/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/180201.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Thursday, February 1, 2018, Vol. 21, No. 023 Headlines A U S T R A L I A BACCHUS REX: First Creditors' Meeting Set for Feb. 8 CLONTARF1 PTY: Second Creditors' Meeting Set for Feb. 7 JOHN'S NUTS: First Creditors' Meeting Scheduled for Feb. 9 MOCHELLES PTY: First Creditors' Meeting Set for Feb. 7 NQR PTY: 351 Jobs at Risk Following Voluntary Administration RALEIGH DAIRY: First Creditors' Meeting Set for Feb. 8 TEN NETWORK: Most Creditors Get 100% Payout From New Owner X & W INVESTMENTS: First Creditors' Meeting Set for Feb. 7 C H I N A CHINA HUIYUAN: Convertible Bonds Issue Credit Pos., Moody's Says GREENLAND HOLDING: Moody's Assigns Ba2 Rating to New USD Notes LESHI INTERNET: Sees CNY11.6BB Net Loss for 2017 MODERN LAND: Fitch Affirms B+ IDR; Alters Outlook to Negative TAIZHOU HUAXIN: Fitch Rates Proposed USD Notes 'BB+(EXP)' YANGO JUSTICE: Moody's Assigns B3 Rating to Sr. Unsec. USD Notes H O N G K O N G CHINA SOUTH CITY: Fitch Rates USD250MM Senior Notes Final 'B' FWD LIMITED: Fitch Rates USD200MM Subordinated Perpetual Sec. BB+ NOBLE GROUP: Moody's Cuts Bond Rating to Ca on Restructuring I N D I A ANNAPORANAA FOODS: CRISIL Lowers Rating on INR8MM Loan to B- ARUN ENGINEERING: CRISIL Reaffirms B Rating on INR10MM LT Loan ASHOK TIMBER: Ind-Ra Migrates B Issuer Rating to Non-Cooperating BFG INTERNATIONAL: ICRA Cuts Rating on INR10cr Loan to D CAPITAL POWER: CRISIL Withdraws B Rating on INR45MM Cash Loan DILEEP TRADERS: CRISIL Assigns B+ Rating to INR7MM Cash Loan DINESH TEXTILE: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating FANIDHAR MEGA: CRISIL Reaffirms 'B' Rating on INR2.5MM LT Loan FIVEBRO INTERNATIONAL: Ind-Ra Raises LT Issuer Rating to 'C' FORTESI SBL: Ind-Ra Withdraws INR100MM Series A1 PTCs Ratings GAJRAJ AUTOMOBILES: Ind-Ra Migrates BB- Rating to Non-Cooperating GLOBAL CLOUD: Fitch Lowers Long-Term IDR to CCC ICON DEVELOPERS: CRISIL Ups Rating on INR6MM LT Loan to B+ JEWEL WORLD: CRISIL Reaffirms B+ Rating on INR6.5MM Cash Loan MAD STUDIOS: ICRA Moves D Ratings to Non-Cooperating Category MALLAN RICE: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan MANGLAM TIMBERS: Ind-Ra Moves B Issuer Rating to Non-Cooperating MONNET ISPAT: JSW Steel Offers INR3,700 crore MULTIFILMS PLASTICS: Ind-Ra Migrates BB Rating to Non-Cooperating NANDINI CREATION: CRISIL Hikes Rating on INR6.5MM Loan to B+ NANO AGRO: ICRA Reaffirms B Rating on INR10cr Cash Loan NEO PACK: Ind-Ra Migrates BB- Issuer Rating to Non-Cooperating OPALIUM INTERNATIONAL: CRISIL Removes Non-Cooperating Ratings PARAMOUNT BLANKETS: CRISIL Lowers Rating on INR9.75MM Loan to D RATI ENGINEERING: CRISIL Cuts Rating on INR3.5MM Cash Loan to B+ RENNY STRIPS: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable SHAKUNTALA WAREHOUSE: Ind-Ra Puts B+/Non-Cooperating Rating SHUNTY BUNTY: CRISIL Assigns B+ Rating to INR14.75MM Cash Loan SUVARNA LAKSHMI: ICRA Reaffirms B+ Rating on INR18cr Loan SUVEERA AGRO: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan TIRUPATHI YARNTEX: ICRA Raises Rating on INR14.50cr Loan to B- V S R MINERALS: CRISIL Assigns 'B' Rating to INR4MM LT Loan VASUDEV POWER: Ind-Ra Withdraws BB(Issuer Not Cooperating) Rating VINAYAKA ELECTROALLOYS: CRISIL Ups Rating on INR5MM Loan to B+ ZAMINDARA TIMBER: CRISIL Reaffirms B+ Rating on INR2.75MM Loan I N D O N E S I A SOECHI LINES: Fitch Assigns B+ Rating to USD200MM Notes SULFINDO ADIUSAHA: Fitch to Rate IDR & Proposed Bonds 'B(EXP)' SULFINDO ADIUSAHA: Moody's Assigns B2 CFR; Outlook Stable J A P A N TOSHIBA CORP: Sharp Considering Bid for PC Business M O N G O L I A STATE BANK: Fitch to Withdraw Ratings for Commercial Reasons S O U T H K O R E A DAEWOO ENGINEERING: Hoban Construction Picked as Preferred Bidder - - - - - ================= A U S T R A L I A ================= BACCHUS REX: First Creditors' Meeting Set for Feb. 8 ---------------------------------------------------- A first meeting of the creditors in the proceedings of Bacchus Rex Pty Ltd, trading as East Broadbeach, will be held at the offices of Worrells Solvency & Forensic Accountants, Suite 54 HQ@Robina, 58 Riverwalk Avenue, in Robina, Queensland, on Feb. 8, 2018, at 11:00 a.m. Dominic Cantone and Jason Bettles of Worrells Solvency were appointed as administrators of Bacchus Rex on Jan. 29, 2018. CLONTARF1 PTY: Second Creditors' Meeting Set for Feb. 7 ------------------------------------------------------- A second meeting of creditors in the proceedings of Clontarf1 Pty Ltd has been set for Feb. 7, 2018, at 11:00 a.m. at the offices of Grant Thornton, Level 17, 383 Kent Street, in Sydney, New South Wales. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Feb. 6, 2018, at 4:00 p.m. Stephen Dixon and Ahmed Bise of Grant Thornton were appointed as administrators of Clontarf1 Pty on Dec. 21, 2017. JOHN'S NUTS: First Creditors' Meeting Scheduled for Feb. 9 ---------------------------------------------------------- A first meeting of the creditors in the proceedings of - John's Nuts Franchising Pty Ltd; - John's Nuts Holdings Pty Ltd; - John's Nuts Leasing Pty Ltd; - John's Nuts Operations Pty Ltd; and - John's Nuts Wholesale Pty Ltd will be held at the offices of Menzies Advisory, Suite 18-19, 79- 83 High Street, in Kew, Victoria, on Feb. 9, 2018, at 10:30 a.m. Michael Caspaney of Menzies Advisory was appointed as administrator of John's Nuts and subsidiaries on Jan. 30, 2018. MOCHELLES PTY: First Creditors' Meeting Set for Feb. 7 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Mochelles Pty Ltd will be held at the offices of Deloitte Financial Advisory Pty Ltd, 8 Brindabella Circuit, Brindabella Business Park, in Canberra Airport, ACT, on Feb. 7, 2018, at 11:00 a.m. Ezio Senatore of Deloitte Financial was appointed as administrator of Mochelles Pty on Jan. 29, 2018. NQR PTY: 351 Jobs at Risk Following Voluntary Administration ------------------------------------------------------------ Patrick Hatch at The Sydney Morning Herald reports that discount supermarket chain NQR, owned by the founders of the Baker's Delight chain, has gone into voluntary administration putting 351 jobs at risk unless a buyer is found. NQR, which has 18 stores across Victoria, appointed Luke Targett and Bruno Secatore from Cor Cordis as administrators on Jan. 24. According to SMH, Mr. Targett said stores will continue to trade as normal while the business is put up for sale as a going concern. "Most of the stores are profitable and making a contribution; there's a couple that we're going to have to have a look at, but that's all part of assessing the business," the report quotes Mr. Targett as saying. "I believe there's a solid profitable core business there and that's what we're trying to get to the bottom of." SMH relates that Mr. Targett said it was too early to say what went wrong with the business. NQR, or Not Quite Right, which undercuts other grocery chains by selling products that have been over stocked, had their packing changed, or are close to their best before dates, went into administration in 2009 but was rescued by its former owners Ken Nienaber and Baker's Delight co-founder Roger Gillespie, SMH recalls. Mr. Gillespie and his wife Lesley started Baker's Delight in 1980, and grew the chain to more than 700 outlets across Australia, Canada, the United States and New Zealand. NQR was entirely owned by the Gillespie family when it collapsed last week, SMH discloses citing corporate documents. According to SMH, Documents lodged with the corporate regulator show NQR ran at consecutive losses of AUD3.6 million and AUD3.8 million in the past two financial years, on steady sales revenue of about AUD35 million a year. NQR's total liabilities of AUD23 million at June 30, 2017, outweighed its total assets of AUD7.8 million, SMH notes. RALEIGH DAIRY: First Creditors' Meeting Set for Feb. 8 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Raleigh Dairy Holdings Pty Ltd will be held at C.ex Coffs, 2-6 Vernon Street, in Coffs Harbour, NSW, on Feb. 8, 2018, at 11:00 a.m. Quentin Olde and John Park of FTI Consulting were appointed as administrators of Raleigh Dairy on Jan. 29, 2018. TEN NETWORK: Most Creditors Get 100% Payout From New Owner ---------------------------------------------------------- Most creditors of Network Ten on Jan. 31 are receiving payments of 100 cents in the dollar under a dividend distribution announced by KordaMentha Restructuring. For some creditors, the payments are higher than originally estimated. Mark Korda, Jenny Nettleton and Jarrod Villani of KordaMentha were appointed as administrators of Ten in June 2017. Following a successful recapitalisation process which resulted in CBS taking control of Ten, the administration was finalised in November 2017. CBS provided AUD40.58 million to fund a dividend to creditors. The dividend provides: * Key content providers who remain with Network Ten and ongoing trade creditors - 100 cents in the dollar, same as the original estimate. * Financial, statutory and other creditors - a first dividend of 45 cents in the dollar, with an estimated final dividend of 21 cents to be paid before June 2018. This is materially higher than the original estimate of 34 cents because claims from creditors were lower than anticipated. * Onerous and terminated contracts (excluding Fox)- 100 cents in the dollar. This is higher than the original estimate of 10 cents in the dollar because of lower claims. * Fox - fixed payment of AUD12 million. Mark Korda said the outcome for everyone involved in Network Ten was outstanding under the circumstances. He said: "The network has a strong and stable new owner, a talented leadership team and a loyal, creative staff whose support was critical to the successful restructure. The viewers, advertisers, content partners and suppliers also helped the network get through a challenging period. And most of the creditors are now getting all their money back". Network Ten is a division of Ten Network Holdings, one of Australia's leading entertainment and news content companies, with free-to-air television and digital media assets. Ten Network Holdings includes three free-to-air television channels - TEN/TEN HD, ELEVEN and ONE - in Australia's five metropolitan markets of Sydney, Melbourne, Brisbane, Adelaide and Perth, plus the online catch-up and streaming service tenplay. Network Ten was forced to go into voluntary administration in June 2017 when its billionaire shareholders backed out from guaranteeing a loan for the Company. KordaMentha Restructuring partners Mark Korda, Jenny Nettleton and Jarrod Villani were appointed as voluntary administrators. The creditors of Ten Network on Sept. 19 voted in favor of a AUD209.7 million takeover bid from CBS Corp. X & W INVESTMENTS: First Creditors' Meeting Set for Feb. 7 ---------------------------------------------------------- A first meeting of the creditors in the proceedings of X & W Investments Pty Ltd will be held at Level 2, 10 Bridge Street, in Sydney, NSW, on Feb. 7, 2018, at 11:00 a.m. Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay Goodwi were appointed as administrators of X & W Investments on Jan. 25, 2018. ========= C H I N A ========= CHINA HUIYUAN: Convertible Bonds Issue Credit Pos., Moody's Says ---------------------------------------------------------------- Moody's Investors Service says that China Huiyuan Juice Group Limited's (B1, stable) issuance of HKD1 billion zero coupon convertible bonds due 2019 is credit positive. "The convertible bond issuance will help reduce Huiyuan's interest expense by RMB35-40 million per year as the company plans to use the proceeds to refinance its existing loans," says Lina Choi, a Moody's Vice President and Senior Credit Officer. On Jan. 25, 2018, Huiyuan announced the completion of its issuance of HKD1 billion in convertible bonds with a zero coupon, due in 2019. "If the convertible bonds are eventually converted into equity upon maturity in January 2019, it could also lower the company's leverage," adds Choi. Moody's considers the convertible bonds as 100% debt-like. In the event of full conversion of the convertible bonds at the initial conversion price of HKD2.31, the conversion shares will represent approximately 13.94% of the enlarged share capital. The convertible bond is subscribed by Hui Ching Lau, an individual who invests in food and snacks businesses in China. Huiyuan regards the investor as a potential strategic partner for the next phase of its development. Huiyuan's modest financial profile reflects its debt-funded capital spending, investment needs and large working capital needs. Moody's expects Huiyuan to continue to deleverage and improve its financial profile over the next two years. Leverage, as measured by adjusted debt/EBITDA, will likely decline to around 5.8x by year-end 2017 and to 4.9x by year-end 2018, primarily driven by the company's use of cash on hand to pay down debt and maintain stable EBITDA growth. Moody's will continue to monitor Huiyuan's sales momentum and progress in deleveraging. The principal methodology used in this rating was Global Soft Beverage Industry published in January 2017. Established in 1992 and headquartered in Beijing, China Huiyuan Juice Group Limited (Huiyuan) is one of the major players in China's juice market. The company has manufactured and distributed fruit juices, vegetable juices and other beverages for more than 20 years. It operates four major business segments - Juice Products, Nectars, Juice Drinks and Other Beverage Products - through subsidiaries. The company is 65% owned by its chairman, Mr. Zhu Xinli. In May 2013, Huiyuan completed the acquisition of the entire share capital of China Huiyuan Industry Holdings, an upstream juice puree and concentrates producer previously owned by its chairman. GREENLAND HOLDING: Moody's Assigns Ba2 Rating to New USD Notes -------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 backed senior unsecured rating to Greenland Holding Group Company Limited's (Ba1 negative) proposed USD notes. The rating outlook is negative. The proposed notes will be issued by Greenland Global Investment Limited and unconditionally and irrevocably guaranteed by Greenland Holding under Greenland Global's USD3 billion medium- term note program. The company plans to use the net proceeds to refinance existing offshore debt and for general corporate purposes. RATINGS RATIONALE "The proposed notes will improve Greenland Holding's debt maturity profile, because Moody's expect a significant amount of the net proceeds will be used to refinance the company's existing offshore debt," says Franco Leung, a Moody's Vice President and Senior Credit Officer. Moody's expects that the size of the new issuance will not be material relative to Greenland Holding's total debt and will not materially affect the company's debt leverage, given its refinancing plans. Moody's expects the company will slightly improve its debt leverage -- as measured by adjusted debt/capitalization -- to 74%-77% over the next 12-18 months from around 78.2% at the end of June 2017. Such a high level of debt leverage positions the company weakly at its Ba1 corporate family rating. However, Greenland Holding's sales execution improved in 2017. The company recorded 20.2% year-over-year contracted sales growth to RMB306.4 billion in 2017, up from a 10.8% increase in 2016. This strong performance was driven partly by the increased proportion of residential properties sold relative to commercial properties, with the latter typically demonstrating longer cash collection cycles. The company also announced a preliminary unaudited 17.3% year- over-year increase in revenue to around RMB290 billion in 2017 and a 10.4% year-over-year rise in assets to around RMB810 billion in 2017. Moody's believes Greenland's property business continued to contribute to a significant part of the group's growth in revenue and assets. Greenland Holding's Ba1 corporate family rating reflects its: (1) track record of delivering strong growth in its property development business and leading market positions in key markets; (2) highly diversified geographic coverage in China (A1 stable); and (3) ability to manage market volatility through diversified property product lines. Another important rating driver is Greenland Holding's strong ability to access funding due to its status as a local state- owned enterprise. A key constraint on Greenland Holding's rating is its debt-funded growth strategy, which has resulted in weak credit metrics. The company's rating is also tempered by its volatile business performance. The Ba2 senior unsecured debt rating is one notch lower than the corporate family rating due to structural subordination risk. This risk reflects the fact that the majority of claims are at the operating subsidiaries and have priority over claims at the holding company in a bankruptcy scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. As a result of these factors, the expected recovery rate for claims at the holding company will be lower. The negative outlook on Greenland Holding's rating reflects the uncertainty surrounding its plan to lower its high debt leverage. An upgrade of Greenland Holding's rating is unlikely in the near term, given the negative outlook. Nevertheless, the outlook could return to stable if Greenland Holding lowers its debt leverage, such that adjusted debt/total capitalization trends below 70.0%- 72.5% and adjusted EBIT/interest is above 2.5x over the next 12- 18 months. Greenland Holding will face downward rating pressure if its financial profile or liquidity position weakens due to: (1) a weak performance in sales or weakness in the collection of sales proceeds; (2) a decline in profit margins; (3) a sizable increase in debt, arising from aggressive expansion or land acquisitions; or (4) an increase in the risk profile of its non-property businesses. Moody's would consider downgrading the rating if the company's credit metrics remain weak, with adjusted debt/total capitalization above 70.0%-72.5%, and adjusted EBIT/interest below 2.5x over the next 12-18 months. A material reduction in the Shanghai government's ownership in Greenland Holding, which negatively affects the company's access to funding, would also be negative for the rating. The principal methodology used in this rating was Homebuilding and Property Development Industry published in January 2018. Founded in 1992, Greenland Holding Group Company Limited is a China-based company. The company was one of the country's largest property developers by contracted sales in 2017. The group is headquartered in Shanghai, with a focus on the real estate sector. The company has other businesses, including construction, consumer products, energy, finance and auto dealerships. The Shanghai State-Owned Assets Supervision and Administration Commission had an effective shareholding of about 46.37% in Greenland Holding at the end of September 2017. LESHI INTERNET: Sees CNY11.6BB Net Loss for 2017 ------------------------------------------------ Xinhua News Agency reports that Leshi Internet Information and Technology, the listed arm of technology conglomerate LeEco, expects about CNY11.6 billion (US$1.84 billion) in net losses last year. The net loss for 2017 includes operation loss, bad debt provision for account receivable and provision for impairment of long-term assets, the Shenzhen-listed firm said in a statement on Jan. 30. According to Xinhua, Leshi attributed its operation loss to the financial strain of related parties, liquidity issues, shrinking advertisement revenue and rising financing costs. The company saw its shares plummet by the daily limit of 10% for five consecutive days since it restarted trading last week, the report notes. Xinhua relates that the plunge came after a suspension from April last year when the company said in a filing on the Shenzhen Stock Exchange that it was contemplating capital restructuring. The planned deal to acquire a film arm from the troubled LeEco was finally dropped due to LeEco's financial woes, the report says. The company warned investors of risks in light of its current operation, Xinhua adds. Leshi Internet Information & Technology Corp., Beijing engages in Internet video, and film and television production and distribution businesses in China. MODERN LAND: Fitch Affirms B+ IDR; Alters Outlook to Negative ------------------------------------------------------------- Fitch Ratings has revised the Outlook on Modern Land (China) Co., Limited's Long-Term Foreign- and Local-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the rating at 'B+'. Fitch has also affirmed Modern Land's senior unsecured rating at 'B+' with a Recovery Rating of 'RR4'. A full list of rating actions is at the end of this commentary. The Negative Outlook reflects Fitch's estimate that Modern Land's leverage, measured by net debt over adjusted inventory including proportionate consolidation of joint ventures (JVs), increased to above 45% at the end of 2017. Fitch believes Modern Land's higher leverage was mainly due to higher leverage at JV levels as the company continued to expand by replenishing land via JV projects. Fitch may take further negative action if Modern Land's leverage is sustained above 40% within the next 18 months. KEY RATING DRIVERS Increasing Leverage: Fitch estimates Modern Land's leverage rose to around 46% as of end-2017 from 34% at end-2016 and 23% at end- 2015. The leverage exceeded Fitch previous expectation of below 40%, mainly due to higher leverage at JV levels. Fitch continues to proportionately consolidate Modern Land's JV net debt and adjusted inventory as Fitch expect the company's attributable contracted sales to continue to account for less than 60% of its reported contracted sales. Modern Land's leverage may improve in 2018, helped by a lower land premium budget and better sales collection from newly acquired projects in Tier 3 cities where home purchase policies are looser than higher-tier cities. Limited Margin Improvement: Fitch expects Modern Land's gross profit margin to hover around 20% in 2017-2018, compared with 41.0% in 2014 and 31% in 2015. Fitch estimate that Modern Land's land cost as a percentage of average selling price exceeded 40% in 2017 and will continue to pressure Modern Land's recognised gross profit margin in 2018. Fitch expects Modern Land's EBITDA margin (excluding capitalised interest) to continue to remain below 20% in 2017-2018, but its lower land appreciation tax and lower funding cost will keep its net profit margins at a relatively stable level. Growing Scale: Modern Land's reported contracted sales increased 34% yoy to CNY22 billion in 2017. Fitch estimates that attributable sales also rose by more than 20% to more than CNY12 billion in 2017, if Fitch assume 54% of the contracted sales were attributable, the same proportion as 1H17. Fitch expects the company to target contracted sales of more than CNY30 billion, or more than CNY16 billion in attributable sales, in 2018. Sustained Land Bank Pressure: Fitch believes Modern Land is still under pressure to replenish quality land to sustain growth in the next three years, even though Fitch estimate that the company's land bank has improved to slightly less than three years of sales from about two years in 2015. Modern Land's attributable available-for-sale land bank was 2.6 million square metres (sq m) in gross floor area (GFA) at end-June 2017, compared with attributable sales GFA of around 1 million sq m in 2016. Modern Land extended its coverage to more Tier 1 and 2 cities in 2015-2017 but also increased land bank in Tier 3 cities in 2017 due to positive regional market sentiment. Fitch estimates that Tier 1 cities, such as Beijing, Guangzhou and Shanghai, and Tier 2 cities, like Hefei, Suzhou and Wuhan, still account for more than 60% of Modern Land's existing saleable resources by value. DERIVATION SUMMARY Modern Land's reported contracted sales and attributable sales have been growing at CAGRs of more than 50% and 30%, respectively, in 2013-2017, faster than most peers in the 'B' rating category. Modern Land's historical low leverage of 30%- 40%, driven by its disciplined financial policy and low land cost, is lower than 'B' rated peers whose leverage are around 45%-55%, such as Hong Yang Group Company Limited (B/Stable) and Guorui Properties Limited (B/Stable). Modern Land's land bank life is shorter than 'BB-' peers' more than three years of annual sales, and remains one of the key constraints for the rating. Modern Land's Negative Outlook reflects Fitch's estimate that the company's leverage increased to above 45% as of end-2017. Fitch will take further negative action if leverage is sustained above 40% in the next 18 months. KEY ASSUMPTIONS Fitch's Key Assumptions Within Fitch Rating Case for the Issuer - Attributable contracted sales of CNY13 billion in 2017 and CNY19 billion in 2018. - Attributable land investment accounting for 70% of attributable contracted sales in 2017 and 50% in 2018. - Average selling price to increase to above CNY15,000/sq m in 2018. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Negative Rating Action - Insufficient land bank for two years of development. - Sustained decline in attributable contracted sales. - EBITDA margin (excluding capitalised interest) below 20% for a sustained period (1H17 EBITDA margin including capitalised interest: 13.2%). - Net debt/adjusted inventory (including JV proportionate consolidation) above 40% for a sustained period. Developments That May, Individually or Collectively, Lead to Positive Rating Action - The Outlook may be revised to Stable if the negative guidelines are not met in the next 18 months. LIQUIDITY Sufficient Liquidity, Lower Funding Cost: Modern Land's liquidity remains healthy, with total cash of CNY8.7 billion, including restricted cash, compared with short-term debt of CNY4.5 billion, at end-June 2017. Modern Land significantly lowered its funding cost to below 7% at end-June 2017 from 8.1% in 2016 and 10.5% in 2015. Fitch estimates Modern Land increased total cash to around CNY10 billion by the end of 2017, which Fitch expect will be sufficient to cover short-term debt obligations. FULL LIST OF RATING ACTIONS Modern Land (China) Co., Limited Long-Term Foreign- and Local-Currency IDR affirmed at 'B+'; Outlook Revised to Negative from Stable Senior unsecured rating affirmed at 'B+' with Recovery Rating of 'RR4' USD500 million 6.875% senior unsecured notes due 2019 affirmed at 'B+' with Recovery Rating of 'RR4' TAIZHOU HUAXIN: Fitch Rates Proposed USD Notes 'BB+(EXP)' --------------------------------------------------------- Fitch Ratings has assigned Taizhou Huaxin Pharmaceutical Investment Co., Ltd.'s (THPI; BB+/Stable) proposed US dollar senior unsecured notes an expected rating of 'BB+(EXP)'. The notes will be issued by Huaxin Pharmaceutical (Hong Kong) Co., Limited, a wholly owned subsidiary of THPI. THPI will provide an unconditional and irrevocable guarantee to the proposed notes. The notes represent the direct, unsubordinated, unconditional and unsecured obligations of Huaxin Pharmaceutical (Hong Kong) and shall at all times rank pari passu with all other present and future obligations. The proceeds will be used for working capital and other general corporate purposes. The final rating on the proposed US dollar notes is contingent upon the receipt of final documents conforming to information already received. KEY RATING DRIVERS Links to Taizhou Municipality: THPI's ratings are credit linked, but not equalised, with those of Taizhou municipality in eastern China. The link reflects the Taizhou government's ownership of THPI and its strong level of control and oversight, as well as the strategic importance of THPI to the municipality and the development zone in which THPI operates. RATING SENSITIVITIES Changes to Fitch's internal credit assessment of Taizhou municipality will be mirrored in THPI's rating. Changes to THPI's shareholding, strategic importance to the municipality or support from the municipality may also trigger a change in THPI's ratings. Any change in THPI's Issuer Default Rating will result in a similar change in the rating of the proposed notes. Fitch published an exposure draft on new criteria for government- related entities (GREs) on Nov. 27, 2017, which would apply to THPI if adopted as criteria. Fitch will monitor both the application of existing and any new central government laws, regulations and directives that will effectively prohibit or restrict support by the local and regional governments to the entities, with a practical impact on the entities' future ability to service their debts. Fitch interprets such initiatives as being undertaken by the central government to disentangle GREs from public-sector balance sheets, address indiscriminate GRE debt growth, and encourage greater market discipline. Depending on the degree of certainty and the extent of the prohibition, the agency will take rating action, which could result in either a widening of the notching or the adoption of a bottom-up ratings approach, possibly even to the extent of the removal of all support expectations. YANGO JUSTICE: Moody's Assigns B3 Rating to Sr. Unsec. USD Notes ---------------------------------------------------------------- Moody's Investors Service has assigned a B3 senior unsecured rating to the USD notes to be issued by Yango Justice International Limited and guaranteed by Yango Group Co., Ltd (Yango, B2 stable). The company plans to use the bond proceeds mainly to refinance existing debt. The notes rating reflects Moody's expectation that Yango will complete the note issuance upon satisfactory terms and conditions, including proper registrations with the National Development and Reform Commission and the State Administration of Foreign Exchange in China (A1 stable). RATINGS RATIONALE "The proposed note issuance will extend Yango's debt maturity profile and will not have a material impact on its credit metrics, as the proceeds will mainly be used to refinance existing debt," says Kaven Tsang, a Moody's Vice President and Senior Credit Officer. Yango's B2 corporate family rating (CFR) reflects the company's strong sales execution, large scale and good track record in Fujian Province and the Yangtze River Delta. It is also supported by its ability to access the domestic debt market. On the other hand, the company's B2 rating is constrained by its weak financial metrics due to its sizeable debt-funded land acquisitions to support sales growth, as well as its expansion into new regions. It is also constrained by weak liquidity due to high funding needs to support its fast growth plan. Nevertheless, Moody's expects the company to adopt a more measured approach to land acquisitions. Accordingly, its debt growth will likely slow down over the next 2 years. As a result, revenue/adjusted debt could improve to around 30%- 40% and interest coverage to 1.6x-1.7x in the next 12-18 months from 22% and 1.5x for the 12 months to June 30, 2017 respectively. Such levels are comparable with those of its B2- rated Chinese property peers. Yango's CFR also factors in the company's weak liquidity position because of its high funding needs to support its fast growth plan. Its cash balance of around RMB31.2 billion at the end of June 2017 was inadequate to cover its short-term debt of around RMB35.4 billion. The B3 rating of Yango's senior unsecured debt is one notch lower than its corporate family rating of B2, reflecting structural subordination risks. This risk reflects the fact that the majority of claims are at the operating subsidiaries, and have priority over claims at the holding company in a bankruptcy scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. As a result, the expected recovery rate for claims at the holding company will be lower. Yango's stable rating outlook reflects Moody's expectation that Yango will (1) be able to refinance its short-term debt; (2) maintain strong contracted sales growth; and (3) adopt a more measured approach towards land acquisitions to improve its liquidity and debt leverage positions over the next 12 to 18 months. Upward ratings pressure could emerge if Yango shows a track record of improvement in its liquidity and debt leverage positions, while maintaining strong contracted sales growth. Credit metrics indicative of upward rating pressure include: (1) revenue/adjusted debt above 60%-65%, (2) adjusted EBIT/interest cover above 2x; and (3) cash/short-term debt above 1.25x on a sustained basis. Downward rating pressure could emerge if there is a deterioration in Yango's credit metrics or liquidity position, such as increased refinancing risk. Credit metrics indicative of downward ratings pressure include adjusted EBIT/interest coverage below 1.25x-1.50x. The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. Yango Group Co., Ltd is a Chinese property developer focused on the Greater Fujian, Yangtze River Delta, and Pearl River Delta regions. It listed on the Shenzhen Stock Exchange in 2002. Its operations are mainly focused on mass-market residential property development. It had a total land bank of around 33.1 million square meters at the end of September 2017. ================ H O N G K O N G ================ CHINA SOUTH CITY: Fitch Rates USD250MM Senior Notes Final 'B' ------------------------------------------------------------- Fitch Ratings has assigned China South City Holdings Limited's (CSC; B/Stable) USD250 million 7.25% senior notes due 2021 a final rating of 'B' and a Recovery Rating of 'RR4'. The notes are rated at the same level as CSC's senior unsecured rating because they constitute its direct and senior unsecured obligations. The assignment of the final rating follows the receipt of documents conforming to information already received. The final rating is in line with the expected rating assigned on 17 January 2018. CSC's ratings are supported by well-located property projects, growing non-development income, close collaboration with local governments, a long record in integrated trade centre development and sufficient liquidity. The ratings are constrained by CSC's rising leverage and weak industry outlook. KEY RATING DRIVERS Rising Non-Development Income: Income from CSC's non-development business increased by 15% yoy in the last 12 months to September 2017 to HKD1.8 billion, driven mainly by growth in its outlet, property management service, and logistics and warehousing businesses. Fitch believes CSC's diversification will enhance internal cash flow and smooth out sales volatility. Fitch expect non-development income/interest coverage, which was almost at 1.0x in the 12 months to September 2017, to exceed 1.0x in the next 12 months. Higher Leverage: CSC's leverage, measured by net debt/adjusted inventory, rose to 52.4% at end-September 2017 from 48.1% a year earlier, which was in line with Fitch estimate. The increase in leverage was mainly due to faster acquisitions during the year to replenish the company's residential land bank, with land premium making up around 80% of sales value during first half of the financial year to 31 March 2018 (1HFY18). Fitch expects leverage to remain between 50% and 60% for the next two to three years if CSC continues with Fitch estimated capex of HKD8.5 billion-10 billion a year, which will be used to build up saleable residential resources, replenish its residential land bank in Tier 2 cities, and invest in its non-development segment. Fitch believes the developer's rising leverage is mitigated by its growing recurring income. However, CSC's ratings will come under pressure if the non-development segment fails to expand despite continued investment. Residential Sales Support Performance: Contracted sales rose 37% yoy to HKD9.8 billion in the 12 months to September 2017, buoyed by strong sales in four Tier 2 cities: Hefei, Zhengzhou, Nanchang and Chongqing. The increase in contracted sales was mainly driven by a 30% rise in gross floor area sold and a recovery of 5% in average selling prices to HKD8,130 per sq m during the period. Residential sales accounted for around 90% of total contracted value during 1HFY18, of which residential sales in Hefei alone made up 37% of total sales. Fitch expects contracted sales to reach HKD10 billion-11 billion in FY18 as residential markets in the Tier 2 cities where the company operates remain strong. Weak Demand for Trade Centres: Demand in the trade and logistics- centre sector has been weak since late 2014 as small and medium- sized enterprises have withheld investment amid weaker economic growth, slower relocation demand, delays in completion of transportation networks by local governments, and weaker investor appetite. Fitch does not see any signs of recovery in demand for trade centre space in the next 12-18 months. Sustained EBITDA Margin: CSC's EBITDA margin narrowed to 29.0% in the 12 months to September 2017 from above 30% in past years, mainly due to shift towards lower-margin residential properties. However, this is mitigated by the company's low weighted-average land cost of CNY404 (HKD493) per sq m in 1HFY18, and a cut in selling and general expenses (12 months to September 2017: -17% yoy), and larger recurring EBITDA from the non-development segment. Fitch expects CSC's EBITDA margin to remain at around 30% in the next year or two, providing a buffer to absorb average selling price volatility. DERIVATION SUMMARY CSC's projects are located in Tier 1 and 2 cities in China, which are better located than those of two other Fitch-rated trade centre developers - Hydoo International Holding Limited (B- /Stable) and Wuzhou International Holdings Limited (CCC), whose projects are mainly in Tier 3 and 4 cities. This translates into larger scale and better EBITDA margins for CSC compared with its peers in the same industry. CSC's leverage is higher than that of Hydoo and Wuzhou as part of its cash is tied up in the construction of investment properties. Fitch expects its diversification into the non-development segment to generate stable operational cash flow for the company. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for CSC include: - Contracted sales at HKD10 billion-11 billion in FY18. - Non-development income to increase to HKD1.8 billion-2 billion in FY18. - Capital expenditure at HKD8.5 billion-10 billion in FY18. RATING SENSITIVITIES Developments that may, individually or collectively, lead to negative rating action include: - EBITDA margin sustained below 20% - Net debt/adjusted inventory sustained above 50% if non- development income/interest is below 1.0x (FYE17: 0.9x) and - Net debt/adjusted inventory sustained above 60% if non- development income/interest is above 1.0x. No positive rating action is expected in the next 12-18 months given persistent weak demand for trade and logistic centres. LIQUIDITY Adequate Liquidity: CSC had cash and cash equivalents, including restricted cash, of around HKD9.3 billion and unutilised banking facilities of HKD5.6 billion at end-September 2017, covering short-term debt of HKD12.4 billion. CSC's successful issuance in the offshore bond market has also alleviated refinancing pressure and lowered its average borrowing cost to 6.2% at end-September 2017, from 6.3% at FYE16 and 6.8% at FYE15. FWD LIMITED: Fitch Rates USD200MM Subordinated Perpetual Sec. BB+ ----------------------------------------------------------------- Fitch Ratings has assigned Hong Kong-based insurance group FWD Limited's (BBB+/Stable) USD200 million 5.5% subordinated perpetual securities a final rating of 'BB+'. The assignment of the final rating follows the receipt of documents conforming to information already received. The final rating is in line with the expected rating assigned on 19 January 2018. KEY RATING DRIVERS FWD Limited issued the subordinated debt to redeem part of the company's senior notes and fund the ongoing expansion of its life insurance subsidiary in Hong Kong, if needed. The perpetual securities will be eligible for 100% equity credit in calculating financial leverage according to Fitch's methodology based on their non-cumulative features. Fitch estimates FWD Limited's consolidated financial leverage would decrease to 27% at end-1H17 on a pro-forma basis (end-2016: 31%) following the security issue. The securities are rated three notches below FWD Limited's Issuer Default Rating (IDR) due to their subordination status and non- performance risk. The securities are notched down two levels to reflect the poor recovery prospects of subordinated debt issued at a holding company. The rights and claims of security holders in the event of winding-up rank pari passu with those of any parity obligations, such as the issuer's preference shares. One additional notch is applied for non-performance risk, which Fitch views as minimal since interest cancellation is at the issuer's sole discretion. RATING SENSITIVITIES Any change to the 'A'/Stable Insurer Financial Strength Rating of FWD Limited's subsidiary, FWD Life Insurance Company (Bermuda) Limited, will lead to a corresponding change in FWD Limited's Issuer Default Rating and the rating of the subordinated perpetual securities. For details on the rating sensitivities for FWD Limited and its insurance subsidiaries, see Fitch Rates FWD Limited's Proposed Subordinated Securities 'BB+(EXP)', dated 19 January 2018. NOBLE GROUP: Moody's Cuts Bond Rating to Ca on Restructuring ------------------------------------------------------------ Moody's Investors Service has downgraded Noble Group Limited's senior unsecured bond ratings to Ca from Caa3 and the rating on its senior unsecured medium-term note (MTN) program to (P)Ca from (P)Caa3. At the same time, Moody's has affirmed Noble's Caa3 corporate family rating. The rating outlook remains negative. RATINGS RATIONALE The rating action follows Noble's announcement on January 29, 2018 that it has reached an in-principle agreement with a group of its senior debt holders on its financial restructuring. Under the agreement, Noble's senior debt will be reduced to $1.7 billion from $3.4 billion, and existing senior debt holders will receive: (1) 70% equity ownership in the restructured company; (2) 90% or $180 million in preference shares in the restructured company; and (3) distributions of any cash in excess of cash to be used as working capital and for operating expenses. The agreement is subject to final documentation, regulatory and shareholder approval, and implementation. Noble also seeks to launch an agreement for its existing senior debt holders to vote in favor of the proposed restructuring and to commence implementation. "If successful, the transaction will constitute a distressed debt exchange, which is a default event under Moody's definition. The downgrade of Noble's debt ratings to Ca considers this default and Moody's assessment of the high economic loss incurred when compared to the original payment promises," says Gloria Tsuen, a Moody's Vice President and Senior Analyst. "The affirmation of Noble's corporate family rating at Caa3 reflects the continued high operating challenges facing the company, and uncertainty over the timing and outcome of the restructuring which -- if successful -- could significantly improve Noble's financial and liquidity profile," adds Tsuen. In Moody's view, a high level of uncertainty surrounds the company's ability to turn around its operations and return to profitability, given the challenging operating environment and Noble's weakened business profile following prolonged liquidity pressure and the disposal of its major businesses. The company has also sold some of its businesses, including Global Oil Liquids and North American Gas & Power in January 2018 and Noble Americas Energy Solutions in 2017 to generate cash and reduce debt. Nevertheless, Moody's recognizes that completion of the financial restructuring would substantially reduce Noble's debt and interest costs and materially improve its liquidity. The proposed restructuring includes a new committed 3-year $700 million facility for trade finance and hedging. The negative outlook reflects uncertainty over (1) whether the proposed restructuring will be successfully completed; and (2) whether the company will be able to return to profitability after the restructuring, if completed. Noble's ratings could be upgraded if the proposed financial restructuring is successfully completed, thereby significantly improving its financial and liquidity profile. Noble's ratings would be downgraded if (1) the company fails to implement the financial restructuring, thereby further heightening default risk, given the large amount of debt maturing over the next six months and its weak level of operating cash flow; or (2) debt recovery -- in the case of default -- is likely to be significantly lower than currently anticipated. The principal methodology used in these ratings was Trading Companies published in June 2016. Noble Group Limited is a manager of global supply chains for physical commodities. The company's activities across these chains include the sourcing, storage, processing, transportation, and distribution of various commodity products. ========= I N D I A ========= ANNAPORANAA FOODS: CRISIL Lowers Rating on INR8MM Loan to B- ------------------------------------------------------------ CRISIL has downgraded its rating on the long term bank loan facility of Annaporanaa Foods (APF) to 'CRISIL B-/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 8 CRISIL B-/Stable (Downgraded from 'CRISIL B/Stable') Downgrade reflects significant deterioration in the financial risk profile on account of the capital withdrawal and debt funded capital expenditure resulting in stretched liquidity. Capital of INR1.96 crore was withdrawn from the firm resulting in high gearing of 7.87 times as on March 31, 2017. With expected significant debt repayment obligations, liquidity is expected to deteriorate over the medium term. The rating continue to reflect its weak financial risk profile marked by modest networth and high total outstanding liabilities to adjusted networth (TOLANW), modest scale of operations and stretched liquidity. These weaknesses are partially offset by the extensive experience of promoter in the agriculture industry. Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: Modest networth and high TOLANW (Rs 1.18 crore and 7.87 times as on March 31, 2017) along with weak interest coverage ratio of 1.31 times represent weak financial risk profile. Financial risk profile is expected to deteriorate further on account of debt funded capital expenditure in fiscal 2018. * Modest scale of operations and low operating profitability: AFI's scale of operations has remained modest with operating income of INR24.8 crore in fiscal 2017. Also, operating margins has remained low, in the range of 1-2 per cent over the past three years ended fiscal 2017. * Stretched liquidity: Firm's liquidity is stretched on account of low net cash accruals against significant debt repayment obligations coupled with high bank limit utilization. Strength * Extensive experience of the promoter: APF's proprietor has extensive experience of more than two decades in the agro products industry. The promoter's extensive experience has enabled the firm to establish strong relationship with its customers and suppliers. Outlook: Stable CRISIL believes APF will continue to benefit from the extensive experience of its promoter. The outlook may be revised to 'Positive' in case of a significant and sustained improvement in revenue and profitability or capital infusion from the proprietor leading to improved capital structure. The outlook may be revised to 'Negative' in case of a significant decline in cash accruals or stretch in working capital cycle, or higher-than-expected, debt-funded capital expenditure, further weakening the financial risk profile. Based out of Madurai, APF was established in 2007 by Mr. Raj Prabhu as proprietorship firm and is engaged in manufacturing of fried gram. ARUN ENGINEERING: CRISIL Reaffirms B Rating on INR10MM LT Loan -------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on the bank facilities of Arun Engineering Projects Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 12.5 CRISIL A4 (Reaffirmed) Cash Credit 2.5 CRISIL B/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 10 CRISIL B/Stable (Reaffirmed) The ratings continue to reflect AEPPL's modest scale of operations, geographical concentration in the revenue profile, and a large working capital requirement. These weaknesses are partially offset by the experience of the promoters in the construction industry. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations, with concentration in geography and clientele: Intense competition may continue to restrict the scalability of operations; thus, revenue was average at INR21.6 crore in fiscal 2017. Also, the company is likely to remain exposed to risks related to concentration as it executes civil work only for the Karnataka government. * Large working capital requirement: Gross current assets were sizeable at 307 days as on March 31, 2017, driven by large inventory and debtors of 232 days and 72 days, respectively. The upcoming legislative election in Karnataka is expected to affect the payment cycle; any change in the working capital requirement will remain a key monitorable. Strength * Experience of promoters: The former promoter, the late Mr Arun Kumar Harry, had been in the infrastructure development business for over three decades; his son, Mr Arun John Grieg, currently manages the business and has extensive experience in execution of water supply and underground drainage works. Benefits derived from the promoters' experience and, healthy relations with customers and suppliers, should continue to support the business. Outlook: Stable CRISIL believes AEPPL will continue to benefit over the medium term from the experience of the promoters. The outlook may be revised to 'Positive' if a substantial increase in profitability and cash accrual, along with a prudent working capital management, strengthen the financial risk profile. Conversely, the outlook may be revised to 'Negative' if a steep decline in profitability, sizeable working capital requirement, or any large, debt-funded capital expenditure weakens the financial risk profile. AEPPL was originally set up in 1972 as a proprietorship by the late Mr. R A Harry at Bengaluru; it got reconstituted as a private-limited company in 1998. The company provides engineering, procurement, and construction services in the water supply and underground drainage water system segments. ASHOK TIMBER: Ind-Ra Migrates B Issuer Rating to Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Ashok Timber Trading Co.'s (ATTCO) Long-Term Issuer Rating to the non- cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The ratings will now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR75 mil. Fund-based limits migrated to non-cooperating category with IND B(ISSUER NOT COOPERATING) rating; -- INR300 mil. Non-fund-based limits migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on February 18, 2015. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE ATTCO is engaged in the trading of timber. The company procures timber from Malaysia, Burma and Africa and sells it in Maharashtra, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. It was set up as a partnership firm in 1958. BFG INTERNATIONAL: ICRA Cuts Rating on INR10cr Loan to D -------------------------------------------------------- ICRA Ratings has revised the long-term rating assigned to the INR10.00 crore fund based facilities and INR3.00 crore term loan facility of BFG International Private Limited from [ICRA]BB to [ICRA]D. ICRA has also revised the short-term rating for the INR1.25 crore non-fund based facilities of BFG from [ICRA]A4 to [ICRA]D. ICRA has also revised the long term/short term rating for INR0.25 crore unallocated limits of BFG from [ICRA] BB/ [ICRA]A4 to [ICRA]D. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 3.00 Ratings downgraded to [ICRA]D Based term loan from [ICRA]BB(Stable) Long Term-Fund 10.00 Ratings downgraded to [ICRA]D Based facility from [ICRA]BB(Stable) Short Term-Non 1.25 Ratings downgraded to [ICRA]D Fund Based facility from ICRA]A4 Long term/short 0.25 Ratings downgraded to [ICRA]D Term-unallocated from [ICRA]BB(Stable)/ICRA]A4 limits Rationale The rating revision considers the delay in debt servicing in the recent past. The ratings continue to be constrained by the high debt level and high interest cost which have resulted in stretched coverage indicators. ICRA, however, takes note of the established track record of the company; the considerable experience of BFG's promoters in the Fiber reinforced plastic manufacturing industry. Key rating drivers Credit Weaknesses Delay in debt servicing on the back of high repayments and interest cost: There has been a delay in the debt servicing in the recenet past. Elevated debt levels along with high interest cost associated resulted in a delay in debt servicing. Weak liquidity position: The company's liquidity position has been constrained by weak operating margins and high working- capital intensity on account of high receivables. Credit Strengths Long-standing experience of Promoters: longstanding experience and track record of the promoters in the industry (BFG India, a wholly-owned subsidiary of BFG Bahrain). The Company receives operational and financial support from the promoter, including that for customer/order acquisition, working capital support, technical training and support, among others. BFG is engaged in the manufacture of products made of fiberglass reinforced plastic (FRP). Its manufacturing facility is located in Sricity Special Economic Zone, Chitoor. It has the capability to manufacture products that cater to a wide range of industries including but not limited to defense, wind energy, construction, aviation, transportation and marine. Currently the company's major focus has been on transportation and wind energy sectors. The Company is a wholly owned subsidiary of BFG International WLL, Bahrain (BFG Bahrain). CAPITAL POWER: CRISIL Withdraws B Rating on INR45MM Cash Loan ------------------------------------------------------------- CRISIL has been consistently following up with Capital Power Infrastructure Private Limited (CPIL; part of the Capital group) for obtaining information through letters and emails dated July 10, 2017, and August 8, 2017, among others, apart from telephonic communication. However, the issuer has remained non- cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 95 CRISIL A4 (Issuer Not Cooperating; Rating Withdrawal) Cash Credit 45 CRISIL B/Stable (Issuer Not Cooperating; Rating Withdrawal) Letter of Credit 10 CRISIL A4 (Issuer Not Cooperating; Rating Withdrawal) The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company'. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of CPIL. This restricts CRISIL's ability to take a forward looking view on the credit quality of the entity. CRISIL believes information available for CPIL is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB' rating category or lower. Based on the last available information, the rating on bank facilities of CPIL continues to be 'CRISIL B/Stable/CRISIL A4 Issuer Not Cooperating' CRISIL has withdrawn its ratings on the bank facilities of CPIL at the company's request and on receipt of a no-objection certificate from the banker. The withdrawal is in line with CRISIL's policy on withdrawal of its ratings on bank loans. For arriving at the ratings, CRISIL has combined the business and financial risk profiles of CPIL, Capital Power Systems Ltd (CPS), and Capital Electricals Ltd (CEL). This is because the three companies, together referred to as the Capital group, have a common management and are engaged in the same business. CEL (formerly, Mayur Electrical Industries Pvt Ltd) was incorporated in 1994 and is promoted by Mr Pawan Kumar Bansal. The company manufactures electric wires and cables at its plant in Noida, Uttar Pradesh. CPS was incorporated in 1988, promoted by Mr Bansal, Mr Dinesh Chand Gupta, and Mr. Mahesh Kumar Gupta. The company manufactures single-phase and three-phase electronic metres, which it primarily supplies to State electricity boards (SEBs) unit is in Noida. CPIL, incorporated in 2008 and promoted by Mr Bansal, undertakes EPC (engineering, procurement, and construction) projects for SEBs and state power utilities for erecting substations and setting up transformers, poles, feeders, and cables. DILEEP TRADERS: CRISIL Assigns B+ Rating to INR7MM Cash Loan ------------------------------------------------------------ CRISIL has assigned its 'CRISIL B+/Stable' rating on the long- term bank facilities of Dileep Traders - Kollam (DTK). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 7 CRISIL B+/Stable The rating continues to reflect extensive experience of the promoters in the cashew processing business. These rating strengths has been partially offset by below average financial risk profile and modest scale of operations and exposure to intense competition in the fragmented industry. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations and exposure to intense competition in the fragmented industry: The firm's business risk profile remains constrained on account of its small scale of operations in a highly fragmented industry. The firm recorded revenues of INR27.85 crore during 2016-17 (refers to financial year, April 1 to March 31); the modest scale of operations is partly due to the limited track record of operations of the firm. The cashew industry is marked by limited differentiation in technology involved in the processing of cashew nuts. This, coupled with relatively moderate capital requirements to set up a cashew- processing unit has resulted in low entry barriers. Consequently, the domestic cashew processing industry is highly fragmented, marked by the presence of many small players, leading to intense competition in both the organised and unorganised segments. * Below-average financial risk profile: The DTK has below-average financial risk profile marked by modest net worth of INR1.16 cr., high gearing of 4.2 times as on March 31, 2017. The company has moderate debt protection metrics with net cash accrual to Total debt (NCATD) and interest coverage ratios of over 0.03 and 1.3 times, respectively, for 2016-17. Financial risk profile may remain below average over the medium term. Strength * Extensive experience of the promoters in the cashew processing business: DTK is promoted by Mr. Dileep Kunju. The proprietor has been related to the same line of business for over 2.5 decades. The firm has a strong customer base in the domestic market, with whom it has been associated since inception, resulting in repeat business. Its long-standing position in the cashew segment has given the firm a negotiating edge with its various intermediaries. DTK also has a good network of raw cashew nut suppliers spread across several geographies, which ensures availability of high quality cashew nuts throughout the year. Outlook: Stable CRISIL believes that Dileep Traders - Kollam (DTK) will continue to benefit from the promoter's extensive experience in the cashew industry. The outlook may be revised to 'Positive', if the firm scales up its revenues and maintains its margins resulting in an improvement in its capital structure. Conversely, the outlook may be revised to 'Negative', if the firm records lower than expected revenues and profitability or undertakes greater than expected debt funded capex or in case of significant withdrawals by the promoter. Set up as a Proprietorship firm in 2000 by Mr. Dileep Kunju, Dileep Traders - Kollam (DTK) is engaged in the processing of raw cashew nuts and sales of cashew kernels. DTK currently operates three processing facility, two in Kerala and one in Tamil Nadu with combined installed capacity of dispatching around 8000 kg per day of cashew kernels. For fiscal 2017, DTK profit after tax (PAT) was INR0.14 crore on net sales of INR27.85 crore, against a PAT of INR0.11 crore on net sales of INR23.60 crore for fiscal 2016. DINESH TEXTILE: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Dinesh Textile Mills' (DTM) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The ratings will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR40 mil. Fund-based working capital limits migrated to non- cooperating category with IND B+(ISSUER NOT COOPERATING) rating; -- INR11.69 mil. Long-term loans migrated to non-cooperating category with IND B+(ISSUER NOT COOPERATING) rating; and -- INR2.5 mil. Non-fund-based working capital limits migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on Feb. 26, 2015. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE DTM is a partnership firm incorporated in 2012 by A.S. Dinesh and S. Jayanthi. The company manufactures garments and exports them to European countries. FANIDHAR MEGA: CRISIL Reaffirms 'B' Rating on INR2.5MM LT Loan -------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on the bank facilities of Fanidhar Mega Food Park Private Limited. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term Bank Loan Facility 2.5 CRISIL B/Stable (Reaffirmed) Proposed Short Term Bank Loan Facility 1.5 CRISIL A4 (Reaffirmed) The ratings continue to reflect the company's exposure to risks related to implementation of its project, which is in the initial stage. The ratings also factor expected average financial risk profile because of partly debt-funded project. These weaknesses are partially offset by its promoters' extensive business experience and their funding support. Analytical Approach For arriving at the ratings, CRISIL has treated as neither debt nor equity the unsecured loan of INR7.05 crore as on March 31, 2017, extended to FMFPPL by its promoters and their family members, as the loan is likely to remain in the business over the medium term. Key Rating Drivers & Detailed Description Weakness * Exposure to project implementation risks: Timely implementation of the company's mega food park, timely receipt of government grants, and stabilisation of operations are key rating sensitivity factors. The project is expected to commence operations from November 2019. * Average financial risk profile: Financial risk profile may remain average on account of debt funded project resulting in project gearing of 1.32 times. Strengths * Promoters' extensive experience: The company will benefit from its promoters' experience of over three decades. * Promoters' fund support and expected favourable debt repayment structure: Equity and unsecured loans from the promoters, and 29 months of moratorium for repayment of term loan with tenure of seven years will support the company's liquidity in the initial years of operations. * Government support to project by way of funding grant Funding risk is mitigated as 42% of the project cost will be funded through grant from the central government's Ministry of Food Processing Industries and the Gujarat government. Timely realisation of the grant is a key monitorable. Outlook: Stable CRISIL believes FMFPPL will continue to benefit from its promoters' extensive business experience and their funding support. The outlook may be revised to 'Positive' if timely project implementation and stabilisation of operations lead to expected revenue, profitability, and cash accrual in the initial phase of operations. The outlook may be revised to 'Negative' if delay in project implementation or in stabilisation of operations leads to lower revenue and cash accrual, or if a stretch in working capital cycle weakens the financial risk profile, especially liquidity. FMFPPL, incorporated in 2010 and promoted by Mr Ravjibhai Patel, Mr. Krunal Patel, Mr. Rushabh Patel, and their family members, is establishing a mega food park at Munderda village in Mehsana district in Gujarat. The food park will include warehouse facility; cold storage; multi-fruit processing lines; potato flakes plant; grading, sorting, and cleaning lines; laboratory for research and testing; and food processing units. It is likely to commence commercial operations from November 2019. This food park will be set up under the Mega Food Park Scheme of Ministry of Food Processing Industries. Under the scheme, the government will provide operational and financial support to private players for setting up facilities to link agricultural production to the market by bringing together farmers, processors, wholesalers, and retailers, to maximise value addition, minimise wastage, increase farmers' income, and create employment opportunities. FIVEBRO INTERNATIONAL: Ind-Ra Raises LT Issuer Rating to 'C' ------------------------------------------------------------ India Ratings and Research (Ind-Ra) has upgraded Fivebro International Private Limited's (FIPL) Long-Term Issuer Rating to 'IND C' from 'IND D'. The instrument-wise rating actions are: -- INR8.6 mil. Term loan due on March 31, 2019 upgraded with IND C rating; -- INR130 mil. Fund-based working capital limits upgraded with IND C/IND A4 rating; -- INR120 mil. Non-fund-based letter of credit limits upgraded with IND A4 rating; and -- INR30 mil. Non-fund-based bank guarantee limits upgraded with IND A4 rating. KEY RATING DRIVERS The upgrade reflects FIPL's timely servicing of debt for the three months ended December 2017. However, the ratings remained constrained by FIPL's tight liquidity position, as reflected by its use of the fund-based limits at 113.66% and that of non-fund- based limits at 100% during the 12 months ended December 2017. FIPL's business is working capital intensive in nature with a net working capital cycle of 149 days in FY17 (FY16: 248 days). Its receivable days remained high between 150-250 days during FY15- FY17. Consequently, FIPL's credit metrics remained stretched in FY17 with gross interest coverage (operating EBITDA/gross interest expense) at 0.3x (FY16: 0.18x) and net leverage (adjusted net debt/operating EBITDA) at 30.55x (56.08x). Moreover, the company's scale of operations remains small and operating margins weak on account of the trading nature of business. Revenue was INR589.37 million in FY17 (FY16: INR446.22 million) and EBITDA margin were 2.57% (2.06%). RATING SENSITIVITIES Positive: An improvement in the working capital cycle leading to an improvement in overall liquidity profile of the company would result in a positive rating action. COMPANY PROFILE Incorporated in 2002 in Gujarat, FIPL is involved in the trading of water treatment components such as pumps, motors, valves and membranes. The company has 11 offices and nine warehouses across India. FIPL is promoted by Mr. Nishit Doshi and his family, who have almost three decades of experience in the same line of business. FORTESI SBL: Ind-Ra Withdraws INR100MM Series A1 PTCs Ratings ------------------------------------------------------------- India Ratings and Research (Ind-Ra) has withdrawn Fortesi SBL IFMR Capital 2018's (an ABS transaction) provisional rating: -- INR100.0 mil. Series A1 pass-through certificates (PTCs) due on October 2019 withdrawn with WD rating. KEY RATING DRIVERS Ind-Ra had assigned provisional rating to the transaction on 23 January 2018; with PTCs of INR10.0 million. However, since the transaction in the previous form is not likely to be converted to a final rating and upon the request of the issuer, the aforesaid provisional rating has been withdrawn. COMPANY PROFILE Capital Float is a non-banking finance company which started its operations in 2013 and has Mr. Sashank Rishyasringa and Mr. Gaurav Hinduja as co-founders. The company provides loans (majorly unsecured) to small and medium-sized enterprises across 88 locations in 16 states, using a technology-enabled underwriting platform that tries to integrate traditional lending methods with an algorithm-based credit assessment. It adopts a hybrid model to lend to SMEs whereby the company finances some proportion of the money from its own balance sheet while the balance proportion is off-balance sheet and is financed by co- lenders which can be financial institutions or high net-worth individuals. The current on-book portfolio comprises 80% of the portfolio while the rest 20% is off-balance sheet portfolio. Capital Float is backed by well-known investors such as SAIF Partners, Aspada Investment Company, Sequioa Capital and Ribbit Capital. The company has completed four rounds of equity funding. Most extant investors participated in subsequent rounds of funding, indicating their willingness to provide support and growth capital. The company's loan portfolio stood at INR5.4 billion on 31 March 2017 compared to INR1.3 billion on 31 March 2016. It reported a net loss of about INR634.7 million in FY17 as against a net loss of INR290 million in FY16. The company classifies any loan as non-performing asset if it is overdue for over 90 days. In FY17, gross non-performing assets (>90 dpd) of Capital Float's portfolio stood at 1.23% as against 0.49% in FY16. As of September 2017, the company's loan portfolio stood at INR8.8 billion and gross non-performing asset at 1.81% of the total credit book. GAJRAJ AUTOMOBILES: Ind-Ra Migrates BB- Rating to Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Gajraj Automobiles Private Limited's Long-Term Issuer Rating to the non- cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The ratings will now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR180 mil. Fund-based working capital limits migrated to non- cooperating category with IND BB-(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on February 14, 2014. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 2010, Gajraj Automobiles is engaged in the dealership of Tata Motors Limited's medium and heavy commercial vehicles in seven districts of Odisha. GLOBAL CLOUD: Fitch Lowers Long-Term IDR to CCC ------------------------------------------------ Fitch Ratings has downgraded Global Cloud Xchange Limited's (GCX) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'CCC' from 'B-'. Fitch has also downgraded the rating on GCX Limited's US$350 million 7% senior secured notes due 2019 to 'B-' with a Recovery Rating of 'RR2', from 'B+' with Recovery Rating of 'RR2'. GCX Limited is a wholly owned subsidiary of GCX. The downgrade reflects Fitch view that GCX faces excessive refinancing risk around the USD350 million secured notes due August 2019 due to uncertain trading conditions and fall-out from the default and break-up of its 100% parent, Reliance Communications Limited (Rcom). Fitch believe that timely refinancing may be a challenge without greater certainty on the future relationship with Rcom and clearer trading prospects; the bond's current yield to maturity is around 11% -12%. The notes are rated two notches higher than GCX's IDR due to superior recoveries of between 71%-90% on senior secured notes in a default scenario, based on Fitch estimated value that would be available to creditors. The notes are secured by the assets and equity interests of GCX and its key subsidiaries and are guaranteed by GCX and its key operating subsidiaries, which generate most of the group's revenue and EBITDA. KEY RATING DRIVERS Excessive Refinancing Risk: Fitch believe that GCX will face pressures to refinance its USD350 million secured notes due in August 2019 in light of deteriorating liquidity, persistent negative FCF and lack of resolution of receivables due from Rcom. The company's financial performance has weakened since the notes were issued in 2014, and lenders are likely to require a higher interest rate than the current 7%, even if replacement credit is available, putting pressure on GCX's cash generation. Deteriorating Liquidity: Fitch forecast GCX's cash balance as of end-December 2017 (end-September 2017: USD37 million) to remain below USD40 million due to a lower-than-expected indefeasible right of usage (IRU) sales. Fitch forecast IRU sales of USD55 million for the financial year ending March 2018 (FY18), and it will remain flat during FY19 due to the addition of new under-sea cables by telcos and 'over the top' companies. However, management believes that it may sign additional IRU deals in 4QFY18, leading to overall FY18 cash sales of around USD55 million-60 million and cash rising above USD60 million at end-March 2018, after it pays the coupon of USD12.3 million due on 1 February 2018 on the USD350 million bonds. Constantly Negative FCF: Fitch forecast GCX to have negative FCF in FY18, as cash flow from operations of USD10 million-15 million may fall short of Fitch capex estimate of around USD25 million (1HFY18: USD13 million), even if the company pays no dividend. FCF is unlikely to recover in FY19 if working-capital outflows persist on non-payment by Rcom. There will be additional cash pressure if it pays a dividend to support USD13 million of loans due at its immediate parent, Reliance Global BV (RGBV). RGBV's stake in GCX is pledged for the loan. GCX paid USD15 million in dividends in FY17. However, management does not intend to pay dividend to Rcom during FY18- 19. Fitch believes that GCX's FY18 cash EBITDA could remain flat at around USD75 million-80 million (FY17: USD78 million) on IRU sales of around USD55 million (FY17: USD51 million) and weakness at its managed-service segment. Non-Payment by Rcom: Net receivables due from Rcom have risen steadily (end-September 2017: USD120 million, FYE17: USD94 million), with which it has an annual trading relationship worth about USD30 million-35 million. Rcom faces extremely weak liquidity following its bond default in November 2017 and debt restructuring. GCX's management plans to acquire some of Rcom's assets to offset its receivables. However, any such transaction will require approval from Rcom's joint lenders, which may prevent timely execution of a deal. Fitch continue to rate GCX's IDR based on its standalone profile under Fitch Parent and Subsidiary Rating Linkage methodology, due to weak legal, operational and strategic linkages with its parent. Fitch understand Rcom may be looking to sell all or part of its stake in GCX. GCX's cash flow is partially ringfenced, and dividends to Rcom are subject to an incurrence test of debt/EBITDA of below 3.75x (FY17: 3.00x) and restricted payment covenants. However, GCX is able to pay about USD10million-15 million in annual dividends under the ringfencing conditions. Recovery Rating of 'RR2': Fitch have downgraded GCX Limited's USD350 million bond to 'B'-'/'RR2'.Fitch uses the going-concern value approach to calculate the post-restructuring enterprise value, as the liquidation approach is not appropriate since GCX's assets are of little use if dismantled and liquidated. Fitch estimates post-restructuring cash flow of around USD74 million, the same as last year. This assumes the depletion of the current position to reflect the distress that provoked a default and a level of corrective action that Fitch assumes would have occurred during restructuring. Fitch assume a cash flow multiple of 4.5x as Fitch believe that Rcom may settle for a lower value for GCX, given its weak liquidity and cash requirements. The adjusted going-concern enterprise value after administrative claims of USD300 million is then applied to the USD350 million secured notes, giving an estimated 86% recovery. DERIVATION SUMMARY The rating action reflects Fitch's assessment that GCX is exposed to excessive refinancing risk on its USD350 million secured notes due August 2019. Its cash balance is depleting on persistently negative FCF due to lower cash generation and working-capital outflows related to transactions with Rcom. GCX's business profile is exposed to high execution risk on the successful completion of lumpy IRU sales in FY18-FY19 amid an oversupplied industry that is characterised by frequent price erosions. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Revenue to decline by low-single digit percentage in FY18. - Cash EBITDA of around USD75 million-80 million with an IRU sale of around USD55 million. - Rcom will not pay for net sales of around USD30 million-35 million during FY18-FY19. - Annual capex of around USD25 million. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Visibility on GCX's ability to refinance its 2019 secured notes. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Fitch believes that liquidity has weakened such that default appears probable, refinancing appears unavailable or liquidity concerns are immediate. LIQUIDITY Deteriorating Cash Balance: Fitch expect liquidity to continue to be poor. GCX had an unrestricted cash balance of USD37 million at end-September 2017, (1QFY18: USD53 million, FY17: USD62 million), with the only debt being the USD350 million secured notes due August 2019. GCX's committed undrawn facilities of USD30 million expired in September 2017. The company needs a minimum cash balance of USD40 million-50 million to pay its annual interest cost of USD25 million, maintenance capex of around USD20 million and taxes of USD3 million. ICON DEVELOPERS: CRISIL Ups Rating on INR6MM LT Loan to B+ ---------------------------------------------------------- Due to inadequate information, CRISIL, in line with SEBI guidelines, had migrated the rating on the long-term bank facility of Icon Developers (ID) to 'CRISIL B/Stable'; Issuer not cooperating'. However, management has subsequently shared information necessary for carrying out comprehensive review of the rating. Consequently, CRISIL is migrating the rating on the firm's long-term facility from 'CRISIL B/Stable/Issuer not cooperating' to 'CRISIL B+/Stable. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term 6 CRISIL B+/Stable (Migrated Bank Loan Facility from 'CRISIL B/Stable' Issuer Not Cooperating) Term Loan 6 CRISIL B/Stable/Issuer Not from 'CRISIL B/Stable' Issuer Not Cooperating) The ratings reflect geographical concentration risk and vulnerability to inherent cyclicality in the real estate sector in India. These weaknesses are partially offset by extensive experience of the partners in the real estate market. Key Rating Drivers & Detailed Description Weakness * Geographical concentration risk: ID is currently developing a single project in Kanpur. Developing a single site project exposes the firm to geographical concentration risk as any adverse geopolitical event in the specific location can severely impact operations. * Vulnerability to inherent cyclicality in the real estate sector in India: The residential real estate industry is unorganized with the presence of a large number of regional players due to lower entry barriers. Despite stiff competition, past track record, quality and goodwill help large players to command premium pricing for their projects. However, there is severe competition among the small regional players. Moreover, the industry is inherently cyclical in nature as evidenced during the 2008 economic slowdown. Strengths * Extensive experience of partners in real estate sector market: ID is partnership firm; the day to day operations of the project are managed by Mr Pawan Garg. The partners have vast experience in the real estate sector of over two decades. Till date ID has completed around 5 residential/commercial projects totalling to developed area of around 2.5 lakh sq. ft. Outlook: Stable CRISIL believes that ID will continue to benefit over the medium term from the extensive industry experience of its partners. The outlook may be revised to 'Positive' if larger than anticipated advances/bookings from customers leads to healthy cash accruals. Conversely, the outlook may be revised to 'Negative' if ID faces a time or cost overrun in its ongoing project, or in case of lower than anticipated customer advances, leading to pressure on its revenue and profitability. ID is constructing 145 luxury apartments along with club & other facilities over 2 acres of land area at Bara Devi (Kidwai Nagar). ID is a partnership firm; the day to day operations of the project are managed by Mr Pawan Garg. JEWEL WORLD: CRISIL Reaffirms B+ Rating on INR6.5MM Cash Loan ------------------------------------------------------------- CRISIL's rating on the long-term bank facilities of Jewel World (JW) continues to reflect the firm's average financial risk profile because of small networth and weak total outside liabilities to tangible networth (TOLTNW) ratio, large working capital requirement, modest scale of operations, and geographical concentration in revenue profile. These weaknesses are partially offset by the extensive experience of its promoters. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 6.5 CRISIL B+/Stable (Reaffirmed) Proposed Long Term Bank Loan Facility 1 CRISIL B+/Stable (Reaffirmed) Analytical Approach Unsecured loans from promoters have been treated as neither debt nor equity as these are expected to remain in business and carry market rate of interest. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations and geographical concentration in revenue profile: With revenue of INR45.95 crore for fiscal 2017, scale remains small in the intensely competitive gold retail segment that has low entry barrier. Also, entire revenue comes from the firm's two showrooms in Ahmedabad. * Average financial risk profile: Networth was small at INR7.04 crore as on March 31, 2017, while working capital-intensive operations led to a high TOLTNW ratio of 1.88 times. Strength * Extensive experience of promoters: Prior to setting up JW, promoters had been engaged in the wholesale gold jewellery business. Outlook: Stable CRISIL believes JW will continue to benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' if significant improvement in scale of operations and profitability leads to sizeable cash accrual. The outlook may be revised to 'Negative' if revenue or profitability declines, capital structure or debt protection metrics weaken, or working capital cycle gets stretched. Set up in 2013 as a partnership firm by Ahmedabad-based Soni and Patel families, JW retails gold jewellery and has two showrooms in Ahmedabad. MAD STUDIOS: ICRA Moves D Ratings to Non-Cooperating Category ------------------------------------------------------------- ICRA Ratings has moved the long term ratings for the bank facilities of Mad Studios Private Limited (MSPL) to the 'Issuer Not Cooperating' category. The rating is now denoted as "[ICRA]D ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based-Cash Credit 2.50 [ICRA]D ISSUER NOT COOPERATING; Rating moved to the 'Issuer Not Cooperating' category Fund Based-Term Loan 13.00 [ICRA]D ISSUER NOT COOPERATING; Rating moved to the 'Issuer Not Cooperating' category Non-fund Based 2.00 [ICRA]D ISSUER NOT COOPERATING; Limit Rating moved to the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis best available/dated/ limited information on the issuers' performance. Accordingly the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Mad Studios Private Limited (MSPL) was incorporated on 30th January, 2012 and is primarily engaged in the production of television commercials. The company also in the recent past forayed into movie production and end to end production services business that entails leasing of equipment and related services to various directors, film studios, production houses, etc. MSPL is a part of the Mad Group. The flagship company of the Group is Mad Entertainment Limited, promoted by Mr. Sunil Manchanda who has been in the Media Industry for more than two decades. The Group has produced more than 1000 television commercials for various famous brands till date. MALLAN RICE: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan ----------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the long- term bank facilities of Mallan Rice & Gen. Mills (MRGM). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL B+/Stable (Reaffirmed) Term Loan 2 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect MRGM's large working capital requirement, a modest scale of operations in the highly fragmented rice industry, and an average financial risk profile. These weaknesses are partially offset by the experience of the partners in the rice industry. Key Rating Drivers & Detailed Description Weaknesses * Large working capital requirement: Gross current assets were sizeable at 341 days as on March 31, 2017, driven by large inventory of 310 days. Inventory is high because the entire annual paddy requirement has to be obtained during the crop season (September to March). This trend may continue over the medium term. * Modest scale of operations amid intense competition: Revenue declined significantly to INR8.47 crore in fiscal 2017, from INR22.89 crore in the previous year, due to a halt in operations during the crop season because of unfavourable pricing. Thereafter, the operations were revamped, resulting in revenue of around INR11 crore until December 2017; revenue is expected at INR15-17 crore by end of fiscal 2018. However, operations are expected to remain small over the medium term due to intense competition. * Weak financial risk profile: Total outside liabilities to adjusted networth ratio was high at 9.48 times as on March 31, 2017, due to modest networth of INR0.97 crore and substantial working capital debt. Interest coverage ratio was 1.7 times, with a negative net cash accrual to adjusted debt ratio in fiscal 2017 due to sizeable capital withdrawal by the partners. Strength * Experience of partners: Benefits derived from the partners' experience of over a decade and healthy relations with customers and suppliers should continue to support the business. Outlook: Stable CRISIL believes MRGM will continue to benefit over the medium term from the experience of the partners. The outlook may be revised to 'Positive' if a substantial increase in revenue, profitability, and cash accrual strengthens the financial risk profile. Conversely, the outlook may be revised to 'Negative' if an aggressive, debt-funded capital expenditure or a stretch in working capital cycle weakens the financial risk profile. MRGM was set up in 2001 as a partnership between Mr Sanjeev Kumar Garg and Mr Dimple Garg. It mills basmati rice at its facility in Muktsar, Punjab, at a milling capacity of 4 tonne per hour. MANGLAM TIMBERS: Ind-Ra Moves B Issuer Rating to Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Manglam Timbers' (MT) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The ratings will now appear as 'IND B(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR17.5 mil. Fund-based limits migrated to non-cooperating category with IND B(ISSUER NOT COOPERATING) rating; and -- INR40 mil. Non-fund-based limits migrated to non-cooperating category with IND A4(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on May 27, 2014. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Formed in 1995 by Mahesh Patel, MT imports, supplies and trades Indian, African and Burmese teak wood logs. It procures teak woods and processes it as per customer requirements. MONNET ISPAT: JSW Steel Offers INR3,700 crore --------------------------------------------- BloombergQuint reports that JSW Steel has offered INR3,700 crore for Monnet Ispat which is undergoing the insolvency resolution proceedings that are expected to be completed by mid-February, sources said. JSW is a bidder in the resolution proceedings of Monnet Ispat, which owes more than INR10,000 crore to its lenders, the report says. Out of INR3,700 crore, INR2,700 crore will be paid as cash to lenders, one of the people cited above said on the condition of anonymity, BloombergQuint relays. Monnet Ispat will invest INR1,000 crore as equity which will be used for settling dues of employees and workmen, operational creditors and used for the day-to-day running of the company, the person, as cited by BloombergQuint, added. The amount offered earlier was INR3,500 crore but the lenders negotiated and "JSW Steel agreed to add another INR200 crore", he said. The last date to submit the plan was Dec. 23 and JSW Steel along with AION Capital is the only firm which has submitted resolution plan, he said, BloombergQuint relays. As per the rules, the entire insolvency process has to end within 270 days. Priority should be 180 days and if not cleared another 90-day time can be sought, the report notes. About Monnet Ispat Monnet Ispat and Energy Limited is a holding company. The Company is engaged in the business of conducting coal mining operations and manufacturing coal-based sponge iron and various other steel/iron-based products. The Company operates through three segments: Iron & Steel, Power and Others. Its principal products and services include steel and power. It has an integrated steel plant at Raigarh that has a production capacity of 1.5 million tons per annum (MTPA) to produce hot rolled (HR) plates, rebars and structure profiles to cater to the infrastructure and construction industry. The Company has coal blocks, such as Gare Palma IV/5, Utkal B2, Urtan North, Raigmar dipside block and Mandakini. It is also engaged in producing ferro-alloys, which includes vital alloys, such as Ferro Manganese (Fe-Mn) and Silico-Manganese (Si-Mn). These are supplied in diverse shapes and forms from billets and ingots to powders, fillers and allied reinforcements. Monnet Ispat was one the 12 companies identified by the Reserve Bank of India for action under the Insolvency and Bankruptcy Code (IBC). MULTIFILMS PLASTICS: Ind-Ra Migrates BB Rating to Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Multifilms Plastics Private Limited's (MPPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR50 mil. Fund-based limits migrated to non-cooperating category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER NOT COOPERATING) rating; -- INR40 mil. Non-fund-based limits migrated to non-cooperating category with IND BB(ISSUER NOT COOPERATING)/IND A4+(ISSUER NOT COOPERATING) rating; and -- INR9.3 mil. Term loan due on June 2019 migrated to non- cooperating category with IND BB(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on January 12, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 1984, MPPL manufactures multilayer plastic films used by fast-moving consumer goods industry for packaging. The company is promoted by Mr. Sudhir Bandiwadekar, who oversees its overall operations. NANDINI CREATION: CRISIL Hikes Rating on INR6.5MM Loan to B+ ------------------------------------------------------------ CRISIL has upgraded its rating on the long-term bank loan facilities of Nandini Creation (NC) to 'CRISIL B+/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 1 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Long Term Loan 6.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Proposed Long Term .5 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') The upgrade reflects improvement in the business and financial performance. Revenue is expected to increase to over INR14.0 crore in fiscal 2018, from INR5.98 crore in fiscal 2015. Further growth is expected with customer addition and increasing demand from existing customers, which would be met by enhanced capacities. Also, the operating margin has remained comfortable at 15.58% over this period. Moreover, the total outside liabilities to tangible networth (TOLTNW) ratio, which was 2.33 time as on March 31, 2017, is expected to remain below 2.0 time over the medium term, supported by no major capital expenditure (capex) and gradual repayment of term loans. The rating reflects large working capital requirement and a modest scale of operations in the highly competitive textile industry. These weaknesses are partially offset by the industry experience of the proprietor and an established customer base. Key Rating Drivers & Detailed Description Weaknesses * Modest scale of operations: Revenue was modest, at around INR13.93 crore for fiscal 2017 largely due to the highly fragmented nature of the industry. * Large working capital requirement: Gross current assets were high at 324 days as on March 31, 2017, largely due to substantial receivables and an increase in current assets. * Modest financial profile: The networth was modest, the gearing high, and debt protection metrics average. The networth improved to INR5.69 crore as on March 31, 2017, due to equity infusion of INR4.0 crore during fiscal 2017; this led to correction in the gearing. Strengths * Industry experience of the proprietor and an established customer base: The proprietor has an experience of 5-7 years in the textile industry. He has an established and healthy relationship with customers such as Lifestyle International Pvt Ltd's Max and Lifestyle stores, The Chennai Silks, Bazaar Kolkata, Vishal Megamart, Mafatlal Industries Limited (Mafatlal), Reliance, and Arvind Mills. Outlook: Stable CRISIL believes NC will continue to benefit over the medium term from its established customer base. The outlook may be revised to 'Positive' if significant scaling up of operations and profitability, or substantial equity infusion strengthens the financial risk profile, particularly liquidity. The outlook may be revised to 'Negative' if aggressive, debt-funded capex, or lower-than-expected revenue and operating profit margin lead to deterioration in the financial risk profile. Established in 2011, NC is an Ahmedabad-based proprietorship firm of Mr Mahesh Agarwal. It manufactures garments, mainly women's kurtis. The firm procures grey fabric and outsources the weaving, dyeing, and finishing activities. It undertakes stitching in- house. In fiscal 2015, NC set up its own weaving capacities and started undertaking weaving on a job-work basis for Mafatlal. NANO AGRO: ICRA Reaffirms B Rating on INR10cr Cash Loan ------------------------------------------------------- ICRA Ratings has reaffirmed the long-term rating of [ICRA]B to the INR10.00-crore cash credit facility of Nano Agro Foods Pvt. Ltd. (NAFPL). ICRA has also assigned a long-term rating of [ICRA]B to the INR0.73-crore unallocated limits of NAFPL. The outlook on the long-term rating is Stable. ICRA has also removed the rating from Issuer not cooperating category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 10.00 [ICRA]B(Stable); Reaffirmed Removed from 'issuer Non- cooperating' category Unallocated 0.73 [ICRA]B(Stable); Reaffirmed Removed from 'issuer Non- cooperating' category Rationale The rating reaffirmation continues to remain constrained by the modest scale of operations, with NAFPL reporting a de-growth in the past two fiscals and a weak financial profile as reflected by its low profitability margins and weak coverage indicators. The rating also takes into account the vulnerability of the company's profitability to any fluctuations in raw material prices and the inherently low value additive ginning business. The rating considers its exposure to industry regulations pertaining to the minimum support price (MSP) and export restrictions amidst intense competition in a fragmented industry caused by numerous small and unorganised players in the field. The rating, however, continues to derive comfort from the past experience of the promoters in the cotton industry and proximity of the company's manufacturing plant to raw materials, easing procurement. Outlook: Stable ICRA believes NAFPL will continue to benefit from the past experience of its promoters in the cotton industry. The outlook may be revised to 'Positive' if the company reports substantial growth in revenue and profitability, or an improvement in its capital structure through equity infusion which strengthens the financial risk profile. The outlook may be revised to 'Negative' in case of substantial de-growth or moderation in profitability or in case of any major debt-funded capital expenditure, or stretch in the working capital cycle that may affect the liquidity position. Key rating drivers Credit strengths Extensive experience of promoters in the cotton industry: NAFPL was incorporated in 2007, by promoters having an extensive experience in the cotton industry through their former association with Chirag Oil Industries, which is involved in a similar line of business operations. Location specific advantage: The company benefits in terms of lower transportation cost and an easy access to quality raw material, due to its proximity to raw material suppliers. Credit challenges Modest scale of operations with a weak financial risk profile: The operating income (OI) of the company has witnessed de-growth in the past two fiscals by ~17% and ~8% in FY2016 and FY2017, respectively mainly due to a decline in sales volume. The profitability margins moderated in FY2017 owing to fluctuating raw material prices coupled with limited value addition in the cotton ginning business. Despite NAFPL's low net-worth, the gearing reduced to 2.27 times as on FY2017 end on account of lower working capital requirement as compared to the previous year. The coverage indicators continued to remain weak due to low profitability margins. Profitability remains vulnerable to agro-climatic condition and regulatory changes: The cotton ginning business is low value additive in nature and the profit margins are also exposed to fluctuations in the raw material (raw cotton) prices, which depend upon various factors like seasonality, climatic conditions, international demand and supply situation, export policy, etc. Further, it is also exposed to the regulatory risks with regards to the MSP, which is set by the Government. Intense competition and fragmented industry: The company faces stiff competition from other small and unorganised players in the industry, which limits its bargaining power with customers and suppliers and hence, exerts pressure on its margins. Incorporated in 2007, NAFPL is involved in the business of raw cotton ginning and pressing to produce cotton bales and cotton seeds. The manufacturing facility, located at Rajkot in Gujarat, is equipped with 30 ginning machines and one pressing machine with an installed capacity of 170 bales per day. The promoters of the company have extensive past experience in the cotton industry vide their former association with Chirag Oil Industries, which is involved in a similar line of business. In FY2017, the company reported a net profit of INR0.0 crore on an OI of INR45.47 crore, as compared to a net profit of INR0.01 crore on an OI of INR49.33 crore in FY2016. NEO PACK: Ind-Ra Migrates BB- Issuer Rating to Non-Cooperating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Neo Pack Plast (India) Private Limited's (NPPIPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The ratings will now appear as 'IND BB-(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: Instrument Type -- INR50 mil. Fund-based working capital limits migrated to non- cooperating category with IND BB-(ISSUER NOT COOPERATING) rating; -- INR5.80 mil. Long-term loans migrated to non-cooperating category with IND BB-(ISSUER NOT COOPERATING) rating; -- INR3.50 mil. Non-fund-based working capital limits migrated to non-cooperating category with IND A4+(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on February 12, 2015. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 1995 by Aziz Khan, NPPIPL manufactures and supplies paints, resins, varnish, preservatives and plastic liner bags. The company has one unit in Vapi for manufacturing paints and related products and another unit in Daman for manufacturing plastic bags. OPALIUM INTERNATIONAL: CRISIL Removes Non-Cooperating Ratings ------------------------------------------------------------- Due to inadequate information, CRISIL in line with SEBI guidelines, had migrated the rating of Opalium International Exports (OIE) to 'CRISIL B+/Stable/CRISIL A4/Issuer Not Cooperating'. However, the management has subsequently started sharing requisite information, necessary for carrying out comprehensive review of rating. Consequently, CRISIL is migrating the rating on bank facilities of OEI from 'CRISIL B+/Stable/CRISIL A4/Issuer Not Cooperating' to 'CRISIL B+/Stable/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 1.5 CRISIL B+/Stable (Migrated from 'CRISIL B+/Sable' Issuer Not Cooperating) Packing Credit 3 CRISIL A4 (Migrated from 'CRISIL A4' Issuer Not Cooperating) Packing Credit 1.5 CRISIL A4 (Migrated from in Foreign Currency 'CRISIL A4' Issuer Not Cooperating) The ratings continue to reflect OIE's modest scale, below-average financial risk profile and working-capital-intensive operations. These rating weaknesses are partially offset by its promoters' extensive experience in the fabric trading business. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations amid intense competition: Scale of operations is modest, reflected in revenue estimate at INR22-24 crore for fiscal 2018, due to intense competition and fragmented trading industry. * Below-average financial risk profile: Small networth of INR2.6- 2.7 crore, total outside liabilities to adjusted networth (TOLANW) of 5-5.5 times and debt protection metrics marked by interest coverage ratio of 1.4-1.5 times during fiscal 2018. * Working capital intensive operations: OIE's working capital requirements are high, marked by gross current assets estimated around 225-235 days for fiscal 2018, on account of considerable inventory of 90 days and receivables of 90 days. Strengths * Extensive experience of the partners: OIE benefits from its partner's industry experience of over 30 years, which has resulted in steady orders from customers and longstanding relationships with suppliers and customers. Outlook: Stable CRISIL believes that OIE will benefit from its promoters' extensive experience in the fabric trading industry over the medium term. The outlook may be revised to 'Positive' if the firm significantly increases its scale of operations and cash accruals coupled with improvement in capital structure. Conversely, the outlook may be revised to 'Negative' in case of deterioration in OIE's financial risk profile, particularly liquidity, owing to further elongation in working capital cycle or significant decline in profitability. OIE, set up in 1993 as a partnership firm, trades in fabric in the domestic as well as international market. The firm markets its products under its own brands 'Opalium and Bonytex'. PARAMOUNT BLANKETS: CRISIL Lowers Rating on INR9.75MM Loan to D --------------------------------------------------------------- CRISIL Ratings has been consistently following up with Paramount Blankets Private Limited (PBPL) for obtaining information through letters and emails dated January 24 2017, and February 14, 2017, among others, apart from telephonic communication. However, the issuer has remained non-cooperative. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 9.75 CRISIL D (Issuer Not Cooperating; Downgraded from 'CRISIL C') Long Term Loan .11 CRISIL D (Issuer Not Cooperating; Downgraded from 'CRISIL C') Proposed Long Term 5.75 CRISIL D (Issuer Not Bank Loan Facility Cooperating; Downgraded from 'CRISIL C') The investors, lenders and all other market participants should exercise due caution while using the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward looking component as it is arrived at without any management interaction and is based on best available or limited or dated information on the company'. Detailed Rationale Despite repeated attempts to engage with the management, CRISIL failed to receive any information on either the financial performance or strategic intent of PBPL. This restricts CRISIL's ability to take a forward-looking view on the credit quality of the entity. CRISIL has downgraded its rating on the long-term bank facility of PBPL to 'CRISIL D' from 'CRISIL C'. The downgrade reflects delays in repayment of debt obligations, because of its stretched liquidity position. PBPL was incorporated in 2004, promoted by Mr. Satbhushan Gupta. The company manufactures polyester mink blankets, which it sells in the domestic market. Its manufacturing unit is at Sonepat (Haryana). RATI ENGINEERING: CRISIL Cuts Rating on INR3.5MM Cash Loan to B+ ---------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Rati Engineering (RATIEN) to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 5 CRISIL A4 (Downgraded from 'CRISIL A4+') Cash Credit 3.5 CRISIL B+/Stable (Downgraded from 'CRISIL BB-/Stable') Proposed Long Term .5 CRISIL B+/Stable (Downgraded Bank Loan Facility from 'CRISIL BB-/Stable') The downgrade reflects CRISIL's belief that operations will remain affected by change in the firm's ownership of the firm with movement of partners during the financial year 2018. The business has been adversely impacted with operations coming to a standstill on account of this. While operations are expected to resume in fiscal 2019, extent of ramp up will remain a key monitorable. The ratings reflect RATIEN's large working capital requirement and average financial profile. These weaknesses are partially offset by the experience of its promoters in the construction industry. Key Rating Drivers & Detailed Description Weaknesses * Large working capital requirement: The firm is required to maintain security deposit and performance guarantee, leading to working capital-intensive operations. * Average financial risk profile: Networth was small at INR3.69 crore as on March 31, 2017, despite a comfortable gearing of below 1.0 time. Strength * Experience of promoters: Key promoter, Mr Gautam Besania, has been in the construction segment for about a decade, leading to established relationship with various contractors and government departments in Gujarat. Outlook: Stable CRISIL believes RATIEN will continue to benefit over the medium term from the extensive experience of its promoters. The outlook may be revised to 'Positive' if sustained ramp up in operations leads to higher cash accrual and if equity infusion improves financial risk profile. The outlook may be revised to 'Negative' if lower-than-expected revenue or delay in resuming operations affects overall business risk profile. Set up as a partnership firm in May 2010 by Mr Gautam Bhesania and members of Patel family, RATIEN focuses on engineering, procurement, and construction (EPC) projects for the civil infrastructure and power sectors. Majority of its topline comes from road projects in Gujarat. RENNY STRIPS: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed Renny Strips Pvt Ltd's (RSPL) Long-Term Issuer Rating at 'IND BB+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR130 mil. Fund-based limits affirmed with IND BB+/Stable rating; and -- INR50 mil. Non-fund-based limits affirmed with IND A4+ rating. KEY RATING DRIVERS The affirmation reflects RSPL's continued small scale of operations due to limited production capacity and thus a moderate credit profile. Revenue increased to INR988 million in FY17 (FY16: INR638 million) due to an increase in the quantity sold to 31,505MT (19,820MT). However, EBITDA margin declined to 2.4% in FY17 (FY16: 3.6%), due to an increase in power & fuel expenses resulting from an increase in tariff rate. Net financial leverage (adjusted net debt/operating EBITDAR) remained high at 6.0x in FY17 (FY16: 5.9x) due to a high debt balance at year-end whereas interest coverage (operating EBITDA/gross interest expense) improved to 1.9x (1.6x) due to a decline in other interest cost. The company has indicated revenue of INR720 million during 3QFY18; hence, the agency believes it will witness positive revenue growth during FY18. The ratings are supported by RSPL's founder-promoters' around two decades of experience in the steel industry and continued adequate liquidity position as reflected by 95% average utilisation of the fund-based working capital during the 12 months ended December 2017. RATING SENSITIVITIES Negative: Deterioration in the overall credit metrics could lead to a negative rating action. Positive: A substantial rise in the revenue along with an improvement in the credit metrics could be positive for the ratings. COMPANY PROFILE RSPL was incorporated in 1996 in Ludhiana, Punjab, by Dev Raj Gupta and Binny Gupta. The company manufactures mild steel wires, coil & rods at its 25,000MTPA unit. The company is now managed by Mrs Chetna Gupta and Mr Binny Gupta, who look after the day-to-day operations under the guidance of Mr. Dev Raj Gupta. SHAKUNTALA WAREHOUSE: Ind-Ra Puts B+/Non-Cooperating Rating ----------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Shakuntala Warehouse's (SW) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The ratings will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR174 mil. Fund-based limits migrated to non-cooperating category with IND B+(ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on December 21, 2016. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Incorporated in 2006, SW is a partnership firm that provides trading and warehousing services for rice and paddy. Based in Obedullaganj, Madhya Pradesh, the firm owns a warehouse with an annual storage capacity of 10,000 tonnes. The firm is promoted by partners Mr Kamlesh Kumar Argal and Mr Amitesh Argal. SHUNTY BUNTY: CRISIL Assigns B+ Rating to INR14.75MM Cash Loan -------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank facilities of Shunty Bunty Automobiles Private Limited (SBAPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 3.25 CRISIL B+/Stable (Assigned) Loan Against Property 2.00 CRISIL B+/Stable (Assigned) Cash Credit 14.75 CRISIL B+/Stable (Assigned) Electronic Dealer Financing Scheme (e-DFS) 10.00 CRISIL B+/Stable (Assigned) The rating reflects SBAPL's weak financial risk profile and exposure to intense competition. These weaknesses are partially offset by comfortable business risk profile, driven by healthy relationship with its principal supplier, Tata Motors Ltd (TML; 'CRISIL AA/Positive/CRISIL A1+'), and the extensive experience of the promoters. Key Rating Drivers & Detailed Description Weakness * Weak financial risk profile: Networth was modest around INR6.12 crore and total outside liabilities to tangible networth ratio was high at 6.69 times as on March 31, 2017. Debt protection metrics were average: interest coverage was 1.15 times in fiscal 2017. * Exposure to intense competition: Stiff competition from dealers of other MHCV manufacturers, such as Ashok Leyland, Eicher Motors, and Force Motors, results in low operating profitability. Margin may remain under pressure over the medium term. Strength * Comfortable business risk profile, driven by healthy relationship with TML: SBAPL has been dealer of TML's medium and heavy commercial vehicles (MHCVs) in the districts of Uttar Pradesh since October 2004, benefitting from the strong brand and dominant market position of its principal. The principal provides incentives on sales and reimbursement for promotional expenditure. CRISIL believes operating income will improve as demand increases. * Extensive experience of the promoters: The promoters' experience of around a decade in the commercial vehicle dealership business has helped maintain demand in Uttar Pradesh, despite decline in the market share of the principal. Outlook: Stable CRISIL believes SBAPL will continue to benefit from its healthy relationship with TML. The outlook may be revised to 'Positive' if a sizeable capital infusion and prudent working capital management leads to a stronger financial risk profile, particularly liquidity. The outlook may be revised to 'Negative' if low operating income and cash accrual, stretch in working capital cycle, or a large debt-funded capital expenditure (capex) weakens financial risk profile, especially liquidity. Based in Kanpur, SBAPL was started in October 2004 by Mr Hari Kishan Oberoi and is promoted by the Oberoi family. In addition to dealing with MHCVs, the company sells spares and lubricant oils, and now owns one sales, spares, and services (3S) in Chakarpur, Kanpur. SUVARNA LAKSHMI: ICRA Reaffirms B+ Rating on INR18cr Loan --------------------------------------------------------- ICRA Ratings has reaffirmed the long-term rating of [ICRA]B+ to the INR18.00 crore cash credit limits and INR9.20 crore unallocated bank facilities of Suvarna Lakshmi Jewellers. The outlook on the long-term rating is 'Stable'. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 18.00 [ICRA]B+(Stable); Reaffirmed Unallocated limits 9.20 [ICRA]B+(Stable); Reaffirmed Rationale The rating reaffirmation continues to be constrained by SLJ's weak financial risk profile characterised by interest coverage ratio of 1.15 times and high gearing of 3.93 times as on March 31, 2017; high working capital intensive nature of the business, as reflected by high utilisation of working capital limits, owing to high inventory levels maintained to provide variety to customers; and geographical concentration risk inherent to a single-retail outlet business. The rating also factors in small scale of operations in the intensely competitive gems-and-jewellery retail industry; and risks arising from partnership nature of the firm such as capital withdrawal as observed in FY2017. The rating, however, positively factors in the long experience of the promoters in the jewellery retail business and loyal customer base associated with Tanishq brand; and favourable long-term outlook of the jewellery industry supported by the cultural underpinnings, evolving lifestyle, growing disposable income, favourable demographic dividend and the growing penetration of organised sector. Outlook: Stable ICRA believes Suvarna Lakshmi Jewellers will continue to benefit under brand name of Tanishq and the extensive experience of its partners. The outlook may be revised to 'Positive' if substantial growth in revenue and profitability, and better working capital management, strengthens the financial risk profile. The outlook may be revised to 'Negative' if cash accrual is lower than expected, or if any major capital expenditure, or stretch in the working capital cycle, weakens liquidity. Key rating drivers Credit strengths Long of experience of promoters in the retail industry and strong loyal customer base for brand Tanishq: Founded in 2009 for the purpose of branded jewellery retail, SLJ is a level-3 dealer of one of the India's leading gold Jewellery brand Tanishq. Established relationship with the principal Titan Company Limited and the track record of the management in branded retail helps in achieving loyal customer base. Favourable long-term outlook of the jewellery industry: The long- term outlook of the jewellery industry is favourable supported by the cultural underpinnings, evolving lifestyle, growing disposable income, favourable demographic dividend and the growing penetration of organised sector. Credit challenges Financial profile characterised by leveraged capital structure and weak debt coverage indicators: The total debt of the company mainly consists of working capital borrowings from the bank, standing at INR20.09 crore as on March 31, 2017. SLJ's financial risk profile is weak characterised by interest coverage ratio of 1.15 times in FY2017 and high gearing of 3.93 times as on March 31, 2017. High working capital intensity resulting from high inventory levels which impacts liquidity: Typically, the inventory holding is high in jewellery retailing business as the dealers must stock adequate varieties to attract customers and also capitalise on customer walk-ins. The firm's ability to ramp up is directly proportional to the inventory holding: additional varieties are critical to converting walk-ins to customers and expand the existing customer base and to be in sync with new designs and trends. The working capital intensity continues to be high at 56.90% in FY2017 which increased from 50.94% in FY2016 owing to increase in inventory days. Intense competition and high geographical concentration risk: The company faces stiff competition from other unorganised players, thereby putting pressure on revenues and margins. The scale of operations is small with an operating income of INR41.78 crore in FY2017. SLJ operates through single retail outlet resulting in high geographical concentration risk. Risks associated with constitution as a partnership firm- Given SLJ constitution as a partnership firm, it is exposed to risks including the possibility of withdrawal of capital by the partners as observed in FY2017 where in company had withdrawn INR2.93 crore for repayment of unsecured loans. Suvarna Lakshmi Jewellers (SLJ) was founded in 2009 to undertake the business of branded jewellery retail. The company operates as a level-3 dealer of Tanishq's jewellery products. SLJ operates through its own showroom located at Dilsukhnagar, Hyderabad. The firm is promoted and managed by Mr. B Satya Prakash Rao and his family members. SUVEERA AGRO: CRISIL Reaffirms B+ Rating on INR5MM Cash Loan ------------------------------------------------------------ CRISIL has reaffirmed its 'CRISIL B+/Stable'/CRISIL A4' rating to bank facilities of Suveera Agro Industries (SAR). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 3 CRISIL A4 (Reaffirmed) Cash Credit 5 CRISIL B+/Stable (Reaffirmed) The rating continues to reflect modest scale of operations, average financial risk profile constrained by small net worth, and exposure to intense competition. These rating weaknesses are partially offset by extensive experience of partners in the rice milling industry. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations and exposure to intense competition: SAR's business risk profile is constrained on account of its small scale of operations reflected in its operating income of INR32 crores in fiscal 2017. The rice milling industry is fragmented and intensely competitive. It has a modest milling capacity given the presence of players with capacities of 50 tph to 70 tph in Andhra Pradesh. While large players have better efficiencies and pricing power, small players are exposed to intense competition. In the absence of capacity addition plans over the medium term, CRISIL believes that SAR's business risk profile will continue to be constrained by modest scale of operations in a highly competitive rice milling industry. * Average financial risk profile: The financial risk profile of the firm is constrained due to small net worth of INR3.8 crores as on March 31, 2017 due to modest accruals. Profitability is modest on account of intense competition. The domestic rice industry is highly regulated in terms of paddy prices, export/import policy for rice, and rice release mechanism, which affects the credit quality of players. Nevertheless, gearing was low at 0.44 times as on March 31, 2017 due to moderate reliance on debt. Debt protection metrics was average with interest coverage and Net Cash Accruals to Total Debt (NCATD) of 1.9 times and 0.15 times respectively. Strength: * Extensive industry experience of SAR's promoters in the rice milling industry: SAR's business risk profile benefits from the extensive experience of promoters in the rice milling industry. The family of the promoters has been involved in Processing and trading of rice for almost 2 decades. The promoters' extensive industry experience has enabled the firm establish healthy linkages with farmers, aiding the raw material (paddy) procurement. The firm also has healthy relationship with traders and wholesalers operating in the open market, resulting in steady offtake of rice. CRISIL believes that the business risk profile will continue to benefit from the promoters' extensive experience in the rice milling industry. Outlook: Stable CRISIL believes that the firm will continue to benefit from extensive experience of its partners. The outlook may be revised to 'Positive' in case of significant improvement in revenue, profitability and the capital structure. The outlook may be revised to 'Negative' if a large, debt-funded capital expenditure, stretch in the working capital cycle, or decline in sales volume and profitability, weakens the financial risk profile, especially liquidity. SAR, set up in 2010 as a partnership firm and based in Hanuman Junction (Andhra Pradesh), is engaged in processing of paddy into rice, bran, broken rice and husk. The rice mill, located in Hanuman Junction of Krishna District (Andhra Pradesh) and is promoted by Mr NVV Prasada Rao, Mr Gadde Srinivasa Rao, Mr Gadde Chakradhar and Mr Naga Bhirava Krishna Phanendra. TIRUPATHI YARNTEX: ICRA Raises Rating on INR14.50cr Loan to B- -------------------------------------------------------------- ICRA Ratings has upgraded the long-term rating from [ICRA]C+ to [ICRA]B- for the INR18.00-crore long-term facilities of Tirupathi Yarntex Spinners Private Limited (TYSPL). The outlook on the long-term rating is Stable. ICRA has reaffirmed the short-term rating at [ICRA]A4 for the INR1.50-crore short-term interchangeable limits of the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Term Loan 2.90 [ICRA]B-(Stable); Upgraded from [ICRA]C+ Cash Credit 14.50 [ICRA]B- (Stable); Upgraded from [ICRA]C+ Bank Guarantee 0.60 [ICRA]B- (Stable); Upgraded from [ICRA]C+ Short-term Interchangeable (1.50) [ICRA]A4; Reaffirmed Rationale The rating revision positively factors in the equity infusion of INR3.0 crore by the promoters in FY2017, which has resulted in an improvement in its net-worth position and has also enabled the company in meeting the repayment obligations on a timely basis. The ratings continue to take comfort from the extensive experience of the promoters in the spinning industry for nearly two decades and the financial support extended by the promoters in the form of unsecured loans. The ratings, however, continue to remain constrained by the weak financial profile of the company characterised by weak profitability, highly leveraged capital structure and stretched coverage indicators on account of low accruals from operations coupled with high interest expenses, notwithstanding the improvement witnessed in FY2017. Besides, the ratings also factor in TYSPL's modest scale of operations and its presence in a highly fragmented industry characterised by intense competition, which restricts the pricing flexibility to an extent. Outlook: Stable ICRA believes that TYSPL will continue to benefit from the extensive experience of its promoters in the spinning industry and consistent financial support extended by them. The outlook may be revised to 'Positive' if the profitability and liquidity position of the company improves significantly. The outlook may be revised to 'Negative' if cash accrual is lower than expected or if any further deterioration in its profit margins or stretch in the working-capital cycle weakens the liquidity. Key rating drivers Credit strengths Extensive experience of the promoters: The Managing Director of TYSPL, Ms. Ramani Devi, has an extensive experience of over two decades in the spinning industry. The directors of the company, Mr. Alagar Raja and Mr. Krishnama Raja, also have longstanding presence in the spinning sector for nearly 18 years. Financial support extended by the promoters: The promoters have been extending constant financial support to the company in meeting debt obligations. In FY2017, the promoters infused equity of INR3.0 crore. Besides, they have also extended non-interest bearing unsecured loans to the tune of INR8.8 crore as on March 31, 2017. Credit challenges Highly leveraged capital structure: The financial profile of the company is characterised by stretched capital structure primarily on account of high reliance on external borrowings. Further, its net-worth position was also impacted by net level losses for three consecutive years. Nevertheless, the equity infusion of INR3.0 crore by the promoters in FY2017 has supported the net- worth position to an extent. Weak coverage indicators: The coverage indicators of the company are stretched primarily on account of moderate accruals from operations coupled with high interest expenses. Small scale of operations in a highly fragmented industry limits pricing flexibility: TYSPL is a small-scale player in the spinning industry with an installed capacity of 30,696 spindles. With a small scale of operations, it has limited bargaining power with its customers and suppliers. Furthermore, the intense competition prevailing in the industry owing to its fragmented nature exerts pressures on the company's pricing flexibility, thereby limiting the profitability. TYSPL was established as a proprietary concern and was converted into a private limited company in 1996. At present, it is managed by Ms. Ramani Devi (Managing Director) and her sons Mr. Alagar Raja and Mr. Krishnama Raja. TYSPL manufactures 100% cotton yarn. The factory units are present in Rajapalayam at two separate locations. Unit A has an installed capacity of 19,080 spindles and Unit B is installed with 11,616 spindles. The company also owns a windmill with a capacity of 850 KW. V S R MINERALS: CRISIL Assigns 'B' Rating to INR4MM LT Loan ----------------------------------------------------------- CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the bank facilities of V S R Minerals (VSR). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Proposed Long Term Bank Loan Facility 4 CRISIL B/Stable Bank Guarantee 0.75 CRISIL A4 Overdraft 5.25 CRISIL A4 Ratings reflect modest scale of operations and operating margins. Rating also factors in below average financial risk profile constrained by modest net worth and stretched liquidity however supported by moderate gearing and debt protection metrics. Rating weaknesses are partially offset extensive experience of partners. Key Rating Drivers & Detailed Description Weakness * Modest scale of operations and operating margins: Business risk profile is constrained by modest scale of operations as reflected in revenues of INR34 crores in Fiscal 2017 and expected revenues of INR38 crore in Fiscal 2018. Modest scale of operations limits company's bargaining power with suppliers and customers which in- turns limits the operating profitability of the company. * Below average financial risk profile: Financial risk profile is below average constrained by modest net worth and stretched liquidity however the same is supported by moderate gearing and debt protection metrics. Interest coverage ratio was above 2 times over the past three years, through Fiscal 2017, and net cash accruals to total debt was at around 8% for the fiscal 2017. Strengths * Extensive experience of partners: Since 2008 the company has been procuring material from Jindal Steel (JSW) because of which it has established strong relationship with the same which supports the business profile of the company. Furthermore, over the years the promoters have included many small as well as large builders and civil contractors in its customers profile and currently around 30 such builders and civil contractors are there in the customer profile of the company CRISIL believes that extensive experience of partners will continue to benefit the company over the medium term. Outlook: Stable CRISIL believes that VSR will continue to benefit over the medium term from the extensive experience of the partners. The outlook maybe revised to 'Positive' if ramp-up in scale of operations and improved profitability substantially strengthen financial risk profile. Conversely, the outlook maybe revised to 'Negative' if low cash accrual, or large working capital requirements or capital expenditure weakens the financial risk profile. Based out of Koppal district, Karnataka, VSR is a partnership firm established in 2008 by Mr. G. Ramu, Mr. G Sai Baba, Mr. Santosh Keloji and Mr. Sayed Parvez. The firm is engaged in trading of Ground Granualted Blast Furnace Slag (GGBFS) and cement. VASUDEV POWER: Ind-Ra Withdraws BB(Issuer Not Cooperating) Rating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has withdrawn Vasudev Power Private Limited's (VPPL) Long-Term Issuer Rating of 'IND BB(ISSUER NOT COOPERATING)'. The instrument-wise rating actions are: -- INR10 mil. Fund-based working capital facilities withdrawn with WD rating; and -- INR75 mil. Non-fund-based facilities withdrawn with WD rating. KEY RATING DRIVERS Ind-Ra is no longer required to maintain the ratings for the above facilities, as the agency has received no-objection certificates from the lenders. This is consistent with the Securities and Exchange Board of India's circular dated 31 March 2017 for credit rating agencies. Ind-Ra will no longer provide analytical and rating coverage for VPPL. COMPANY PROFILE VPPL was established in 1998 as a proprietorship firm. In 2010, it was reconstituted as a private limited company. VPPL is engaged in all types of electrical and power distribution works such as laying of high/low-tension cables up to 66KV, erection and maintenance of substations up to 220KV, location and rectification of cable faults up to 66KV, transformer maintenance, and transformer oil and lube oil filtration. VINAYAKA ELECTROALLOYS: CRISIL Ups Rating on INR5MM Loan to B+ -------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Vinayaka Electroalloys India Private Limited (VEIPL) to 'CRISIL B+/Stable' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Long Term Loan 5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') The upgrade reflects improvement in the company's business risk profile driven by healthy order flow and steady operating margin. For the eight months ended fiscal 2018, revenue was around INR19 crore, and is expected at around INR25-27 crore for the fiscal, supported by steady demand. Operating margin is expected to remain at 13-14% supported by focus on value-added products. The upgrade also reflects the sustained improvement in financial risk profile. Interest coverage ratio is expected to improve to 2.5- 3.0 times over the medium term supported by improving profitability. Cash accrual is expected at INR2.0-2.4 crore, sufficient to meet debt obligation of INR1.6-1.2 crore over the medium term. Need-based fund support from the promoters (INR1.8 crore as on March 2017) should benefit the financial risk profile. The rating reflects the company's modest scale of operations, and large working capital requirement. These weaknesses are partially offset by the experience of its promoters in the steel castings industry. Analytical Approach CRISIL has treated unsecured loans (INR1.8 crore as on March 31, 2017) extended to VEIPL by the promoters as 75% equity and 25% debt, as the loans do not bear interest, and are subordinated to external debt. Also, there has been no withdrawal in the past five years. Key Rating Drivers & Detailed Description Strengths * Experience of promoters: The promoters' experience of over two decades and healthy relationships with customers and suppliers should continue to support the business. Weakness * Modest scale of operations: The company reported revenue of INR14.4 crore in fiscal 2017, reflecting its modest scale of operations. Though the revenue is expected to increase over the medium term, it will remain small in the competitive steel castings industry, which has a large number of organised and unorganised players. * Working capital-intensive operations: The company had gross current assets of 314 days as on March 31, 2017. Increasing scale and large manufacturing lead time will continue to keep operations working capital intensive. Outlook: Stable CRISIL believes VEIPL will continue to benefit from the experience of its promoters. The outlook may be revised to 'Positive' if there is a significant increase in revenue and profitability, while improving its working capital management, resulting in better financial risk profile. The outlook may be revised to 'Negative' if decline in revenue and profitability or stretched working capital cycle weakens financial risk profile and liquidity. VEIPL, established in 2006 and based in Erode (Tamil Nadu), manufactures steel castings for valves and pumps. Mr S Venkatachalamurthi, Mr P Chinnusamy, and Mr K Muthurathinam are the promoters. ZAMINDARA TIMBER: CRISIL Reaffirms B+ Rating on INR2.75MM Loan -------------------------------------------------------------- CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on the bank facilities of Zamindara Timber Private Limited (ZTPL). Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 2.75 CRISIL B+/Stable (Reaffirmed) Letter of Credit 16.00 CRISIL A4 (Reaffirmed) Proposed Long Term Bank Loan Facility 1.25 CRISIL B+/Stable (Reaffirmed) The ratings continue to reflect ZTPL's modest financial risk profile and modest scale of operations. These rating weaknesses are partially offset by the promoter's extensive experience in the timber trading industry. Key Rating Drivers & Detailed Description Weakness * Modest financial risk profile: Financial risk profile is marked by modest net worth (INR 3.9 crores as on March 31, 2017), high total outside liabilities to adjusted net worth (TOLANW) ratio (5-9 times over the three fiscals ended March 31, 2017) and modest interest coverage ratio of 1.4 times in fiscal 2017. Financial risk profile is expected to remain modest over the medium term * Modest scale of operations: ZTPL operates in highly fragmented timber processing industry marked by low entry barriers due to low capital requirements and hence, scale of operations has remained modest with operating income of INR49 crores in fiscal 2017. Scale of operations is likely to remain modest over the medium term. Strength * Promoters' extensive experience in timber trading industry: ZTPL's promoter has over four decades of experience in trading of timber and has developed healthy relations with its customers and suppliers over the years. Benefits from extensive promoter experience is expected to continue over the medium term. Outlook: Stable CRISIL believes that ZTPL will continue to benefit over the medium term from its promoters' extensive experience in the timber trading industry. The outlook may be revised to 'Positive' in case the company improves its financial risk profile because of higher-than-expected cash accruals, better-than-expected working capital management, or funding support from its promoters. Conversely, the outlook may be revised to 'Negative' in case ZTPL's financial risk profile weakens because of lower- than-expected cash accruals, larger-than-expected increase in its working capital requirements, or larger-than-expected debt-funded capital expenditure. ZTPL was incorporated in 1975 as a proprietorship concern, and was reconstituted into partnership firm in 2001. In July 2014 the firm was reconstituted as a company with Mr. Amit Kamboj and Mr. Salesh Kamboj as the directors. The company is engaged in the processing and trading of timber. The firm is based in Karnal (Haryana), with its processing facilities located at Gandhidham (Gujarat). ================= I N D O N E S I A ================= SOECHI LINES: Fitch Assigns B+ Rating to USD200MM Notes ------------------------------------------------------- Fitch Ratings has assigned a 'B+' final rating with a Recovery Rating of 'RR4' to Indonesia-based PT Soechi Lines Tbk's (Soechi, B+/Negative) USD200 million 8.375% senior unsecured notes maturing in 2023. The notes have been issued by Soechi's wholly owned subsidiary Soechi Capital Pte. Ltd. The notes are guaranteed by Soechi and all its operating subsidiaries, and the proceeds will be used mainly to refinance Soechi's existing debt. The final rating is in line with the expected rating assigned on 22 January 2018, and follows the receipt of final documents conforming to earlier information. Soechi's key shipping business is relatively stable, supported by growing demand, a robust market position and regulatory protection. However, the shipyard segment has underperformed relative to Fitch expectations and has been a drag on the leverage profile. The situation is compounded by a lack of new shipbuilding contracts. The Negative Outlook factors in the risk that Soechi's FFO adjusted net leverage will remain higher than 4.0x - the level above which Fitch would consider negative rating action - until 2018, given a lack of cash flow visibility for its shipyard business and higher-than-estimated shipping capex without a commensurate improvement in EBITDA. KEY RATING DRIVERS Weak Shipyard Performance: Soechi has invested around USD200 million in its shipyard, which began operations in 2012. However, annualised 9M17 EBITDA was weak at USD2 million, resulting in a significant drag on the consolidated leverage profile. Soechi has not secured any new shipbuilding contracts after being awarded contracts for three new ships by the Ministry of Transportation in 2015, and has had to postpone delivery of existing orders due to delays in construction and inspections. Soechi's current order-book includes three ships it is building for PT Pertamina (Persero) (BBB/Stable) under contracts worth more than USD60 million. The company completed construction of Pertamina's first ship in January 2018, and expects to deliver it soon while delivery of the other two is targeted for 4Q18, around two years behind initial plans. The company expects new orders to flow in gradually, and also expects to earn ship-repair revenues from 2018, having completed capex on key facilities including a floating dry dock. Fitch assume increased shipyard revenue from 2018, but the lack of new contracts presents a risk to Fitch forecasts. Resilient Shipping Business: Soechi's tanker capacity is geared predominantly towards transportation of oil and related products. Indonesia's oil consumption has grown steadily, supported by an expanding economy, and tanker demand is likely to be sustained. Soechi's fleet capacity under longer-term time-charter contracts was sustained at a relatively high level of 95% as of September 2017 (end-2016: 85%), indicating robust demand. A higher share of time-charter contracts improves cash flow stability, and Fitch think Soechi is well-placed to secure further such contracts for its expanding fleet. The outlook for Soechi's shipping business is supported by its robust market position as the country's largest independent tanker operator. Indonesia's shipping industry is fragmented, with a large number of small players, and enjoys protection from foreign competition by cabotage laws - which mandate the use of Indonesia-flagged vessels for domestic transportation, and limit foreign ownership to 49% in joint ventures for operation of Indonesia-flagged vessels. Old Fleet, Small Size: The average age of Soechi's fleet (weighted by capacity) is around 18 years, against a typical useful ship life of 30 years. The company's fleet-age profile corresponds with its strategy of operating older ships, which is the norm in Indonesia's market. The average age of Indonesian- flagged vessels is more than 20 years. However, older ships have higher maintenance expenses and are more prone to operational issues. In addition, Soechi's fleet of 39 revenue-earning ships as of September 2017 is also small relative to global peers. Customer Concentration, but Low Risk: Pertamina is the company's largest customer, contributing 60% to Soechi's 9M17 revenue. This exposes Soechi to the risk of Pertamina not renewing contracts, not granting new contracts or defaulting on its payments. However, Fitch believe these risks are significantly alleviated by Soechi's long-standing relationship with Pertamina (Soechi's predecessor companies have been contracted by Pertamina since 1981), Pertamina's robust credit profile, as well as Soechi's leading market position and conservative capex policy, which is tied to the demand outlook. Negative FCF, Risks to Deleveraging: Fitch forecast negative free cash flow (FCF) from 2018 due to steady spending on vessel acquisitions, and FFO adjusted net leverage to remain at around 4x over the next three years. Fitch assume a moderation in Soechi's fleet capacity growth, and think its leverage profile could worsen with a higher rate of expansion. In addition, Soechi's credit profile could deteriorate if it does not maintain capex discipline over acquisitions tied to the likelihood of new contracts. Soechi's FFO fixed-charge cover should remain relatively healthy at above 3x. DERIVATION SUMMARY Soechi's rating can be compared with that of Russian shipping company PAO Sovcomflot (BB/Positive), which is rated 'BB-' on a standalone basis. Sovcomflot enjoys a one-notch uplift due to strong government support. Its rating is underpinned by a robust business profile - a leading global position as tanker owner; a healthy share of long-term contracts with about two-thirds of the fleet being on time charters in 2016; a fairly young fleet; and diversified customer base. Sovcomflot's fleet is much larger and more diversified than Soechi's, resulting in an EBITDAR that was more than 10x that of Soechi in 2016. Sovcomflot's FFO adjusted net leverage was similar to that of Soechi in 2016, but it has a better business profile. Fitch feel this justifies the differential in the ratings. KEY ASSUMPTIONS Fitch's key assumptions within Fitch rating case for the issuer include: - Soechi's deadweight tonnage to increase by a compound annual growth rate (CAGR) of around 6% over 2017-2020. This is lower than the growth rate of 17% over 2013-2016. - Flat tanker day-rates. - Average annual capex, including upfront docking charges, of around USD60 million over 2017-2020. - Maintenance expenses to rise by 2% per year and salaries by 5% per year from 2017, after adjusting for an increase in fleet size. - General and administrative expenses to increase by 8% per year from 2017. - Shipyard revenue to increase to USD30 million in 2018 (2016: USD24 million) with ship-repair business starting to contribute to earnings. The recovery analysis assumes that Soechi would be liquidated in case of bankruptcy. Fitch have also assumed a 10% administration claim. Liquidation Value Approach - Fitch liquidation value of around USD280 million is at a significant discount to Soechi's latest appraised value for its fleet of around USD370 million provided by a domestic appraiser, and is closer to the scrap value of the ships - given their old age. - Soechi had secured debt of USD252 million as of 30 September 2017. In addition, Fitch assume the use of USD5 million of committed but undrawn credit facilities, implying a total of USD257 million for the debt waterfall. Fitch have assumed that it refinances USD200 million of the outstanding debt with the senior unsecured bond, leaving USD57 million of prior ranking secured debt. - The waterfall results in a recovery of over 50% for the note holders. However, Fitch have rated the senior unsecured bonds 'B+' with a Recovery Rating of 'RR4' because, under Fitch Country-Specific Treatment of Recovery Ratings criteria, Indonesia falls into Group D of creditor friendliness, and the instrument ratings of issuers with assets located in this group of countries are subject to a soft cap at the issuer's IDR. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Negative Rating Action Include: - Inability to reduce FFO adjusted net leverage to 4x or lower by 2018 - FFO fixed-charge cover below 3x on a sustained basis - Substantial deterioration of the operating environment Developments that may lead to a revision of the Outlook to Stable include the issuer not meeting any of the negative rating sensitivities. LIQUIDITY Improved Liquidity: Soechi's debt comprised secured bank loans amounting to USD252 million as of September 2017. The loans required regular repayments and implied a need for sustained refinancing by Soechi. However, with refinancing using proceeds from the bond, Soechi's liquidity profile will improve due to significantly reduced repayment requirements in the next four years. SULFINDO ADIUSAHA: Fitch to Rate IDR & Proposed Bonds 'B(EXP)' -------------------------------------------------------------- Fitch Ratings expects to assign Indonesia-based PT Sulfindo Adiusaha (Sulfindo) a Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B(EXP)' with a Stable Outlook. Fitch has also assigned the company's proposed US dollar senior unsecured notes an expected 'B(EXP)' rating with a Recovery Rating of 'RR4'. At the same time, Fitch Ratings Indonesia has assigned Sulfindo a National Long-Term Rating of 'BBB(idn)' with a Stable Outlook. The ratings reflect the company's well-integrated chemical operations, which allow it to diversify its products, benefit from operational efficiencies, and secure a stable supply of key raw materials. Sulfindo also has a solid domestic market position supported by the industry's high barriers to entry. However, Sulfindo's rating is constrained by its highly leveraged balance sheet and small operational scale compared with its peers. The company's cash flow and margins are also exposed to the inherent price cyclicality of its sales products and raw materials. The expected IDR assumes that Sulfindo will raise sufficient funds from the proposed US dollar bonds to refinance a secured term loan of USD154 million as of end-September 2017, which would improve its liquidity and debt maturity profile. The final ratings are contingent upon the success of the proposed bond issue and the receipt of final documents conforming to information already received. 'BBB' National Ratings denote a moderate default risk relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions are more likely to affect the capacity for timely repayment than is the case for financial commitments denoted by a higher rated category. KEY RATING DRIVERS Integrated Operations: Sulfindo's credit profile benefits from its fully integrated chlor-alkali production that covers the entire value chain, which improves operational efficiency and allows for greater diversification of products, including caustic soda, chlorine, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and polyvinyl chloride (PVC). Caustic soda and PVC sales accounted for 45% and 29%, respectively, of Sulfindo's revenue at end-September 2017. The company also has its own private jetties and storage facilities. The integrated infrastructure also enables the company to lower its costs by streamlining inventory management and taking advantage of volume discounts. Stable Raw-Material Supply: Sulfindo's integrated business model supports its high utilisation rate of above 90% and cost efficiencies due to a stable supply of key raw materials for its final products. Sulfindo uses the chlorine, EDC and VCM it produces internally for its processes further down the production chain. Major feedstocks sourced externally are ethylene, salt and electricity, which account for around 85% of Sulfindo's production cost. Sulfindo has long-term relationships with the major local and international suppliers of its ethylene and salt. Sulfindo's cost efficiency is supported by its ability to source most of its electricity from its 95%-owned subsidiary, PT Merak Energy Indonesia (MEI), through a long-term purchase agreement at below-market price. MEI operates a 2x60MW coal-fired power plant, commercially operational since 2014, with 100% of its electricity generation dedicated to its parent. Sulfindo also has a contract with government-owned electricity generator, PT Perusahaan Listrik Negara (Persero) (BBB/Stable), that can be utilised for back-up during MEI shutdowns for major maintenance or if a breakdown occurs. The stable raw material and utility sources allow Sulfindo to control its production costs. Strong Domestic Presence: Fitch believe Sulfindo has a strong domestic position as there are only two fully integrated chlor- alkali producers in Indonesia. Most of the other competitors are smaller domestic players with only standalone factories, exposing them to the availability and price volatility of raw materials. High investment requirements and the difficulties in storing and transporting chlorine create high barriers to entry in the chlor- alkali industry. The limited competition will ensure that Sulfindo is able to maintain its domestic market share for caustic soda and PVC, and continue as the second-largest player for the medium term. In the past three years, around 65% of Sulfindo's revenue was generated from domestic sales. Fitch expects domestic demand to remain strong as Indonesia is projected to be a net importer of caustic soda and PVC. Fitch do not expect significant capacity expansion from Sulfindo and its major competitors. Small Scale, Limited Diversification: Sulfindo's ratings are constrained by its small profitability and single-site operational scale with limited geographical and product diversification compared with its peers. This reliance increases Sulfindo's exposure during an economic downturn in Indonesia. Sulfindo's credit profile remains exposed to the inherent price cyclicality of its final products and raw materials, which are based on international pricing and global demand-supply dynamics. Sulfindo's inability to influence pricing could translate to volatile margins and cash flows during unfavourable pricing movements. Tight Supplies Benefit Industry: Chlor-alkali producers are benefitting from China's environmental policy, which caused the temporary closure of a number of producers in China. Caustic soda prices have risen to records, gaining about 50% yoy in early January 2018, although most of the spike occurred in 4Q17. Fitch expect this to translate into temporary higher margins for Sulfindo, whose EBITDA margin rose to 16.2% in 9M17 from 9.4% in 2016. However, EDC and PVC prices are not experiencing similar gains as they are more dependent on ethylene prices and their own supply-demand dynamics. Fitch rating case assumes mid-cycle caustic soda prices. High Leverage, Limited Capex: Sulfindo decreased its leverage, measured by adjusted net debt/EBITDAR, to 4.2x (based on annualised EBITDAR) in 9M17 from 9.4x at end-2016, driven by some efficiencies and favourable pricing in its products and raw materials. However, Fitch believes the leverage is at the upper end of 'B'/'BBB(idn)' ratings and Fitch note the company's publicly stated leverage policy to maintain total debt/EBITDA at below 4x. Sulfindo completed its major capex investments in 2015, when it completed its power plant, and with no planned expansionary capex or investment, free cash flow will improve to enable deleveraging. Fitch expect capex intensity (capex/revenue) to be below 10% in 2018 and below 5% in 2019-2020, which is mainly related to maintenance capex. Financing Plan: Sulfindo will use the proposed US dollar senior unsecured notes' proceeds to repay the secured term debt of USD154 million as at end-September 2017. The notes will alleviate liquidity pressure as the company has breached its bank loan covenants although Fitch note that it was able to obtain the requisite waivers. However, Sulfindo has restructured its term loan by extending the repayment schedule. The company plans to prioritise deleveraging as it has limited investment plans. DERIVATION SUMMARY Fitch believe Sulfindo's IDR of 'B' is well-positioned relative to its chemical peers such as Indonesia's PT Chandra Asri Petrochemical Tbk (CAP; BB-/Stable) and China's Shandong Yuhuang Chemical Co., Ltd. (Yuhuang; B/Positive). CAP has significantly larger scale supporting its position as the leading petrochemical player in Indonesia. CAP also generates higher margins with considerably lower leverage. Therefore, Fitch rate CAP two notches above Sulfindo. Fitch believe Yuhuang's larger scale and better coverage are counterbalanced by Sulfindo's better margins and low risk with respect to investments in the medium term. Sulfindo and Yuhuang are therefore rated at the same level. Sulfindo's National Long-Term Rating of 'BBB(idn)' is comparable with domestic peers such as PT Aneka Gas Industri (A- (idn)/Stable). Aneka Gas generates more stable and significantly higher margins due to its long-term contract agreements with its buyers, resulting in lower exposure to the price cyclicality of its sales products. Hence, Aneka Gas is rated two notches higher than Sulfindo. KEY ASSUMPTIONS Fitch's Key Assumptions Within Fitch Rating Case for the Issuer - Mid-cycle caustic soda prices driven by more balanced supply- demand dynamics - Mid-cycle spreads between ethylene and Sulfindo's ethylene- based products - Utilisation rate of around 90%-95% between 2018 and 2020 - Capex of USD25 million in 2018 and around USD15 million in 2019-2020 - No dividend payments between 2018 and 2020 Key Recovery Rating Assumptions: - The recovery analysis assumes that Sulfindo would be considered a going concern in bankruptcy and that the company would be reorganised rather than liquidated. - The going-concern EBITDA for Sulfindo is equal to the company's average 2014-2020F EBITDA to reflect mid-cycle conditions. Fitch uses a multiple of 5.0x for the chemical sector to calculate the company's projected post-reorganisation enterprise value of USD192 million. - 10% administrative claims are applied on the going-concern value. - Sulfindo's secured term loan of around USD154 million at end- September 2017 will be fully repaid using the bond proceeds. As a result, Sulfindo's remaining secured debt will be its short-term working capital loan, which is around USD60 million at end- September 2017. - Fitch estimates recovery of around 60%-70% for Sulfindo's unsecured debt, corresponding to a 'RR3' Recovery Rating, after adjusting for administrative claims. Nevertheless, Fitch has rated Sulfindo's senior unsecured bonds at 'B' with a recovery rating of 'RR4' because, under Fitch's Country-Specific Treatment of Recovery Ratings criteria, Indonesia falls into the Group D of countries based on creditor friendliness. Instrument ratings of issuers with assets in this group are subject to a soft cap at the issuer's IDR. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - No positive rating action is expected in the next 24 months. Positive rating action could result from a significant improvement in its operational and profitability scale, and leverage, calculated as adjusted net debt/EBITDAR, below 3.5x on a sustained basis. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Adjusted net debt/EBITDAR exceeding 4.5x on a sustained basis - Weakening of Sulfindo's competitive position following an oversupply in the domestic market or significant additional capacity from its competitors Additional Developments That May Lead to Negative Rating Action for the National Long-Term Rating: - Failure to secure sufficient funding to meet refinancing needs LIQUIDITY Bond Proceeds to Support Liquidity: Fitch believe Sulfindo's short-term refinancing risk has been reduced by its recent debt restructuring to extend the maturity of its USD154 million amortised-payment loan and obtain the necessary waivers from breaching its covenants. However, a successful bond issuance, structured as a bullet payment, and the ability to refinance its entire secured term loan will further alleviate Sulfindo's liquidity pressure. Sulfindo's remaining debt will be its short- term working capital, which Fitch expect to be renewed annually. The company will also have limited capex in the medium term, which will be supportive of its deleveraging. SULFINDO ADIUSAHA: Moody's Assigns B2 CFR; Outlook Stable --------------------------------------------------------- Moody's Investors Service has assigned a first-time B2 corporate family rating (CFR) to Sulfindo Adiusaha (P.T.). At the same time, Moody's has assigned a B2 rating to the proposed senior unsecured notes due 2023. The notes will be issued by Sulfindo and guaranteed by its 95%-owned subsidiary, Merak Energi Indonesia (P.T.) (MEI). The ratings outlook is stable. Proceeds of the notes issuance will be primarily used to repay existing debt, fund capital expenditures and for other general corporate purposes. RATINGS RATIONALE "Sulfindo's B2 CFR reflects its established market position in the Indonesian chlor-alkali and polyvinyl chloride (PVC) industries, low cost operations, and improved operating performance," says Brian Grieser, a Moody's Vice President and Senior Credit Officer. Sulfindo is a commodity-chemical producer and distributor of caustic soda, ethylene dichloride (EDC) and PVC, which accounted for approximately 45%, 25% and 29% of revenue during the nine months ended September 30, 2017. The balance of sales are from hydrochloric acid and sodium hypochloride. The B2 CFR reflects Moody's expectation that the proposed refinancing will materially reduce Sulfindo's dependence on short term funding, by eliminating loan amortization payments, and enable prospective compliance with financial maintenance covenants in its working capital facilities. The CFR is also constrained by Sulfindo's exposure to earnings and cash flow volatility given the commodity nature of its raw materials, which include ethylene, coal, salt and water, and its final products. Combined, Moody's estimates that ethylene and electricity accounted for about 72% of cost of goods sold in 2017, including the cost of Sulfindo's captive power generation. This exposure to volatile raw material costs is somewhat mitigated by the companies operation of a captive 2x 60MW coal fired power plant in Merak, Indonesia (Baa3 positive), the integrated pipeline with Chandra Asri Petrochemical Tbk (P.T.) (Ba3 stable) which allows for the low cost delivery of ethylene and the close proximity of key customers which reduces logistic costs. Moody's expects that Sulfindo will maintain adjusted financial leverage of around 4.0x-4.5x in 2018; which is consistent with the B2 ratings. Moody's expect the company to maintain EBITDA margins between 16% to 19% over the next 12 months benefitting from improved prices for its caustic soda and PVC and the likely growth in end-market demand in 2018 and 2019. The B2 rating on the proposed senior unsecured notes reflect Moody's expectation that the new notes will represent the large majority in the post--refinancing capital structure. The stable outlook reflects Moody's view that the recent improvement in Sulfindo's operating performance, highlighted by improved EBITDA margins and cash flows in 2017, is sustainable in 2018 and 2019. The outlook also incorporates Moody's expectation that Sulfindo will be free cash flow positive in 2018 and will allocate cash to debt reduction, thereby reducing its reliance on short term funding. The ratings could be downgraded if the company fails to address its high level of debt maturities in 2018 and 2019 in a timely manner. Further, the rating could also be downgraded, if the company were to begin paying dividends or make large debt funded acquisitions such that the company's credit metrics deteriorate. Credit metrics indicative of downward pressure on the ratings include adjusted debt/EBITDA exceeding 5.0x for an extended period. An upgrade is unlikely at this time given the company's exposure to the commodity chemical cycle, small scale, track record of debt restructurings and its weak liquidity profile. A ratings upgrade would require adjusted debt/EBITDA to be maintained below 3.0x for an extended period. The principal methodology used in these ratings was Chemical Industry published in January 2018. Sulfindo Adiusaha (P.T.) is a fully integrated chlor-alkali and PVC producer in Indonesia. Sulfindo's plants are located at a 28 hectare site in Merak, Indonesia and includes plants for the production of caustic soda and chlorine, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and PVC. Sulfindo is owned by entities controlled by Debora Wahjutirto Tanoyo. The company has been owned and controlled by Ms. Tanoyo's family since 2001. ========= J A P A N ========= TOSHIBA CORP: Sharp Considering Bid for PC Business --------------------------------------------------- Kyodo News reports that Sharp Corp has emerged as a potential buyer for Toshiba Corp's loss-making personal computer business, sources close to the matter said on Jan. 30. Toshiba had been in talks to sell the business to Taiwan's AsusTek Computer Inc but a deal failed to materialize, leading the struggling conglomerate to look for other potential buyers. Toshiba could alternatively opt to sell to a private equity fund, the sources said, Kyodo relays. Sharp previously sold laptop PCs under the Mebius name but withdrew from the business in 2010 to focus on other areas such as flat-panel TVs. Having since been acquired by Taiwan's Hon Hai Precision Industry Co, a major Apple Inc. supplier, Sharp has been aggressively expanding its reach under CEO Tai Jeng-wu, according to Kyodo. Kyodo says Toshiba has sold off many of its core businesses in an effort to cover massive losses in its now-bankrupt U.S. nuclear subsidiary. It sold its home appliance business to Midea Group Co in 2016 and also plans to sell its TV business and profit-making memory chip business. Toshiba Client Solutions Co, which makes the Dynabook line of laptops, has struggled to make a profit amid competition from Chinese and Taiwanese rivals and the spread of smartphones and tablet PCs. Toshiba expects the subsidiary to log an operating loss of JPY5 billion for the year through March 2018. About Toshiba Corp 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 Jan. 24, 2018, S&P Global Ratings said it has raised two notches to 'CCC+' from 'CCC-' both its long-term corporate credit and senior unsecured debt ratings on Japan-based capital goods and diversified electronics company Toshiba Corp. S&P said, "We also placed the ratings on CreditWatch with positive implications. We have kept our 'C' short-term corporate credit and commercial paper program ratings on Toshiba on CreditWatch with positive implications." The TCR-AP on Dec. 15, 2017, reported that Moody's Japan K.K. affirmed Toshiba Corporation's Caa1 corporate family rating and senior unsecured debt ratings, and its Ca subordinated debt rating. Moody's has also changed the ratings outlook to stable from negative. At the same time, Moody's has affirmed Toshiba's commercial paper rating of Not Prime. =============== M O N G O L I A =============== STATE BANK: Fitch to Withdraw Ratings for Commercial Reasons ------------------------------------------------------------ Fitch Ratings plans to withdraw the ratings on State Bank LLC for commercial reasons on or about Feb. 28, 2018, which is approximately 30 days from date of this commentary. Fitch currently rates State Bank LLC as follows: - Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B-'; Outlook Positive - Short-Term Foreign-Currency IDR at 'B', - Long-Term Local-Currency IDR at 'B-'; Outlook Positive - Viability Rating at 'b-' - Support Rating at '5' - Support Rating Floor at 'B-' Fitch reserves the right in its sole discretion to withdraw or maintain any rating at any time for any reason it deems sufficient. Fitch believes that investors benefit from increased rating coverage by Fitch and is providing approximately 30 days' notice to the market of the rating withdrawal of State Bank LLC. Ratings are subject to analytical review and may change up to the time Fitch withdraws the ratings. Fitch's last rating action for the above referenced entities was on November 20, 2017. The ratings were affirmed and the Outlook revised to Positive from Stable. ==================== S O U T H K O R E A ==================== DAEWOO ENGINEERING: Hoban Construction Picked as Preferred Bidder ----------------------------------------------------------------- Yonhap News Agency reports that state-run Korea Development Bank (KDB) said on Jan. 31 it has chosen Hoban Construction Co. as a preferred bidder to sell a controlling stake in Daewoo Engineering & Construction Co. The decision comes after Hoban Construction, a mid-sized builder, made a solo bid for the stake earlier this month, Yonhap relates. KDB plans to sell a 50.75 percent stake in Daewoo Engineering. Under a deal, Hoban Construction will buy a 40 percent stake in Daewoo Engineering and acquire the remaining 10.75 percent stake two years later, according to Yonhap. As of 2016, Hoban Construction reported sales of 1.2 trillion won (US$1.12 billion), compared with Daewoo Engineering's 10.9 trillion won, Yonhap discloses. KDB, a key creditor of Kumho Asiana Group, purchased the stake in Daewoo Engineering in 2010 to help the debt-ridden conglomerate restructure its finances. Kumho Asiana's two subsidiaries -- Kumho Tire and Kumho Industrial -- have been under a debt restructuring program since early 2010 due to a severe cash crunch sparked by the group's purchase of Daewoo Engineering in 2006, Yonhap discloses. ********* 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. Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman, Editors. Copyright 2018. 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. *** End of Transmission ***