded to A1 (sf); previously on Mar 16,
2016 Definitive Rating Assigned A2 (sf)
-- Class D Notes, Upgraded to Baa1 (sf); previously on Mar 16,
2016 Definitive Rating Assigned Baa2 (sf)
RATINGS RATIONALE
The upgrade was prompted by an increase in credit enhancement
(from note subordination and the Guarantee Fee Reserve Account)
available for the affected notes.
Sequential amortization of the notes in all three transactions
since closing led to the increase in note subordination.
The Guarantee Fee Reserve Account is non-amortizing and can be
used to cover charge-offs against the notes, and liquidity
shortfalls that remain uncovered after drawing on the liquidity
facility and principal.
In addition, the transaction portfolios have been performing
within Moody's expectations. The decrease in both scheduled and
indexed loan to value ratios since the last rating action has led
to lower MILAN CE for the transactions.
Liberty Series 2014-2 Trust
The note subordination available for the Class B, Class C, Class
D, Class E and Class F notes has increased to 12.4%, 7.0%, 3.9%,
1.9% and 1.0% from 6.4%, 3.6%, 2.0%, 1.0% and 0.5%.
The Guarantee Fee Reserve Account has accumulated AUD1.5 million
(0.58% of current total current note balance) from excess spread.
The performance of the transaction has been within expectations
since closing. As of December 2016, cumulative loss amounts
totaled AUD1,477.
Based on the observed performance and outlook, Moody's maintained
its expected loss assumption at 1% as a percentage of the
original pool balance.
Moody's decreased its MILAN CE assumption to 10.5% from 11.6%
since the last rating action, based on the current portfolio
characteristics.
Liberty Series 2015-1 Trust
The note subordination available for the Class B, Class C, Class
D, Class E, and Class F notes has increased to 9.2%, 5.4%, 3.5%,
2.3% and 1.4% from 5.3%, 3.1%, 2.0%, 1.3% and 0.8%.
The Guarantee Fee Reserve Account has accumulated AUD1.5 million
(0.52% of current total current note balance) from excess spread.
The performance of the transaction has been within expectations
since closing. As of December 2016, cumulative loss amounts
totaled AUD133,490.
Based on the observed performance and outlook, Moody's maintained
its expected loss assumption at 1.1% as a percentage of the
original pool balance.
Moody's decreased its MILAN CE assumption to 8.5% from 9.6% since
the last rating action, based on the current portfolio
characteristics.
Liberty Series 2016-1 Trust
The note subordination available for the Class B, Class C, and
Class D notes has increased to 8.9%, 6.7% and 4.5% from 6.7%,
5.1% and 3.4%.
The Guarantee Fee Reserve Account has accumulated AUD1.2 million
(0.53% of current total current note balance) from excess spread.
The performance of the transaction has been within expectations
since closing. As of December 2016, cumulative loss amounts
totaled AUD39,022.
Based on the observed performance and outlook, Moody's maintained
its expected loss assumption at 1.4% as a percentage of the
original pool balance.
Moody's decreased its MILAN CE assumption to 11.8% from 14% since
the last rating action, based on the current portfolio
characteristics.
The MILAN CE and expected loss assumptions are the two key
parameters used by Moody's to calibrate the loss distribution
curve, which is one of the inputs into the cash-flow model.
The transactions are Australian RMBS secured by a portfolio of
prime and non-conforming residential mortgage loans. A portion of
the portfolio consists of loans extended to borrowers with
impaired credit histories or made on a limited documentation
basis.
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2016.
Factors that would lead to an upgrade or downgrade of the
ratings:
Factors that could lead to an upgrade of the ratings include (1)
performance of the underlying collateral that is better than
Moody's expectations, and (2) deleveraging of the capital
structure.
Factors that could lead to a downgrade of the ratings include (1)
performance of the underlying collateral that is worse than
Moody's expectations, (2) decrease in the notes' available credit
enhancement, and (3) deterioration in the credit quality of the
transaction counterparties.
MESOBLAST LIMITED: Had $33.9 Million Cash as of Dec. 31
-------------------------------------------------------
Mesoblast Limited filed with the U.S. Securities and Exchange
Commission its quarterly report (for entities subject to Listing
Rule 4.7B) for the period ended Dec. 31, 2016.
At the beginning of the quarter, the Company had US$60.35 million
in cash and cash equivalents. Net cash (used in) operating
operating activities was US$25.53 million. At the end of the
quarter, Mesoblast had US$33.90 million in cash and cash
equivalents.
Mesoblast is in advanced negotiations with selected
pharmaceutical companies with respect to potential partnering of
certain Tier 1 product candidates. If Mesoblast enters into a
binding transaction in the next quarter, Mesoblast expects that
one effect of the transaction is that its cash reserves are
likely to increase.
Mesoblast does not make any representation or give any assurance
that such a binding transaction will be concluded.
In addition, Mesoblast expects its cash reserves to increase in
the next quarter as the Company expects to receive the following
income:
-- the R&D tax incentive from the Australian Government;
-- royalty income earned on sales of TEMCELL HS Inj. in Japan;
and
-- interest income.
Mesoblast has established an equity facility for up to A$120
million/US$90 million over 36 months, to be used at its
discretion to provide additional funds as required.
A full-text copy of the Form 6-K is available for free at:
https://is.gd/kQEJcD
About Mesoblast Ltd.
Melbourne, Australia-based Mesoblast Limited (ASX:MSB;
Nasdaq:MESO) develops cell-based medicines. The Company has
leveraged its proprietary technology platform, which is based on
specialized cells known as mesenchymal lineage adult stem cells,
to establish a broad portfolio of late-stage product candidates.
Mesoblast's allogeneic, 'off-the-shelf' cell product candidates
target advanced stages of diseases with high, unmet medical needs
including cardiovascular diseases, immune-mediated and
inflammatory disorders, orthopedic disorders, and
oncologic/hematologic conditions.
Mesoblast reported a loss before income tax of $90.82 million for
the year ended June 30, 2016, compared to a loss before income
tax of $96.24 million for the year ended June 30, 2015.
As of Sept. 30, 2016, Mesoblast had $665.4 million in total
assets, $155.6 million in total liabilities and $509.9 million in
total equity.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2016, citing that the Company has
suffered recurring losses from operations that raise substantial
doubt about its ability to continue as a going concern.
PARTKORT PTY: In Liquidation; First Meeting Set For Feb. 20
-----------------------------------------------------------
Timothy Clifton and Simon Miller of Clifton Hall were appointed
as Joint and Several Liquidators of Partkort Pty Ltd, trading as
38 Degrees Surf West Lakes, on Feb. 9, 2017.
A meeting of creditors will be held at 11:00 a.m. on Feb. 20,
2017, at Clifton Hall, Level 3, 431 King William Street, in
Adelaide.
PEPPER RESIDENTIAL: S&P Raises Rating on Class F Notes to BB
------------------------------------------------------------
S&P Global Ratings raised its ratings on five classes of notes
issued by Permanent Custodians Ltd. as trustee of Pepper
Residential Securities Trust No.13. At the same time, S&P
affirmed its 'AAA (sf)' ratings on the class A1 and class A2
notes.
The underlying collateral portfolio consists of loans to
conforming and nonconforming borrowers. The current portfolio
consists of 499 consolidated loans with a weighted-average
current loan-to-value ratio of 70.09% and weighted-average loan
seasoning of 3.6 years.
The rating actions reflect:
-- The build-up of credit support to all rated note classes
since transaction close in 2014. Credit support to the
class A1 notes has increased to 50.34% as of Dec. 31, 2016,
from 30% at close and has more than doubled for the class
A2, class B, class C, class D, class E, and class F notes.
Subordination to the rated notes exceeds the minimum amount
of credit support assessed to be commensurate with the
respective rating levels. S&P therefore views credit
support provided to be sufficient to withstand stresses
commensurate with these ratings.
-- The transaction benefits from structural mechanisms that
support the timely payment of interest. The mechanisms
include a liquidity facility equal to 2.5% of the
outstanding balance of the notes, subject to a floor
A$1.0 million or the balance of the performing loan amount
at that time. The class A1 and class A2 notes benefit from
a yield-enhancement reserve of A$1.5 million, and all notes
benefit from the ability to principal draw.
-- The transaction benefits from the availability of a
retention amount built from excess spread before the call
date. The retention amount is applied to the most
subordinated rated note at that time and serves to create
overcollateralization in the transaction.
-- The availability of an amortization amount built from
excess spread after the call date. The level of excess
spread is applied with principal collections to reduce the
balance of the most senior-rated note when the call date is
met.
-- All rated notes have the ability to make timely payment of
principal and interest under S&P Global Ratings' cash-flow
analysis and assumptions at the respective rating levels.
-- Some 6.14% of the pool is in arrears as of Dec. 31, 2016.
This is above Standard & Poor's Performance Index (SPIN)
for nonconforming mortgages. However, losses to date have
been minimal, equating to A$693,595, or 0.17% of the
original pool balance. The bond factor was approximately
39% as of Dec. 31, 2016.
-- There is a documented minimum margin to be maintained on
the assets.
RATINGS RAISED
Class Rating To Rating From
B AAA (sf) AA (sf)
C AA (sf) A (sf)
D A- (sf) BBB (sf)
E BBB (sf) BB (sf)
F BB (sf) B (sf)
RATINGS AFFIRMED
Class Rating
A1 AAA (sf)
A2 AAA (sf)
TZ LIMITED: Ex-Director Gets 10 Year Jail for Dishonest Conduct
--------------------------------------------------------------
Former TZ Limited director, Andrew John Sigalla, was on Feb. 10,
2017, sentenced to ten years imprisonment, with a minimum of six
years to serve, having been found guilty on Nov. 22, 2016, of 24
counts of dishonest conduct, following a jury trial in the
Supreme Court of New South Wales.
The jury found that Mr. Sigalla used his position as a director
dishonestly to gain financial advantage by causing AUD8.6 million
in company funds to be transferred to either himself, his related
entities or others, contrary to section 184(2) of the
Corporations Act.
The offences related to transfers of funds from the accounts of
TZ Limited between December 2006 and March 2009. In relation to
one of the counts, there was a transfer of TZ Limited shares
worth approximately AUD500,000 to a company based in Hong Kong.
The funds transferred to Mr Sigalla's accounts were largely used
to reduce his debt with bookmaker Tom Waterhouse or to make
mortgage payments on behalf of one of his personal companies.
Her Honour Justice Adamson said, 'The offending conduct took
place over a period of more than two years in circumstances which
demonstrated considerable deception, ingenuity, opportunism and
greed.'
'Private investment in public companies is a significant aspect
of the market economy. If potential investors fear that the
directors of public companies will misuse their positions to
their own advantage, they will be loath to invest and the market
will be deprived of capital which would otherwise have been
available.'
ASIC Commissioner John Price said, 'This sentence reflects the
gravity of the offending in this case and shows that the courts
take offences involving dishonesty by company directors
seriously.'
'This should serve as a timely reminder to company directors
about the serious consequences of failing to act with propriety.'
The matter was prosecuted by the Commonwealth Director of Public
Prosecutions.
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C H I N A
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FUTURE LAND: S&P Assigns 'B+' Rating to Proposed Sr. Unsec. Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B+' long-term issue rating and
'cnBB' long-term Greater China regional scale rating to a
proposed issue of U.S. dollar-denominated senior unsecured notes
by Future Land Development Holdings Ltd. (BB-/Stable/--; cnBB+/--
). The ratings are subject to S&P's review of the final issuance
documentation.
The issue rating is one notch lower than the long-term corporate
credit rating on Future Land to reflect the structural
subordination risk. The company intends to use the proceeds from
the proposed notes to refinance its existing debt and for general
working capital.
S&P expects Future Land to use the proceeds predominantly to
refinance its higher-cost borrowings, specifically to early
redeem the outstanding US$350 million 10.25% senior notes due
2019. In addition, S&P expects the company to continue tapping
into domestic borrowing in 2017 to lower funding costs, extend
debt maturity, and reduce the exposure to foreign currency debt.
S&P expects Future Land to maintain its strong sales execution in
2017 with an attainable annual target of Chinese renminbi 75
billion in contracted sales. The ratings on Future Land continue
to reflect S&P's view that the company's geographic concentration
in the Yangtze River Delta remains high albeit showing an
improving trend.
The stable outlook reflects S&P's expectation that Future Land
will improve its geographic diversity and profitability in the
next 12 months. S&P believes the company will grow its EBITDA
significantly in 2017 while controlling leverage. S&P expects
the company's debt-to-EBITDA ratio to be materially lower at
4.0x-4.5x in 2017, from more than 5x in 2016.
* Chongqing's Tightened Pre-Sale Rules Negative for Developers
--------------------------------------------------------------
Moody's Investors Service says that tightened pre-sale
regulations on commodity properties in the major western Chinese
city of Chongqing by the municipal authorities are credit
negative for property developers because it will weaken their
liquidity and limit financial flexibility.
"Developers in China typically use the pre-sale proceeds from
their property projects to repay the related construction
financing, and the tightened requirements will likely increase
their upfront capital requirements, or they will have to find
alternative unsecured funding to repay outstanding secured
project loans to meet the new pre-sale requirements," says
Stephanie Lau, a Moody's Assistant Vice President and Senior
Analyst.
"In addition, such regulations will delay developers' pre-sale
cash flows, liquidity and expansion plans, and they will also
likely accelerate industry consolidation for small and illiquid
developers in Chongqing, as they are less likely to have access
to unsecured financing in China," says Kaven Tsang, a Moody's
Vice President and Senior Credit Officer.
According to Hong Kong media reports on February 6, the
authorities in Chongqing had announced on February 4 that
developers must settle all financing that is secured by the
project's land use rights before they can register for a pre-sale
permit. In addition, developers are not allowed to obtain secured
financing for projects that have been granted pre-sale status.
Moody's conclusions were contained in a just-released report,
"Tightening of Pre-sale Property Regulations in Chongqing Is
Credit Negative for Developers".
Among Moody's rated developers, Longfor Properties Co. Ltd. (Ba1
positive) and China Aoyuan Property Group Limited (B2 positive)
generated around 9%-10% of their contracted sales in Chongqing in
H1 2016 and are more exposed than their peers.
However, Moody's does not expect the tightened measures to
materially impact the two companies because they have strong
liquidity, diversified funding channels and access to the
offshore bond market.
They have further strengthened their liquidity by tapping
unsecured onshore funding in the past two years. In 2015 and
2016, Longfor and China Aoyuan raised RMB19.8 billion and RMB4.4
billion respectively through the onshore corporate bond market.
Their strong liquidity, as evidenced by their ample amount of
cash on hand, also provides them with strong financial
flexibility to cope with the new requirements. Longfor's cash
holdings -including restricted cash - totaled RMB16.3 billion at
end-June 2016, covering 329% of its short-term debt in the same
period. It has maintained a cash/short-term debt ratio at 240% or
higher since 2014.
By contrast, China Aoyuan had cash on hand of RMB10.2 billion at
end-June 2016, covering 248% of its short-term debt as of the
same date.
In the case of Longfor, the company can also collateralize its
mature investment properties in Chongqing to procure secured
funding for new projects under development. It has maintained a
long track record of property development in Chongqing, as well
as well good access to onshore and offshore financing.
For China Aoyuan, Guangdong Province remains its core market,
generating 50% of its contracted sales in H1 2016. Its track
record and solid end-user demand for residential housing in the
province will partly mitigate the impact of potential sales
volatility in Chongqing.
Chongqing is a key market in the central and western part of
China, representing one of the country's four municipalities
other than Beijing, Shanghai and Tianjin that is directly under
the administration of the central government.
Subscribers can access the full report at
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC
_1059070.
The report may also be found through Moody's topic page "China's
Trilemma: Growth, Reform and Stability", available at
http://www.moodys.com/chinarebalancing.This page provides a
centralized source for Moody's research related to key credit
issues in China as the country's macroeconomic story continues to
unfold.
Recent Moody's publications relating to China's Trilemma include:
* Inside China: January 2017
* China Property Focus -- January 2017
* Banking System Profile: China
* China Curtails Growth of Short-Term Savings Products, a Credit
Positive for Insurers
* Insurance -- China: China's Proposal to Tighten Insurers'
Shareholding Management Is Credit Positive
* State-Owned Enterprises -- China: Reform to Remain Gradual
With Credit Implications Varying Across Sectors
* China Credit: Implications of Government's Plans to Reduce
Corporate Leverage Are Mixed
* Banking System Outlook -- China: Deteriorating Operating
Environment and Asset Quality Drive Negative Outlook
* Securitization -- China: 2017 Outlook -- Asset Performance
Stable for Auto ABS and RMBS, Negative for CLOs
* Regional and Local Governments -- China: 2017 Outlook -- High
Leverage of State-Owned Enterprises Drives Negative Outlook
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I N D I A
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AGRAWAL DISTILLERIES: ICRA Assigns B+ Rating to INR4.0cr Loan
-------------------------------------------------------------
ICRA has assigned its rating of [ICRA]B+ to the INR7.90 crore
fund based limits and to INR0.10 crore unallocated limits of
Agrawal Distilleries Private Limited. The outlook on the long
term rating is 'Stable'. ICRA also assigned its rating of
[ICRA]A4 to the INR2.00 crore non-fund based limits of ADPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 4.00 [ICRA]B+(Stable) Assigned
Term Loan 3.90 [ICRA]B+(Stable) Assigned
Unallocated Limits-
LT 0.10 [ICRA]B+(Stable) Assigned
On short term scale
Bank Guarantee 2.00 [ICRA]A4 Assigned
Detailed Rationale
ICRA's rating takes into account the strong growth of liquor
consumption in the state of Madhya Pradesh, which has aided the
growth in ADPL's production capacity utilisation and the
operating income. ICRA also draws comfort from the long standing
experience of the promoters and the monopoly it enjoys in
Khandwa, Damu and Dagar districts of Madhya Pradesh. The rating
positively factors in the increasing production capacity
translating into growth in the operating income with ADPL
reporting an operating income of INR33.29 crore as against
INR25.69 crore in the previous year. The rating also takes into
account the healthy capital structure along with comfortable debt
protection measures such as interest coverage and Net cash
accruals/Total Debt.
Nevertheless, the rating is constrained by geographical
concentration risk with ADPL's operations being confined to
Madhya Pradesh and vulnerability of the company's operations to
regulatory risks in the form of high taxes, stringent government
controls and possibility of non-renewal of licenses. ICRA also
notes the profitability of the company vulnerable to raw material
price fluctuations. The ratings are also constrained by the capex
to be undertaken by the company in FY2018 which will going
forward pressurize the capital structure.
Going forward, the ability of the company to bring about a
sustained improvement in its operating income and profitability
with maintaining healthy capital structure, will be the key
rating sensitivities.
Key rating drivers
Credit Strengths
* Long experience of the promoters in the liquor business
* Consumption of liquor has consistently increased in Madhya
Pradesh in the last 10 years indicating favorable demand
outlook for the product
* Healthy growth in the operating income of the company on the
back of growing production capacity utilisation
* Monopoly enjoyed by the company for the production of country
liquor in its region, mitigating the risk of price competition
Credit Weakness
* High business risk inherent in the liquor industry owing to
high taxes and stringent government controls and regulations
* Aggressive capex in the FY2018 to leverage the capital
structure and pressurise the net profitability; however,
mitigated with healthy accruals of the company and the
monopoly
the company enjoys for country liquor manufacturing.
* Susceptibility of profit margins to the fluctuation in the
rectified spirit and molasses
* Operations of the company dependent on the success in the
annual draws of the licenses.
Detailed description of key rating drivers highlighted:
Agrawal Distilleries Private Limited was incorporated in 1997
under the name of Agrawal Breweries and Textile Limited and the
founding promoters were Mr. Subhash Agrawal and Mr. Luv Agrawal.
The company was taken over with 100% shares owned by Vivashwan
Hotel India Pvt. Ltd. in 2005 and renamed to ADPL. In April 2015,
VHIPL sold 65% of the shares to the new promoters of the company.
The management has nearly 2 decades of experience in the same
line of business. Despite the increasing excise duty in MP, the
consumption of the liquor has seen an upward trend in the past
decade. While the country liquor has seen a CAGR of 8.32% since
FY2003, IMFL (Malt) has recorded a growth of 15.88% during the
same period. The operating income of the company increased has
increased with a CAGR of 19.65% during the period between FY2012
to FY2016. The increase in the sales is primarily driven through
increase in the production capacity. MP is divided into 51
districts and ADPL has the exclusive right to sale in 3
districts; Khandwa, Damu and Dagar in MP. ADPL primarily supplies
country liquor to retailers of country liquor in MP. Competition
from the other distilleries in the earmarked regions is absent as
the region exclusivity is won through tender bidding and
consequentially, all the retailers buy the CL from ADPL only.
Liquor industry is highly regulated in India with each state
controlling the production, sales and duty structure
independently. As a result, there are difficulties in the
transfer of production from one state to another along with huge
burden of duties and taxes. The state controls the licenses for
production, distributorship and retailing also. The company will
undergo capex in FY18 with a purchase of multi effective
evaporation machine (MEE) which helps in improving the efficiency
in the evaporation of unrequired liquids from the portable
spirit. The total cost of the machine including the civil work is
INR5.37 crore, of which the company has financed this trough a
term loan of INR3.90 crore, internal accruals of INR1.00 crore
and the remaining through unsecured loans. Furthermore, the
management will also undergo a capex for a new grain plant and
the cost of project is INR30.00 crore. Owing to these capex, the
capital structure of the company will get leveraged, however, it
will be partly mitigated with healthy accruals of the company and
the monopoly the company enjoys for country liquor manufacturing.
Agrawal Distilleries Private Limited was incorporated in 1997
under the name of Agrawal Breweries and Textile Limited and the
founding promoters were Mr. Subhash Agrawal and Mr. Luv Agrawal.
The company was taken over with 100% shares owned by Vivashwan
Hotel India Pvt. Ltd. in 2005 and renamed to ADPL. In April 2015,
VHIPL sold 65% of the shares to the new promoters of the company.
The key Directors of the company are Mr. Harminder Singh Bhatia,
Mr. Naveen Agarwal, Mr. Raswant Singh and Mr. Satya Narayan
Sharma. The company is a maker of portable spirit (country
liquor) with one distillery cum bottling unit at Barwaha, MP and
a bottling plant at Khargone, MP. The production plant of the
company is located in Bawwaha, MO having the production capacity
of 15,000 litres per day.
ICL recorded a net profit of INR2.29 crore on an operating income
of INR47.43 crore for the year ending March 31, 2016.
APEX BUILDERS: CRISIL Reaffirms B+ Rating on INR12MM Term Loan
--------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Apex Builders
continues to reflect exposure to risks related to saleability of
its ongoing project, and to cyclicality inherent in the Indian
real estate sector. These weaknesses are partially offset by low
funding risk associated with the project, and promoters'
extensive experience and funding support.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable (Reaffirmed)
Term Loan 12 CRISIL B+/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks to saleability of its ongoing project: AB
sold 25% of its flats in fiscal 2016 and expects to sell 36% of
them till fiscal 2017, resulting in high demand risk of the
project. The project has seen demand from customers of other
projects executed by the Kasturi group, founded by members of AB.
Although the location of AB's project is advantageous on account
of its proximity to the industrial belt in Pimpri-Chinchwad,
Bhosari, and Chakan, competition from other projects coming up in
the area has resulted in high demand risk for the project.
* Susceptibility to cyclicality inherent in the Indian real
estate sector: The real estate sector in India is cyclical and is
marked by sharp movements in prices and a highly fragmented
market structure. Execution of real estate projects in India is
affected by multiple property laws and non-standardised
regulations across states. CRISIL believes AB's business risk
profile, over the medium term, will remain exposed to risks and
cyclicality inherent in the real estate sector.
Strengths
* Low funding risk associated with the project: The total cost of
AB's ongoing project is estimated at INR70.0 crs., including the
land cost. The project is expected to be funded through customer
advances of INR29.3 crs., equity of INR20.5 crs., and bank loan
of INR20.0 crs.. However, the project is exposed to low funding
risk as the promoters have brought in majority of their
contribution upfront and bank loan is disbursed. CRISIL believes
AB will be able to generate sizeable advances from incremental
bookings which will be sufficient to meet its maturing debt
obligation and for funding the incremental cost resulting in low
funding risk.
* Promoters' extensive experience: The Kasturi group has been
engaged in residential real estate development in Pune,
Maharashtra, since 1998. The group has executed over seven
residential and commercial projects in Pune, covering more than 1
million square feet of saleable area. CRISIL believes AB will
continue to benefit over the medium term from the group's
extensive experience, timely project execution capabilities,
established market presence, and strong relationships with
customers.
Outlook: Stable
CRISIL believes AB will continue to benefit over the medium term
from its promoters' extensive experience in the real estate
sector in Pune. The outlook may be revised to 'Positive' in case
of sizeable bookings of units and timely receipt of customer
advances, leading to substantial cash inflow. Conversely, the
outlook may be revised to 'Negative' if slow bookings of units
and delay in receipt of customer advances result in delayed
implementation of the project and pressure on liquidity.
AB was established as a partnership firm in 2013 in Pune by
members of the Kasturi group, to execute a residential project at
Borhadwadi, near Moshi, in Pune.
The Kasturi group, established by Mr. Bharat Agarwal, has been
developing real estate in Pune since 1998. So far, the group has
implemented more than ten projects aggregating over 0.15 crs.
square feet of saleable area.
BIRESHWAR COLD: CRISIL Reaffirms B Rating on INR4.01MM Loan
-----------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Bireshwar Cold Storage Private Limited at 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.01 CRISIL B/Stable (Reaffirmed)
Working Capital Loan 0.60 CRISIL B/Stable (Reaffirmed)
Working Capital
Term Loan 0.24 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect the company's susceptibility to
regulatory changes and intense competition in the West Bengal
cold storage business, vulnerability to delays in payment by
farmers because of adverse market conditions, and modest networth
and high gearing. These weaknesses are partially offset by the
extensive experience of its promoter and above-average debt
protection metrics.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to regulatory changes and intense competition: The
potato cold storage industry in West Bengal is regulated by the
West Bengal Cold Storage Association, which fixes storage rent
and marketing, drying, and insurance charges. Fixed rentals limit
ability to generate profits based on individual strengths and
geographical advantages. Furthermore, since the cold storage
segment is fragmented, players have limited bargaining power
against customers and have to offer discounts to ensure healthy
utilisation of storage capacity.
* Vulnerability to delays in payment by farmers: The company
provides loans to farmers against stored products. However,
during adverse market conditions, farmers do not find it
profitable to pay rental and interest charges along with loan
obligation, and hence do not retrieve potatoes from cold
storages. Thus, the company remains exposed to delays in payment.
Strength
* Extensive experience of promoter: Presence of around a decade
in the cold storage industry has enabled the promoter to
establish strong relationship with farmers and traders, thereby
ensuring healthy utilisation of storage capacity.
Outlook: Stable
CRISIL believes BCSPL will continue to benefit over the medium
term from the extensive experience of its promoter. The outlook
may be revised to 'Positive' if improved cash accrual or capital
infusion by promoter strengthens financial risk profile and risk-
absorption capacity. The outlook may be revised to 'Negative' if
stretched receivables, non-recovery of loan extended to farmers,
inefficient working capital management, or large debt-funded
capital expenditure weakens liquidity.
Set up in 1974 and promoted by Mr. Taraknath Pal, BCSPL provides
cold-storage facilities to potato farmers and traders. Unit is in
Kotulpur in Bankura district, West Bengal.
Profit after tax (PAT) was INR29 lakhs on revenue of INR2.4 crore
in fiscal 2016, against PAT of INR6 lakh on revenue of INR1.88
crore in fiscal 2015.
DHOLADHAR DEVELOPERS: CRISIL Cuts Rating on INR8.0MM Loan to D
--------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Dholadhar Developers Private Limited to 'CRISIL D' from
'CRISIL C'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 2.2 CRISIL D (Downgraded
Bank Loan Facility from 'CRISIL C')
Term Loan 8.0 CRISIL D (Downgraded
from 'CRISIL C')
The downgrade reflects the company's delays in servicing debt on
account of stretched liquidity. Occupancy of its mall is
moderate, at 60%, and is likely to increase. However, large debt
obligation will continue to put pressure on its liquidity.
Key Rating Drivers & Detailed Description
Weaknesses
* Delays in servicing term loan obligation:
The company has delayed its debt obligation by 3-10 days over the
past six months due to stretched liquidity as its accrual is
barely adequate to meet debt obligation. The company has monthly
obligations of INR11.34 lakhs per month. The installment due in
December was serviced with a delay of around 5 days.
* Exposure to risks related to saleability of project
DDPL's mall project was to be completed by December 2015, but was
delayed due to unfavourable weather conditions and structural
issues, and was completed only in April 2016. Occupancy at the
mall is 60%. Ability to tie-up leases for unleased space and
sustain footfall are two major concerns.
Strength
* Advantageous location and funding support from promoter
DDPL's mall is Dharamsala's first shopping and entertainment
complex. Dharamsala is a well-known tourist centre and is the
winter capital of Himachal Pradesh. The local population is over
15 lakh as per the 2011 census, and over 300,000 tourists visit
Dharamsala every year, promising robust footfall for DDPL's mall-
cum-multiplex. The mall is along the National Highway, at the
centre of the town, with the nearest market just 60 yards away.
It is the only large privately owned area in Dharamsala, as all
other land holdings in the vicinity are either government-owned
or forest land.
The promoter has infused equity and extended unsecured loans to
support project construction and meet debt obligation.
DDPL, incorporated in 2007, is promoted by Mr. Gurmit Singh Mann,
who has experience of over 48 years in the real estate industry.
The company operates Maximus Mall, a 54,000-square feet
commercial complex with a two-screen multiplex, in Dharamsala.
The operations of the mall were started in April 2016 and fiscal
2017 will be the first year of operations for the company.
EMAAR MGF: ICRA Withdraws D Rating on INR600cr NCD
--------------------------------------------------
ICRA has withdrawn the [ICRA]D rating assigned to INR600 crore
NCD programme of Emaar MGF Land Limited as there is no amount
outstanding against the rated instruments.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-convertible
Debenture Programme 600 [ICRA]D; rating withdrawn
Emaar MGF Land Limited is a joint venture (JV) between the MGF
Group (41.59% stake), an established real estate developer in the
National Capital Region, and Emaar Properties PJSC (56.54%
stake), which is one of the largest real estate developers in the
Gulf region with a presence in over 12 countries. Remaining stake
is held by minority shareholders. EMGF commenced operations in
India in February 2005. EMGF is present in various segments of
the Indian real estate industry, namely the residential,
commercial, retail and hospitality sectors. At present, it is
developing projects in NCR, Mohali, Hyderabad, Lucknow, Indore
and Chennai. It has land reserves approximating ~9000 acres. The
company is currently developing 49 projects with total saleable
area of ~40.6 million sq. ft.
EVEREST HOLOVISIONS: CARE Reaffirms B+ Rating on INR5.50cr Loan
---------------------------------------------------------------
The ratings assigned to the bank facilities of Everest
Holovisions Limited continue to remain constrained by small scale
of operations with low networth base, fluctuating profit margins
with volatility in input polyester prices, leveraged capital
structure, working capital intensive nature of operations and
presence in the fragmented & competitive industry.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 1.71 CARE B+; Stable Reaffirmed
Long-term/Short- 5.50 CARE B+; Stable/CARE A4
Term Bank Facilities Reaffirmed
The reaffirmation of the ratings also factors deterioration in
capital structure and elongation of operating cycle albeit in
the increase in scale of operations along with improvement in
profit margins in FY16 (refers to the period April 1 to
March 31) and risk associated with ongoing expansion project with
financial closure pending.
The ratings, however, continue to derive strength from long track
record of operations, experienced management with demonstrated
financial support and established relationship with reputed
clientele.
The ability of EHL to increase the scale of operations amidst
competition, improve capital structure & debt coverage indicators
along with liquidity position by efficiently managing working
capital requirement is the key rating sensitivity.
Detailed description of the key rating drivers
The scale of operations of EHL has been fluctuating over FY13-
FY16 on account of fluctuating realizations. The company has been
posting cash losses over FY13-FY15. However, in FY16, led by
better operating performance, it posted net profit of 1.52% in
FY16. Furthermore, profitability has also been fluctuating owing
to fluctuation in polyester prices and high competition faced
from other players. On the other hand, the capital structure
stood leveraged with small tangible networth base on account of
eroding tangible net-worth base led by net level losses and high
amount of borrowings to support the operations. Furthermore, the
liquidity position of the entity remained weak with below unity
current ratio and high utilization of working capital limits.
Furthermore, EHL is undertaking a debt funded expansion project
for which financial closure is pending. EHL faces risk of timely
completion of the same and stabilization of enhanced facilities
thus generating envisaged cash accruals.
However, EHL is promoted by Mr Rajendra Surana, who possesses
over two decades of experience in the holographic industry. He is
also assisted by Mr Kailesh Shah and Mr Smitesh Surana, who also
possess requisite experience in the holographic industry. The
experience of the promoters has enabled them to maintain healthy
relationship with reputed clientele and garner regular orders
from them.
Established as Ojasmit Holovision Limited in 1997, EHL is an ISO
9001:2000 certified company and an accredited member of
International Hologram Manufacturers Association (IHMA) and
Authentication Solution Providers' Association (ASPA, erstwhile
Hologram Manufacturers Association of India). It is engaged in
manufacturing of holographic solutions (such as holograms
stickers, holographic films, holographic integrated labels,
holographic stamping foils, holographic shrink sleeves,
holographic strip, holographic wads, etc.). EHL procures raw
materials (mainly high quality polyester films, adhesives and
release liner) largely from local suppliers (about 98% of total
purchases in FY16) and the rest through imports. The company
generated around 97% of its revenue from the domestic market
during FY16 (vis-a-vis ~95% in FY15), while the exports accounted
for the rest. EHL operates a manufacturing facility located at
Silvassa, possessing installed capacities of 1.50 crore sheets
per annum of sticker hologram, 1,200 MTPA of embossed wide web
film, 2.65 crore meters per annum of coated products, utilized at
~48%, ~65% and ~35% respectively in FY16 (vis-a-vis ~26%, ~53%
and ~44% respectively in FY15). EHL's products find application
in diverse fields of printing, pharmaceuticals, automobile and
others for brand establishment, brand protection and promotion
purposes. Moreover, the company is planning to enhance its
installed capacity of embossed wide web film from the existing
1,200 MTPA to 1,680 MTPA, by adding up two machines.
During FY16, the total operating income of the company stood at
INR19.40 crore (vis-a-vis INR17.65 crore in FY15), whereas the
PAT during the same year stood at INR0.30 crore (vis-a-vis a net
loss of INR1.14 crore in FY15).
GOVINDAM PROJECTS: CARE Assigns 'B' Rating to INR10cr LT Loan
-------------------------------------------------------------
The rating assigned to the bank facilities of Govindam Projects
Private Limited is primarily constrained by its small scale of
operation with low profitability margin, lack of backward
integration vis-a-vis volatility in raw material prices, highly
competitive and fragmented industry and working capital intensive
nature of operation. The rating, however, derives strength from
its experienced promoter and proximity to raw material sources.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10 CARE B; Stable Assigned
Going forward, the ability of the company to improve its scale of
operations along with profitability margins and efficient
management of working capital are the key rating sensitivities.
Detailed description of the key rating drivers
GPPL is a small player in the steel industry mostly dominated by
large, mid-sized players with small scale of operation having a
total operating income of INR27.40 crore with a net loss of
INR2.86 crore in FY16 (refers to the period April 1 to March 31).
Furthermore, the total capital employed was also low at INR19.93
crore as on March 31, 2016. Furthermore, during 9MFY17, the
company has earned a total operating income of INR38.06 crore as
per the management.
GPPL does not have any backward integration for its basic raw
material (like iron ore, non-coking coal, dolomite, etc) and is
required to purchase the same from open market.
The spectrum of the steel industry in which the company operates
is highly fragmented and competitive marked by the presence of
numerous players in northern and eastern India.
GPPL's business, being manufacturing of sponge iron, is working
capital intensive marked by high average inventory period on
account of company's decision to stock raw materials to avoid
price fluctuation risk along with slow movement of finished goods
due to lesser demand. The same has resulted in elongated
operating
cycle rating between 90 days and 123 days during FY14 to FY16.
The company is managed by Mr. Pradeep Kr Khemka, Managing
Director, with the help of other three directors. The directors
are having around three decades of experience in iron and steel
industry.
GPPL plant is located at Rourkela in Odisha, which is also in
proximity to the steel and mining areas of West Bengal and
Jharkhand. Hence, its presence in the steel and mining region
results in benefits derived from a lower logistic expenditure
(both on transportation and storage), easy availability and
procurement of raw materials at effective prices.
Govindam Projects Private Limited was incorporated during
February 2003 to initiate a sponge iron manufacturing business.
The company has set up its manufacturing unit at Kuarmunda,
Rourkela in Odisha with an installed capacity of 60,000 MTPA.
During FY16, the company has initiated an iron ore crusher unit
in its existing location.
During FY16, the company reported a total operating income of
INR27.40 crore (FY15: INR44.79 crore) and a net loss of INR2.86
crore (PAT in FY15: INR0.47 crore). There was a cash loss during
FY16 of INR1.67 crore (GCA in FY15: INR1.65 crore). The company
has earned INR38.06 crore during 9MFY17.
HARBANSH LAL: Ind-Ra Assigns 'BB+' Long-Term Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Harbansh Lal
Foods Private Limited a Long-Term Issuer Rating of 'IND BB+'.
The Outlook is Stable. The instrument-wise rating action is given
below:
-- INR200 mil. Fund-based working capital limits assigned
IND BB+/Stable/IND A4+
KEY RATING DRIVERS
The ratings are constrained by HLFPL's moderate scale of
operations and credit metrics, due to its presence in the
intensely competitive milk foods industry. In FY16, revenue was
INR1,050.07 million (FY15: INR780.93 million), EBITDA margins
were 2.77% (3.52%), interest coverage (operating EBITDA/gross
interest expense) was 1.65x (1.55x) and net leverage (total
adjusted debt/operating EBITDAR) was 5x (6.77x).
The ratings, however, are supported by the company's comfortable
liquidity position as evidenced by its around 86% average fund-
based working capital utilization for the 12 months ended January
2017. The ratings are further supported by over a decade-long
experience of HLFPL's promoters in the milk foods processing
industry and the company's 12-year-long operational history.
RATING SENSITIVITIES
Negative: Deterioration in the margins leading to deteriorated
credit metrics will be negative for the ratings.
Positive: A significant improvement in the top line and/or
diversification of the revenue sources while maintaining and/or
improving current credit profile will be positive for the
ratings.
COMPANY PROFILE
Incorporated in 2004, HLFPL is promoted by Mr. Harbansh Lal and
is engaged in the production of skimmed milk powder, butter,
dairy whitener, etc. The company's registered office is located
in Meerut, UP. Its current installed capacity is 300,000 litres
per day. It supplies its products under the Padamshri brand.
HV CONNECTING: CRISIL Reaffirms B+ Rating on INR17.75MM Loan
------------------------------------------------------------
CRISIL has reaffirmed the long term ratings at 'CRISIL B+/Stable'
while assigning the rating 'CRISIL A4' on the short-term facility
of HV Connecting Infra (India) Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.00 CRISIL A4 (Assigned)
Cash Credit 10.25 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 17.75 CRISIL B+/Stable (Reaffirmed)
CRISIL's ratings on the bank facilities of HVCIPL continue to
reflect the company's below average financial risk profile marked
by a high TOLTNW and modest networth. The ratings also factor
HVCIPL's exposure to risks pertaining to supplier concentration.
These rating weakness are partially offset by extensive
experience of promoters and company's established distribution
network.
Key Rating Drivers & Detailed Description
Weaknesses
* Below average financial risk profile: HVCIPL's Networth is
expected to remain modest, in the range of INR7.5- INR10 crore
over the medium term. On account of high incremental working
capital requirements, HVCIPL's TOLTNW metric is expected to be
high at over 3.5 times over the medium term.
* Exposure to risks pertaining to supplier concentration: HVCIPL
remains exposed to risks pertaining to concentration in its
supplier profile, with 2 key principals Reliance Jio Infocomm
Limited and Gionee Communication Equipment Co. Limited expected
to account for over more than 70 per cent of its revenues for
2016-17. HVCIPL's association with these principals is of short
duration and therefore the company is exposed to risk associated
with operating policy of new principals. HVCIPL's scale of
operations is also moderate, therefore limiting its pricing
flexibility, as depicted in its thin operating margins of around
0.5-0.8 per cent.
Strengths
* Extensive experience of promoters: The company is promoted by
Mr. Vijay Yadav, who has extensive experience of more than two
decades in the industry. Business risk profile is strengthened by
extensive experience of promoters.
* Established distribution network: Company benefits from the
established distribution network in state of Gujarat. Backed by
established distribution network, company was able to obtain
exclusive distributorship for Reliance Jio Infocomm Limited and
Gionee Communication Equipment Co. in fiscal 2017.
Outlook: Stable
CRISIL believes that HVCIPL will benefit from its promoters'
extensive industry experience over the medium term. The outlook
may be revised to 'Positive' in case the company achieves more
than expected growth in revenue and profitability or in case of a
large equity infusion leading improved capital structure. The
outlook may be revised to 'Negative' in case of decline in
HVCIPL's revenue or further deterioration in its capital
structure or stretch in liquidity due to increase in working
capital requirements.
Incorporated in 2008, HVCIPL is a dealer of Karbonn, Micromax,
Sony and Apple brand of mobile phones, operating mainly in South
Gujarat, Bhubaneswar (Odisha), Nalasopara (Palghar, Maharashtra),
Daman (Daman and Diu), and Silvassa (Dadra and Nagar Haveli).
HVCIPL is also exclusive zonal distributor for Reliance Jio and
Gionee for state of Gujarat. The day-to-day operations of the
company are managed by Mr. Vijay Yadav.
Profit after tax was INR0.43 crore on net sales of INR114 crores
in fiscal 2016, against INR0.17 crore and INR87 crore,
respectively, in fiscal 2015.
IMPERIALL TECHNOFORGE: CARE Assigns 'D' Rating to INR6.60cr Loan
----------------------------------------------------------------
The rating assigned to the bank facilities of Imperiall
Technoforge Private Limited is primarily due to irregularity in
servicing of its debt obligations due to weak liquidity position.
Establishing a clear debt servicing track record with an
improvement in the liquidity position is the key rating
sensitivity.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 6.60 CARE D Assigned
Rajkot-based (Gujarat) ITPL was incorporated in 2012 as a private
limited company by Mr. Samir Vaishnav and Mr. Vallabhbhai P
Vaishnav. ITPL is engaged into the business of manufacturing of
investment castings. Products manufactured by ITPL are used in
steel forging components which mainly covers flanges components,
transmission components and earthmoving components.
During FY16 (A), ITPL reported net loss of INR3.19 crore on a TOI
of INR8.03 crore as against net loss of INR3.39 crore on a TOI of
INR4.84 crore during FY15. During 9MFY17 (Provisional) ITPL has
achieved a TOI of INR1.73 crore.
JANWANI FOODS: CARE Assigns B Rating to INR5cr Long Term Loan
-------------------------------------------------------------
The rating assigned to the bank facilities of Janwani Foods
Industries is primarily constrained on account of project
implementation risk associated with it and vulnerability of
margins to the fluctuation in the prices of agro-based raw
materials which are seasonal in nature. The rating is also
constrained on account of its presence in the highly competitive
and fragmented food processing industry and constitution as a
partnership concern.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5 CARE B; Stable Assigned
The rating, however, favorable takes into account experienced
partners in the industry.
The ability of the firm to successful complete its project within
envisaged time and cost parameter and stabilize its operations
with achievement of envisaged level of TOI and profitability
would be the key rating sensitivities.
Detailed description of the key rating drivers
JFI is looked after by its experienced partners having around a
decade of experience in the agro commodities business. There is
risk associated with green field project undertaken in the highly
fragmented and competitive agro commodity industry. The operating
margins of the firm are highly susceptible to the fluctuation in
the prices of agro-based raw material as well as seasonality
associated with the industry.
Sihora-based (MP) Janwani Foods Industries was formed as a
partnership concern in June, 2015 by Ms. Rekha Janwani, Ms.
Sangeeta Janwani and Ms. Soumya Janwai with an objective to set
up greenfield project for manufacturing and trading of Maida,
Atta, suji and choker etc.
JAY BHARAT: CARE Raises Rating on INR23.72cr Loan to BB-
--------------------------------------------------------
The revision in the long-term rating assigned to the bank
facilities of Jay Bharat Metcast Private Limited takes into
account of significant improvement in profit margins, capital
structure and debt coverage indicators during FY16 (refers to the
period April 1 to March 31). The ratings continue to derive
benefits from vast experience of the promoters and group entity
support coupled with its association with reputed entity having
established marketing network.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 23.72 CARE BB-; Stable Revised
from CARE B+
Long-term Bank 10.44 CARE BB-; Stable/CARE A4
Facilities/Short- Revised from CARE B+/
term Bank CARE A4
Facilities
The ratings, however, continue to remain constrained on account
of moderate scale of operations, moderate liquidity position,
susceptibility to fluctuations in raw material prices and intense
competition from the local rolling mills and susceptible to
cyclicality of the steel industry.
The ability of SLPM to increase its scale of operations coupled
with improvement in profitability and capital structurealong with
efficient management of its working capital requirements are the
key rating sensitivities.
Detailed description of key rating drivers
JBMPL registered a total operating income (TOI) of INR52.77 crore
during FY16 as against TOI of INR59.16 crore in FY15 on
account of lower sales realization during FY16 as compared to
FY15 pertaining to decline in steel prices.
During FY16, PBILDT margin of JBMPL improved significantly and
stood at 11.07%, primarily due to decrease in material
cost which was mainly related heavy metal scrap from
INR20.40/K.g. during FY15 to INR11.10/K.g. during FY16.
Consequently, the PAT margin of JBMPL has improved and stood
positive at 0.13% during FY16 as against net loss during
FY15. Furthermore, during FY16, GCA improved and stood at INR2.39
crore mainly on account of higher profits.
The capital structure of JBMPL remained moderately comfortable
marked by an overall gearing of 1.01 times as on March 31, 2016,
as against 2.13 times in FY15 on account of significant infusion
of equity share capital of INR17.46 crore by the promoters. The
debt coverage indicators also improved and stood moderate by
interest coverage of 1.69 times during FY16 and total debt to GCA
of 15.01 times in FY16 owing to better gearing level and PBILDT.
The liquidity position of JBMPL remained moderate marked by
current ratio of 1.82 times as on March 31, 2016 due to high
working capital borrowings and current portion of long-term debt
as on balance sheet date. The cash flow from operations turned
into negative at INR7.56 crore during FY16 due to blockage of
fund into inventories, which has also led to increase in the
inventory period to 245 days during FY16, which has resulted into
elongated working capital cycle stood at 174 days as against 101
days due to higher inventory days.
JBMPL was incorporated in July 2012 by Mr. Mukesh R. Thakur and
Mr. Rakesh R. Thakur and other accompanied directors. JBMPL
started commercial production in August 2013 with manufacturing
of steel billets which was later discontinued in June 2014. Since
June 2014 it has started manufacturing Thermo Mechanically
Treated (TMT) Bars. The company has its manufacturing facility
located at Valsad, Gujarat with an installed capacity of 65000
Metric Tonnes Per Annum (MTPA) for TMT Bars as on March 31, 2016.
JBMPL sells its product to the clients all across South Gujarat
and Maharashtra.
The company markets TMT bars under the brand name of 'Kamdhenu'
and for the same it has entered into retail license agreement
during April 2014 with Kamdhenu Ispat Ltd. to use its trademark
for the purpose of manufacture and trade of TMT bars for a period
of 3 years and pay royalty for the same.
As per the audited results for FY16, JBMPL reported profit after
tax (PAT) of INR0.07 crore on a total operating income (TOI) of
INR52.77 crore as against net loss of INR7.70 crore on a TOI of
INR59.16 crore during FY15 (A).
KUNSTWERK MACHINERY: CRISIL Assigns 'B' Rating to INR7MM Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the bank
facilities of Kunstwerk Machinery India Private Limited (KMPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Working
Capital Facility 7 CRISIL B/Stable
Cash Credit 2 CRISIL B/Stable
Export Packing Credit 1 CRISIL B/Stable
The ratings reflect a below-average financial risk profile,
marked by low net worth. The rating also factors working capital
intensive and modest scale of operations. These rating weaknesses
are partly offset by promoters' extensive industry experience.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile marked by low net worth:
The financial risk profile of the company is below average marked
by low net worth. The net worth is low at INR2.24 Cr as on March
31, 2016. Capital structure is also weak, with gearing of about
1.64 times and total outside liabilities to tangible networth
ratio of 2.92 times as on March 31, 2016. This is on account of
high reliance on bank debt and creditors to meet working capital
requirement.
* Working capital intensive operations:
Operations of KMPL is working capital intensive marked by gross
current assets of 166 days as on March 31, 2016. This is partly
offset by high credit period it receives from its creditors which
stood at 104 days as on the same date.
* Modest scale of operations
Scale is modest, with revenue of INR11 crore in fiscal 2016, due
to fragmented and intensely competitive nature of the industry.
Strength
* Extensive experience of promoters:
The company benefits from the extensive experience and expertise
of promoters.
Outlook: Stable
CRISIL believes KMPL will benefit over the medium term from the
promoters' extensive industry experience. The outlook may be
revised to 'Positive' if operating income and net cash accruals
improve, strengthening the financial risk profile. The outlook
may be revised to 'Negative' if revenue or working capital cycle
deteriorates, leading to deterioration in the financial risk
profile.
Incorporated in 2009, KMPL manufactures agro-based capital goods.
The operations are managed by Mr. Suraj Ramakrishnan.
KMPL made a profit of INR0.19 crore on revenue of INR11.37 Cr in
the fiscal 2016, against profit of INR0.05 crore on revenue of
INR5.49 crore in the fiscal 2015.
MIRAMBIKA AGRO: Ind-Ra Assigns 'B+' Long-Term Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Mirambika Agro
Industries (MAI) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable. The instrument-wise rating actions are:
-- INR60 mil. Fund-based facilities assigned IND B+/Stable/IND
A4 rating; and
-- INR4.56 mil. Long term loans assigned IND B+/ Stable rating
KEY RATING DRIVERS
The ratings reflect MAI's small scale of operations and weak
credit metrics. Revenue was INR308 million in FY16 (FY15: INR217
million). EBITDA interest coverage (operating EBITDA/gross
interest expense) was 1.3x in FY16 (FY15: 1.3x) and net financial
leverage (total adjusted net debt/operating EBITDA) was 6.5x
(5.5x). EBITDA margin remained volatile and fluctuated between
2.8% and 5.4% during FY14-FY16 on account of raw material price
volatility. The firm has booked revenue of INR210 million in
9MFY17 (unaudited).
The ratings factor in the firm's tight liquidity position with
the fund-based facilities being utilized at an average of 99.8%
over the 12 months ended December 2016.
The ratings, however, derive support from more than a decade of
experience of the promoter in the agro commodities manufacturing
and trading business.
RATING SENSITIVITIES
Positive: Significant increase in scale and profitability leading
to sustained improvement in credit metrics would be positive for
the rating.
Negative: A decline in the revenue and operating profitability
resulting in significant deterioration in the credit metrics will
be negative for the ratings.
COMPANY PROFILE
MAI was incorporated as a partnership firm by Mr. Manhardan
Gadhavi, Ms. Pravinaben Gadhavi and Mr. Pratapsang Gadhavi in
2012. The firm is engaged in processing of various agro
commodities such as rice, wheat, pulses etc. MAI realizes 100%
of revenue from the domestic market.
NUTAVE STONE: CRISIL Assigns 'B' Rating to INR4.96MM Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of Nutave Stone Crushers. The rating reflects the
exposure to risks associated with stabilisation of operations.
This rating weakness is partially offset by benefits from the
prudent funding mix for the project.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 4.96 CRISIL B/Stable
Cash Credit 0.75 CRISIL B/Stable
Proposed Long Term
Bank Loan Facility 0.29 CRISIL B/Stable
Key Rating Drivers & Detailed Description
Weakness
* Risks pertaining to stabilisation of the operations:
The company's operations are nascent as commercial operations for
stones crushing commenced only in October 2016, the firm remains
exposed to risks pertaining to stabilisation of its operations.
Strength
* Prudent funding mix for the project:
The initial capex of INR10.5 crore has been funded in debt:
equity ratio of 1:1. Hence, the capital structure is expected to
remain comfortable around 1 times in the medium term, despite
operations still being at a nascent stage.
Outlook: Stable
CRISIL believes NSC will continue to benefit from the funding
support received from the partners, and the comfortable capital
structure. The outlook may be revised to 'Positive' if earlier-
than-expected stabilisation of plant operations, leads to higher
cash flows. The outlook may be revised to 'Negative' if any delay
in ramp-up of operations, along with low capacity utilisation,
negatively impacts the cash flows.
NSC, incorporated as a partnership concern in 2015, has set up a
plant for crushing of stones, at Nutave village, Karnataka. The
plant, with a capacity of 300 tonnes per hour, has become
operational from October 2016.
PRECISION ENGINEERING: CRISIL Cuts Rating on INR6.5MM Loan to B-
----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Precision Engineering Components to 'CRISIL B-/Stable' from
'CRISIL B+/Stable/', and reaffirmed its rating on the short-term
facility at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .76 CRISIL A4 (Reaffirmed)
Bill Discounting .50 CRISIL A4 (Reaffirmed)
Cash Credit 6.50 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
Letter of Credit 1.20 CRISIL A4 (Reaffirmed)
Proposed Long Term 4.35 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B+/Stable')
Standby Line of 1.00 CRISIL B-/Stable (Downgraded
Credit from 'CRISIL B+/Stable')
The ratings' downgrade reflects expectations of continued
pressure on the business and liquidity profiles on account of
weak demand and a continued stretch in the working capital cycle.
Gross current assets (GCAs) remained high over six months as on
March 31, 2016, on account of sluggishness in inventory
procurement and payments by clients. Liquidity profile remained
stretched with fully utilised bank lines driven by the high
working capital requirements. A further stretch in the working
capital cycle could adversely impact liquidity and thus remains a
key rating sensitivity factor for the medium term. Revenue
declined 65% in fiscal 2016 driven by the low demand in end user
industries. The demand from end-user industries will determine
cash accrual generation and thereby the liquidity and hence will
be monitored closely.
The ratings continue to reflect the high working capital
requirements and stretched liquidity profile. These weaknesses
are offset by the moderate capital structure and extensive
experience of PEC's promoters in the fabrication industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Working-capital-intensive operations: Operations are working
capital intensive, as reflected in GCAs of 180 days as on
March 31, 2016, driven by large debtor and inventory levels. The
extended credit offered to customers results in high debtor days.
* Limited financial flexibility coupled with high bank limit
utilisation: The small networth and moderate gearing reflect weak
capital structure. This limits the firm's capability to raise
further debt to meet exigencies. Further, PEC has large working
capital requirements, funded through short-term bank borrowings.
Strength
* Extensive experience of promoters: The promoter, Mr. Ravi
Bhojwani, has extensive experience in the fabrication and
machined component industry. The promoter is involved in the
functional areas of the business. The extensive experience of
promoters has also resulted in established relationships with
customers, reflected in repeat orders from them.
Outlook: Stable
CRISIL believes PEC will continue to benefit from the extensive
industry experience of its promoters and established relationship
with key customer. The outlook may be revised to 'Positive' if
scale up in operations and efficient working capital management
improves liquidity. The outlook may be revised to 'Negative' if
stretch in working capital cycle or sizeable debt-funded capital
expenditure weakens liquidity.
PEC was set up in 1984 as a partnership firm by Mr. J H Bhojwani.
Later, his son, Mr. Ravi Bhojwani, joined the firm as a promoter-
partner. PEC manufactures machined components, including traction
systems, stator frames, plugs and sockets for oil rig controls,
contactors and relays for electric traction, and steam turbine
fasteners.
For fiscal 2016, PEC reported a net loss of INR1.8 crore on an
operating income of INR4.98 crore as against a PAT of INR0.16
crore on an operating income of INR14.93 crore the previous
fiscal.
QUADRA INFRATEL: CRISIL Reaffirms B Rating on INR5MM Cash Loan
--------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Quadra Infratel Synergies Private Limited at 'CRISIL
B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 3 CRISIL A4 (Reaffirmed)
Cash Credit 5 CRISIL B/Stable (Reaffirmed)
Business risk profile is expected to improve, with revenue
expected to grow at around 35% in fiscal 2017, backed by
outstanding order book of INR6.5 crore as on January 30, 2017.
Operating margin stood above average at 20.2% in fiscal 2016,
driven by bulk procurement of raw material, and is expected to
remain stable over the medium term.
Liquidity is constrained by full utilisation of bank limit, owing
to large working capital requirement. It is however supported by
adequate cash accrual against minimal debt repayment obligation
and funding support from promoters in the form of unsecured loans
(outstanding at INR1.69 crore as on March 31, 2016).
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the telecommunication (telecom)
tower civil and electrification work industry: Revenue of INR8.12
crore in fiscal 2016 reflects modest scale of operations. Despite
booking revenue of INR7 crore till December 2016 and having
orders worth INR6.5 crore to be executed till March 31, 2017,
scale is expected to remain modest over the medium term.
* Large working capital requirement: Gross current assets of 553
days as on March 31, 2016, driven by large debtors and inventory
of 192 days and 370 days, respectively, reflect working capital
intensity in operations. This scenario is likely to continue over
the medium term, thereby constraining financial flexibility.
* Below-average financial risk profile: High total outside
liabilities to tangible net worth ratio (13.72 times as on
March 31, 2016) along with weak debt protection metrics (interest
coverage and net cash accrual to total debt ratios were 1.36
times and 0.06 time, respectively for fiscal 2016) will keep
financial risk profile below average.
Strength
* Promoters' experience: The promoter, Mr. Girish Parashar, and
his sons have over a decades' experience in the civil and
electrification work of telecom towers. Moreover, orders in this
industry are not tender based, but driven by track record and
goodwill. Hence, QISPL comfortably gains repeat orders owing to
benefits derived from the promoters' expertise and strong market
position.
Outlook: Stable
CRISIL believes QISPL will continue to benefit over the medium
term from the promoters' experience. The outlook may be revised
to 'Positive' if financial risk profile, particularly liquidity,
is strengthened by substantial increase in cash accrual and
efficient working capital management. Conversely, the outlook may
be revised to 'Negative' if financial risk profile weakens owing
to large, debt-funded expansions, substantial decline in revenue
and profitability, or stretched working capital cycle.
QISPL, a Noida-based company is an EPC contractor for telecom
projects. The company provides services to telecom operators such
as site acquisition, civil construction, site electrification,
operations and management of telecom towers.
Profit after tax, on a standalone basis, was INR0.14 crore on net
sales of INR20.19 crore in fiscal 2016, vis-a vis loss of INR0.39
crore on net sales of INR19.56 crore in fiscal 2015.
RACHANA LIFE: CRISIL Upgrades Rating on INR30MM Term Loan to BB-
----------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Rachana Life Spaces to 'CRISIL BB-/Stable' from 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 30 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
The upgrade reflects limited exposure to risk related to
implementation of ongoing project, as reflected in the fact that
70% of the construction was already complete as on March 31,
2016. This was because of customer advances of INR29 crore, which
supported timely implementation of the project. Liquidity is also
backed by funding from promoters in the form of equity and
unsecured loans, which were INR8.06 crore as on March 31, 2016.
Incremental booking and timely inflow of customer advances, and
funding from promoters during exigency will remain key rating
sensitivity factors.
The rating reflects the extensive experience of RLS' promoters in
the real estate market in Pune, advantageous location of project,
and funding support from promoters. These strengths are partially
offset by exposure to demand risks related to ongoing project and
to cyclicality inherent in the Indian real estate sector.
Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of promoters and advantageous location of
project
The project, Bella Casa, is being constructed on the Pune-Mumbai
bypass highway that is located near the Hinjewadi IT Park, Pune,
that houses corporate offices of many renowned information
technology and financial services companies. Also, the promoters
have been in the real estate industry for nearly two decades.
* Funding from promoters: Equity and unsecured loans from
promoters were INR8.06 crore as on March 31, 2016.
Weaknesses
* Exposure to demand risks for ongoing project
Only 25% of the total booking was made till March 2016. Moreover,
receipt of customer advances is directly linked to completion of
different milestones in the construction process. Thus, any
deviation in implementation schedule can lead to significant time
or cost overrun.
* Vulnerability to risks and cyclicality inherent in the real
estate industry
The real estate sector is cyclical and characterised by sharp
movements in prices. Also, completion of real estate projects is
affected by multiple property laws and government regulations.
Outlook: Stable
CRISIL believes RLS will benefit over the medium term from the
strong track record of its promoters. The outlook may be revised
to 'Positive' if sizeable booking and customer advances result in
high cash inflow. The outlook may be revised to 'Negative' if
time and cost overruns in, or lower-than-expected sales from,
project; or significant support to group companies further
weakens liquidity.
Set up in 2010 as a partnership firm by Pune-based Mr. Vinay
Kalbhor and Mr. Nitin Bhanagay, RLS is currently undertaking
second phase of residential project, Bella Casa, on the Pune-
Mumbai bypass highway.
REALTRACK WIRE: CRISIL Cuts Rating on INR6.83MM Corp. Loan to D
---------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Realtrack Wire Industries Private Limited to 'CRISIL D/CRISIL D'
from 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.75 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 4.00 CRISIL D (Downgraded from
'CRISIL B/Stable')
Corporate Loan 6.83 CRISIL D (Downgraded from
'CRISIL B/Stable')
Inland/Import 1.50 CRISIL D (Downgraded from
Letter of Credit 'CRISIL B/Stable')
The downgrade reflects recent delays in servicing term loan
because of weak liquidity following modest cash accrual and large
working capital requirement.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in competitive industry: With a
turnover of Rs22.7 crore in fiscal 2016, scale remains small.
Operating margin too was average at 6.2% and has declined from
previous years.
* Weak financial risk profile: Networth was small at Rs3.33 crore
and gearing high at 7 times as on March 31, 2016, due sizeable
working capital debt. Also, operations are working capital-
intensive, with gross current assets of 149 days as on March 31,
2016. Furthermore, cash accrual has been less than Rs1.0 crore in
the two years through fiscal 2016 against large debt obligation.
Though promoters have extended funding support, low cash accrual,
large debt repayment, and incremental working capital requirement
will continue to constrain liquidity over the medium term.
Strength
* Extensive experience of promoters: Presence of over 16 years in
the steel wire industry has enabled the promoters to ramp up
operations in the past few years.
Incorporated in 2011 and promoted by Ahmedabad-based Mr. Tushar
Shah and Mr. Vipul Shah, RWIPL manufactures various types of
steel wires from wire rods. Commercial operations began from June
2013.
RWIPL's net loss was INR0.02 crore on operating income of INR22.7
crore for fiscal 2016, while profit after tax (PAT) was INR0.04
crore on operating income of INR14.7 crore for fiscal 2015.
SARASWATI EDUCATIONAL: Ind-Ra Affirms BB Rating on INR208MM Loan
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has taken these rating
actions on Saraswati Educational Charitable Trust's (SECT) bank
facilities:
-- INR208.4 mil. (reduced from INR230) Term loan, Union Bank to
mature on March 2022, affirmed with IND BB/Stable rating
-- INR149.8 mil. (reduced from INR150 mil.) Term loan, Union
Bank to mature on June 2022. affirmed with IND BB/Stable
Rating;
-- INR300 mil. Proposed term loan, Union Bank assigned
provisional IND BB/Stable rating; and
-- INR20 mil. Working capital facility, Union Bank assigned
IND BB/Stable rating
KEY RATING DRIVERS
The ratings continue to be constrained by SECT's tight liquidity
profile. Available funds (cash and unrestricted investments)
stood at INR2.99 million in FY16, with limited financial cushion
to operating expenditure (3.44%) and debt (0.66%). Ind-Ra
expects liquidity position to improve from the present level due
to rise in tuition fee income on the back of expanding scale of
operations. Debt burden (defined as debt/current balance before
interest and depreciation (CBBID)) increased to 4.07x in FY16
(FY15: 3.77x) as the trust is undertaking debt-led capex to
expand the current college facilities. Total debt surged to
INR473.62 million in FY16 from INR330.03 million in FY15.
However, debt/CBBID will improve gradually in the near-to-medium
term on the back of an expected improvement in CBBID and the
completion of debt-led capex plans. To fund its capex plan, the
trust has undertaken an INR300 million term loan, which is
expected to be sanctioned in FY17. It has no major capex plans
until FY21.
The trust also retired a certain portion of its debt as
prepayments (INR59.65 million) in FY16, resulting in weakening of
debt service coverage ratio to 0.71x. (FY15: 1.03x). Although
interest service coverage ratio declined to 2.82x in FY16 (FY15:
2.97x), but still remained at a moderate position of above 2x
level.
SECT continues to expand hospital operations with 410 beds in
FY16 from 100 beds in FY14 (commenced operations). The occupancy
rate was 50% in FY16.
Total student headcount was 181 in FY17, including 134 for the
medical college (started in FY17) and 47 for the aviation academy
(FY16: 30), thus functioning at 86.19% of its capacity. Ind-Ra
expects better enrolment numbers starting FY18 owing to its plan
of introducing PG courses, and new para medical and nursing
courses. The trust currently has no expansion plans for the
aviation academy.
SECT reported strong operating margins of 57.25% (FY15: 59.41%).
The operating income increased 38.17% yoy to INR203.02 million,
largely driven by a 55.67% yoy increase in hospital income to
INR153.98 million. Total core operating expenses increased to
INR86.79 million in FY16 (FY15: INR59.63 million) owing to an
increase in staff costs to INR39.27 million (INR18.89 million)
and operating expenses to INR47.53 million (INR40.74 million).
The rise in staff costs was due to the hiring of staff for the
medical college. Ind-Ra expects the trust's operating
performance to remain strong in the future on the back of rise in
headcount in the MBBS course and incoming hospital receipts.
RATING SENSITIVITIES
Positive: Strong operating performance and higher-than-expected
increase in the size of operations, coupled with an improvement
in the credit metrics and debt servicing ability could be
positive for the ratings.
Negative: Deteriorating financial profile resulting from a lower-
than-expected rise in the headcount and weakening demand
flexibility, coupled with a disproportionate increase in debt
could be negative for the ratings.
COMPANY PROFILE
SECT has colleges near Lucknow. It also has an aviation academy,
a medical college and a 410-bed hospital. The trust's aviation
academy is duly approved by the Directorate General of Civil
Aviation, Government of India. The trust has a fleet of six
aircrafts and a 1.8 km airstrip.
SECT's Saraswati Hospital and Research Centre is approved by the
state government and the Medical Council of India. The medical
college has an intake capacity of 150 students.
SHREE GURU RAGHAVENDRA: CARE Reaffirms B Rating on INR5.25cr Loan
-----------------------------------------------------------------
The rating assigned to the bank facilities of Shree Guru
Raghvendra Ginning and Pressing continues to be constrained by
its modest scale of operations, moderate profitability, moderate
solvency position and debt coverage indicators, working capital
intensive nature of operations with high inventory holding. The
rating further continues to be constrained due to susceptibility
of profitability margins to fluctuations in raw material prices,
seasonality associated with availability of cotton, presence of
entity in a highly fragmented and regulated industry with limited
value addition and limited financial flexibility owing to
partnership nature of constitution.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank
Facilities 5.25 CARE B; Stable Reaffirmed
The rating, however, continues to factor in the extensive
experience of the promoters through associate entities engaged
in similar line of business, long track record of operations of
firm and location advantage emanating from proximity to raw
material source.
The ability of the entity to increase its scale of operations,
improve solvency position and profitability margins admist
intense competition and efficient management of working capital
requirement are the key rating sensitivities.
Detailed description of the key rating drivers
SGRGP's scale of operations remained at modest level with
fluctuating total operating income and cash accruals during
last three years ending FY16. The PBILDT margin of the entity
stood low on account of high cost of raw materials and limited
value addition nature of business along with high degree of
competition and fragmentation. Further the same are susceptible
to fluctuation in raw material prices i.e; raw cotton as the
entity has to stock high level of inventory owing to seasonal
availability of the same along with changing regulation by
government for Minimum Support Price (MSP) and quota for exports.
Further with low tangible networth and high dependence on
external borrowings resulted in moderately leveraged capital
structure. However the entity benefits from it being located in
cotton producing belt of Marathwada (Maharashtra) resulting to
lower logistic expenditure and proximity to clients as well.
The entity is spearheaded by Mr. B.Moulali, Mr.K.Muralikrishna,
Mr.K.J Swaroop, Mr.B.Mallikarjun and Mr.Anil Kumar having
experience of over one and half decades in the industry.
Beed (Maharashtra) based, SGRGP, started with its commercial
production in the year 2013 as a partnership firm. The firm was
set up to undertake the business of cotton ginning and cotton oil
extraction. The manufacturing unit is located at Beed,
Maharashtra with an installed capacity of processing 81000 cotton
bales per annum as on March 31, 2016. SGRGP procures cotton from
Agricultural Produce Market Committee (APMC) and local farmers,
while the finished product i.e. cotton bales is sold to various
distributors located in and around Beed. The firm is also engaged
in the trading of cotton bales, cotton oil, cotton seeds, and
cotton seed cake. Sree Parimala Cotton Ginning and Pressing
Factory (SRCGPF), Laxmi Venkatesh Ginning and Pressing Factory
(LVGPF), the associate concerns of SGRCGP, are engaged in the
same business as SGRGP.
In FY16 (refers to a period from April 1 to March 31), the entity
registered a total operating income of INR8.87 crore and profit
after tax of INR0.12 crore.
SHRI GURU: CARE Reaffirms B+ Rating on INR20cr Long Term Loan
-------------------------------------------------------------
The rating of Shri Guru Gorakhnath Rice Mills continues to be
constrained by modest scale of operations, weak financial risk
profile marked by low profitability margins, leveraged capital
structure and weak coverage indicators. The rating is further
constrained by its elongated operating cycle, constitution of the
entity as partnership firm, susceptibility to fluctuation in raw
material prices and its presence in a highly competitive and
fragmented agro-processing.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 20 CARE B+; Stable Suspension
Facilities revoked and rating reaffirmed
However, the rating continues to derive strength from experience
of the partners in the rice milling segment and long track record
of partners in the rice business along with the proximity of the
location of the milling plant of firm to paddy growing areas.
Going forward, SGGNRM's ability to profitably scale-up its
operations while improving its capital structure along with
effective working capital management would be the key rating
sensitivities.
Detailed description of the key rating drivers
SGGNRM has been founded by Mr. Bankey Lal Goel, one of the
managing partner of the firm, and has extensive experience of
over two decades of operating the rice milling business. The
other partners in the firm, Mr. Brijesh Kumar and Ms. Pushpa
Rani, are also experienced in business. SGGNRM plant's proximity
to the paddy-growing areas of the country results in benefits
derived from a lower logistic expenditure (both on transportation
and storage), easy availability and procurement of raw materials
at effective prices.
The financial risk profile of the firm is characterized by
moderate scale of operation, low profitability and weak debt
service coverage indicators. The decline in the total income of
the firm over the last two years is on account of weak global
demand and decline in basmati rice prices. The decline in sales
realization along with increase in partner's remuneration led to
decline in operating profit margin over last two years. With
decline in scale of operations, the working capital borrowings
declined leading to improvement in overall gearing at the end of
FY16 (refers to the period April 1 to March 31). However, it
remains to be high. With low profitability in the last two years,
the coverage indicators weakened with decline in interest
coverage ratio and high total debt to gross cash accruals as at
the end of FY16.
The commodity nature of the product makes the industry highly
fragmented, with numerous players operating in the unorganized
sector with very less product differentiation. For retain the
volumes, the firm has to offer high credit period to its clients.
The high collection period and moderate inventory days led to
elongated total operating cycle of 142 days during FY16.
The rice processing sector as a whole is vastly regulated by the
GoI and any adverse changes in the regulatory framework could
negatively impact rice processing units. Also, the firm remains
susceptible to changes in import policies of various countries.
Shri Guru Gorakh Nath Rice Mills was established in 1990 as a
partnership firm. The firm has three partners, Ms. Pushpa Devi,
Mr Brijesh Kumar and Mr Bankey Lal, with profit and loss sharing
ratio of 1:2:2. Mr Bankey Lal looks after the overall operations
of the firm and is the managing partner of the firm.
The firm is primarily engaged in milling and processing of
basmati rice at its sole processing facility situated at Dadri,
Uttar Pradesh, which has a processing capacity of 8 metric tons
per hour (MTPH) of paddy as on March 31, 2016. The firm sells its
products under the brand name 'Pankhi' and 'Ten Star' in the
domestic market and exports its products to Middle East, Europe
and US markets. The major exports of firm are in Europe;
Switzerland (about 70%) and in US markets (about 10-15%).
SHRI LAXMI: CARE Assigns B+ Rating to INR7.64cr LT Loan
-------------------------------------------------------
The rating assigned to the bank facilities of Shri Laxmi Narayan
Real Ispat Pvt Ltd is primarily constrained by its small scale of
operation with low profitability margin, lack of backward
integration vis-a-vis volatility in raw material prices, highly
competitive and fragmented industry and working capital intensive
nature of operation. The rating, however, derives strength from
its experienced promoter and proximity to raw material sources.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.64 CARE B+; Stable Assigned
Going forward, the ability of the company to improve its scale of
operations along with profitability margins and efficient
management of working capital are the key rating sensitivities.
Detailed description of the key rating drivers
SLNRI is a small player in the steel industry mostly dominated by
large, mid-sized players with small scale of operation having a
total operating income of INR42.22 crore and a PAT of INR0.26
crore in FY16 (refers to the period April 1 to March 31).
Furthermore, the total capital employed was also low at INR11.61
crore as on March 31, 2016. [Furthermore, during 9MFY17 the
company has earned a total operating income of INR35.90 crore as
per the management. The profitability margins, marked by PBILDT
margin and PAT margin, also remained low throughout the period
and the same was 2.46% and 0.61% respectively during FY16.
SLNRI does not have any backward integration for its basic raw
material (like ingots, billets, scrap etc.) and is required to
purchase the same from the open market.
The spectrum of the steel industry in which the company operates
is highly fragmented and competitive marked by the presence of
numerous players in northern and eastern India. Hence, the
players in the industry do not have pricing power and are exposed
to competition induced pressures on profitability.
SLNRI's business, being manufacturing of Ms. channels and angles,
is working capital intensive marked by high utilization of its
bank borrowing around 90% during the last 12 months ended on
December 2016 The company is managed by Mr Daya Lal Patel,
director, with the help of other director Mr Ratanshi Bhai Patel.
The directors are having around two decades of experience in the
iron and steel industry.
SLNRI plant is located at Raipur in Chhattisgarh, which is in
proximity to the steel and mining areas of Odisha, West Bengal
and Jharkhand. Hence, its presence in the steel and mining region
results in benefits derived from a lower logistic expenditure
(both on transportation and storage), easy availability and
procurement of raw materials at effective prices.
Shri Laxmi Narayan Real Ispat Pvt Ltd. was incorporated during
January 2010 by one Daya Lal Patel and Ratanshi Bhai Patel of
Raipur to initiate an iron and steel product manufacturing
business. The company setup its manufacturing facility at Tendua
in Raipur with an installed capacity of 25,000 MTPA.
During FY16, the company reported a total operating income of
INR42.22 crore (FY15: INR59.46 crore) and PAT of INR0.26 crore
(in FY15: INR0.22 crore). GCA during FY16 was of INR0.43 crore
(in FY15: INR62 crore). The company has earned INR35.90 crore
during 9MFY17.
SOLAR PRINT: Ind-Ra Affirms 'BB' Long-Term Issuer Rating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Solar Print
Process Private Limited's (SPPPL) Long-Term Issuer Rating at
'IND BB'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR29.9 mil. (increased from INR16.9) Term loan affirmed
with 'IND BB'/Stable rating;
-- INR18.6 mil. (increased from INR10) Line of credit (term
loan) affirmed with 'IND BB'/Stable rating;
-- INR5 mil. (decreased from INR6.7) Letter of guarantee
affirmed with 'IND BB'/Stable/ 'IND A4+' rating
KEY RATING DRIVERS
The affirmation reflects continued small scale of operations and
moderate to weak credit metrics. In FY16, SPPPL's revenue was
INR380.88 million (FY15: INR380.21 million), gross interest
coverage (operating EBITDA/gross interest expense) was 1.30x
(1.41x) and net financial leverage (total adjusted net
debt/operating EBITDAR) was 6.47x (6.57x).
The ratings, however, continue to be supported by over three
decades of experience of SPPPL's founders in the print services
industry, the company's long operational history and satisfactory
EBITDA margins. In FY16 SPPPL's EBITDA margin was 10.98% (FY15:
10.62%). The ratings are further supported by SPPPL's
comfortable liquidity position as reflected in its 83.12% average
use of working capital limits over the 12 months ended December
2016.
RATING SENSITIVITIES
Negative: Deterioration of the EBITDA margins leading to weaker
credit metrics could be negative for the ratings.
Positive: A significant improvement in the revenue along with
improvement in the credit metrics could be positive for the
ratings.
COMPANY PROFILE
SPPPL was incorporated in 1983 and provides an entire range of
print services, using state of the art technology and solutions
from industry leaders. It has its works and registered office in
New Delhi.
SOMESWARA ENTERPRISES: CRISIL Assigns B Rating to INR10MM Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Someswara Enterprises.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Warehouse Receipts 10 CRISIL B/Stable
The rating reflects the firm's modest scale of, and working
capital-intensive, operations and below-average financial risk
profile. These weaknesses are partially offset by the extensive
experience of proprietor and longstanding relationship with
customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of INR27.14 crore in
fiscal 2016, scale remains small, leading to weak profitability.
* Large working capital requirement: Gross current assets were
107 days as on March 31, 2016, because of large inventory and
stretched receivables.
Strength
* Extensive experience of proprietor: The proprietor has been in
the trading business for over two decades, resulting in
established relationship with a wide clientele.
Outlook: Stable
CRISIL believes SE will benefit over the medium term from the
extensive experience of its proprietor. The outlook may be
revised to 'Positive' if significant improvement in capital
structure, revenue, and operating margin lead to a better
financial risk profile. The outlook may be revised to 'Negative'
if profitability weakens further due to increased competition, or
if working capital management deteriorates.
Established in 2015 as a proprietorship firm by Mr. K Someswara
Rao, SE trades in several products such as jute bags, wastepaper,
and pulses.
For 2015-16 (refers to financial year, April 1 to March 31), SE
reported net profit of INR0.05 Crore on total revenue of INR27.14
Crore, against net profit of INR0.01 Crore on total revenue of
INR3.69 Crore for 2014-15.
SUPER TECH: CRISIL Upgrades Rating on INR6.5MM Loan From B+
-----------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of Super
Tech Laces Tirupur Private Limited to 'CRISIL BB-/Stable/CRISIL
A4+' from 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
Letter Of Guarantee 1.5 CRISIL A4+ (Upgraded from
'CRISIL A4')
Rupee Term Loan 6.5 CRISIL BB-/Stable (Upgraded
from 'CRISIL B+/Stable')
The upgrade reflects CRISIL's expectation that STLPL's revenue
growth will continue over the medium term, backed by steady
increase in volumes post completion of its capital expansion
(capex) in fiscal 2016. Additional benefits of the capital
expansion are likely to be seen over the medium term, on
operating efficiency with reduction in wastage and cost of power.
STPLP already reported improvement in operating margins to 15.5
percent in fiscal 2016, from 11.5 percent in fiscal 2015. Higher
profits and improvement in cash accretions to result in
efficiency in operating cycle in the next three years.
Key Rating Drivers & Detailed Description
Strengths
* Promoters' extensive experience in the embroidery industry: The
promoters have over 15 years of experience in this business and
have established a sound relationship with customers and
suppliers.
* Average financial risk profile: Gearing was 1.3 times as on
March 31, 2016, and debt protection metrics were adequate in
fiscal 2016. Despite additional borrowing in fiscal 2017, these
metrics are likely to remain adequate over the medium term.
Weaknesses
* Modest scale of operations: STLPL has modest scale of
operations marked by modest revenues of INR24.81 Cr for fiscal
2016
* Susceptibility of margins to fluctuations in raw material
prices: The margins are likely to remain impacted by any
fluctuation in raw material prices. Furthermore, bargaining power
with customers is low.
Outlook: Stable
CRISIL believes STLTPL will continue to benefit from the
extensive industry experience of its promoters. The outlook may
be revised to 'Positive' n case of an improvement in scale of
operations, while profitability is maintained. The outlook may be
revised to 'Negative' if there is a decline in revenue or
profitability, leading to lower-than-expected cash accrual, or a
stretched working capital cycle, resulting in deterioration in
the financial risk profile, especially liquidity.
STLTPL, based in Tirupur, Tamil Nadu, was established in 1996 as
a proprietary concern by Mr. Arvind Kumar Singh; the firm was
reconstituted as a private limited company in 2006. It
manufactures and trades in a variety of laces, including crochet,
cambric, lycra, cotton laces, and others.
STLPL's profit after tax (PAT) of INR0.39 crore on net sales of
INR24.81 crore for fiscal 2016, vis-a-vis INR0.73 crore and
INR22.89 crore, respectively, for fiscal 2015.
SUPERIOR INDUSTRIES: Ind-Ra Assigns 'BB' Long-Term Issuer Rating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Superior
Industries Limited (SIL) a Long-Term Issuer Rating of 'IND BB'.
The Outlook is Stable. The instrument-wise rating actions are.
-- INR325 mil. Fund-based limits assigned IND BB/Stable/IND A4+
Rating
KEY RATING DRIVERS
The rating reflects SIL's small scale of operations, moderate
credit profile, and volatile EBITDA margins, due to raw material
price volatility and its presence in a highly fragmented and
competitive industry. Revenue was INR769.40 million in FY16
(FY15: INR543.17 million), net leverage (Ind-Ra adjusted net
debt/operating EBITDAR) was 4.39x (15.01x), interest cover
(operating EBITDA/gross interest expense) was 1.77x (1.55x) and
EBITDA margins were 12.43% (6.2%). EBITDA margins fluctuated
between 5.97% to 12.43% over FY13-FY16.
However, the ratings are supported by SIL's promoters' experience
of over 20 years in the alcohol manufacturing business. The
ratings are further supported by the company's strong
relationships with customers and suppliers. The ratings factor in
SIL's satisfactory liquidity as evident from its 57.86% average
utilisation of the working capital limits for the 12 months ended
January 2017.
RATING SENSITIVITIES
Negative: Pressure on the operating profit margins and/or any
unexpected debt-led capex leading to deterioration in the credit
metrics could be negative for the ratings.
Positive: An improvement in operating profit margins leading to
an improvement in the overall credit metrics will be positive for
the ratings.
COMPANY PROFILE
SIL was established in 1998 and manufactures alcohol. It has a 3
million cases per annum beer production facility, 40,000 litres
per day rectified spirits manufacturing facility and a 25,000
liters per day ethanol production facility, located in Faridabad
(Haryana) and Bareilly (Uttar Pradesh). It manufactures products
under the brand names Superior Lite, Superior 50000 & John's
Berg.
TULIPS AMBBIENCE: CRISIL Cuts Rating on INR4.20MM Term Loan to D
----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Tulips Ambbience Private Limited to 'CRISIL D/CRISIL D' from
'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.5 CRISIL D (Downgraded
from 'CRISIL B/Stable')
Letter of Credit 0.30 CRISIL D (Downgraded
from 'CRISIL A4')
Term Loan 4.20 CRISIL D (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects delays in servicing the term loan. The
delays were caused by weak liquidity due to a sluggish operating
performance over the 12 months through December 2016. Operating
profitability declined substantially in fiscal 2016 due to an
increase in fixed costs following the setting up of a new
showroom at Delhi and a slow ramp-up in sales. The profitability
will remain suppressed over the medium term amid stagnant
revenue, thus adversely impacting cash accrual and thereby debt
servicing ability.
Key Rating Drivers & Detailed Description
Weaknesses
* Subdued financial risk profile: The networth was negative as on
March 31, 2016, leading to a weak capital structure. Low
profitability has also resulted in a low interest coverage ratio
of 0.7 time in fiscal 2016. The financial risk profile is
expected to remain subdued over the medium term.
* Modest scale of operations in the fragmented soft-furnishing
industry: Revenue was INR12.0 crore in fiscal 2016, and is
expected to remain modest due to the high degree of fragmentation
in the industry.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of nearly two decades in the soft furnishing
business. Benefits from this experience will continue to support
the business risk profile.
Incorporated in 2001, TAPL is promoted by Mrs Raajkumarri Mutha,
who has been in this line of business for over two decades. The
company designs and manufactures customised soft furnishings for
retail and corporate clients. It has a workshop in Pune and
showrooms in Pune, Bengaluru, and Delhi.
In fiscal 2016, net loss was INR1.16 crore on sales of INR12.5
crore, against net loss of INR1.5 crore on sales of INR12.3 crore
in fiscal 2015.
UTTAM CHAND: CRISIL Ups Rating on INR8MM Cash Loan to B+
--------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Uttam Chand Rakesh Kumar to 'CRISIL B+/Stable' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 8 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects CRISIL's belief of steady improvement in
liquidity, supported by sustenance of the efficient working
capital management, reflected in gross current assets of around
43 days as on March 31, 2016, steady cash accrual and need-based
funding support from partners by way of unsecured loans from time
to time. The working capital utilisation, currently at 100%,
should come down post enhancement in bank lines expected in the
next couple of months. Revenue will grow at around 20% in the
near term, backed by substantial increase in sales volume and
better prices.
Analytical Approach
For arriving at the rating, CRISIL has treated unsecured loans
(INR4.86 crore outstanding as on March 31, 2016) extended to UCRK
by its partners as neither debt nor equity in calculating the
financial ratios. This is because these loans are subordinated to
bank debt and are expected to remain in the business over the
medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Financial risk profile is
below average due to weak debt protection metrics marked by
interest coverage ratio of 1.19 times in fiscal 2016. The ratio
is expected to remain weak at 1.20 times over the medium term due
to continued low operating margin and sizeable working capital
debt.
* Moderate scale of operations in intensely competitive industry,
leading to low operating profitability: Although, scale of
operations improved to INR299.47 crore in fiscal 2016 from
INR258.08 crore in fiscal 2015, it continues to remain moderate.
Moderate scale is reflected in low operating margin of less than
1% over the four years ended March 31, 2016.
Strengths
* Extensive experience of promoters in the industry: UCRK was set
up in 2008 by Mr. Rakesh Bhatia and family. The Bhatia family has
been trading dry fruits for over seven decades. Benefits from
their extensive experience and strong relations with customers
and suppliers will support business growth in the near to medium
term.
* Efficient working capital management: Gross current assets
(GCAs) were 43 days as on March 31, 2016, driven by inventory and
receivables of 26 days and 8 days, respectively. Moreover, GCAs
remained low at 30-45 days over the three years ended March 31,
2016. The business risk profile will remain supported by
efficient working capital management, but will remain a rating
sensitivity factor over the medium term.
Outlook: Stable
CRISIL believes UCRK will benefit from the promoters' experience
over the medium term. The outlook may be revised to 'Positive' if
the financial risk profile improves with higher-than-expected
cash accrual, driven by substantial increase in profitability.
Conversely, the outlook may be revised to 'Negative' if financial
risk profile weakens because of low profitability or revenue,
stretched working capital cycle, or any large, debt-funded
capital expenditure programme.
UCRK, set up in 2008, trades in dry fruits such as almonds and
pistachios. The operations are managed by Mr. Rakesh Bhatia and
his son, Mr. Akshay Bhatia. Its registered office is in Delhi.
Profit after tax was INR0.22 crore on net sales of INR299.47
crore in fiscal 2016, vis-a-vis INR0.17 crore and INR258.08
crore, respectively, in fiscal 2015.
VENKATADRI SPINNING: CRISIL Ups Rating on INR8.82MM Loan to C
-------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities Venkatadri
Spinning Mills Private Limited to 'CRISIL C/CRISIL A4' from
'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.18 CRISIL A4 (Upgraded
from 'CRISIL D')
Overdraft 4.00 CRISIL C (Upgraded
from 'CRISIL D')
Term Loan 8.82 CRISIL C (Upgraded
from 'CRISIL D')
The upgrade reflects timely servicing of debt over the three
months through January 2016. The upgrade also factors in CRISIL's
belief that the company will continue to meet its debt obligation
in a timely manner, backed by sustained need-based fund support
from the promoters.
VSMPL also has a below-average financial risk profile marked by
small net worth, high gearing, and weak debt protection metrics
and large working capital requirements. The rating also factors
in the company's small scale of operations in the intensely
competitive cotton yarn industry, and the susceptibility of its
profitability margins to volatility in cotton prices. These
rating weaknesses are partially offset by the extensive
experience of VSMPL's promoters in the textile industry, and its
established relationship with customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations in the intensely competitive cotton
yarn industry
VSMPL had commenced commercial operations in August 2011 and had
generated revenue of INR22.38 crores during 2015-16, underpinning
its small scale of operations in the fragmented cotton yarn
industry.
* Susceptibility to volatility in cotton prices
Operating margin of cotton yarn manufacturers are susceptible to
changes in cotton prices. Apart from demand and supply factors,
cotton prices are also influenced by government policies. Cotton
is the major raw material accounting for more than 65 percent of
the company's production cost. Cotton prices have been highly
volatile in the past and are expected to remain so, thereby
exposing the company to price risk.
* Below-average financial risk profile
The financial risk profile has small networth, high gearing and
below-average debt protection metrics. The networth is small at
INR4.51 crores as on March 31, 2016, due to low initial paid-up
capital and limited accretion to reserves; the latter is a result
of small scale of operations and modest profitability margin. The
company has followed an aggressive financial policy, with its
peak gearing over the past three years through 2015-16 being high
at 3.2 times.
Strength
* Promoters' extensive experience in the textile industry, and
established relationship with customers
The promoters have over 15 years industry experience and have
established healthy relationship with customers. The bulk of the
revenue is derived through supply of cotton yarn and hence there
are established relations with dealers who have provided
sufficient demand for the products. VSMPL has generated revenue
of around INR22.38 crores during 2015-16.
VSMPL was set up in 2009, as a private limited company, by Mr.
Srimannarayana and Mr. Hanumantha Rao. The company manufactures
cotton yarn; its spinning mill is in Rajahmundry (Andhra
Pradesh).
VSMPL reported a profit after tax (PAT) of INR7 lakhs on net
sales of INR22.38 crores for 2015-16 (refers to financial year,
April 1 to March 31), as against a PAT of INR0.7 lakhs on net
sales of INR21.03 crores for 2014-15.
VNM JEWEL: Ind-Ra Assigns 'B' Long-Term Issuer Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned VNM Jewel Crafts
Limited (VNMJC) a Long-Term Issuer Rating of 'IND B'. The
Outlook is Stable. Instrument-wise rating action is:
-- INR50 mil. Fund-based working capital assigned
IND B/Stable/IND A4 rating
KEY RATING DRIVERS
The ratings reflect VNMJC's moderate scale of operations and
modest credit metrics. Revenue plunged to INR312 million in FY16
(FY15: INR678 million) mainly on the back of a decline in sale of
gold coins (FY16: INR162.45 million, FY15 INR465.33 million) and
lower sales from own retail outlet (INR60 million, INR320
million), resulting from an unfavorable domestic market demand.
EBITDA margins were low but improved to 2.02% in FY16
(FY15:0.42%) and remained in the range of 1.5%-2.1% over the last
four years due to raw material price volatility, and its presence
in a highly fragmented and competitive industry. However,
interest cover increased to 1.6x in FY16 (FY15: 0.8x) and
leverage improved to 4.9x (FY15: 7.4x) on the back of improving
profitability.
The company indicated revenue of INR250 million in 8MFY17 and has
an order book of INR1 million, which will be executed by the
third week of February 2017.
VNMJC had a tight liquidity position as reflected by almost full
utilization of fund-based working capital facilities for the 12
months ended November 2016.
However, the ratings draw support from the promoters' combined
experience of more than five decades in the similar line of
business.
RATING SENSITIVITIES
Positive: A substantial growth in the top line and improvement in
the profitability margins leading to a sustained improvement in
the credit metrics could be positive for the ratings.
Negative: A substantial decline in the top line or profitability,
leading to deterioration in the overall credit metrics could be
negative for the ratings.
COMPANY PROFILE
Incorporated in 1890, VNMJC is a Kerala-based manufacturer and
distributor of gold jewellery, gold medallions, gold coins/bar,
and silver jewellery. The company also sells through its own
retail outlet, situated in Kochi.
Z V STEELS: ICRA Reaffirms B+ Rating on INR18cr Loan
----------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ and the
short-term rating of [ICRA]A4 assigned to the INR18.00 crore1
bank facilities of Z V Steels Private Limited. The outlook
assigned on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limit 18.00 [ICRA]B+ (Stable)/Re-affirmed
Non-Fund Based Limit 10.00 [ICRA]A4 / Re-affirmed
Rationale
The ratings re-affirmation continues to remain constrained by the
thin profitability of the company, following the low value-added
nature of the trading business. The highly fragmented nature of
the steel trading business, characterised by stiff competition
also exerts pricing pressures on ZVSPL. The capital structure
continues to remain leveraged with a gearing of 6.78 times as on
March 31, 2016. However, ICRA notes that 21% of the total debt as
on March 31, 2016 comprised unsecured loans from directors. The
ratings are further constrained by the firm's exposure to price
risks and demand cyclicality inherent in the steel business.
The ratings, however, continues to factor in the extensive
experience of the promoters in the steel industry, along with
ZVSPL's diversified customer base.
Key rating drivers
Credit Strengths
* Extensive experience of management in the steel trading
business;
* Diversified customer base.
Credit Weakness
* Operations exposed to inherent cyclicality in steel industry;
* Low profitability and coverage indicators due to trading
nature of business;
* Leveraged capital structure with a gearing of 6.78 times, as
on March 31, 2016; however, 21% of the total debt as on
March 31, 2016 comprised unsecured loans from directors;
* Industry characterised by severe competition from a large
number of players in the unorganised as well as organised
sectors.
Sensitivities
* Vulnerability of profitability to fluctuations in steel
prices, given the minimum monthly off-take requirements
as per the dealership terms;
* Capital infusion to pare debt, leading to improvement in
capital structure;
* Ability to scale up operations and maintain adequate margins.
Description of key rating drivers highlighted:
Z V Steels Private Limited is an authorised distributor for JSW
Steel Limited and its products form majority of its supplies. For
its authorised sales, the company signs agreement with JSW Steel
Limited each year for a certain quantity, on achievement of which
it receives royalty in the form of commission. As the company is
required to procure a certain minimum quantity of steel from its
suppliers in a month, it results in moderate inventory levels and
exposes it to risks of price volatility, given the cyclicality
inherent in steel prices.
The total debt as on March 31, 2016 increased to INR38.02 crore
from INR28.11 crore as on March 31, 2016, due to the increase in
unsecured loans and working capital borrowings, with the addition
of channel finance facility for JSW Steels. This led to
deterioration in capital structure with gearing increasing to
6.78 times as on March 31, 2016 from 5.62 times as on March 31,
2015. The increase in debt, coupled with a decrease in
profitability has led to weakening of coverage indicators.
The steel trading industry is fragmented and is characterised by
severe competition. ZVSPL faces intense competition from a large
number of organised and unorganised players, which restricts its
pricing flexibility. However, the firm's established track record
of operations and association with reputed companies for
procurement of traded goods gives it an edge over its
competitors.
ICRA expects the company's revenues to improve by 5-7% in FY2017
over FY2016, supported by the gradual improvement in domestic
steel prices in the current fiscal. The company's profitability
would remain pressurised due to the intense competitive pressure
in the industry.
Going forward, the company's ability to increase its scale of
operations, while sustaining its profit margins and managing its
working capital requirements, would remain the key rating
sensitivities. Its ability to infuse funds to trim debt and
improve the capital structure will also remain the other credit
rating sensitivity.
For arriving at the ratings ICRA has considered the standalone
financial performance of Z V Steels Private Limited, along with
recent operational developments. The company does not have any
subsidiary and operates as a standalone entity.
Z V Steels Private Limited was incorporated in August 1997 as a
private limited company named Z V Steel Trader Private Limited.
Later in November 1997, it was renamed as Z.V. Steels Private
Limited. The company trades in flat steel products, namely cold
rolled close annealed (CRCA), galvanized plain (GP), hot rolled
(HR), cold rolled (CR) sheets/coils. ZVSPL is an authorised
distributor of JSW Steel Limited and its products constituted
around 80% of the total procurement in FY2016. The company has
its registered office in Mumbai and its warehouse facility is
located in Navi Mumbai.
ZVSPL recorded a profit after tax of INR0.61 crore on an
operating income of INR198.96 crore for the year ending March 31,
2016 and a profit before tax of INR0.65 crore on an operating
income of INR108.04 crore for the seven months ending October 31,
2016 (provisional numbers).
ZIPPY EDIBLE: ICRA Assigns B+ Rating to INR14cr Term Loan
---------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B+ to the INR16
crores of fund based limits of Zippy Edible Products Private
Limited. The outlook on the long term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits-
Term Loan 14.00 [ICRA]B+(Stable); assigned
Fund Based Limits-
Cash Credit 2.00 [ICRA]B+Stable); assigned
Rationale
The assigned rating factors in the limited track record of
operations with operating income of INR14.57 crore in FY16 and
capacity utilisation of 55%. The rating is also constrained by
weak financial profile characterised by low return indicators and
aggressive gearing in FY2016. The rating also takes into account
the increase in the total debt of the company from INR12.01 crore
in FY16 to INR19.74 crore (as per the provisional numbers) in
FY17 on account of debt funded capex being undertaken by the
company during the current fiscal for adding manufacturing
capacity of potato pallets and expansion of pasta manufacturing.
The rating is also constrained by the operations being dependent
on agricultural commodities which expose the company to the risks
of agro-climatic conditions along with the limited industry size
of present instant noodles segment with organized sector
dominating higher market share.
The rating however, favorably factors in the healthy demand
prospects for ZEPPL's products and locational advantages for the
company in terms of proximity to raw materials supplies with many
wheat mills located in the vicinity. Going forward, the ability
of the company to achieve higher capacity utilisation and
maintain margins as well as efficiently manage its working
capital requirements would be the key rating sensitivities.
Key rating drivers
Credit Strengths
* Location advantage by way of proximity to raw material
supplies with wheat mills located in the vicinity
* Steady demand prospects for instant noodles segment owing
to changing lifestyle and increase in consumptions of ready
to eat meals
Credit Weakness
* Limited track record of operations with operating income of
INR14.57 crore in FY16
* Capital structure constrained by primarily debt funded nature
of project with total term debt of INR15.07 crore as on
January 2017 (as per the provisional numbers)
* Weak financial profile characterised by aggressive gearing
in FY2016 which is further projected to increase in the
current fiscal on account of the capex incurred by the company
in FY17.
* Operations being dependent on agricultural commodities,
exposes the company to the risks of agro-climatic conditions
* High competitive intensity having presence of established
players like Bambino, Nestle, ITC
Description of key rating drivers highlighted:
The company is located in Jaspur, Uttarakhand which has many
wheat processing mills in vicinity. The main raw material
required by the company Semolina (commonly known as Suji) which
is derived by modern milling of wheat into flour. The commercial
production commenced from April, 2015 onwards; hence, FY2016 was
the first full year of operation for the company. The total
installed capacity to produce pasta and Vermicelli is 7920 MTPA.
During the first year of operation, the capacity utilization
remained moderate at 55%. The company sells its products directly
in the local markets in Uttar Pradesh, Uttrakhand and Delhi under
its brands "Digraono" and "Dilizia".
The Company is planning to set up a new plant right next to the
existing plant. The product profile of the new plant will include
potato pallets and pasta. The total installed capacity will be
10,200 MTPA. The raw material required will be semolina and
potato scratch and flakes. The total estimated project cost is
estimated to be INR13.53 crore which will be funded through
INR8.80 crore of term loans; share capital of INR3.85 crore and
promoters support of INR0.88 crore. The trial runs would commence
from March 2017 and commercial production will commence from
April 2017.
As per the audited financials for FY16, the company recorded net
profit of INR0.10 crore on operating income of INR14.57 crore.
Zippy Edible Products Private Limited (ZEPP) was incorporated in
August 2013 and is engaged in the manufacturing of pasta and
Vermicelli in the category of Instant Noodles. The commercial
production commenced from April 2015. The unit is located in
Jaspur in Uttarakhand and has a total production capacity of
7,920 Metric Tons Per Annum.
The Company is planning to set up a new plant; the building will
be constructed on the same land premise as the current plant
which is on lease. The product profile of the new plant will
include potato pallets and pasta. The total installed capacity
will be 10,200 MTPA and the plant is scheduled to commence
operations from April, 2017.
=================
I N D O N E S I A
=================
BANK DANAMON: Moody's Affirms BCA at ba1; Revises Outlook to Pos.
-----------------------------------------------------------------
Moody's Investors Service has affirmed the Baa3 deposit and,
where applicable, issuer and senior unsecured debt ratings of 10
banks in Indonesia (Baa3 positive).
At the same time, Moody's has revised the outlooks for the
ratings of eight banks to positive from stable. The affected
banks are: (1) Bank Mandiri (P.T.); (2) Bank Rakyat Indonesia
(P.T.) (BRI); (3) Bank Central Asia Tbk (P.T.); (4) Bank Negara
Indonesia TBK (P.T.) (BNI); (5) PT Bank CIMB Niaga Tbk; (6) Bank
Tabugan Negara (P.T.) (BTN); (7) Bank Danamon Indonesia TBK
(P.T.); and (8) Lembaga Pembiayaan Ekspor Indonesia (Indonesia
Eximbank).
The rating outlooks for two other banks are maintained: Pan
Indonesia Bank TBK (P.T.)'s (Panin) rating outlook remains stable
and Bank Permata TBK (P.T.)'s rating outlook remains negative.
The rating actions follow the affirmation of Indonesia's Baa3
sovereign rating, and the change in the outlook for Indonesia's
rating to positive from stable on 8 February 2017.
In addition, the P-3 short-term deposit ratings, baseline credit
assessments (BCAs), Adjusted BCAs and counterparty risk (CR)
assessments assigned to the banks were affirmed.
RATINGS RATIONALE
The rating actions on the 10 Indonesian banks are driven by
Moody's revision of the outlook on Indonesia's Baa3 sovereign
rating to positive from stable.
The key drivers of the revision to Indonesia's sovereign outlook
are emerging signs of a reduction in structural constraints on
Indonesia's rating, including its level of external vulnerability
and the strength of its institutions:
1) Indonesia's vulnerability to external shocks is declining
somewhat and is expected to continue to do so, as a result of
measures fostering narrower current account deficits, higher
foreign exchange reserves, and a slower rise in private sector
external debt; and
2) Indonesia's lengthening track record of macroeconomic
stability and fiscal discipline, together with its measured but
ongoing progress on structural economic, fiscal and regulatory
reforms, suggest that policy effectiveness is improving.
Indonesia's credit strength is a key input in Moody's deposit and
debt ratings for financial institutions in the country, because
it affects Moody's assessment of the government's capacity to
provide support in times of stress.
Moody's revision of the outlook on the Indonesian government's
Baa3 rating to positive from stable increases the potential for a
higher sovereign rating to raise the supported ratings for most
Moody's-rated financial institutions in the country.
For more information on the sovereign credit rating action,
please refer to the Government of Indonesia issuer page on
www.moodys.com.
The Macro Profile for Indonesia remains at Moderate and
unaffected by the sovereign rating action.
EIGHT BANKS WITH POSITIVE OUTLOOK
The Baa3 deposit ratings of the eight banks - Mandiri, BRI, Bank
Central Asia, BNI, CIMB Niaga, BTN, Danamon, Indonesia Eximbank
-- incorporate Moody's assumptions of High to Very High
probability of government support for the banks in times of need.
As such, these ratings -- currently positioned at the same level
as Indonesia's sovereign rating -- are likely to benefit from a
widening of support uplift of up to 1 notch when the sovereign
rating is upgraded.
TWO BANKS WITH STABLE OR NEGATIVE OUTLOOK
Panin's Baa3 rating was affirmed, with a stable outlook, to
reflect Moody's stable view of the bank's standalone credit
profile (ba2 BCA) and the two notches of government support
uplift already incorporated in the rating.
Taking into account Moody's view of the bank's lower systemic
importance compared to its larger peer banks, Moody's does not
expect to increase the rating uplift for this bank beyond two
notches, even if the sovereign's rating eventually rises to Baa2.
Permata's Baa3 rating was affirmed with a negative outlook.
Despite the positive rating action on the sovereign, the pressure
on Permata's rating remains to the downside, taking into account
the bank's deteriorating asset quality and profitability, as well
as uncertainties over the likelihood of receiving extraordinary
support from its existing key shareholders in the future.
WHAT COULD MOVE THE RATING UP/DOWN
Given the revision of the sovereign rating outlook to positive
from stable, the ratings of the eight banks with positive
outlooks are likely to be upgraded if the sovereign rating is
upgraded, provided that these banks maintain strong standalone
financial metrics.
Conversely, the outlook on the banks' ratings could be revised to
stable if the sovereign rating outlook is revised to stable.
Permata's ratings would be downgraded if its BCA and/or Adjusted
BCA are downgraded as a result of any of the following: a sharp
increase in its NPLs and restructured loans and/or a continued
decline in its core capital buffer because of high credit costs
and/or rapid credit growth; an erosion of its liquidity profile;
a change in its major shareholders that creates uncertainty over
affiliate support.
Permata's Baa3 deposit ratings are unlikely to be upgraded, given
the negative outlook. However, the outlook could return to stable
if the downside risks to its BCA moderate.
Panin's Baa3 rating could face negative pressure if its BCA is
downgraded as a result of a deterioration in its financial
fundamentals, especially in its asset quality, against a backdrop
of rapid loan growth; and/or a weakened capital position, without
a clear recapitalization plan.
The ratings and rating outlooks for the affected banks are listed
below in alphabetic order:
Bank Central Asia Tbk (P.T.)
- Long-term foreign currency issuer rating affirmed at Baa3;
outlook changed to positive from stable
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- BCA and adjusted BCA affirmed at baa3;
- CR Assessment affirmed at Baa2(cr)/P-2(cr);
- Outlook for the bank revised to positive from stable.
Bank Danamon Indonesia TBK (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- Adjusted BCA affirmed at baa3;
- BCA affirmed at ba1;
- CR Assessment affirmed at Baa2(cr)/P-2(cr);
- Outlook for the bank revised to positive from stable.
Bank Mandiri (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- BCA and adjusted BCA affirmed at baa3;
- CR Assessment affirmed at Baa2(cr)/P-2(cr);
- Outlook for the bank revised to positive from stable.
Bank Negara Indonesia TBK (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- Foreign currency senior unsecured debt rating affirmed at Baa3;
outlook changed to positive from stable
- BCA and adjusted BCA affirmed at ba1;
- CR Assessment affirmed at Baa3(cr)/P-3(cr);
- Outlook for the bank revised to positive from stable.
Bank Permata TBK (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook maintained at negative
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- Adjusted BCA affirmed at ba1;
- BCA affirmed at ba2;
- CR Assessment affirmed at Baa3(cr)/P-3(cr);
- Outlook for the bank maintained at negative.
Bank Rakyat Indonesia (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- Foreign currency senior unsecured debt rating affirmed at Baa3;
outlook changed to positive from stable
- BCA and adjusted BCA affirmed at baa3;
- CR Assessment affirmed at Baa2(cr)/P-2(cr);
- Outlook for the bank revised to positive from stable.
Bank Tabungan Negara (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- BCA and adjusted BCA affirmed at ba2;
- CR Assessment affirmed at Baa3(cr)/P-3(cr);
- Outlook for the bank revised to positive from stable.
Lembaga Pembiayaan Ekspor Indonesia
- Long-term local and foreign currency issuer rating affirmed at
Baa3; outlook changed to positive from stable
- Foreign currency senior unsecured debt rating affirmed at Baa3;
outlook changed to positive from stable
- Long-term foreign senior unsecured MTN program rating affirmed
at (P)Baa3;
- Short-term foreign senior unsecured MTN program rating affirmed
at (P)P-3;
- Outlook for the bank revised to positive from stable.
Pan Indonesia Bank TBK (P.T.)
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook maintained at stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- BCA and adjusted BCA affirmed at ba2;
- CR Assessment affirmed at Baa3(cr)/P-3(cr);
- Outlook for the bank maintained at stable.
PT Bank CIMB Niaga Tbk
- Long-term foreign currency issuer rating affirmed at Baa3;
outlook changed to positive from stable
- Long-term local and foreign currency bank deposit ratings
affirmed at Baa3; outlook changed to positive from stable
- Short-term local and foreign currency bank deposit ratings
affirmed at P-3;
- Adjusted BCA affirmed at baa3;
- BCA affirmed at ba2;
- CR Assessment affirmed at Baa2(cr)/P-2(cr);
- Outlook for the bank revised to positive from stable.
The banks are headquartered in Jakarta, and reported total assets
at end-September 2016 of:
Bank Central Asia Tbk (P.T.): IDR660 trillion ($51 billion)
Bank Danamon Indonesia TBK (P.T.): IDR175 trillion ($13 billion)
Bank Mandiri (P.T.): IDR975 trillion ($75 billion)
Bank Negara Indonesia TBK (P.T.): IDR572 trillion ($44 billion)
Bank Permata TBK (P.T.): IDR171 trillion ($13 billion)
Bank Rakyat Indonesia (P.T.): IDR932 trillion ($72 billion)
Bank Tabungan Negara (P.T.): IDR197 trillion ($15 billion)
Lembaga Pembiayaan Ekspor Indonesia: IDR94 trillion ($7 billion)
Pan Indonesia Bank TBK (P.T.): IDR195 trillion ($15 billion)
PT Bank CIMB Niaga Tbk: IDR237 trillion ($18 billion)
The principal methodology used in rating Bank Mandiri (P.T.),
Bank Rakyat Indonesia (P.T.), Bank Central Asia Tbk (P.T.), Bank
Negara Indonesia TBK (P.T.), PT Bank CIMB Niaga Tbk, Bank Tabugan
Negara (P.T.) (BTN), Pan Indonesia Bank TBK (P.T.), Bank Danamon
Indonesia TBK (P.T.) and Bank Permata TBK (P.T.) was Banks
published in January 2016. The principal methodologies used in
rating Lembaga Pembiayaan Ekspor Indonesia (Indonesia Eximbank)
were Finance Companies published in December 2016, and
Government-Related Issuers published in October 2014. Please see
the Rating Methodologies page on www.moodys.com for a copy of
these methodologies.
PERTAMINA (PERSERO): Moody's ba1 BCA Remains Unchanged
------------------------------------------------------
Moody's Investors Service has taken a number of rating actions on
non-financial corporates in Indonesia that are also government-
related issuers (GRIs). The rating actions follow the change in
outlook on Indonesia's Baa3 sovereign rating to positive from
stable on Feb. 8, 2017.
As a result of the sovereign rating action, Moody's has taken the
following rating actions:
Pertamina (Persero) (P.T.) (Pertamina): Affirmed the Baa3 issuer
and senior unsecured bond ratings. Also affirmed the (P)Baa3
rating on $10 billion Global Medium-Term Note program. Outlook
changed to positive from stable. The ba1 baseline credit
assessment (BCA) remains unchanged.
Telekomunikasi Indonesia (P.T.) (Telkom): Affirmed the Baa1
issuer rating. Stable outlook is maintained and baa1 BCA remain
unchanged.
Semen Indonesia (Persero) Tbk (P.T.) (Semen Indonesia): Affirmed
Baa3 issuer rating. Stable outlook is maintained and baa3 BCA
remain unchanged.
RATINGS RATIONALE
"The change in outlook on Pertamina's ratings follows the change
in outlook on the Indonesian sovereign ratings and reflects the
company's strategically-important position as Indonesia's only
national integrated oil and gas company," says Vikas Halan, a
Moody's Vice President and Senior Credit Officer.
"The outlook on Telkom stays stable. The company's Baa1 issuer
rating is already two notches above the rating of the sovereign
and as such, does not benefit from any tangible uplift due to
government ownership. The rating reflects the company's
established position as Indonesia's largest integrated
telecommunications operator and an operating and financial
profile reflective of a strong investment-grade company," says
Annalisa Di Chiara, a Moody's Vice President and Senior Credit
Officer.
However, Telkom's rating is also constrained by its exposure to
Indonesia's competitive, although stabilizing operating
environment, and the risk of intervention from the Government of
Indonesia (Baa3 positive) given Telkom is a majority state-owned
company.
"The outlook on Semen Indonesia stays stable. Moody's assumptions
for extraordinary support from Government of Indonesia for Semen
Indonesia does not result in an uplift from its baa3 BCA even if
the sovereign rating were to be upgraded to Baa2," says Brian
Grieser, a Moody's Vice President and Senior Analyst.
Semen Indonesia's ratings are currently constrained at Baa3 given
the company's business profile, in particular its lack of product
and geographic diversification, and the challenging market
conditions for Indonesian cement producers. Upward pressure on
the rating may be limited until the company expands its
geographic and product reach while maintaining its conservative
policy.
The principal methodology used in rating Pertamina (Persero)
(P.T.) was Global Integrated Oil & Gas Industry published in
October 2016. The principal methodology used in rating Semen
Indonesia (Persero) Tbk (P.T.) was Building Materials Industry
published in January 2017. The principal methodology used in
rating Telekomunikasi Indonesia (P.T.) was Telecommunications
Service Providers published in January 2017. Other methodologies
used include Government-Related Issuers published in October
2014. Please see the Rating Methodologies page on www.moodys.com
for a copy of these methodologies.
Pertamina (Persero) (P.T.) (Pertamina) is a 100% Indonesian
government-owned, fully-integrated oil and gas corporation, with
operations in upstream oil, gas and geothermal exploration and
production, downstream oil refining, marketing, distribution,
transportation and trading of petroleum products.
Telekomunikasi Indonesia (P.T.) (Telkom) is the largest
integrated telecommunications company in Indonesia. The company,
along with majority owned subsidiary, Telekomunikasi Selular
(P.T.) (Baa1 stable), generated gross revenue of IDR112.9
trillion (approximately US$8.4 billion) for the 12 months ended
30 September 2016. Telkom is 52.1% owned by the Government of
Indonesia.
Semen Indonesia (Persero) Tbk (P.T.) ("Semen Indonesia") is the
largest cement manufacturer in Indonesia. Semen Indonesia has a
total installed capacity of 31.8 million tons per annum (mtpa)
and sales volume of 21.0 million tons in the nine months ended 30
September 2016 (9M 2016) (20.3 million tons for 9M 2015) with
four integrated cement plants and three grinding units located in
Gresik and Tuban in East Java, Indarung in West Sumatra, Pangkep
in South Sulawesi, Cigading in West Java and Vietnam. Semen
Indonesia is 51% owned by the Indonesian government and the
remaining shares are publicly held.
PERUSAHAAN LISTRIK: Moody's ba2 BCA Remains Unchanged
-----------------------------------------------------
Moody's Investors Service has taken a number of rating actions on
Indonesian infrastructure government-related issuers (GRIs),
following the change in outlook on Indonesia's Baa3 sovereign
rating to positive from stable on Feb. 8, 2017.
As a result of the sovereign rating action, Moody's has changed
the outlook on the ratings of the following companies:
Perusahaan Gas Negara (P.T.) (PGN): Affirmed Baa3 local currency
issuer and foreign currency senior unsecured ratings and revised
outlook to positive from stable. The baa3 BCA remains unchanged.
Perusahaan Listrik Negara (P.T.) (PLN): Affirmed Baa3 local
currency issuer and foreign currency senior unsecured ratings, as
well as its (P)Baa3 senior unsecured MTN (foreign) rating. The
outlook is revised to positive from stable. The ba2 BCA remains
unchanged. At the same time, Moody's has also affirmed the Baa3
rating on the senior unsecured bond issued by Majapahit Holding
BV, PLN's wholly owned subsidiary, and guaranteed by PLN. The
outlook is revised to positive from stable.
Pelabuhan Indonesia II (Persero) (P.T.) (Pelindo II): Affirmed
Baa3 foreign currency issuer and senior unsecured ratings and
revised outlook to positive from stable. The baa3 baseline credit
assessment (BCA) remains unchanged.
The outlook for the following Indonesian infrastructure GRI
remains unchanged:
Pelabuhan Indonesia III (Persero) (P.T.) (Pelindo III): Affirmed
Baa3 foreign currency issuer and senior unsecured ratings. The
stable outlook and ba1 BCA remains unchanged.
RATINGS RATIONALE
The change in outlook on PGN, PLN, and Pelindo II's ratings
follow the change in outlook on the sovereign rating.
"The change in outlook on PGN's ratings reflects the company's
dominant position in Indonesia's gas transmission and
distribution sector, and Moody's expectations that the government
will maintain its majority ownership of PGN," says Abhishek
Tyagi, a Moody's Vice President and Senior Analyst.
"The change in outlook on PLN's ratings reflects the company's
strategically important position as Indonesia's only vertically
integrated electric utility, including its dominant position in
generation, transmission and distribution, and its close linkage
with the government as also reflected by its 100% ownership by
the government," adds Tyagi.
"The change in outlook on Pelindo II's ratings reflect its
strategic role as the key international maritime gateway for
Indonesia, given its control of the terminals in Jakarta. Moody's
believes that the Indonesian government will provide a high level
of support, if required, in light of Pelindo II's strategic role
and the government full ownership of Pelindo II through the
Ministry of State Owned Enterprises (MSOE)," says Ray Tay, a
Moody's Vice President and Senior Analyst.
"The outlook on the Pelindo III's ratings remains stable. These
ratings already incorporate one notch of uplift reflecting
Pelindo III's important maritime role in Indonesia. Moody's
expectations of support for Pelindo III, in case of need, is such
that a one notch uplift in the rating remains appropriate. As
such, its ratings would be upgraded only if its baseline credit
assessment improves," adds Tay.
The methodologies used in Pelindo II and Pelindo III were
Privately Managed Port Companies published published in September
2016, and Government-Related Issuers published in October 2014.
The methodologies used in PGN, PLN and Majapahit Holding BV were
Regulated Electric and Gas Utilities published in December 2013,
and Government-Related Issuers published in October 2014. Please
see the Rating Methodologies page on www.moodys.com for a copy of
these methodologies.
Established in 1965, Perusahaan Gas Negara (P.T.) (PGN) is
primarily engaged in the transmission and distribution of natural
gas. Its transmission business is mainly operated under its 60%-
owned PT Transportasi Gas Indonesia (unrated). Its distribution
business achieved a strong 83% share of total volumes in
Indonesia in 2015. The Indonesian government, through the MSOE,
owns 57% of the company.
Perusahaan Listrik Negara (P.T.) (PLN) is the dominant operator
of generation plants, transmission and distribution (T&D)
networks. Its transmission network covered around 41,683ckm and
its distribution network covered 943,573ckm at end-2015. PLN is
also the country's largest electricity producer, with a capacity
of around 43.9GW, which accounted for 83.5% of the market at end-
2015. It is the sole offtaker for Indonesia's independent power
producers.
Pelabuhan Indonesia II (Persero) (P.T.) (Pelindo II) -- also
known as the Indonesian Port Corporation (IPC) -- is Indonesia's
largest port operator, with 12 ports across 10 provinces in
Western Java, Sumatra and Kalimantan. Pelindo II handled
container throughput of 6.2 million 20-foot equivalent units
(TEUs) in 2016. In 2015, the company handled about 45% of
Indonesia's entire container throughput. It also operates
Indonesia's largest and busiest container port, Tanjung Priok in
Jakarta, which handled over 5.5 million TEUs in 2016. The port is
also Indonesia's main international container gateway.
Pelabuhan Indonesia III (Persero) (P.T.) (Pelindo III) is
Indonesia's second largest port operator with 43 ports across
seven provinces in central and eastern Indonesia. It handled
container throughput of 4.6 million TEUs in 2016. In 2015, the
company handled about 33% of Indonesia's entire container
throughput. It operates the Tanjung Perak port, Indonesia's
second busiest container port, which handled 3.3 million TEUs in
2016.
=========
J A P A N
=========
TAKATA CORP: Expects Third Annual Loss After U.S. Settlement
------------------------------------------------------------
Bloomberg News reports that Takata Corp., the troubled air-bag
maker behind the biggest auto safety recall, said it will
probably report a third consecutive annual loss as it booked a
one-time charge after agreeing to settle a U.S. criminal
investigation.
Net loss will probably be JPY64 billion ($562 million) in the
year through March, compared with a November forecast for a
JPY20 billion profit, Tokyo-based Takata said in a statement on
Feb. 10, Bloomberg relays. The loss would be the widest since
listing in 2006. The supplier posted a net loss of JPY13.1
billion a year earlier.
According to Bloomberg, Takata said Feb. 9 it would book a
combined JPY107.5 billion in charges. The company has admitted to
hiding risks in air bags that have been linked to at least 17
deaths worldwide. It has agreed to pay U.S. regulators, consumers
and car manufacturers $1 billion in penalties.
The Japanese component maker is still in the process of selecting
a sponsor, Takata said in the statement, relates Bloomberg. The
company is considering selling some more non-core businesses,
cutting capital expenditure and producing in low-cost countries,
it said.
Bloomberg says the Japanese supplier raised its operating profit
forecast to JPY40 billion in the year through March, compared
with its previous forecast of JPY35 billion. The company had
JPY83.6 billion in cash as of Dec. 31. Its net assets declined to
JPY47.9 billion as on Dec. 31, down from JPY124.6 billion at the
end of March, Bloomberg discloses.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- 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.
In May 1995, a voluntary recall in the U.S. affecting 8 million
predominantly Japanese built vehicles made from 1986 to 1991 with
seat belts manufactured by the Takata was conducted.
Large recalls of vehicles due to faulty Takata-made airbags began
in 2013.
Takata is presently facing massive costs of recalling 100 million
defective airbag inflators worldwide and lawsuits tied to at
least 16 deaths and numerous injuries.
As of May 19, 2015, Takata has already recalled 40 million
vehicles across 12 vehicle brands for defective airbags.
In November 2015, Takata was fined $200 million by U.S. federal
regulators for mishandling the way it recalled its air bag
inflators. The fine is the largest civil penalty in NHTSA
history.
TAKATA CORP: To Plead Guilty Feb. 27 as Part of DOJ Settlement
--------------------------------------------------------------
Reuters reports that Takata Corp. is set to plead guilty Feb. 27
in federal court in Detroit to a single felony count of wire
fraud to resolve a Justice Department investigation into ruptures
of its airbag inflators linked to at least 16 deaths worldwide,
according to a court filing on Feb. 7.
Reuters says the auto parts supplier agreed last month to the
guilty plea as part of a $1 billion settlement in the world's
largest ever recall.
U.S. prosecutors also charged three former senior Takata
executives in Japan with falsifying test results to conceal the
inflator defect linked the recall of about 100 million air bag
inflators worldwide, Reuters relates.
The Justice Department said Takata has agreed to pay a $25
million fine, $125 million in a victim compensation fund,
including for future incidents, and $850 million to compensate
automakers for massive recall costs, relays Reuters. The auto
parts supplier will be required to make significant reforms and
be on probation and under the oversight of an independent monitor
for three years.
Last month, three senior Takata executives in the United States
left the company, including Kevin Kennedy, who was president of
Takata North America, Reuters recalls. Mr. Kennedy confirmed his
departure in a posting on the employment networking website
LinkedIn but did not return emails, says Reuters.
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- 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.
In May 1995, a voluntary recall in the U.S. affecting 8 million
predominantly Japanese built vehicles made from 1986 to 1991 with
seat belts manufactured by the Takata was conducted.
Large recalls of vehicles due to faulty Takata-made airbags began
in 2013.
Takata is presently facing massive costs of recalling 100 million
defective airbag inflators worldwide and lawsuits tied to at
least 16 deaths and numerous injuries.
As of May 19, 2015, Takata has already recalled 40 million
vehicles across 12 vehicle brands for defective airbags.
In November 2015, Takata was fined $200 million by U.S. federal
regulators for mishandling the way it recalled its air bag
inflators. The fine is the largest civil penalty in NHTSA
history.
TOSHIBA CORP: Likely Lacked Assets to Cover losses in December
--------------------------------------------------------------
The Asahi Shimbun reports that Toshiba Corp.'s losses likely
exceeded its assets as of the end of December, a situation that
could end up bumping its shares from the First Section of the
Tokyo Stock Exchange, sources said.
According to the report, the Tokyo-based electronics appliance
maker's estimated loss from its nuclear business in the United
States is about JPY700 billion ($6.2 billion). Its capital stood
at around JPY360 billion at the end of September.
If the loss and that level of capital are reported in the
company's financial statement for the October-December quarter,
Toshiba will be firmly entrenched in a capital deficit, the
sources said Feb. 8, Asahi Shimbun relates.
If Toshiba's deficits exceed its assets as of March 31, the end
of its business year, the company's shares will be moved from the
TSE's First Section to the Second Section. If Toshiba cannot
rectify the situation within a year of that date, its shares will
be delisted, the report says.
The Asahi Shimbun says Toshiba is scheduled to announce the full
scale of the loss on Feb. 14 in its financial statement for
period from April to December 2016.
Construction costs for four reactors in the United States far
exceeded Toshiba's initial estimate, resulting in the loss, the
report notes. The company has looked for measures to decrease the
loss but has apparently failed to do so.
Toshiba plans to raise its capital before the end of the business
year by selling some of its assets, including part of its
semiconductor business, adds The Asahi Shimbun.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba
Corporation's corporate family rating (CFR) and senior unsecured
rating to Caa1 from B3. Moody's has also downgraded Toshiba's
subordinated debt rating to Ca from Caa3, and affirmed its
commercial paper rating of Not Prime. At the same time, Moody's
has placed Toshiba's Caa1 CFR and long-term senior unsecured bond
rating, as well as its Ca subordinated debt rating under review
for further downgrade.
The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings
said it has lowered its long-term corporate credit rating on
Toshiba Corp. to 'CCC+' and its short-term corporate credit and
commercial paper program ratings on the company to 'C', all by
one notch. All of these ratings remain on CreditWatch with
negative implications. S&P also lowered its senior unsecured
debt rating on Toshiba two notches to 'B-' from 'B+' and kept the
rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the
long- and short-term ratings on Toshiba on CreditWatch with
negative implications at the same time as lowering the long-term
ratings, in response to Toshiba's announcement that it might
recognize several JPY100 billion in impairment losses related to
goodwill arising from its acquisition of a nuclear power business
through U.S.-based Westinghouse Electric Co. LLC, because the
goodwill far exceeded the company's initial estimates.
TOSHIBA CORP: Receives JPY400-Billion Bid for Chip Business Stake
-----------------------------------------------------------------
Reuters reports that Toshiba Corp. has received an offer as high
as JPY400 billion ($3.6 billion) for a 19.9 percent stake in its
flash memory business, with other bids as low as JPY200 billion,
said a person directly involved in the deal.
Suitors include rivals SK Hynix and Micron Technology, and
financial investors like Bain Capital, Reuters relates.
According to Reuters, the Japanese conglomerate was seeking to
raise around JPY300 billion from the stake sale, said the source,
who declined to be named because he is not authorized to speak to
the media.
Toshiba needs to raise funds by the end of March to offset an
imminent multibillion dollar writedown on its U.S. nuclear power
business, says Reuters.
A Toshiba spokeswoman said the company could not comment on
specifics of the sale process, Reuters notes.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
Dec. 30, 2016, Moody's Japan K.K. downgraded Toshiba
Corporation's corporate family rating (CFR) and senior unsecured
rating to Caa1 from B3. Moody's has also downgraded Toshiba's
subordinated debt rating to Ca from Caa3, and affirmed its
commercial paper rating of Not Prime. At the same time, Moody's
has placed Toshiba's Caa1 CFR and long-term senior unsecured bond
rating, as well as its Ca subordinated debt rating under review
for further downgrade.
The TCR-AP reported on Jan. 26, 2017, that S&P Global Ratings
said it has lowered its long-term corporate credit rating on
Toshiba Corp. to 'CCC+' and its short-term corporate credit and
commercial paper program ratings on the company to 'C', all by
one notch. All of these ratings remain on CreditWatch with
negative implications. S&P also lowered its senior unsecured
debt rating on Toshiba two notches to 'B-' from 'B+' and kept the
rating on CreditWatch negative. On Dec. 28, 2016, S&P placed the
long- and short-term ratings on Toshiba on CreditWatch with
negative implications at the same time as lowering the long-term
ratings, in response to Toshiba's announcement that it might
recognize several JPY100 billion in impairment losses related to
goodwill arising from its acquisition of a nuclear power business
through U.S.-based Westinghouse Electric Co. LLC, because the
goodwill far exceeded the company's initial estimates.
=====================
P H I L I P P I N E S
=====================
UNIWIDE HOLDINGS: To be Delisted Over Dissolution, PSE Breaches
---------------------------------------------------------------
Doris Dumlao-Abadilla at the Philippine Daily Inquirer reports
that the Philippine Stock Exchange is moving to delist Uniwide
Holdings Inc. from its roster of listed companies, citing the
defunct retailer's dissolution and continuing violation of
disclosure rules.
In a notice to investors on Feb. 10, the PSE said it had
initiated involuntary delisting proceedings against Uniwide, the
Inquirer relates. It said Uniwide had failed to submit structured
reportorial requirements, particularly annual reports from 2013
to 2015 as well as first to third quarterly reports for the years
ended 2014 to 2016, according to the Inquirer.
Uniwide has also failed to submit on time the reports on the
number of shareholders in 2014 and 2015, foreign ownership
reports in 2014 and 2015, top 100 stockholders report in 2014 and
public ownership report in 2014, the report adds.
The Inquirer says the PSE also cited as ground for delisting the
Securities and Exchange Commission (SEC)'s order for the
dissolution and liquidation of assets of all companies in the
Uniwide group.
About Uniwide Holdings
Uniwide Holdings Inc. (UW) was incorporated on Sept. 15, 1994,
primarily to engage in the business of investment by way of
acquisition, transfer, exchange or disposal of real or personal
property. The company started commercial operations on July 1,
1995. UW was established to act as the franchisor of the
retail/wholesale stores that trade under the name Uniwide Sales,
and to consolidate the real estate interests of the Gow Family.
The company is currently the franchisor of five Uniwide Sales
Warehouse Clubs and one Uniwide Sales Department Store.
Uniwide filed for rehabilitation in June 1999, and the
Securities and Exchange Commission approved its rehabilitation
plan in 2000. Under the plan, the Company will convert 50% of
its unsecured debt into 15-year convertible notes redeemable
anytime at its convenience, while the remaining 50% would be
restructured into a 10-year loan with 0% interest and a 3-year
grace period; payment will begin on the fourth year.
At that time, it still had eight warehouse clubs and two
department stores with total assets of PHP19.864 billion and
liabilities worth PHP11.101 billion, according to GMANews.TV.
By the end of 2008, Uniwide was operating only five warehouse
clubs and a department store. At the end of September 2009, the
group's assets stood at PHP2.726 billion, while liabilities
further increased to PHP12.292 billion.
The Uniwide group is composed of Uniwide Sales, Inc., Uniwide
Holdings, Inc., Naic Resources and Development Corp., Uniwide
Sales Realty & Resources Corp., First Paragon Corp., and Uniwide
Sales Warehouse Club, Inc.
================
S R I L A N K A
================
SRI LANKA: Fitch Affirms IDR at 'B+'; Revises Outlook to Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Sri Lanka's Long-Term Foreign- and
Local Currency Issuer Default Ratings (IDR) at 'B+' and revised
the Outlook to Stable from Negative. The Country Ceiling and
issue ratings on Sri Lanka's senior unsecured foreign- and local-
currency bonds are also affirmed at 'B+'. The Short-Term Foreign-
and Local-Currency IDRs are affirmed at 'B'.
KEY RATING DRIVERS
Sri Lanka's 'B+' rating balances its weak public finances and
strained external liquidity position compared with peers against
the steady progress made on the country's ongoing International
Monetary Fund (IMF) supported programme, which commenced in June
2016. The IMF programme has eased near-term pressure on the
balance of payments. The rating is supported by Sri Lanka's
favourable growth performance as well as its basic human
development indicators and governance standards, which are more
favourable as compared with some peers.
The Outlook revision reflects the following key rating drivers:
Improving Fiscal Finances: Fitch estimates that Sri Lanka's 2016
fiscal performance was better than in 2015, following strong
revenue growth that was supported by a value-added tax (VAT)
hike. This, along with lower government spending, should narrow
the deficit in 2016 to around -5.6% of GDP, from -7.4% in 2015.
Fitch believes the 2016 VAT hike to 15% from 11% and other
revenue reforms announced in the 2017 budget are likely to
support further fiscal deficit reductions in 2017, with the
agency revising down its 2017 deficit forecast to -4.7% of GDP
against its earlier estimate of close to -7%. The authorities'
2017 deficit estimate of -4.6% is below the agency's estimate, as
the authorities have higher growth assumptions. However, Fitch
expects authorities to lower spending if there is a large revenue
shortfall to keep the fiscal deficit under control.
Improved Policy Coherence and Credibility: Sri Lanka's three-year
extended fund facility with the IMF has improved policy coherence
and credibility and has eased some near-term balance of payments
pressure. Fitch expects the country's external funding profile to
benefit from support by multilateral agencies, although its
external liquidity position remains weak compared with peers. The
IMF-supported programme sets ambitious fiscal targets and the
authorities have made steady progress, meeting their quantitative
performance targets for the first review in November 2016.
Progress on some structural benchmarks has also been made,
including passage of the 2017 budget in line with programme
targets.
Stable Growth Trends: Sri Lanka's growth performance remains
favourable. Fitch estimates the country's five-year (2012-2016)
average real GDP growth at 5.3%, which is stronger than some of
its 'B' category peers. However, Fitch has revised its 2016
growth estimate to around 4.5%, from 5.3% (forecast at the time
of the last review) due to weaker-than-expected 1H16 growth
caused by the May 2016 floods. Furthermore, the Central Bank of
Sri Lanka hiked-up interest rates twice in 2016 by a cumulative
100bp, slowing credit growth and private consumption, although
this has also improved macro stability.
Sri Lanka's 'B+' IDRs reflect the following key rating drivers:
Relatively High Government Debt: Fitch estimates overall gross
general government debt to have reached close to 77% of GDP by
end-2016, although it should gradually decline over 2017-2018 due
to improving government revenues. At this level, government debt
remains above the 56% 'B' median and 51% 'BB' median. Further,
foreign-currency debt - which is close to 40% of GDP - weakens
Sri Lanka's fiscal finances, as it increases the risk of higher
debt in local currency terms if the rupee depreciates sharply.
Weak External Liquidity Position: Sri Lanka's external liquidity
position is weakened by low foreign-exchange reserves and high
external debt service payments. Measured by Fitch's external
liquidity metric, this ratio is far below the 'B' and 'BB'
median. As per the agency's estimate, the external liquidity
ratio was close to 58% at end-2016, against around 163% for the
'B' median and 155% for the 'BB' median. Furthermore, Sri Lanka's
external finances are vulnerable to a sell-off in treasury bills
and bonds by foreign investors, which currently account for
nearly 30% of foreign-exchange reserves. Outflows from treasury
bills and bonds in October and November 2016 led to a fall in
foreign-exchange reserves, although the reserves improved by
around USD419m from end-November 2016 to around USD6bn by end-
2016.
Strong Human Development Indicators: Sri Lanka's basic human
development, including education, health and literacy standards,
is high compared with the 'B' and 'BB' median, as indicated by a
favourable United Nations Human Development Index score. The
country also ranks better than the 'B' median on the World Bank's
composite governance indicator score - falling in the 48th
percentile against the 31st percentile of the 'B' median.
SOVEREIGN RATING MODEL and QUALITATIVE OVERLAY
Fitch's proprietary sovereign rating model (SRM) assigns Sri
Lanka a score equivalent to a rating of 'BB-' on the Long-term
Foreign-Currency IDR scale.
Fitch's sovereign rating committee adjusted the output from the
SRM to arrive at the final Long-Term Foreign-Currency IDR by
applying its qualitative overlay (QO), relative to rated peers,
as follows:
- Public Finances: -1 notch to reflect Sri Lanka's weak fiscal
position on account of high government debt and interest payments
as a share of government revenue.
Fitch's SRM is the agency's proprietary multiple regression
rating model that employs 18 variables based on three-year
centred averages, including one year of forecasts, to produce a
score equivalent to a Long-Term Foreign-Currency IDR. Fitch's QO
is a forward-looking qualitative framework designed to allow for
adjustment to the SRM output to assign the final rating,
reflecting factors within Fitch criteria that are not fully
quantifiable and/or not fully reflected in the SRM.
RATING SENSITIVITIES
The Stable Outlook reflects Fitch's assessment that upside and
downside risks to the rating are balanced.
The main factors that, individually or collectively, could
trigger positive rating action are:
- Continued improvement in public finances underpinned by a
credible medium-term fiscal strategy, including a broadening of
the government revenue base.
- Increase in foreign-exchange reserves supported by smaller
current-account deficits and higher non-debt capital inflows.
The main factors that, individually or collectively, could
trigger negative rating action are:
- Deterioration in policy coherence and credibility, leading to
a loss of investor confidence, or a derailment of the
International Monetary Fund supported programme that leads to
external funding stress.
- Reversal of fiscal improvements that leads to a failure to
stabilise government debt ratios.
KEY ASSUMPTIONS
Global economic assumptions are consistent with Fitch's latest
global economic outlook.
*********
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 2017. 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 ***